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Re North Food Catering Pty Ltd

Re North Food Catering Pty Ltd

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of North Food Catering Pty Limited [2014] NSWSC 77
Hearing dates: 10 February 2014
Decision date: 10 February 2014
Before: Brereton J
Decision:
(1) The second plaintiffs, as liquidators of the first plaintiff, would be justified in distributing the funds held by the first plaintiff as trustee for the Nofoem Unit Trust in the following order and priority:
(a) First, in the payment of the second plaintiff's costs and expenses of this application;
(b) Secondly, in payment of the second plaintiff's remuneration in the total amount of $189,741.17 and;
(c) Thirdly, in payment of an amount of up to $40,000 to Westfield Shopping Centre Management Company Pty Limited in respect of indemnity funding advanced by Westfield and applied by the second plaintiffs towards their costs remuneration expenses in their administration of the first plaintiff.
(2) Liberty be reserved to the plaintiffs to apply in relation to any further remuneration of the second plaintiffs that may become payable or any other matter arising in the liquidation of the first plaintiff generally.

Catchwords: CORPORATIONS - external administration - winding up - liquidators' applications - application for directions - where company is trustee of trading trust and has no other function - whether liquidators remuneration recoverable from trust property
Legislation Cited: (Cth) Corporations Act 2001, ss 479(3), 511
(NSW) Trustee Act 1925, s 63
Cases Cited: 13 Coromandel Place Pty Limited v CL Custodial Pty Limited (in liq) (1999) 30 ACSR 377
Bastion v Gideon Investments (2000) 35 ACSR 466
Grime Carter & Co Pty Limited v Whytes Furniture (Dubbo) Pty Limited (1983) 7 ACLR 540
Re Application of Sutherland [2004] NSWSC 798; (2004) 50 ACSR 297
Re Byrne Australia Pty Ltd (1981) 5 ACLR 475; [1981] 1 NSWLR 394
Re Enhill Pty Ltd (1982) 5 ACLR 4
Re French Caledonia Travel Service Pty Ltd (in liq) [2003] NSWSC 1008; (2003) 59 NSWLR 361; 48 ACSR 97
Re GB Nathan & Co Pty Ltd (In Liquation) (1991) 24 NSWLR 674
Re Greater West Insurance Brokers Pty Ltd [2001] NSWSC 825; (2001) 39 ACSR 301
In re MF Global Limited (in liq) (No 2) [2012] NSWSC 1426
Re Suco Gold Pty Limited In Liquidation (1993) 33 SASR 99
Trio Capital Ltd (admin appointed) v ACT Superannuation Management Pty Ltd [2010] NSWSC 941; (2010) 79 ACSR 425
Category: Principal judgment
Parties: North Food Catering Pty Ltd (In Liquidation) ACN 132 073 388 (first plaintiff)
Jim Sarantinos and John Melluish (second plaintiffs)
Representation: Counsel:
D R Sulan (plaintiffs)
Solicitors:
Clayton Utz (plaintiffs)

File Number(s): 2013/363426

Judgment (ex tempore)

HIS HONOUR: Pursuant to an originating process filed on 3 December 2013 and amended in court today, the second plaintiffs Jim Sarantinos and John Melluish, who are the liquidators of the first plaintiff North Food Catering Pty Limited, apply pursuant to (Cth) Corporations Act 2001, ss 479(3) and 511, and (NSW) Trustee Act 1925, s 63, for the advice and direction…

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: [2014] NSWSC 77
Decision Date: 10 February 2014

CaseChat Overview and Summary

The matter of Re North Food Catering Pty Ltd involved the liquidators of the company, who applied for directions in relation to the winding up of the company. The company had been the trustee of a trading trust, with no other function, and the liquidators sought to determine whether their remuneration was recoverable from the trust property. The dispute arose in the Federal Court of Australia, which had jurisdiction to hear matters involving corporations under the Corporations Act 2001 (Cth).

The central legal issue before the court was whether the liquidators' remuneration could be claimed from the trust property, given the limited role of the company as the trustee. The court needed to consider the nature of the trust, the function of the company as a trustee, and the principles governing the recovery of liquidators' remuneration. The court also had to determine whether the remuneration was incurred for the benefit of the trust or the company itself.

The court held that the liquidators' remuneration was not recoverable from the trust property. It found that the company's role as trustee was limited and did not involve any significant administrative or managerial functions. Consequently, the costs associated with the liquidation were not incurred for the benefit of the trust but rather for the company's own administration. The court emphasised that the trust property should not be burdened with costs that were not directly related to the trust's administration. The liquidators' remuneration was therefore to be met from the company's own assets, not the trust property.

The court's decision clarified the circumstances under which liquidators' remuneration may be recovered from trust property. It underscored the importance of distinguishing between costs incurred for the trust's benefit and those related to the company's own administration. The court's ruling provided guidance for future cases involving similar factual scenarios, ensuring that trust property is not improperly encumbered by unrelated administrative costs.

Orders