Re Way To Go Refrigerated Couriers Pty Ltd (In Liquidation)
[2023] WASC 38
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE WAY TO GO REFRIGERATED COURIERS PTY LTD (IN LIQUIDATION); EX PARTE KELLY DALE MEYN AND DERMOTT JOSEPH MCVEIGH as joint and several liquidators OF WAY TO GO REFRIGERATED COURIERS PTY LTD (IN LIQUIDATION) [2023] WASC 38
CORAM: HILL J
HEARD: 3 FEBRUARY 2023
DELIVERED : 3 FEBRUARY 2023
PUBLISHED : 16 FEBRUARY 2023
FILE NO/S: COR 14 of 2023
MATTER: IN THE MATTER OF WAY TO GO REFRIGERATED COURIERS PTY LTD (IN LIQUIDATION)
EX PARTE
KELLY DALE MEYN AS JOINT AND SEVERAL LIQUIDATOR OF WAY TO GO REFRIGERATED COURIERS PTY LTD (ACN 136 843 171) (IN LIQUIDATION)
DERMOTT JOSEPH MCVEIGH AS JOINT AND SEVERAL LIQUIDATOR OF WAY TO GO REFRIGERATED COURIERS PTY LTD (ACN 136 843 171) (IN LIQUIDATION)
First Plaintiffs
WAY TO GO REFRIGERATED COURIERS PTY LTD (ACN 136 843 171) (IN LIQUIDATION)
Second Plaintiff
Catchwords:
Corporations - Application for relief under s 89 of Trustees Act 1962 (WA) - Where plaintiff as liquidator of company seeks orders to enable sale of company's assets - Where company was trustee of trust - Company removed as trustee upon liquidation by terms of trust deed - Application allowed
Legislation:
Corporations Act 2001 (Cth), s 90-15 (Sch 2)
Trustees Act 1962 (WA), s 89
Result:
Application allowed
Category: B
Representation:
Counsel:
| First Plaintiffs | : | L Bone |
| Second Plaintiff | : | L Bone |
Solicitors:
| First Plaintiffs | : | HWL Ebsworth |
| Second Plaintiff | : | HWL Ebsworth |
Case(s) referred to in decision(s):
Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677
Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40; (2018) 260 FCR 310
Rathner (liquidator), Re Garrows Close Pty Ltd (in liq) [2021] FCA 505
Re Anderson (Liquidator) v Aravanis (Trustee) [2021] FCA 1185
HILL J:
(This judgment was delivered extemporaneously and has been edited from the transcript.)
The first plaintiffs are the liquidators of Way to Go Refrigerated Couriers Pty Ltd (Company), having been appointed on 16 December 2022.
The Company is the trustee (Trustee) of the Way to Go Refrigerated Couriers Unit Trust (Trust).
On 20 January 2023, the plaintiffs filed an originating process in this court seeking orders under s 90-15 of the Insolvency Practice Schedule (Corporations) of the Corporations Act 2001 (Cth) (Act) (Insolvency Practice Schedule) as well as orders under s 89 of the Trustees Act 1962 (WA) (Trustee Act) for the purpose of facilitating their dealing with, and distribution of, assets of the Company, including to enable the winding up of the Company and the Trust to be completed.
Evidence
In support of the application, the plaintiffs relied on two affidavits of Kelly Meyn filed 19 January 2023 (one open;[1] one confidential[2]) as well as an affidavit of Ewelina King filed 2 February 2023.[3]
[1]Affidavit of Kelly Dale Meyn filed 20 January 2023.
[2]Confidential Affidavit of Kelly Dale Meyn filed 20 January 2023.
[3]Affidavit of Ewelina Sylwia King filed 2 February 2023.
The Company was incorporated on 29 April 2009. An Australian Securities and Investments Commission (ASIC) search, which is annexed to the affidavit, discloses that the sole director and company secretary of the Company is Geranco Stefanov.[4]
[4]Affidavit of Kelly Dale Meyn filed 20 January 2023, 'KDM-1'.
On 16 December 2022, Mr Stefanov resolved to wind up the Company and to appoint the first plaintiffs as joint and several liquidators of the Company.[5] The resolution records that at this time, the director had concerns about the solvency of the Company.[6]
[5]Affidavit of Kelly Dale Meyn filed 20 January 2023 [7].
[6]Affidavit of Kelly Dale Meyn filed 20 January 2023, 'KDM-4'.
Based on the enquiries undertaken by the first plaintiffs to date, the liquidators believe the Company is the Trustee of the Trust, that the Company only traded in its capacity as Trustee of the Trust and did not conduct any business on its own account or as trustee of any other trust.[7]
[7]Affidavit of Kelly Dale Meyn filed 20 January 2023 [9(a)], [9(c)].
Among the books and records of the Company is a copy of the Unit Trust Deed. The Unit Trust Deed discloses that the Trust was established on 29 April 2009.[8] From Mr Meyn's review of the Trust Deed, he has noted that pursuant to cl 28.1.2, on the appointment of liquidators, the company was automatically removed as Trustee of the Trust and now holds the assets of the Trust as bare trustee.[9]
[8]Affidavit of Kelly Dale Meyn filed 20 January 2023, 'KDM-6'.
[9]Affidavit of Kelly Dale Meyn filed 20 January 2023 [17(a)], [17(b)].
On the basis of the liquidators' investigations to date:
(a)no replacement trustee has been appointed;[10]
(b)there are creditors who have security interests over some of the assets of the Company or Trust;[11]
(c)the claims of creditors exceed $2 million.[12]
[10]Affidavit of Kelly Dale Meyn filed 20 January 2023 [18].
[11]Affidavit of Kelly Dale Meyn filed 20 January 2023 [15(b)].
[12]Affidavit of Kelly Dale Meyn filed 20 January 2023 [15(c)].
Since their appointment, the liquidators have taken steps to secure the assets of the Company and Trust, to obtain valuations of these assets and engage with creditors and security holders of the Company and the Trust.[13]
[13]Affidavit of Kelly Dale Meyn filed 20 January 2023 [11].
The liquidators have given notice of the application to ASIC, creditors and persons claiming to be creditors of the Company. I am advised that no party has sought to be heard on the application and no notice of intention to be heard has been filed with the court.
Legal Principles
The legal principles that govern this application are well known and can be summarised in the following terms.
First, where a corporate trustee enters into external administration, the company's right of indemnity and accompanying equitable lien over the assets of the trust survives the appointment.
Second, where a company has been removed as trustee of the trust by reason of the terms of the trust deed, the company retains the right to holds trust assets as bare trustee but the liquidator of the Company does not have the power to sell those assets to satisfy that indemnity absent intervention by the court.[14]
[14] See Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq)[2018] FCAFC 40; (2018) 260 FCR 310 [44], [85] ‑ [91] (Allsop CJ), [139], [142] (Siopis J) and [198] (Farrell J); Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 [22]-[28] (Gordon J).
Third, the liquidators, in essence, have two options available to them. One, to apply for an order conferring on them the power to deal with the assets of the trust or, two, to apply to be appointed as receivers and managers of the trust.
In this case, the first plaintiffs do not seek to be appointed as receivers and managers of the Trust. Instead, orders are sought under s 90‑15 of the Insolvency Practice Schedule and s 89 of the Trustees Act to facilitate their dealing with the assets of the Company to enable the winding up of the Company and the Trust to proceed.
Section 90-15(1) of the Insolvency Practice Schedule provides that the court may make 'such orders as it thinks fit in relation to the external administration of a company'. The power is broad and is at least as extensive as the powers formerly available under ss 479(3) and 511 of the Act.
The power under s 89 of the Trustees Act is also relatively broad. It enables the court to confer upon a trustee the power to deal with trust assets.[15] It has been accepted by courts in respect of similar, but not identical legislation, that, by necessary implication, this power not only permits the conferral of power on a corporate trustee, but also its liquidators in such a capacity.[16]
[15] Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 [30] (Gordon J).
[16] Rathner (liquidator), Re Garrows Close Pty Ltd (in liq) [2021] FCA 505 [8] (Beach J).
Courts are generally willing, upon an appropriate application, to make orders permitting the liquidator of a (former) corporate trustee to sell trust assets. In situations where the property of the trust will be exhausted following its sale and subsequent distribution to creditors, it may be appropriate merely to give the liquidator a power of sale. That said, the more common course is for the liquidator of the insolvent (former) corporate trustee to apply to be appointed receiver and manager for the purpose of selling the trust assets and distributing the proceeds among trust creditors.
In Re Anderson (Liquidator) v Aravanis (Trustee),[17] Colvin J considered a similar application. His Honour noted that s 89 of the Western Australian legislation is in slightly different terms to the Victorian legislation that has been the subject of many of the previous authorities. His Honour considered that it required the court to be of the opinion that a sale 'is expedient in the management or administration of any property vested in a trustee' in order for the court to be able to confer upon the trustee the necessary power.
[17] Re Anderson (Liquidator) v Aravanis (Trustee) [2021] FCA 1185.
In holding it was appropriate to make the orders sought, his Honour had regard to the amounts involved and the entitlement of the company to a right of exoneration that far exceeds the assets of the company.
Disposition
On the evidence before me, I accept that by reason of cl 28.1.2 of the Unit Trust Deed, on the appointment of the first plaintiffs as liquidators, the Company was automatically removed as Trustee of the Trust. As a consequence, the Company is now a bare trustee of the Trust's assets and does not have the power to sell or otherwise deal with the assets of the Trust. No new trustee has been appointed. The Company only acted as Trustee of the Trust and in no other capacity and all assets held were held as Trustee of the Trust.
The orders sought by the plaintiffs are consistent with the legal principles that I have outlined above. In particular, it is clear on the evidence before the court that the entitlement of the Company to the exoneration from the assets of the Trust far exceed the assets of the Company. Given the evidence before the court, I consider it is appropriate to make the orders sought rather than requiring the liquidators to be appointed as receivers and managers of the Trust property.
In relation to the costs of the application, the plaintiff sought orders for the costs of the application be costs in the winding up. I consider this to be the appropriate costs order.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
16 FEBRUARY 2023
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