Re Total Truss Systems Pty Ltd (in liq) - [2021] VSC 205

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2020 04120

IN THE MATTER of TOTAL TRUSS SYSTEMS PTY LTD (IN LIQ) (ACN 109 644 984)

APPLICATION BY:

NATHAN DEPPELER AND MATTHEW JESS (IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF TOTAL TRUSS SYSTEMS PTY LTD (IN LIQUIDATION)) (ACN 109 644 984)	First plaintiffs
TOTAL TRUSS SYSTEMS PTY LTD (IN LIQUIDATION) (ACN 109 644 984)	Second plaintiff

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	5 February and 24 March 2021
DATE OF JUDGMENT:	24 March 2021
DATE OF REASONS:	27 April 2021
CASE MAY BE CITED AS:	Re Total Truss Systems Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2021] VSC 205

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CORPORATIONS – Application by liquidators of trustee company – Trust deed contained ipso facto clause removing a corporate trustee upon company being placed into liquidation – Corporate trustee became bare trustee upon liquidation – Liquidators proceeded without power to deal with assets of the trust – Delay by the liquidators in making application to the court – Orders sought nunc pro tunc to enable liquidators to get in and deal with trust assets – Relief from liability in dealing with trust assets not ultimately pressed and application otherwise granted – s 90-15 of the Insolvency Practice Schedule (Corporations), Schedule 2 and s 1318 of the Corporations Act 2001 (Cth), ss 63 and 67 of the Trustee Act 1958 (Vic) – Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677; Re Brimson Pty Ltd (in liq) (2019) 136 ACSR 649; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) (2018) 260 FCR 310.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr S J Waldren	BJT Legal

HIS HONOUR:

By originating process filed 29 October 2020, the first plaintiffs, Nathan Deppeler and Matthew Jess (‘the liquidators’) in their capacity as joint and several liquidators of the second plaintiff, Total Truss Systems Pty Ltd (in liq) (ACN 109 644 984) (‘the Company’), make application under ss 90-15 and 90-20 of the Insolvency Practice Schedule (Corporations) (‘IPSC’)[1], s 1318 of the Act, alternatively s 63 of the Trustee Act 1958 (Vic) (‘Trustee Act’), and the inherent jurisdiction of the Court for orders and declarations concerning matters arising in the liquidation of the Company which was the trustee of a trust.[2]
[1]Schedule 2 of the Corporations Act 2001 (Cth).
[2]This proceeding was referred to an Associate Judge for determination by orders made 10 November 2020.

The application is supported by affidavits of Mr Deppeler sworn 28 October 2020 (‘First Deppeler Affidavit’), 22 December 2020 (‘Second Deppeler Affidavit’), 27 January 2021 (‘Third Deppeler Affidavit’) and 3 March 2021 (‘Fourth Deppeler Affidavit’). The plaintiffs have also filed nine affidavits relating to service or attempted service, which is discussed below.

Background

On 4 December 2014, the Company was placed into voluntary liquidation pursuant to s 491 of the Corporations Act 2001 (Cth) (‘the Act’) and the first…

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: [2021] VSC 205
Decision Date: 24 March 2021

CaseChat Overview and Summary

The liquidators of Total Truss Systems Pty Ltd sought orders from the court to enable them to deal with the assets of a trust established by the company. The trust deed contained an ipso facto clause that resulted in the corporate trustee, the company, becoming a bare trustee upon the company's liquidation. As a consequence, the liquidators were without the authority to deal with the assets of the trust. The liquidators had delayed in making the application to the court, and sought orders nunc pro tunc to remedy the situation.

The court considered the relevant provisions of the Corporations Act and the Trustee Act, and noted the authorities on the issue of ipso facto clauses and their effect on trustees. The court was satisfied that the liquidators had made a genuine error in not realising that they did not have the power to deal with the trust assets and that the delay in making the application was not due to any fault or negligence on their part. The court also noted that the beneficiaries of the trust had not opposed the application and that there was no risk of prejudice to any party if the orders were made.

The court granted the application, making orders nunc pro tunc to enable the liquidators to get in and deal with the trust assets. The court noted that relief from liability for dealing with the trust assets had not been pressed and that such relief was not ultimately necessary. The court considered that the making of the orders was in the interests of justice and would avoid unnecessary expense and delay in the administration of the estate of the liquidated company. The court also made orders for the payment of costs of the application.

Orders