SUPREME COURT OF QUEENSLAND
CITATION: Re PBS Building (Qld) Pty Ltd [2024] QSC 108 PARTIES: MITCHELL HERRETT, JONATHON COLBRAN & RICHARD STONE IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF PBS BUILDING (QLD) PTY LTD
ACN 114 856 674
(applicants)
vQUEENSLAND BUILDING AND CONSTRUCTION COMMISSIONER
(respondent)
FILENO: BS 7248 of 2023 DIVISION: Trial Division PROCEEDING: Application ORIGINATINGCOURT: Supreme Court of Queensland at Brisbane DELIVEREDON: 3 June 2024 DELIVEREDAT: Brisbane HEARINGDATE: 17 November 2023 JUDGE: Brown J ORDERS: 1. The application for directions under paragraphs [1] and [1B] of the amended Originating Application is refused.
2. The amended Originating Application is otherwise adjourned.
3. The parties are to request to relist the matter within 7 days if they seek any direction from the Court in light of the reasons for judgment.
4. The parties will be heard as to costs.
CATCHWORDS: CORPORATIONS – VOLUNTARY ADMINISTRATION –
– ADMINISTRATOR – LIQUIDATORS – JURISDICTION AND POWERS OF COURT – APPLICATION FOR
DIRECTIONS – REMUNERATION – where the applicants are the liquidators, and formerly administrators, of a building company – where the building company, as head contractor, held monies on trust for subcontractor beneficiaries under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) – where there are likely insufficient non-trust assets to meet the liquidators’ remuneration, costs and expenses –
whether the Building Industry Fairness (Security of Payment) Act 2017 (Qld) precludes recovery of the liquidators’ remuneration, costs and expenses from the funds held on trust
– whether the funds held on trust are property of the company for the purposes of the Corporations Act 2001 (Cth) – whether the legislative regime excludes any right of indemnity being exercised by a trustee under equitable principles or the application of the Court’s inherent jurisdiction in equity to provide for remuneration of a trustee
Corporations Act 2001 (Cth) ss 443D, 443F, 437B, 545, 555, 556, sch 2
Building Industry Fairness (Security of Payments) Act 2017
(Qld), ss 3, 7, 8, 11B, 12, 18, 20, 20A, 20B, 20C, 21, 31B, 32,
33A, 34, 36, 37, 51, 51A, 51C, 51E, 51G, 56, 56A, 56B
Trusts Act 1973 (Qld) ss 72, 96, 97, 101Australian Securities and Investment Commission v Marco (No 9) (2021) 399 ALR 735; [2021] FCA 1306, considered
Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347, cited
Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (2019) 268 CLR 524; [2019] HCA 20,
followed
Lane v Federal Commissioner of Taxation (2017) 253 FCR 46; [2017] FCA 953, cited
Park v Whyte (No 2) [2018] 2 Qd R 413; [2017] QSC 229,
considered
Park v Whyte (No 3) [2018] 2 Qd R 475; [2017] QSC 230,
consideredRe Adaman Resources Pty Ltd (Administrators Appointed) (No 4) [2021] FCA 644, cited
Re All Class Insurance Brokers Pty Ltd (in liq) [2014] NSWSC 475, consideredRe Berkeley Applegate (Investment Consultants) Ltd (in liq)
[1989] Ch 32, consideredRe MF Global…
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- AGLC
- Re PBS Building (Qld) Pty Ltd [2024] QSC 108
- Case
- [2024] QSC 108
- Decision Date
CaseChat Overview and Summary
The key legal issue before the Court was whether the provisions of the BIF Act, specifically those concerning trust accounts, prevent the administrator and liquidator from being reimbursed for their services from the trust funds. The applicants argued that if the Court construed the BIF Act in a way that prevents reimbursement from trust funds, it would conflict with the Corporations Act. The Court needed to consider the interplay between the BIF Act and the Corporations Act to resolve this issue. Additionally, the Court had to consider whether there were sufficient non-trust assets available to cover the applicants' costs and expenses.
The Court found that the applicants’ concerns about insufficient funds to cover their remuneration and costs were valid, given the limited non-trust assets available. However, the Court did not grant the specific directions sought by the applicants, instead refusing the application for directions under paragraphs [1] and [1B] of the amended Originating Application. The Court adjourned the amended Originating Application and instructed the parties to relist the matter within seven days if they sought further directions from the Court. The Court also noted that the parties would be heard regarding costs.
In conclusion, the Court refused the specific directions sought by the applicants and adjourned the matter, leaving open the possibility of further directions if requested by the parties. The Court's decision highlighted the importance of ensuring that there are sufficient non-trust assets to cover the costs of administration and liquidation, while also considering the interplay between the BIF Act and the Corporations Act. The parties were instructed to relist the matter within seven days if they sought further directions from the Court, and the Court would also consider costs at a later stage.
Orders
Orders of the court
1. The application for directions under paragraphs [1] and [1B] of the amended Originating Application is refused.
2. The amended Originating Application is otherwise adjourned.
3. The parties are to request to relist the matter within 7 days if they seek any direction from the Court in light of the reasons for judgment.
4. The parties will be heard as to costs.
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
The applicants contend that, in the event the Court construes the BIF Act such that the relevant provisions prevent the administrator and liquidator from being reimbursed for administering the trust accounts from the trust funds, then the provisions would be in conflict with the Corporations Act 2001 (Cth) (Corporations The facts relevant to the present issues for determination by the Court were not controversial. PBS (Qld) is a building company which carried out building work in Queensland. It entered into the contract for construction of homes for the Latitude project on or about 15 August 2022 for a contract sum of approximately $41,085,937 (exclusive of GST). On 29 April 2022, PBS (Qld) had entered into a contract with respect to the Bokarina project for the construction of civil landscaping, streetscapes and homes, the contract sum being $16,459,378.14. Both the Latitude contract and Bokarina contract were “eligible contracts” and required a project trust under ss 12 and 14 of the BIF Act. Three trust accounts were duly opened in the name of PBS Building (Qld) Pty Ltd:(a)the Latitude account, which was a project trust account;(b)the Bokarina account, which was a project trust account; and(c)the PBS Building (Qld) Pty Ltd – Retention Trust Account. Administrators were appointed to the PBS group of companies, which included PBS (Qld) on 7 March 2023. On 16 June 2023, the applicant commenced this proceeding by way of originating application. On or about 6 September 2023, the creditors resolved to wind up PBS (Qld) and accordingly, it entered into liquidation on that date. As at 6 October 2023, PBS (Qld) had $1,985.11 cash at the bank. The trust account balances, which had not changed after the commencement of the proceedings, contained:(a)Latitude account - $35,424.36;(b)Bokarina account - $2,516.35; and(c)Retention account - $352,920.59. As at 6 October 2023, the costs incurred by the applicants as administrators and then liquidator were:(a)$115,084.65 in legal fees;(b)$41,687.39 in subcontractor communication costs;(c)$32,245.50 in relation to Mr Herrett’s time in respect of commission, correspondence and other work in respect of statutory obligations under the BIF Act and these proceedings. Given the costs already incurred to date by the external administrators, it may be reasonably inferred that there is a real risk that unless the applicants can access funds in the trust accounts, there will be insufficient funds to meet their remuneration, costs and expenses, although it depends on recovery from various debtors of PBS (Qld). In 2020 the BIF Act was amended by the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (Qld) (2020 Amendment Act). A number of amendments were made to the BIF Act which followed recommendations being made by a panel who had been appointed to carry out a review of the BIF Act.1 Chapter 2 of the BIF Act was inserted by the 2020 Amendment Act. It introduced a trust regime which is unique to Queensland and, as at the date of this hearing, had not been adopted by other states.