Ruhe, in the matter of Solar and Storage Australia Pty Ltd
[2024] FCA 1155
•1 October 2024
FEDERAL COURT OF AUSTRALIA
Ruhe, in the matter of Solar and Storage Australia Pty Ltd [2024] FCA 1155
File number: QUD 538 of 2024 Judgment of: SARAH C DERRINGTON J Date of judgment: 1 October 2024 Date of publication of reasons: 2 October 2024 Catchwords: CORPORATIONS – insolvency – right of indemnity – application by liquidator concerning realisation of trust assets – where orders sought would enable liquidator to carry on business and sell trust property to satisfy debts owing to trust creditors – whether appropriate to grant the orders sought Legislation: Corporations Act 2001 (Cth) ss 420, 491, 1318
Federal Court of Australia Act 1976 (Cth) s 57(1)
Federal Court Rules 2011 (Cth) rr 14.21, 14.22
Insolvency Practice Schedule (Corporations) ss 90-15, 90-20
Cases cited: Re Cremin, Brimson Pty Ltd (in liq) (2019) 136 ASCR 649 Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 15 Date of last submissions: 30 September 2024 Date of hearing: 1 October 2024 Solicitor for the Plaintiffs: Mr J D Sole of Cronin Miller Litigation ORDERS
QUD 538 of 2024 IN THE MATTER OF SOLAR AND STORAGE AUSTRALIA PTY LTD ACN 627 639 605 (IN LIQUIDATION)
ALICE FAY RUHE (IN HER CAPACITY AS LIQUIDATOR OF SOLAR AND STORAGE AUSTRALIA PTY LTD ACN 627 639 605 (IN LIQUIDATION))
First Plaintiff
SOLAR AND STORAGE AUSTRALIA PTY LTD ACN 627 639 605 (IN LIQUIDATION)
Second Plaintiff
ORDER MADE BY:
SARAH C DERRINGTON J
DATE OF ORDER:
1 OCTOBER 2024
THE COURT ORDERS THAT:
1.Pursuant to s 1318 of the Corporations Act 2001 (Cth) (Act), Ms Ruhe, in her capacity as liquidator of Solar and Storage, acted honestly and ought fairly to be excused for any breaches, failures or omissions relating to the liquidation of Solar and Storage in dealing with the property of the Solar and Storage Trust (Trust).
2.Pursuant to s 57(1) of the Federal Court of Australia Act 1976 (Cth), Ms Ruhe, a registered liquidator, be appointed without security as receiver and manager over the business and assets of the Trust.
3.The need for Ms Ruhe to file a guarantee under rr 14.21 and 14.22 of the Federal Court Rules 2011 (Cth) be dispensed with.
4.Ms Ruhe have, in respect of the business and assets of the Trust, the powers that a receiver has in respect of the business and property of a company under s 420 of the Act (other than ss 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)carry on the business of the Trust;
(b)employ any person in connection with the businesses of the Trust;
(c)sell the assets of the Trust;
(d)pay the creditors of the Trust from the proceeds of the assets of the Trust, pursuant to the priorities prescribed under the provisions of the Act;
(e)compromise any claim made against Solar and Storage in its capacity as trustee of the Trust or against any of the Trust property on any terms Ms Ruhe sees fit;
(f)bring any claim against any party on behalf of the Trust; and
(g)execute any tax returns, financial statement or other documents relating to the Trust.
5.The remuneration, costs and disbursements (including legal costs) incurred by Ms Ruhe in her capacity as liquidator of Solar and Storage, and as receiver of the business and assets of the Trust, including the costs of this application, be paid in priority from the Trust assets on an indemnity basis.
6.There be liberty to apply to any person who can demonstrate sufficient interest to modify or discharge paragraphs 1 to 5 on not less than 48 hours written notice to Ms Ruhe.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
SARAH C DERRINGTON J:
INTRODUCTION
The first plaintiff, Ms Alice Fay Ruhe, is the liquidator of Solar and Storage Australia Pty Ltd (in liquidation) (the second plaintiff, or the Company), a business involved in the sale of photovoltaic equipment. On 27 July 2018, Solar and Storage was appointed trustee of the Solar and Storage Trust, pursuant to a trust deed dated that same day. On 30 March 2023, Ms Ruhe was appointed liquidator of Solar and Storage, pursuant to s 491 of the Corporations Act 2001 (Cth), and by way of a shareholders' resolution, passed by Solar and Storage’s sole member.
By an originating application filed on 12 September 2024, the liquidator applies under ss 90-15 and 90-20 of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Corporations Act, ss 420 and 1318 of the Corporations Act, s 57 of the FederalCourt of Australia Act 1976 (Cth), and the inherent jurisdiction of the Court, for orders concerning the realisation of trust assets.
In broad terms, the liquidator seeks orders in relation to Solar and Storage and the Trust, to the following effect:
1.that pursuant to s 57(1) of the Federal Court Act, Ms Ruhe be appointed as receiver of the assets in business of the Solar and Storage Trust without security;
2.that pursuant to s 1318 of the Corporations Act, Ms Ruhe be excused for any breaches, failures or omissions relating to the administration of Solar and Storage in dealing with the assets of the Trust;
3.that pursuant to s 420 of the Corporations Act, Ms Ruhe have, in respect of the assets and business of the Trust, the powers that a receiver has in respect of the assets and business of the Company;
4.the costs, expenses and remuneration incurred by Ms Ruhe in bringing this application and acting as the receiver of the assets and business of the Trust, be paid in priority from the assets of the Trust;
5.the need for Ms Ruhe to file a guarantee under rr 14.21 and 14.22 of the Federal Court Rules 2011 (Cth) be dispensed with; and
6.such further or other order as the Court considers just or convenient for the efficient and expeditious hearing and determination of this proceeding, and to give effect to the relief sought in this proceeding.
The hearing of the application occurred before me on 1 October 2024, in my capacity as Commercial & Corporations Duty Judge at the time of filing. In support of the application, the liquidator relies on her affidavit dated 9 September 2024 (Ruhe Affidavit), and an affidavit of Jonathan Daniel Sole, a solicitor acting on behalf of the plaintiffs, dated 27 September 2024 (Sole Affidavit).
BACKGROUND
The Sole Affidavit deposes to the steps that have been taken to give notice of this application to persons who might be interested, including the Australian Securities and Investments Commission (ASIC). No person has appeared today in opposition to the application.
The background facts, as set out in the Ruhe Affidavit, are as follows. In summary, Storage and Solar commenced trading on 20 July 2018, operated a business selling solar photovoltaic equipment, and ceased trading on 30 March 2023. Solar and Storage entered liquidation on 30 March 2023 and Ms Ruhe was appointed that same day. On 13 April 2023, the liquidator caused an Initial Information for Creditors to be circulated to creditors of the Company. On 22 June 2023, the liquidator caused a Statutory Report by Liquidator to be circulated to creditors. In the course of her investigations into the affairs of Solar and Storage, the liquidator identified that the Company was trustee for the Trust, which was established by a trust deed dated 27 July 2018.
SHOULD THE ORDERS BE GRANTED?
The liquidator’s investigations
Based on her investigations to date, it appears to Ms Ruhe that:
(1)the Company operated as trustee of the Trust, and did not operate in its own capacity;
(2)assets held by the Company were held as trustee for the Trust, and liabilities were also incurred in that capacity; and
(3)the trust deed provides, relevantly, at cll 5.2(e) and 5.2(f), that the Company will remain in office as trustee for the Trust until it has a liquidator, receiver, administrator, or official manager appointed, or becomes an Externally Administered Body Corporate, or otherwise, is wound up or otherwise ceases to exist.
As at 9 September 2024, Ms Ruhe had identified and realised the following assets held by Solar and Storage, as trustee of the Trust:
(a)$9,000.00 in cash at bank, as at the appointment date, being 30 March 2023;
(b)$7,650.00 (inclusive of GST) from the sale of equity in a leased motor vehicle; and
(c)$1,150.00 (inclusive of GST) from the sale of computer equipment.
Ms Ruhe has not identified any other assets of the Company or Trust, other than those just stated.
As to creditors, Ms Ruhe has identified that, as at 9 September 2024, Solar and Storage, as trustee of the Trust, had the following liabilities:
(a)$185,417.38 in secured creditors and
(b)$309,328.33 in unsecured creditors.
Ms Ruhe also identified that the Trust had no liabilities which were not held by the Company, as trustee of the Trust, although, it appeared a number of creditors merely invoiced the Company.
On 3 April 2023 and 13 April 2023, respectively, Ms Ruhe caused searches of the Personal Property Securities Register (PPSR) to be conducted. She has identified a number of parties with security interests registered against Solar and Storage on the PPSR. Mr Sole has identified that it is difficult to match the limited assets held by Solar and Storage with those security interests identified on the PPSR.
The power to grant the orders sought
Ms Ruhe has brought to my attention the principles on which the Court exercises its power to make the orders sought by the liquidator. They have been set out by Moshinsky J in Re Cremin, Brimson Pty Ltd (in liq) (2019) 136 ASCR 649, at, in particular, [48]-[51]. There is no need to restate those principles, which I adopt.
DISPOSITION
I am satisfied that Solar and Storage is entitled to a right of indemnity with respect to the debts owed to creditors of the Trust. Solar and Storage acted solely as trustee of the Trust and that was the totality of its affairs. All of the creditors are therefore trust creditors (see, eg, Cremin at [50]) and, therefore, no issue arises concerning the application of trust assets to general creditors as distinct from trust creditors.
In those circumstances, it is appropriate to make orders to facilitate the sale of the trust assets and the application of the proceeds in favour of trust creditors. It is, therefore, appropriate to make the orders sought by the liquidator substantially in terms of the draft.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Sarah C Derrington. Associate:
Dated: 2 October 2024
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