Re Western Peeled Pty Ltd (in Liquidation)
[2024] WASC 374
•11 OCTOBER 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE WESTERN PEELED PTY LTD (IN LIQUIDATION); EX PARTE GREGORY PAUL QUIN AND KIMBERLEY STUART WALLMAN JOINT AND SEVERAL LIQUIDATORS OF WESTERN PEELED PTY LTD (IN LIQUIDATION) (ACN 130 934 762) AND WESTERN PEELED PTY LTD (IN LIQUIDATION) (ACN 130 934 762) [2024] WASC 374
CORAM: HILL J
HEARD: 4 OCTOBER 2024
DELIVERED : 4 OCTOBER 2024
PUBLISHED : 11 OCTOBER 2024
FILE NO/S: COR 145 of 2024
MATTER: IN THE MATTER OF WESTERN PEELED PTY LTD (IN LIQUIDATION)
EX PARTE
GREGORY PAUL QUIN AND KIMBERLEY STUART WALLMAN joint and several liquidators of WESTERN PEELED PTY LTD (IN LIQUIDATION) (ACN 130 934 762)
First Plaintiff
WESTERN PEELED PTY LTD (IN LIQUIDATION) (ACN 130 934 762)
Second Plaintiff
Catchwords:
Corporations - External administration - Winding up - Where company in liquidation is bare trustee - Application for appointment of liquidators as receivers and managers of trust property - Turns on own facts
Legislation:
Corporations Act 2001 (Cth) s 477(2)
Insolvency Practice Schedule (Corporations) (sch 2 to the Corporations Act
2001) (Cth) s 90-15
Rules of the Supreme Court 1971 (WA) O 51 r 1
Supreme Court Act 1935 (WA) s 25(9)
Supreme Court (Corporations) Rules 2004 (WA) r 2.8
Result:
Application granted
Category: B
Representation:
Counsel:
| First Plaintiff | : | B Powell |
| Second Plaintiff | : | B Powell |
Solicitors:
| First Plaintiff | : | Pragma Lawyers |
| Second Plaintiff | : | Pragma Lawyers |
Cases referred to in decision:
Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677
In the matter of Hercules Car Parking Systems (Victoria) Pty Ltd [2018] NSWSC 409
In the matter of Mecfab Holdings Pty Ltd [2015] NSWSC 46
Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40; (2018) 260 FCR 310
HILL J:
(This judgment was delivered extemporaneously and has been edited from the transcript to include references, headings and to correct matters of grammar and expression.)
On 6 August 2024, the first plaintiffs were appointed as joint and several liquidators of the second plaintiff, Western Peeled Pty Ltd (Company).[1] Prior to their appointment, the Company was the trustee of the Western Peeled Unit Trust (Trust).[2]
[1] Affidavit of Gregory Paul Quin filed 24 September 2024, 'GPQ-2', p 13.
[2] Affidavit of Gregory Paul Quin filed 24 September 2024, 'GPQ-7', p 73.
On 24 September 2024, the plaintiffs filed an originating process in this court seeking, among other things, orders that the first plaintiffs:
(a)be appointed as receivers and managers without security over the assets of the Trust;
(b)in acting as receivers and managers, have the powers that a liquidator has in respect of the property of the Company, pursuant to s 477(2) of the Corporations Act 2001 (Cth) (Act), as if the reference to 'corporation' in that section was a reference to 'the Trust'; and
(c)would be justified and acting reasonably in proceeding on the basis that the Company carried on business in its capacity as trustee of the Trust, that all assets of the Trust are properly characterised as assets held by the Company in that capacity and that all creditors of the Company are creditors of the Trust.
Factual background
In support of their application, the plaintiffs filed two affidavits: an affidavit of the first-named first plaintiff, Gregory Paul Quin, filed 24 September 2024, and an affidavit of service of William James Gilbert, which was filed on 30 September 2024. The following factual summary is taken from the affidavit of Mr Quin.
The Company was incorporated on 5 May 2008. In accordance with the obligations set out in the Supreme Court (Corporations) (WA) Rules 2004 (WA) (Corporations Rules), the affidavit annexes a company search from the records of the Australian Securities and Investments Commission (ASIC), which discloses that there were two directors of the Company, Giulio Breglia and Aaron Mitchell-Bathgate.[3]
[3] Affidavit of Gregory Paul Quin filed 24 September 2024, 'GPQ-1'.
On 6 August 2024, the Company was wound up in insolvency by order of the court and the first plaintiffs were appointed as joint and several liquidators of the Company.[4]
[4] Affidavit of Gregory Paul Quin filed 24 September 2024, 'GPQ-2'.
Based on the enquires they have undertaken to date, the first plaintiffs believe that:
(a)the Company was the trustee of the Trust;[5] and
(b)the Company carried on its business and activities solely in that capacity. This includes having financial statements prepared for the Trust but not the Company,[6] and the Company ordinarily issuing invoices in its name as trustee for the Trust.[7]
[5] Affidavit of Gregory Paul Quin filed 24 September 2024, 'GPQ-7', p 73.
[6] Affidavit of Gregory Paul Quin filed 24 September 2024, 'GPQ-3', [8(e)].
[7] Affidavit of Gregory Paul Quin filed 24 September 2024, 'GPQ-9', [22].
Among the books and records of the Company is a copy of the Trust deed. The Trust deed discloses that the Trust was established on 13 May 2008.[8] Pursuant to cl 13.2(2) of the Trust deed, on the appointment of a liquidator, the Company was disqualified from acting as trustee.[9]
[8] Affidavit of Gregory Paul Quin filed 24 September 2024, 'GPQ-7', p 73.
[9] Affidavit of Gregory Paul Quin filed 24 September 2024, 'GPQ-7', p 65.
Service of application
On the evidence before me, I am satisfied that ASIC has been served with copies of the originating process as well as the affidavit of Mr Quin,[10] as required by r 2.8 of the Corporations Rules.
[10] Affidavit of William James Gilbert filed 30 September 2024.
No one has given notice to the plaintiffs' solicitors, nor to the court, that they wish to be heard on the application.
Should the plaintiffs be appointed as receivers of the Trust and directions given?
The legal principles that govern this application are well known and can be summarised as follows.
Where a corporate trustee enters external administration, the company's right of indemnity and accompanying equitable lien over the assets of the trust survives the appointment. Where a company is removed as trustee of the trust under the terms of the trust deed, the company retains the right to holds trust assets as bare trustee. However, the liquidator does not have the power to sell those assets to satisfy that indemnity unless they obtain orders from the court.[11]
[11] 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), [198] (Farrell J); Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 [22] - [28] (Gordon J).
In those circumstances, the liquidator has, in essence, two options. First, to apply for an order that confers power on the liquidator to deal with the assets of the trust, or alternatively, to apply to be appointed as receiver and manager of the trust.
In this case, the first plaintiffs seek to be appointed as receivers and managers of the Trust and also seek orders under s 90‑15 of the Insolvency Practice Schedule (Corporations) (sch 2 of the Act) (IPS) to facilitate their dealing with the assets of the Company to enable the winding up of the Company, as well as the Trust, to proceed.
Section 90-15(1) of the IPS provides that the court may make 'such orders as it thinks fit in relation to the external administration of a company'. This is a broad power and is at least as extensive as the powers that were formerly available under s 479(3) and s 511 of the Act.
Courts are generally willing, upon an appropriate application, to make orders that permit a liquidator of a (former) corporate trustee to sell trust assets.
Order 51 r 1 of the Rules of the Supreme Court 1971 (WA) expressly confers power on the court to appoint a receiver. This power is also conferred under s 25(9) of the Supreme Court Act 1935 (WA), which gives the court power to appoint a receiver where it appears to be just and convenient.
In the absence of any relevant conflict, it is commonly the case that the court will appoint the liquidator of the corporate trustee as receiver without security.[12]
[12] In the matter of Hercules Car Parking Systems (Victoria) Pty Ltd [2018] NSWSC 409 (Brereton J).
Appointing the liquidator of the corporate trustee as receiver of a trust's assets facilitates and simplifies the external administration of the corporate trustee by providing for the trust's business and assets to be under the same control as the corporate trustee while it is in external administration. This aids in the vindication of the trustee company's right of indemnity out of the trust's assets.[13]
[13] In the matter of Mecfab Holdings Pty Ltd [2015] NSWSC 46 [9].
On the evidence before me, I accept that by reason of cl 13.2(2) of the Trust deed, on the appointment of the first plaintiffs as liquidators, the Company was immediately disqualified from acting as trustee of the Trust. As a consequence, the Company is now a bare trustee and does not have the power to sell or otherwise deal with the assets. No new trustee has been appointed.
I am satisfied on the evidence before me that the Company has acted solely as trustee of the Trust and that all assets of the Company were held in its capacity as trustee of the Trust.
The orders that are sought by the plaintiffs in the originating process are consistent with the legal principles that I have outlined.
Given the evidence before the court, I accept that it is expedient for the first plaintiffs to have the power to sell the property of the Trust. I also accept it is appropriate to appoint them as receivers and managers of the assets of the Trust without security.
This is in accordance with the legal principles that I have outlined and will protect the Company's right of indemnity, as well as the position of creditors. Other advantages with the proposal include that the first plaintiffs are subject to the regulatory regime applicable to insolvency practitioners, that they have professional indemnity insurance, and are subject to the continued supervision of the court.
The form of orders sought by the plaintiffs include service of the court's orders on the creditors of the Company and allow for any aggrieved party to apply to this court to vacate or vary these orders. These orders protect the creditors of the Company from any possible prejudice that might otherwise arise from this application, which is being heard on an ex parte basis.
In relation to the orders sought under s 90-15 of the IPS, I accept Mr Quin's evidence that the Company has acquired assets and incurred liabilities solely in its capacity as trustee of the Trust. For this reason, it is appropriate to make orders that the first plaintiffs will be acting properly and are justified in proceeding to conduct the affairs of the Trust on the basis that all its assets are properly characterised as being held by the Company in its capacity as trustee of the Trust.
Finally, in relation to the costs of the application, the plaintiffs sought orders that the costs of the application be costs in the winding up of the second plaintiff, and otherwise be paid from Trust property. In my view, this is 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
11 OCTOBER 2024
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