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Re Rowena Nominees Pty Ltd; Ex parte Conlan

Re Rowena Nominees Pty Ltd; Ex parte Conlan

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Case Copied 27 April 2006 80 min read

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RE ROWENA NOMINEES PTY LTD; EX PARTE MARK ANTHONY CONLAN AS LIQUIDATOR OF ROWENA NOMINEES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQ) & ORS [2006] WASC 69

CORAM: SIMMONDS J

HEARD: 25 NOVEMBER 2005 & 10 FEBRUARY 2006

DELIVERED : 27 APRIL 2006

FILE NO/S: CIV 2252 of 2004

MATTER :Section 89 and 92 of the Trustees Act 1962

EX PARTE
MARK ANTHONY CONLAN AS LIQUIDATOR OF ROWENA NOMINEES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQ) (ACN 008 818 273)
First Applicant
ROWENA NOMINEES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQ) AS TRUSTEE (ACN 008 818 273)
Second Applicant
MARK ANTHONY CONLAN AS LIQUIDATOR OF OAKLEIGH ACQUISITIONS PTY (IN LIQ) (ACN 008 879 454)
Third Applicant
OAKLEIGH ACQUISITIONS PTY (IN LIQ) AS TRUSTEE (ACN 008 879 454)
Fourth Applicant

Catchwords:

Directions concerning trust property - Trustees Act 1962 (WA) - Scope of power to give such directions - Shortfall in trust property - Application of principles from bankruptcy and insolvency law - Chapter 5 of the Corporations Act 2001 (Cth) - Use of pari passu and hotchpot principles - Equitable debts - Remuneration and costs of the trustee

Legislation:

Corporations Act 2001 (Cth), Pt 5.6
Finance Brokers Control Act 1975 (WA), s 48

Trustees Act 1962 (WA), s 89, s 92

Result:

Application allowed in part

Category: B

Representation:

Counsel:

First Applicant              :     Mr W S Martin QC & Mr J Price
Second Applicant          :     Mr W S Martin QC & Mr J Price
Third Applicant            :     Mr W S Martin QC & Mr J Price
Fourth Applicant           :     Mr W S Martin QC & Mr J Price
Interested Parties          :     Mr D H Solomon
Interested Parties          :     Mr B R Gannon & Mr J R Ludlow
Interested Parties          :     Mr P G Clifford

Solicitors:

First Applicant              :     Clayton Utz
Second Applicant          :     Clayton Utz
Third Applicant            :     Clayton Utz
Fourth Applicant           :     Clayton Utz
Interested Parties          :     Solomon Brothers
Interested Parties          :     Dibbs Abbott Stillman & Lawrence Legal Solutions
Interested Parties          :     Troika Legal

Case(s) referred to in judgment(s):

Adsett v Berlouis (1992) 37 FCR 201
ASC v Buckley (1996) 7 BPR 15,024
Australian Securities and Investments Commission v Rowena Nominees Pty Ltd (2003) 45 ACSR 424
Australian Securities and Investments Commission v Rowena Nominees Pty Ltd (in liq) (Receiver and Manager Appointed) (Supervisor Appointed) [2006] WASC 36
Barlow Clowes International Ltd (in liq) v Vaughan [1992] 4 All ER 22
Conlan v Registrar of Titles (2001) 24 WAR 299
Coventry v Charter Pacific Corporation Ltd [2005] HCA 67
Ex parte Adamson; In re Collie (1878) 8 Ch D 807
Foskett v McKeown [2001] 1 AC 102
Re Global Finance Group Pty Ltd (in liq) (2002) 26 WAR 385
Re Hobourn Aero Components Limited's Air Raid Distress Fund; Ryan v Forrest [1946] Ch 86
Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361
Target Holdings Ltd v Redferns (A…

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: [2006] WASC 69
Decision Date: 27 APRIL 2006

CaseChat Overview and Summary

In the case of Re Rowena Nominees Pty Ltd; Ex parte Conlan, the dispute involved the interpretation and application of provisions within the Trustees Act 1962 (WA) concerning the power to give directions regarding trust property. Specifically, the case addressed the issue of a shortfall in trust property and the application of principles from bankruptcy and insolvency law, particularly under Chapter 5 of the Corporations Act 2001 (Cth). The application of the pari passu and hotchpot principles, along with the treatment of equitable debts, were central to the legal issues at hand.

The court was required to decide whether amounts claimed as equitable debts should be excluded from the "Commencement Claim" in the substituted originating summons. The legal issue hinged on whether these claims, which were not associated with proprietary claims, could be characterised as payments to the Government Guarantee Fund Board (GGFB). The court also considered the applicability of the Coventry v Charter Pacific Corporation Ltd decision and the reference to Ex parte Adamson; In re Collie, where it was established that equitable debts are claims for the restitution of actual money or property rather than damages for breach of trust.

The court concluded that while an equitable debt associated with a proprietary claim might not form part of the "Fund," an equitable debt that is in personam and not associated with such a claim could not be characterised as a payment to GGFB. The exclusion of equitable debts from the "Commencement Claim" was deemed justified based on the structure of the definition and the purpose of the statutory provisions. The court ruled that the wording of the substituted originating summons was intended to avoid excluding amounts that were already included but subsequently misappropriated, but found that this concern was unfounded due to the clear structure of the definition.

The final orders of the court upheld the exclusion of amounts claimed as equitable debts from the "Commencement Claim," affirming the construction of the statutory provisions as intended to exclude these claims. This decision underscored the importance of distinguishing between proprietary claims and in personam equitable debts in the context of trust property shortfalls.

Orders

Orders of the court

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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 orders in the proposed substituted originating summons, as well as the substituted originating summons, also exclude from a "Commencement Claim" amounts for unliquidated damages or equitable compensation as described in "Commencement Claim" item (f). It is objected that amounts claimed as equitable debts should not be excluded. A claim for equitable debt was identified for this purpose as the amount claimable on a breach of trust as necessary for the restoration of trust property on that breach. I was told this was a reference to what was described in Coventry v Charter Pacific Corporation Ltd [2005] HCA 67, per Gleeson CJ, Gummow, Hayne and Callinan JJ at [47] as follows:"The reference to Ex parte Adamson; In re Collie [(1878) 8 Ch D 807 at 819] was to the well‑known statement by James LJ to the effect that in a suit in equity for restoration of money or property of which the claimant has been cheated, earmarked money or an asset which could be found in specie or traced might be the subject of a proof in bankruptcy; this was on the footing that what was admitted on the proof was an equitable debt or a liability in the nature of an equitable debt." I reproduce below the passage from Ex parte Adamson; In re Collie (1878) 8 Ch D 807 relevant for my purposes that is referred to in Coventry (supra) (per James LJ, at 819):"The Court of Chancery never entertained a suit for damages occasioned by fraudulent conduct or for breach of trust. The suit was always for an equitable debt or liability in the nature of debt. It was a suit for the restitution of the actual money or thing, or value of the thing, of which the cheated party had been cheated. If a man had been defrauded of any money or property and the cheater afterwards became bankrupt, if the money could be earmarked, or if the thing could be found in specie, or traced, the assignees or trustees were made to give it back, or if it could not be earmarked or traced, then proof was allowed against the estate." It seems to me from these quotations that the form of claim is for restoration to the claimant, not to the Fund to which the Commencement Claim applies. To the extent an equitable debt is associated with a proprietary claim, based on a tracing claim or a constructive trust, as the extract from Adamson (supra) appears to indicate, it would be a matter of a claim on property the proceeds of which claim might indeed, as a result of order of the Court, not form part of the Fund. For that purpose, I note the exclusion of moneys ordered to be held for an identified person or persons in these proceedings from the definition of "Fund", to be seen in its closing words. To the extent an equitable debt is not associated with a proprietary claim, as the quotation from Adamson indicates in its closing words, it is an in personam one that in my view could not itself be characterised as a payment to GGFB. It is on payments to GGFB that the concept of a "Commencement Claim" is based. However, counsel for the persons represented by Solomon Bros put it to me the wording was needed to avoid having the effect of excluding an amount that had been included by the preceding words, but represented an amount subsequently misappropriated. However, I do not consider that concern is justified, by reason of the structure of the definition, and the words prefatory to "Commencement Claim" items (e) and (f), "for the avoidance of doubt". The words of inclusion in "Commencement Claim" deal with amounts fixed whether or not conduct with respect to them gives rise to other claims. Amounts in respect of those other claims are not included. However, the original amount will found a Commencement Claim.