SIMON ROGER COAD AS LIQUIDATOR OF NIBBUR PTY LTD

[2023] WASC 498

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   SIMON ROGER COAD AS LIQUIDATOR OF NIBBUR PTY LTD [2023] WASC 498

CORAM:   LEMONIS J

HEARD:   29 NOVEMBER 2023

DELIVERED          :   29 NOVEMBER 2023

PUBLISHED           :   1 MAY 2024

FILE NO/S:   CIV 2145 of 2023

BETWEEN:   SIMON ROGER COAD AS LIQUIDATOR OF NIBBUR PTY LTD

First Plaintiff by Ex Parte

NIBBUR PTY LTD

Second Plaintiff by Ex Parte

FILE NO/S:   CIV 2146 of 2023

BETWEEN:   SIMON ROGER COAD AS LIQUIDATOR OF FALCETTA SERVICES PTY LTD (IN LIQUIDATION)

First Plaintiff by Ex Parte

FALCETTA SERVICES PTY LTD (IN LIQUIDATION)

Second Plaintiff by Ex Parte

Catchwords:

Liquidator appointed to companies which operate solely as trustee of a trust - Liquidator takes steps to get in assets - Orders sought to regularise such steps, taking into account that the subject company operated solely as a trustee - Orders also sought for payment of remuneration and expenses

Legislation:

Corporations Act 2001 (Cth), sch 2 90-15
Trustees Act 1962 (WA), s 89

Result:

Orders made for regularisation and for payment of remuneration and expenses

Category:    B

Representation:

CIV 2145 of 2023

Counsel:

First Plaintiff by Ex Parte	:	C Terren
Second Plaintiff by Ex Parte	:	C Terren

Solicitors:

First Plaintiff by Ex Parte	:	Hall & Wilcox (Perth)
Second Plaintiff by Ex Parte	:	Hall & Wilcox (Perth)

CIV 2146 of 2023

Counsel:

First Plaintiff by Ex Parte	:	C Terren
Second Plaintiff by Ex Parte	:	C Terren

Solicitors:

First Plaintiff by Ex Parte	:	Hall & Wilcox (Perth)
Second Plaintiff by Ex Parte	:	Hall & Wilcox (Perth)

Cases referred to in decision:

In the matter of Accurate Flooring Pty Ltd; Ex Parte Re Jerome Hall Mohen as Liquidator of Accurate Flooring Pty Ltd (In Liquidation) In Its Own Capacity And As Trustee For The Cansam Unit Trust) [2024] WASC 126

In the matter of Brimson Pty Ltd (in Liquidation) [2019] FCA 1023

LEMONIS J:

1. These two proceedings were heard together.  They concern the scenario where a liquidator is appointed to a company which operated only as a trustee of a trust.

2. The purpose of this judgment is to briefly record my reasons for making orders on 29 November 2023 in terms of 'Annexure A' and 'Annexure B' respectively.  I record my gratitude to the plaintiffs' counsel for his assistance in respect of both proceedings.

3. I will first summarise the circumstances relevant to each proceeding.

4. In respect of CIV 2145 of 2023:

   (a)on 5 December 2005, Nibbur Pty Ltd (Nibbur) was appointed as the sole trustee of the Vulgate Family Trust and has remained the sole trustee ever since;

   (b)Nibbur operated only as trustee of the trust and did not operate in its own right;

   (c)clause 17.1.3.4 of the trust deed states that 'the office of Trustee shall be ipso facto determined and vacated if… such Trustee being a company shall enter into liquidation whether compulsory or voluntary'; 

   (d)on 29 September 2022, Mr Coad, the first plaintiff, was appointed as liquidator of Nibbur;

   (e)there are relatively minimal assets held on trust, which the liquidator values at $49,318;

   (f)the liquidator has got in and preserved the trust assets and has incurred fees and expenses in doing so;  and

   (g)on 6 October 2023, the plaintiffs, being Mr Coad and Nibbur, filed an originating motion seeking orders to regularise the steps taken by the liquidator.  It was necessary to do so because Nibbur only operated as a trustee.  The motion also sought orders for payment of fees and expenses.

1. In respect of CIV 2146 of 2023:

   (a)on 8 July 2014, the Falcetta Family Trust was created and Falcetta Services Pty Ltd (Falcetta) appointed as trustee.  Falcetta has remained the sole trustee even since;

   (b)Falcetta only operated as trustee of the Falcetta Family Trust and did not operate in its own right;

   (c)clause 23.7(g) of the trust deed states 'a Trustee is removed from that office if the Trustee… being a corporation, … enters into liquidation'.  Clause 23.8(a) provides that when a trustee is removed from office, the trustee is discharged from the trusts in the trust deed.  However, that is subject to cl 23.8(b), which states: 'Where a sole trustee is removed or resigns, this clause 23.8 will be effective to discharge that Trustee only upon the appointment of a new Trustee';

   (d)on 26 August 2022, Mr Coad, the first plaintiff, was appointed as liquidator of Falcetta;

   (e)there are relatively minimal assets held on trust;

   (f)during the course of the liquidator's appointment, the liquidator has got in, preserved and realised the trust assets.  The liquidator has incurred fees and expenses in doing so.  The total value of the assets realised is $70,337.58. 

   (g)on 6 October 2023, the plaintiffs, being the liquidator and Falcetta, filed an originating motion seeking orders to regularise the steps taken by the liquidator.   It was necessary to do so because Falcetta only operated as a trustee. The motion also sought orders for payment of fees and expenses.

Procedural history

1. Both sets of proceedings came before me initially on 8 November 2023.  At that time, I determined it was appropriate the proceedings be dealt with together as they raised substantively similar subject matters.

2. I did have some queries regarding the structure of the orders then sought.  In particular, those queries related to the following two matters. 

3. First, the orders provided the liquidator with priority over all creditors.  It seemed to me it was not appropriate for there to absolute priority, irrespective of whether the creditor was a secured creditor.  Second, the orders provided for a fixing of fees, however there was an ambiguity as to whether the orders fixed the liquidator's fees in his capacity as both liquidator and receiver, or only as receiver.   

4. I adjourned the proceedings through to 29 November 2023 to enable these two matters to be addressed. When the proceedings came back on before me, the liquidator clarified that the orders fixed his fees in the capacity as both liquidator and receiver, excluding disbursements, costs and expenses. Further, the priority regime was altered such that the extent to which the liquidator had priority for his reasonable costs, expenses and fees as receiver was in accordance with the statutory priorities set out in pt 5.6 div 6 of the Corporations Act 2001 (Cth), with the term 'liquidator' taken to mean 'receiver'.

5. Further, in respect of both proceedings, the liquidator (quite properly) gave notice to creditors, primary beneficiaries and the Australian Securities and Investments Commission of the orders sought.  None indicated any opposition to the making of the orders sought. 

Disposition

1. In the matter of Accurate Flooring Pty Ltd (in liquidation),[1] Hill J summarised the relevant principles as follows:

   18.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. 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.

   19.The liquidator, in essence, has two options available to him. One, to apply for an order conferring on him the power to deal with the assets of the trust or, two, to apply to be appointed as receiver and manager of the trust.

   (footnotes omitted)

   [1] In the matter of Accurate Flooring Pty Ltd; Ex Parte Re Jerome Hall Mohen as Liquidator of Accurate Flooring Pty Ltd (In Liquidation) In Its Own Capacity And As Trustee For The Cansam Unit Trust [2024] WASC 126.

2. In each of these proceedings, the plaintiffs have taken the second option referred to by her Honour, namely that the liquidator be appointed as receiver and manager of the property assets and undertakings of the trust. 

3. Further, orders for the appointment of a receiver over trust assets can be made nunc pro tunc ('now for then') to authorise sales that have already occurred.[2]

   [2] In the matter of Brimson Pty Ltd (in Liquidation) [2019] FCA 1023 [49] - [50].

4. I was satisfied that each of Nibbur and Falcetta were sole trustees and operated only in that capacity.  I was also satisfied that each was removed as trustee upon the appointment of the liquidator and thereafter held the assets of the relevant trust as a bare trustee.  Having regard to these matters, and taking account that there was no objection to the orders sought, I was satisfied it was appropriate to make the orders sought so as to regularise the position.  That is the effect of orders 1 - 3 of the orders that I made on 29 November 2023. 

5. I also considered that it was appropriate to make orders for the liquidator's remuneration both as liquidator and as receiver in accordance with orders 4 - 8 and for the reimbursement of costs and expenses in accordance with those orders.  In that respect, I was satisfied the remuneration, costs and expenses fell within a reasonable range for the work undertaken.

6. Given each trust had minimal assets, I was satisfied it was appropriate to dispense with the requirement to file accounts under the Rules of the Supreme Court 1971 (WA). Further, given the liquidator was appointed receiver in fulfilment of the liquidator's obligations under the Corporations Act, I was also satisfied it was appropriate to dispense with the requirement that the liquidator (as receiver) give security. 

7. As a 'safety net', I granted liberty to apply to any person who can demonstrate a sufficient interest to modify or discharge the orders that were made.  No such application has been made. 

Annexure A

Annexure B

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

AS

Associate to the Honourable Justice Lemonis

1 MAY 2024