FEDERAL COURT OF AUSTRALIA
Amirbeaggi, in the matter of Simpkiss Pty Ltd (in liq) [2018] FCA 2121
File number: NSD 42 of 2018 Judge: MARKOVIC J Date of judgment: 20 April 2018 Date of publication of reasons: 19 February 2019 Catchwords: CORPORATIONS – application by administrator for appointment as receiver and manager pursuant to s 57 of the Federal Court of Australia Act 1976 (Cth) – application for order pursuant to s 81 of the Trustee Act 1925 (NSW) deeming sale of trust assets by trustee within power – application for order approving remuneration of administrator, receiver and manager and liquidator – application for directions for distribution of trust assets – application for declaration pursuant to s 1318 of the the Corporations Act 2001 (Cth) that the administrator acted honestly and ought fairly be excused – applications allowed. Legislation: Corporations Act 2001 (Cth) ss 556, 1318
Federal Court of Australia Act 1976 (Cth) s 57(1)
Trustee Act 1925 (NSW) s 81
Federal Court Rules 2011 (Cth) r 14.24
Cases cited: Jones (Liquidator) v Matrix Partners Pty Ltd, in the matter of Killarnee Civil and Concrete Contractors Pty Ltd (in liq) (2018) 354 ALR 436; [2018] FCAFC 40
Pleash, in the matter of Suncoast Restoration Pty Ltd (in liq) (2013) 211 FCR 203; [2013] FCA 355
Date of hearing: 20 April 2018 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 55 Counsel for the Plaintiffs: Mr D Krochmalik Solicitor for the Plaintiffs: HWL Ebsworth Lawyers ORDERS
NSD 42 of 2018 IN THE MATTER OF SIMPKISS PTY LTD (IN LIQUIDATION) ACN 613 129 794
BETWEEN: SHABNAM AMIRBEAGGI IN HER CAPACITY AS LIQUIDATOR OF SIMPKISS PTY LTD (IN LIQUIDATION) ACN 613 129 794
First Plaintiff
SIMPKISS PTY LTD (IN LIQUIDATION) ACN 613 129 794
Second Plaintiff
JUDGE:
MARKOVIC J
DATE OF ORDER:
20 APRIL 2018
THE COURT DECLARES THAT:
1.The first plaintiff, Shabnam Amirbeaggi (Ms Amirbeaggi), in her capacity as administrator of the second plaintiff, Simpkiss Pty Ltd (In Liquidation) (Company), acted honestly and ought fairly to be excused for any breaches, failures or omissions relating to the administration of the Company in dealing with the property of the Purkiss Family Trust (being the trust established by the Trust Deed dated 21 June 2016 between Peter Malcolm Knight as settlor and the Company as trustee) (Trust), including the sale of stock, plant and equipment conducted in December 2017.
THE COURT ORDERS THAT:
2.The sale by the Company, under the control of Ms Amirbeaggi in her capacity as administrator, of its stock, plant and equipment conducted in December 2017, being assets of the Trust, is deemed to be a sale within the power of the Company as trustee of the Trust.
3.Pursuant to s 57 of the Federal Court of Australia Act 1976 (Cth), the first plaintiff is appointed as receiver and manager (Receiver), without security, of the assets…
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- Case
- [2018] FCA 2121
- Decision Date
CaseChat Overview and Summary
The court had to determine whether the sale of the company's assets by the administrator, who was appointed as the company's administrator under the Corporations Act 2001, was within the company's power as trustee of the Purkiss Family Trust, and if so, whether the administrator could be appointed as receiver and manager of the trust assets. The court also needed to decide on the appropriate remuneration for the administrator and the distribution of the trust assets. Additionally, the court had to consider whether the administrator acted honestly and ought be excused.
The court found that the sale of the company's assets by the administrator was within the company's power as trustee of the Purkiss Family Trust, as the sale was conducted in the best interest of the trust and the administrator had taken all reasonable steps to secure the assets and achieve the best possible return. The court accepted the plaintiffs' submissions and granted the declaration sought by them. The court appointed the administrator as receiver and manager of the trust assets and approved the remuneration for the administrator's roles. The court also provided directions for the distribution of the trust assets, allowing the administrator to distribute the proceeds of the sale to creditors and beneficiaries of the trust. The court held that the administrator acted honestly and ought be excused, given the circumstances of the case.
In conclusion, the court granted the orders sought by the plaintiffs, deeming the sale of the company's assets as a sale within the power of the company as trustee of the trust, appointing the administrator as receiver and manager of the trust assets, approving remuneration for the administrator, and providing directions for the distribution of the trust assets. The court also made a declaration that the administrator acted honestly and ought be excused.
Orders
Orders of the court
2. The sale by the Company, under the control of Ms Amirbeaggi in her capacity as administrator, of its stock, plant and equipment conducted in December 2017, being assets of the Trust, is deemed to be a sale within the power of the Company as trustee of the Trust.
3. Pursuant to s 57 of the Federal Court of Australia Act 1976 (Cth), the first plaintiff is appointed as receiver and manager (Receiver), without security, of the assets and undertaking of the Trust.
4. The need for the Receiver to file a guarantee under r 14.21 and r 14.22 of the Federal Court Rules 2011 (Cth) is dispensed with.
5. The Receiver have all the powers that a receiver has in respect of the business and property of a company under s 420 of the Corporations Act 2001 (Cth) (other than in s 420(2)(s), (t), (u) and (w)) as if the reference in that section to “the corporation” were a reference to the Trust including, without limitation, the power to do all things necessary or convenient to:
(a) investigate transactions made using funds derived from the assets of the Trust;
(b) demand the books and records of the Trust from any person;
(c) determine and make payment of any claims against the assets of the Trust;
(d) distribute the proceeds of the sale of the assets of the Trust (after payment of the costs, expenses and remuneration of Ms Amirbeaggi in her capacity as the Receiver and as administrator and liquidator of the Company) to any creditors of the Trust; and
(e) distribute any surplus thereafter to the beneficiaries of the Trust.
6. The costs, expenses and remuneration of Ms Amirbeaggi in:
(a) acting as the Receiver of the assets and undertaking of the Trust;
(b) acting as the administrator of the Company; and
(c) acting as the liquidator of the Company,
be paid from the assets of the Trust.
7. Ms Amirbeaggi be allowed remuneration for the work undertaken, over the period from 7 December 2017 to 23 January 2018, for and relevant to the purpose of administration of the Company, in the sum of $88,857 (plus GST).
8. The Plaintiffs’ costs of this application be paid out of the assets of the Trust.
9. Liberty is granted to any person affected by these orders, including any creditor of the Company or the Trust or any beneficiary of the Trust, to apply to vary or set aside these orders on 7 business days’ notice to the plaintiffs and to the Court by sending an email to the Associate to Markovic J.
10. Liberty is granted to the plaintiffs to apply to the Court for orders discharging and releasing the Receiver on 7 business days’ notice by sending an email to the Associate to Markovic J.
THE COURT DIRECTS THAT:
11. Ms Amirbeaggi is justified in treating:
(a) all of the assets of the Trust as assets beneficially held by the Company, as bare trustee, subject to any charge or lien that the Company has over the assets of the Trust to secure the payment of any debts properly incurred by the Company as trustee; and
(b) all liabilities incurred by the Company in the conduct of its business as liabilities of the Trust.
12. Ms Amirbeaggi, in her capacity as liquidator of the Company and Receiver of the assets and undertaking of the Trust, is justified in distributing the assets of the Trust as follows:
(a) first, paying the amount of the plaintiffs’ costs of this application as determined in accordance with Order 8 above;
(b) second, paying the amount of $88,857 (plus GST) to Ms Amirbeaggi for her remuneration as determined in accordance with Order 7 above;
(c) third, paying Ms Amirbeaggi’s further expenses and remuneration in her capacity as liquidator of the Company and in her capacity as the Receiver of the Trust, from 23 January 2018 to the conclusion of the receivership and liquidation of the Company, on a time basis at a reasonable fee according to the hours for which she, or any employee of Crouch Amirbeaggi, engage or have engaged in work necessary for and relevant to the purpose of the receivership or liquidation after 23 January 2018, such remuneration to be calculated at the standard hourly rates of Crouch Amirbeaggi from time to time for work of that nature, together with all reasonable out of pocket expenses, but capped at $55,122.50 (plus GST); and
(d) fourth, distributing the balance, after payment of the amounts in (a)-(c) above, to the admitted creditors of the Company in accordance with the priority regime established by ss 555, 556, 560 and 561 of the Corporations Act 2001 (Cth).
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
On 7 December 2017 Ms Amirbeaggi was appointed as administrator of Simpkiss pursuant to s 436A of the Corporations Act 2001 (Cth) (Corporations Act). As at the date of Ms Amirbeaggi’s appointment, Simpkiss was still trading. Its main assets were the business and its stock, plant and equipment used in the business. Following her appointment as administrator Ms Amirbeaggi undertook a number of tasks including:(1)taking control of Simpkiss’ affairs pursuant to s 437A of the Corporations Act;(2)attending to her statutory obligations prescribed by the Corporations Act;(3)liaising with Simpkiss’ external accountant, Peter Knight of Knight Partners, and its employees;(4)taking steps to secure Simpkiss’ assets;(5)temporarily trading the business in the interests of attempting to sell it as a going concern and taking steps to sell the business as a going concern; and(6)liaising with Simpkiss’ stakeholders including creditors and the lessors of the premises from which Simpkiss traded.Sale of Simpkiss’ assets Despite her attempt to do so, Ms Amirbeaggi was unable to sell Simpkiss’ business as a going concern. Accordingly, Ms Amirbeaggi decided to sell Simpkiss’ stock, plant and equipment by way of public online auction. Her decision to do so was based on a number of factors including: that the stock, plant and equipment could not be moved without significant cost being incurred making it more effective to sell them from their current locations; Simpkiss had only paid rent for one of the premises it occupied until 31 December 2017 and Ms Amirbeaggi had secured favourable terms for the ongoing rental of the second premises it occupied to enable the sale to proceed; and that advice she received from valuers and auctioneers was to the effect that she would achieve best results for the sale if it was completed by December 2017. Ms Amirbeaggi engaged Grays Online Auctions via Cardinal Asset Services to undertake the auction of the stock, plant and equipment which was conducted between 18 and 29 December 2017. The auction raised net proceeds of $218,372.42. At auction Ms Amirbeaggi realised substantially more for the plant and equipment than the valuation obtained prior to Ms Amirbeaggi’s appointment. Throughout the auction process Ms Amirbeaggi was in contact with Mr Purkiss who did not express any opposition or objection to it at any point.The Purkiss Family Trust On 6 December 2017 Mr Knight provided Ms Amirbeaggi with an unsigned copy of a trust deed in relation to the Purkiss Family Trust (Trust) which disclosed that Simpkiss was the trustee of the Trust. Following receipt of the unsigned trust deed Ms Amirbeaggi sought details of the Trust from Messrs Purkiss and Knight in order to ascertain whether Simpkiss was in fact acting as trustee of the Trust, including an executed copy of the trust deed and copies of any financial accounts for the Trust. Between 12 December 2017 and 12 January 2018 Ms Amirbeaggi sought information from the Australian Taxation Office (ATO) and Knight Partners to ascertain the status of the Trust. On 15 January 2018 Knight Partners provided Ms Amirbeaggi with an executed copy of the trust deed for the Trust dated 21 June 2016 (Trust Deed).