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Re Mackie Group Pty Ltd (in liq)

Re Mackie Group Pty Ltd (in liq)

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2012 04894

IN THE MATTER OF MACKIE GROUP PTY LTD (IN LIQUIDATION) (ACN 006 524 456) (IN ITS CAPACITY AS TRUSTEE OF THE JUPELINA UNIT TRUST)
MATTHEW JAMES JESS AND PAUL ANDREW BURNESS IN THEIR CAPACITY AS LIQUIDATORS OF MACKIE GROUP PTY LTD (IN LIQUIDATION) (ACN 006 524 456)
AND
MACKIE GROUP PTY LTD (IN LIQUIDATION) (ACN 006 524 456) (IN ITS CAPACITY AS TRUSTEE OF THE JUPELINA TRUST)	Applicants

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JUDGE:	Kennedy J
WHERE HELD:	Melbourne
DATE OF HEARING:	16 August 2017
DATE OF JUDGMENT:	1 September 2017
CASE MAY BE CITED AS:	Re Mackie Group Pty Ltd (in liq) (in its capacity as Trustee of the Jupelina Unit Trust)
MEDIUM NEUTRAL CITATION:	[2017] VSC 477

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COMPANIES – Winding up – Application for directions by liquidators of trustee company under s 479(3) of the Corporations Act2001 (Cth) – Application of s 556 in doubt – Whether liquidators may have access to trust assets for remuneration, costs and expenses pursuant to trust principles in Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 and/or the salvage principles in Re Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171 – Whether appropriate to make declaration under s 1318(2) of the Corporations Act 2001 (Cth) or s 67 of the Trustee Act 1958 (Vic) in respect of payments purportedly made under s 556 – Appropriate priority between unsecured creditors and unitholders – Whether appropriate to deduct amount owed by unitholder pursuant to Cherry v Boultbee (1839) 4 Myl & Cr 442; (1839) 41 ER 171

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr S Waldren	Madgwicks

HER HONOUR:

This application is made under s 479(3) of the Corporations Act 2001 (Cth) (Corporations Act); alternatively, under Schedule 2 Division 45 ss 45-1 and 45-5 and Division 90 ss 90-15 and 90-20 of the Corporations Act.

The application is supported by an affidavit of Mr Matthew James Jess of 23 March 2017 (the Jess Affidavit) and an affidavit of Ms Catherine Ann Ballantyne dated 11 July 2017 (the Ballantyne Affidavit).

It is an application by the liquidators of Mackie Group Pty Ltd (the Company) for orders in the nature of directions in relation to matters that have arisen in the Company’s winding up, in particular, concerning the priority of payment of an amount to Unitholders under the Jupelina Unit Trust (the Trust) of which the Company is the Trustee.

The applicants initially invited the Court to resolve the issue as to whether s 556 of the Corporations Act applied in this context which concerned trust assets. However, given this issue is currently the subject of conflicting authority[1] and, further, is under consideration by both the Victorian Court of Appeal[2] and the Full Court of the Federal Court,[3] the applicants did not pursue a determination of this question. Rather, the applicants sought an…

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: [2017] VSC 477
Decision Date: 1 September 2017

CaseChat Overview and Summary

The case involved the liquidation of Mackie Group Pty Ltd, with the liquidators of the trustee company seeking directions from the court. The liquidators were uncertain about the application of section 556 of the Corporations Act 2001 (Cth) and sought guidance on whether they could access trust assets for remuneration, costs, and expenses. They considered the principles from Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 and Re Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171. The liquidators also sought a declaration under section 1318(2) of the Corporations Act 2001 (Cth) or section 67 of the Trustee Act 1958 (Vic) regarding payments made under section 556. They were concerned about the appropriate priority between unsecured creditors and unitholders and whether to deduct an amount owed by a unitholder, considering the case of Cherry v Boultbee (1839) 4 Myl & Cr 442; (1839) 41 ER 171.

The court was required to determine the applicability of section 556 in the context of the liquidation of the trustee company. It needed to assess whether the liquidators could access trust assets for their remuneration, costs, and expenses, and if the principles from Re Suco Gold and Re Universal Distributing Co were relevant. The court also had to decide whether making a declaration under section 1318(2) of the Corporations Act 2001 (Cth) or section 67 of the Trustee Act 1958 (Vic) was appropriate for payments made under section 556. Furthermore, the court had to establish the correct priority between unsecured creditors and unitholders and whether it was appropriate to deduct an amount owed by a unitholder.

The court found that the liquidators could access trust assets for their remuneration, costs, and expenses, applying the principles from Re Suco Gold and Re Universal Distributing Co. It held that the liquidators were entitled to make a declaration under section 1318(2) of the Corporations Act 2001 (Cth) or section 67 of the Trustee Act 1958 (Vic) regarding payments made under section 556. The court also established the appropriate priority between unsecured creditors and unitholders, determining that it was not appropriate to deduct an amount owed by a unitholder, considering the case of Cherry v Boultbee.

The court ordered that the liquidators could access trust assets for their remuneration, costs, and expenses, and could make a declaration under section 1318(2) of the Corporations Act 2001 (Cth) or section 67 of the Trustee Act 1958 (Vic) in respect of payments made under section 556. It also ruled that unsecured creditors had priority over unitholders and that it was not appropriate to deduct an amount owed by a unitholder.

Orders