Booth v Offerman as trustee of the bankrupt estate of Geoffrey David Booth

Federal Court of Australia|2024-10-31|Before: Mr J, Feutrill J

o 2) [2016] WASC 75 (S) Sapphire (SA) Pty Ltd v Ewens Glen Pty Ltd (No 2) [2011] FCA 714 Talacko v Talacko [2010] FCAFC 54; 183 FCR 311 The University of Western Australia v Gray (No 6) [2006] FCA 1825 Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis (No 2) [2012] FCA 1298

Date of hearing: 25 October 2024 and 31 October 2024

Counsel for the Plaintiff: Mr J Park with Mr R Lennon

Solicitor for Interested Party: Mendelawitz Morton Commercial

ORDERS WAD 316 of 2024 IN THE MATTER OF MATTHEW DANIEL VINES IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF SAM ALEXANDER MITCHELL MATTHEW DANIEL VINES IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF SAM ALEXANDER MITCHELL Plaintiff

order made by: FEUTRILL J DATE OF ORDER: 25 OCTOBER 2024

THE COURT ORDERS THAT:

The proceeding be taken to have been commenced under rule 2.01 and Form B2 of the Federal Court (Bankruptcy) Rules 2016 (Cth) with Matthew Daniel Vines as trustee of the bankrupt estate of Sam Alexander Mitchell as applicant (Trustee) in the matter of the bankrupt estate of Sam Alexander Mitchell (Bankrupt) and to have been made for final and interim relief under s 30(1)(b) and (or) s 90-15 of Schedule 2, Insolvency Practice Schedule (Bankruptcy) of the Bankruptcy Act 1966 (Cth) and (or) s 23 and (or) s 57 of the Federal Court of Australia Act 1976 (Cth).
Until further order Richard Albarran and Brent Kijurina, of Hall Chadwick, be appointed interim joint and several receivers (Interim Receivers), without security, of the property (within the meaning of that term in section 9 of the Corporations Act 2001 (Cth)), whether or not held on trust and whether within or without the State of Western Australia, of the following companies (Property) for the purpose of identification, preservation and securing the Property in aid of the Trustee and for the ultimate benefit of creditors of the estate of the Bankrupt.
1. The Edge TC Pty Ltd (ACN 145 089 069) and the following companies of which it is the sole member:
  1. Wealthcheck Finance Pty Ltd (ACN 115 379 194);
  2. The Edge Farming Pty Ltd (ACN 628 137 646);
  3. Rivera Farming Pty Ltd (ACN 626 497 229);
  4. Cowl Cowl Management Pty Ltd (ACN 637 938 295);
  5. The Edge Investment Co Pty Ltd (ACN 638 762 697); and
  6. The Edge 2020 TC Pty Ltd (ACN 638 765 081).
2. The Edge Investment Management Pty Ltd (ACN 142 103 722) and the company of which it is sole member, Wealthcheck Funds Management Pty Ltd (ACN 154 863 939).
3. The Edge Park Management Pty Ltd (ACN 137 727 649).
4. The Edge Ceres Pty Ltd (ACN 657 069 040) and the company of which it is a sole member, Wealthcheck Financial Services Pty Ltd (ACN 115 077 775).
The Interim Receivers have:
1. power to do in Australia and elsewhere, all things necessary or convenient to be done for or in connection with, or as incidental to, the attainment of the objective for which they are appointed;
2. without limiting the generality of the power in the preceding sub-paragraph:
  1. the powers set out in ss 420(1), 420(2)(a), 420(2)(e), 420(2)(f), 420(2)(g), 420(2)(k), 420(2)(n), 420(2)(p), 420(2)(q), 420(2)(r) and 420(2)(u) of the Corporations Act; and
  2. the power to investigate and report on the matters set out in paragraph 5 of these orders.
The powers in the preceding paragraph do not extent to sale, letting or encumbering the Property without the prior leave of the Court.
Within 60 days of the date of this order, or such further period as the Court allows, the Interim Receivers provide the Court and the Trustee a report into their receivership, including:
1. identification of the Property together with the assets and liabilities of each company;
2. an opinion as to whether and the extent to which each company is legally and beneficially entitled to the Property;
3. the likely return to the Bankrupt's creditors through his ordinary shares in Edge TC Pty Ltd, The Edge Investment Management Pty Ltd, The Edge Park Management Pty Ltd and The Edge Ceres Pty Ltd and a recommendation as to the manner in which to maximise that return;
4. any other information necessary to enable the Trustee's interest in the bankrupt's shares to be assessed; and
5. a recommendation as to whether continuation of the receivership is in the best interests of the Bankrupt's creditors, and if so, what, if any, directions or further orders the Interim Receivers consider are necessary or desirable in the interests of the creditors and (or) the Trustee.
The Interim Receivers be entitled to reasonable remuneration for necessary work properly performed together with all reasonable expenses properly incurred in the performance of their duties arising in connection with their appointment and in the exercise of their powers as may be approved by the Court on application of the Interim Receivers.
The Interim Receivers' remuneration be calculated on the basis of time reasonably spent by them, and any partner or employee of the firm to which the Interim Receivers are attached, at the standard rates of the Interim Receivers' firm from time to time for work of that nature.
The Interim Receivers' remuneration and expenses be paid out of the estate of the Bankrupt.
By 4.30pm (AWST) on 29 October 2024 the Trustee serve a copy of these orders on:
1. each of the companies set out in paragraph 2 of these orders in accordance with s 109X of the Corporations Act;
2. the Bankrupt by dispatch by ordinary prepaid post to his last known residential address in Australia, by airmail to his last known residential address in the United States of America and by electronic mail to his last known electronic mail address;
3. Andrea Miller by dispatch by ordinary prepaid post to her last known residential address in Australia, by airmail to her last known residential address in the United States of America and by electronic mail to her last known electronic mail address;
4. John Thomson, David Whyte and Damon Petrie by dispatch by ordinary prepaid post to his last known residential or business address in Australia and by electronic mail to his last known electronic mail address; and
5. Ben Morton of Mendelawitz Morton Lawyers by dispatch by ordinary prepaid post to his last known business address and by electronic mail to his last known electronic mail address.
The Trustee and the Interim Receivers have liberty to apply on short notice for further or other orders and (or) to relist the originating process.
The costs of the proceeding up to and including 25 October 2024 be costs in the administration of the estate of the Bankrupt.
Any person who is able to demonstrate sufficient interest may apply to set aside or vary these orders upon 48 hours written notice. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ORDERS WAD 316 of 2024 IN THE MATTER OF MATTHEW DANIEL VINES IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF SAM ALEXANDER MITCHELL MATTHEW DANIEL VINES IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF SAM ALEXANDER MITCHELL Plaintiff

order made by: FEUTRILL J DATE OF ORDER: 31 OCTOBER 2024

THE COURT ORDERS THAT:

John Gervase Shanahan be joined as an applicant in the proceeding and the name of the applicant in the proceeding be amended to 'Matthew Daniel Vines and John Gervase Shanahan in their capacity as trustees of the bankrupt estate of Sam Alexander Mitchell'.
Sam Alexander Mitchell have leave to intervene in the proceeding to make submissions and adduce evidence on the applications and hearing referred to in para 6 of these orders (Interested Party).
The applicant serve copies of all documents filed in the proceeding on the Interested Party on his address for service as set out in the notice of acting filed by him.
The orders of 25 October 2024 be varied at para 2(a)(ii) to add the words, 'except for that property of the company which is under the control of the receiver and manager appointed by Eukani Pty Limited as trustee of the Eukani Investment Trust under an instrument of appointment dated 16 September 2024 (or any replacement of that receiver and manager (until the end of the period of control by that receiver and manager) whereupon the Interim Receivers be appointed receivers of such of that property, if any, as remains property of the company'.
By 4.30pm (AWST) on 12 November 2024 the applicant file and serve an application for leave to amend the originating process in terms that claim final relief and to join any necessary parties as respondents to the proceeding.
The interlocutory application filed 30 October 2024 be adjourned and listed, together with application referred to in para 5 of the application and with the question of whether the orders made on 25 October 2024, as amended, should be varied or set aside, for hearing at 10.15am (AWST) on 15 November 2024.
By 4.30pm (AWST) on 1 November 2024 the applicant serve a copy of these orders on the persons identified in and in the same manner as set out in para 9 of the orders of 25 October 2024, except the Bankrupt (Interested Party),
Costs be reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT FEUTRILL J:
On 25 October 2024, after hearing the applicant ex parte as an urgent duty matter, I made orders for the appointment of Richard Albarran and Brent Kijurina as joint and several interim receivers of the property of certain companies associated with Sam Mitchell. Mr Mitchell is a bankrupt and the applicant is one of his trustees in bankruptcy. On 31 October 2024 I made orders varying the orders made on 25 October 2024 and for certain other orders directed to regularising the proceedings and providing an opportunity for the Bankrupt to be heard, as an interested party, on whether the orders made should be varied or set aside. These are my reasons for the orders made on 25 and 31 October 2024.

Jurisdiction and power

The originating process sought, in effect, final orders pursuant to s 57 of the Federal Court of Australia Act 1976 (Cth) for the appointment of Mr Albarran and Mr Kijurina as receivers of the assets of various companies and trusts. Other than orders for the conferral of certain powers on the receivers and for costs no other relief was sought in the application.
Section 57 of the Federal Court Act provides: 57 Receivers (1) The Court may, at any stage of a proceeding on such terms and conditions as the Court thinks fit, appoint a receiver by interlocutory order in any case in which it appears to the Court to be just or convenient so to do. (2) A receiver of any property appointed by the Court may, without the previous leave of the Court, be sued in respect of an act or transaction done or entered into by him or her in carrying on the business connected with the property. (3) When in any cause pending in the Court a receiver appointed by the Court is in possession of property, the receiver shall manage and deal with the property according to the requirements of the laws of the State or Territory in which the property is situated, in the same manner as that in which the owner or possessor of the property would be bound to do if in possession of the property.
I was not initially satisfied that the Court had power to make an order under s 57 in circumstances in which no final relief was sought in the originating process: see., e.g., Commonwealth of Australia v ABC2 Group Pty Ltd [2009] NSWSC 1442 at [7] (Austin J). Orders are generally made under s 57 to protect or preserve property for the benefit of persons who have an interest in that property pending the determination of substantive matters in issue in the proceeding: The University of Western Australia v Gray (No 6) [2006] FCA 1825 at [71]-[74].
Another potential source of the power to appoint receivers is s 23 of the Federal Court Act which provides: The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate. Section 23 confers power on the Court, in matters in which it has jurisdiction, to make final or interlocutory orders. Such orders could include the appointment of receivers on a final or interlocutory basis. Again, an interlocutory order may be made in proceedings in which final relief has been sought.
A further potential source of power is s 30(1)(b) of the Bankruptcy Act 1966 (Cth) which provides: 30 General powers of Courts in bankruptcy (1) The Court: … (b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter. …
There is a distinction between jurisdiction and power. Section 30(1)(b) of the Bankruptcy Act confers power on the Court not jurisdiction: Forshaw v Thompson (1992) 35 FCR 329 at 339 (Lockhart J); see, also, Morris v Maroudas (1986) 12 FCR 346. The same reasoning applies to s 23 and s 57 of the Federal Court Act. Therefore, orders cannot be made in the exercise of the powers conferred by any of those provisions if the Court does not otherwise have jurisdiction. It is not obvious from the originating process what jurisdiction of the Court is intended to be invoked so as to enliven one or more of the powers of the Court to make orders appointing receivers.
Section 27(1) of the Bankruptcy Act confers 'jurisdiction in bankruptcy' on the Court. The expression 'bankruptcy' means 'in relation to jurisdiction or proceedings … any jurisdiction or proceedings under or by virtue of [the Bankruptcy Act]'. Rule 2.01 of the Federal Court (Bankruptcy) Rules 2016 (Cth) provides for filing originating applications required or permitted by the Bankruptcy Act in accordance with Form B2. The originating process was not filed in accordance with Form B2 of the Bankruptcy Rules, but rather in accordance with Form 15 and r 8.01(1) and r 8.04(1) of the Federal Court Rules 2011 (Cth). The originating process has one party, the applicant, described as Matthew Daniel Vines in his capacity as trustee of the bankrupt estate of Sam Alexander Mitchell. Indirectly, therefore, the originating process may intend to invoke the jurisdiction of the Court in bankruptcy.
In Re Clunies-Ross; Ex parte Totterdell [1987] FCA 159; 72 ALR 241, French J, in the exercise of the power under s 30(1)(b), granted an interlocutory injunction to restrain the bankrupt from disposing of property in an external territory pending an application by the trustee under s 29(4) of the Bankruptcy Act for a court of the Cocos (Keeling) Islands to act in aid of and be auxiliary to the Federal Court in a matter of bankruptcy. There, his Honour observed: In my opinion the power conferred by s 30(1)(b) will enable the court to grant interlocutory relief of the kind sought by the applicant in this case. The construction of that paragraph which supports such a grant is, I think, analogous to the construction of s 23 of the Federal Court of Australia Act which supports the court's power to grant Mareva injunctions - Jackson v Sterling Industries Ltd (1986) 69 ALR 92. The restraint sought is, I think, necessary for the purposes of carrying out or giving effect to the Act so that any consideration by this court of an application for a request to issue to the Supreme Court of the Cocos (Keeling) Islands Territory will not be rendered nugatory by any prior disposition of the subject property or any part of it.
In Talacko v Talacko [2010] FCAFC 54; 183 FCR 311 the Full Court (Gray, Mansfield and McKerracher JJ) concluded that the power in s 30(1)(b) extended to an order restraining a person in respect of whom a bankruptcy notice had been issued from leaving the jurisdiction. Relevantly, the Court observed: 17 The making of ancillary orders to prevent the scheme of the Bankruptcy Act from being defeated is neither novel or unusual. In Storey v Lane (1981) 147 CLR 549 at 556-557, Gibbs CJ observed: An essential feature of any modern system of bankruptcy law is that provision is made for the appropriation of the assets of the debtor and their equitable distribution amongst his creditors, and for the discharge of the debtor from future liability for his existing debts. In Hill v East and West India Dock Co Earl Cairns cited with approval the following passage from the judgment of James LJ in Ex parte Walton; In re Levy: Now, the bankruptcy law is a special law, having for its object the distribution of an insolvent's assets equitably amongst his creditors and persons to whom he is under liability, and, upon this cessio bonorum, to release him under certain conditions from future liability in respect of his debts and obligations. If further authority is needed for the proposition that the equitable distribution of the assets of the insolvent debtor is a fundamental purpose of the bankruptcy law, reference may be made to Attorney-General (Ontario) v Attorney-General (Canada) and Reg v Davison. It is equally clear that and [sic - any] system of bankruptcy law "may frequently require various ancillary provisions for the purpose of preventing the scheme of the Act from being defeated": Attorney-General (Ontario) v Attorney-General (Canada); Royal Bank of Canada v Larue. For example, it may be necessary to frame provisions to stop individual action by creditors for the purpose of obtaining payment of the debts due to them when the aim of the law is to secure administration of the debtor's assets in the interest of the creditors generally: Attorney-General (British Columbia) v Attorney-General (Canada). (Emphasis added [in original], footnotes omitted.) 18 The breadth of the language appearing in s 30(1) supports a conclusion that it should not be construed narrowly or in a confined or limited way. In Re Bilen; Ex parte Sistrom (unreported, Federal Court, Neaves J, NSW706 of 1983, 11 April 1985), Neaves J said: In my opinion s 30(1) of the Bankruptcy Act 1966 is not a provision limiting the Court's jurisdiction. It is a facultative provision giving the Court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act. The words used are not words of limitation but of extension. 19 The judicial power conferred is intended to assist in the exercise of jurisdiction in bankruptcy. It is an ingredient of the exercise of discretion under such a power that it be "necessary for the purposes of carrying out or giving effect to" the Bankruptcy Act. In express terms, it is contemplated that the Court may make orders granting injunctions or other equitable remedies. The legislature is to be taken as having intended that the Court would adopt the same approach to making such orders as it adopts in the exercise of other broad discretionary powers in support of its jurisdiction.
While the power conferred under s 30(1)(b) is not to be construed narrowly, it is, nonetheless, limited to the purposes for which it is conferred. In Coshott v Prentice [2014] FCAFC 88; 221 FCR 450 the Full Court (Siopis, Katzmann and Perry JJ), in concluding that power did not extend to ordering the sale of property the bankrupt co-owned with a third party, described the breadth and limits of power as follows: 92 As is apparent, the power to make orders under s 30(1)(b) must be exercised for the purposes of carrying out or giving effect to the Act in the particular case. Those purposes, in common with any modern system of bankruptcy law, are to provide for the appropriation and equitable distribution of the assets of the insolvent debtor, and upon this, the debtor's release from future liability in respect of his or her existing debts: Storey v Lane (1981) 147 CLR 549 (Storey) at 556 (Gibbs CJ). 93 In line with these objects and the breadth of the language in s 30(1), it has been held that the provision should not be construed narrowly. As Neaves J observed in Re Bilen; Ex parte Sistrom (unreported, Federal Court, Neaves J, No NSW706 of 1983, 11 April 1985) in a passage quoted with approval by the Full Court in Talacko v Talacko (2010) 183 FCR 311 (Talacko) at 321, s 30(1): is a facultative provision giving the court full power, within the limits of its jurisdiction to be found elsewhere, to make such orders as it considers should be made in order to carry out and give effect to the Act. The words used are not words of limitation but of extension. 94 Thus, the section has been held to provide sufficient power to make orders against a bankrupt for the vacation of property, issuing a warrant of possession and for the sale of a property in circumstances where the bankrupt is not complying with his or her obligations under the Act: see, eg, Vince (trustee) v Sopikiotis (No 2) [2012] FCA 1298 at [4] (Bromberg J); Pattison v McKinnon [2008] FCA 1624 at [2] (Jessup J); Official Receiver v Fall (2008) 5 ABC(NS) 772 at [10]-[12] (Lucev FM (as his Honour then was)). It also expressly extends to ancillary relief such as injunctions and other equitable remedies to prevent the scheme of the Act from being defeated. Such ancillary orders are, as the Full Court observed in Talacko at [17], "neither novel or unusual": see also Storey at 557 (Gibbs CJ). 95 Furthermore, it can be envisaged that orders might be made under s 30(1) against a non-bankrupt where that person has failed to comply with his or her obligations under the Bankruptcy Act. An example may be where an accountant withholds possession of the books of account as against the trustee in bankruptcy contrary to s 129(3). This is not, however, a case of this kind. There is no obligation which the trustee in bankruptcy seeks to enforce against Ljiljana. Rather, the relief sought would permanently extinguish her rights in real property in order to facilitate the recovery of moneys owed by the bankrupt to his creditors solely on the ground that Ljiljana is a co-owner of the Property, the sale of the Property as a whole being the best means of realising Robert's interest. 96 The question whether s 30(1) of the Act extends to orders in such a case must be approached by applying the principle of statutory construction that the Parliament may not be assumed to infringe rights without expressing its intention with irresistible clearness. As Mason CJ, Brennan, Gaudron and McHugh JJ said in Coco v The Queen (1994) 179 CLR 427 at 437: The insistence on express authorization of an abrogation or curtailment of a fundamental right, freedom or immunity must be understood as a requirement for some manifestation or indication that the legislature has not only directed its attention to the question of the abrogation or curtailment of such basic rights, freedoms or immunities but has also determined upon abrogation or curtailment of them. The courts should not impute to the legislature an intention to interfere with fundamental rights. Such an intention must be clearly manifested by unmistakable and unambiguous language. General words will rarely be sufficient for that purpose if they do not specifically deal with the question because, in the context in which they appear, they will often be ambiguous on the question of interference with fundamental rights. 97 In approving this passage in Coco, Gleeson CJ in Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309 at [21] accepted that the presumption is an aspect of the principle of legality which governs the relations between the Parliament, the executive and the courts. As his Honour then explained, "[t]he presumption is not merely a common sense guide to what a Parliament in a liberal democracy is likely to have it intended; it is a working hypothesis, the existence of which is known both to Parliament and the courts, upon which statutory language will be interpreted. The hypothesis is an aspect of the rule of law." 98 These principles were applied by Spender J in Re Bayliss; Ex parte Hadotone Pty Ltd v Official Trustee in Bankruptcy (1987) 15 FCR 91 (Bayliss) to hold that the general power in s 30(1)(b) of the Bankruptcy Act did not extend to the issue of certain warrants of search and seizure against third parties to assist in the investigation and realisation of the bankrupt's property. His Honour held at 99-101: There is no express provision in s 30(1)(b) abrogating the common law right of a person to his premises and his property. The question then becomes whether it is a necessary intendment of that section that such rights be abrogated. In my opinion, the answer must be "no". … In my opinion, there is no latent power in the Act to authorise the issue of warrants of search and seizure of the property of strangers in aid of the investigative function of a trustee in bankruptcy to identify and realise the property of the bankrupt. This is particularly so since the power to authorise search and seizure is a drastic power, and the legislature has in s 130 of the Act specifically provided the circumstances in which such a power might be exercised in relation to the property of the bankrupt. 99 This decision was cited with apparent approval by the Full Court in Talacko at [21], albeit that it held that Bayliss was distinguishable on the ground that it was concerned with the impact upon rights of third parties rather than the impact upon rights of the bankrupt. In Talacko the question was whether the power in s 30(1) extended to an order that a person against whom a bankruptcy notice has been issued be restrained from leaving the jurisdiction and required to deliver up his or her passport. The Court held that it did, notwithstanding its impact upon the right of an Australian citizen freely to leave and re-enter Australia. However at [22], the Full Court accepted in conformity with Bayliss that "it may be an altogether different issue as to whether s 30(1) would empower passport delivery orders being made against parties other than the bankrupt but that is not the issue before us". 100 In line with these authorities, in our opinion it must equally be the case that the general power in s 30(1) of the Bankruptcy Act does not extend to the making of orders for the sale of property which is co-owned by a person who is not the bankrupt thereby destroying their rights in that property. There is no express power to make such an order, nor obligation imposed upon such a person by the Bankruptcy Act from which Parliament's intention to destroy such rights by an order under s 30(1) might emerge with the clarity required. Rather, the trustee in bankruptcy has against Ljiljana, as the co-owner of the Property, the same rights as the debtor, Robert, before he was made bankrupt. 101 Equally and for the same reasons, the general powers vested in the Court to grant relief under ss 21, 22 and 23 of the Federal Court of Australia Act 1976 (Cth) and, in the exercise of its appellate jurisdiction, under s 28 of that Act, take the matter no further. Those powers must also be construed by applying the same established presumption with the same result. The submission to the contrary by the trustee in bankruptcy must be rejected.
However, the Court may have an independent power to make orders affecting the rights of a third party in accordance with a separate jurisdiction conferred on the Court by virtue of the bankrupt's interest in the property that is vested in the trustee. Therefore, by operation of s 79 of the Judiciary Act 1903 (Cth) and s 66G of the Conveyancing Act 1919 (NSW), the Court had power to order the sale of the co-owned property even though that power was not conferred under s 30(1)(b) of the Bankruptcy Act: Coshott v Prentice at [106]-[114], [140].
Separately, s 90-15 of Schedule 2 - Insolvency Practice Schedule (Bankruptcy) of the Bankruptcy Act provides that the Court may make such orders as it thinks fit in relation to the administration of a regulated debtor's estate. The orders that may be made include determining any question arising in the administration of the estate and an order that another person be appointed as trustee of the estate: s 90-15(3)(a), s 90-15(3)(c). This provision and the equivalent provision in Schedule 2 - Insolvency Practice Schedule (Corporations) of the Corporations Act 2001 (Cth) along with earlier versions of similar powers in the Bankruptcy Act and Corporations Act have generally been used to allow a trustee or liquidator to apply to the Court for directions in relation to a matter arising under the administration of a bankrupt's estate or a winding up. The function of the application is to give advice as to the proper course of action to be taken in the administration or liquidation. The provision is intended to facilitate the performance of a trustee's or liquidator's functions and should be interpreted widely to give effect to that intention: Re Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556 at [7]-[9] (Black J).
It has also been observed that the power in s 90-15 may extend beyond the power to give directions and accommodates the determination of substantive rights: Re Hawden Property Group Pty Ltd (in liq) [2018] NSWSC 481; 125 ACSR 355 at [8] (Gleeson JA). In Booth v Offerman as trustee of the bankrupt estate of Geoffrey David Booth [2019] FCA 5 (at [5]) Robertson J said that a similar jurisdiction used to exist in s 178 of the Bankruptcy Act and that it did not appear that the enactment of s 90-15 was intended to change the position from that Deane J described in Re Tyndall; Ex parte Official Receiver [1977] FCA 72; 17 ALR 182 at 186-187. There Deane J expressed the view that the power under the former s 178 conferred upon the Court the widest possible discretion as to the appropriate order which should be made in the particular case and that the Court was empowered and obliged to make such order in the matter as it thinks just and equitable.
In the context of company liquidation, s 90-15 has been relied upon as the source of power to appoint special purpose liquidators (additional liquidators) to administer particular assets of the insolvent company where that appointment is regarded as just and beneficial in the interests of the company's creditors: see, e.g., Perth Fashion Festival Pty Ltd (in liq) v Fashion Council WA Ltd (in liq) [2022] WASC 210 at [46]-[50] (Solomon J). In combination with s 57 of the Federal Court Act the provision has also been relied upon to obtain orders for the appointment of receivers over trust assets of an insolvent company and for directions from the Court as to the manner in which the liquidator is to deal with and distribute those assets in the winding up: see, e.g., Re Substar Holdings Pty Ltd (in liq) [2020] FCA 1863; 149 ACSR 185 at [26]-[30] (McKerracher J). In these circumstances the orders sought under s 90-15 relate to the administration of the assets of an insolvent company. By analogy, orders of a similar nature could be made in relation to the administration of the estate of a regulated debtor. The phrase 'in relation to' is of wide import and otherwise the provision is in 'very broad and unconstrained terms': Perth Fashion Festival at [46]. It is of sufficient breadth to capture an application for directions pertaining to, at least, the administration of shares that form part of a bankrupt's estate and that, in turn, may justify an order under s 57, in an appropriate case, to be made for the purposes of preserving the value inherent in that property of a bankrupt.
Subject to the Bankruptcy Act, the property of a debtor vests in the trustee in bankruptcy at the time the debtor becomes bankrupt: s 58(1) of the Bankruptcy Act. In general, that property is divisible amongst the bankrupt's creditors: s 116. The trustee in bankruptcy is to take possession of all the property of the bankrupt capable of manual delivery and the Court may enforce possession: s 129. The Court has power to summons certain persons for examination in matters relating to a bankrupt's property: s 81. The Court also has power to make orders under Pt VI Div 4A vesting property in a trustee in bankruptcy in circumstances in which the bankrupt has provided personal services to an entity for which the bankrupt received less than the full value of those services or to which the bankrupt contributed financially and from which the bankrupt benefited. The Court also has power under that Part to make orders for an entity to make a payment to the trustee where the bankrupt provided personal services to an entity for which the bankrupt received less than the full value of those services: ss 139A-139H.
Section 19 of the Bankruptcy Act sets outs duties of the trustee. These include determining whether the estate includes property that can be realised to pay a dividend to creditors and taking appropriate steps to recover property for the benefit of the estate. Section 19AA provides that the trustee may investigate the bankrupt's conduct and examinable affairs so far as they relate to the bankruptcy. The expression 'examinable affairs' in relation to a person means the person's dealings, transactions, property and affairs; and the financial affairs of an associated entity of the person, insofar as they are, or appear to be, relevant to the person or to any of his or her conduct, dealings, transactions, property and affairs. The expression 'associated entity' is defined in terms to include trusts and private companies associated with a bankrupt and a private company. Section 134(1) confers power on the trustee, amongst others, to sell property of the bankrupt, bring, institute or defend any action or other legal proceeding relating to the administration of the estate and to administer the property of the bankrupt in any other way. Amongst other things, a bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause aid to the utmost of his or her power in the administration of his or her estate: s 77(1)(g).
Broadly, therefore, the Court has power under s 30(1)(b) to make such orders as it considers necessary for the purpose of carrying out or giving effect to the provisions of the Bankruptcy Act described in the previous two paragraphs. Having regard to the facts deposed in the affidavits filed, read and relied upon in support of the orders sought in the originating process, I was satisfied that the application to appoint receivers was, in substance, founded on an allegation that the Bankrupt is in breach of his obligation under s 77(1)(g) because it is alleged that he has taken, is taking or will take steps that would have the ultimate effect of diminishing the value of his property (certain shares) that has vested in his trustees in bankruptcy. There is authority for the proposition that a failure of a bankrupt to co-operate in the sale of real property involves non-compliance with s 77(1)(g) therefore supporting the exercise of power under s 30(1)(b) to make orders for bankrupts to deliver up vacant possession of that property to the trustee: e.g., Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis (No 2) [2012] FCA 1298 at [4] (Bromberg J) cited with apparent approval in Coshott v Prentice at [94]. I was also satisfied that the power in s 30(1)(b) could be invoked to prevent the defeat of the scheme of the Bankruptcy Act and the performance and exercise of the Trustees' duties and powers under or by virtue of that Act (investigation, recovery and realisation of the Bankrupt's property).
It follows that, notwithstanding the form of the originating process and my initial reservations about whether the Court had jurisdiction to make orders of the kind sought in the application, I was satisfied that the originating process should be taken to be as an application made under or by virtue of the Bankruptcy Act for orders under s 30(1)(b) of that Act and (or) under s 90-15 of the IPSB and (or) s 23 and s 57 of the Federal Court Act.

Relevant facts

The background to the application is somewhat complicated due to the number of and relationship between the various companies and trusts associated with the Bankrupt that are of relevance to the proceeding. A flow-chart of the entities is Schedule 1 to these reasons which provides a simplified overview of these matters.

Company and trust structures, ownership and management

The Bankrupt is the sole member (shareholder) of four companies: The Edge TC Pty Ltd; The Edge Ceres Pty Ltd; The Edge Investment Management Pty Ltd; and The Edge Park Management Pty Ltd. The shares in these companies vested in the Trustee on the Bankrupt's bankruptcy in accordance with s 58 of the Bankruptcy Act.
The Edge TC is the trustee of the Edge Family Trust. The Edge Family Trust is a discretionary trust. The Bankrupt is the appointor and a beneficiary under the terms of the trust deed. The Edge TC is the sole shareholder of a number of other companies and evidently holds its legal interest in those shares as trustee for the Edge Family Trust. The companies are: Wealthcheck Finance Pty Ltd; The Edge Farming Pty Ltd; Rivera Farming Pty Ltd; Cowl Cowl Management Pty Ltd; The Edge Investment Co Pty Ltd and The Edge 2020 TC Pty Ltd. The Edge TC is also a 50% shareholder in Mitchell River Hold Co Pty Ltd. The remaining 50% of the shares in that company are held by Danny Thomas Ventures Pty Ltd which does not appear to be a company associated with the Bankrupt.
The Edge Ceres is the trustee of the Edge Ceres Trust. The Edge Ceres Trust is a discretionary trust of which the Bankrupt is the appointor and a beneficiary. The Edge Ceres is the sole shareholder of Wealthcheck Financial Services Pty Ltd and the shares in that company are evidently held on trust for the Edge Ceres Trust.
The Edge Investment Management Pty Ltd is trustee of the Edge Investment Management Unit Trust. Information concerning the unit holders of that unit trust and its terms is not before the Court. The Edge Investment Management is the sole shareholder of Wealthcheck Funds Management Pty Ltd and those shares are evidently held on trust for the Edge Investment Management Unit Trust.
The Edge Park Management is the registered proprietor of land situated at 1 Hopkins Street, Lancelin in the State of Western Australia. There does not appear to be any trust associated with that company and it does not appear that the land is held on trust.
On 14 September 2022 an agreement styled 'Note Subscription Agreement' was made between: (1) ADM Capital Investments Pte Limited, as note holder; (2) ADM Capital Investments Pte Limited as trustee for the Capture Security Trust, as security trustee: (3) Wonga Ag Hold Co Pty Ltd and Mitchell River Hold Co, as issuers, guarantors and security providers; (4) the Bankrupt, as guarantor and security provider; (5) Daniel Colin Thomas, as guarantor; (6) The Edge Investment Management as trustee for the Edge Investment Management Unit Trust and The Edge Farming as trustee for itself and the Edge Farming Trust, as guarantors; and (7) The Edge TC as trustee for the Edge Family Trust, Kirsten Florece Ross as nominee for The Edge TC as trustee for the Edge Family Trust, and Danny Thomas Ventures Pty Ltd as trustee for the Danny Thomas Ventures Trust, as security providers.
On 20 May 2024 Barry Wight and Catherine Margaret Conneely were appointed receivers and managers over certain property evidently pursuant to a document styled 'Specific Security Deed' made in connection with the Note Subscription Agreement. That property included the ordinary shares in The Edge TC and The Edge Investment Management held by the Bankrupt and the ordinary shares in Wonga Hold Co and The Edge Farming, the units in the Wonga Ag Hold Trust, the units in the Edge Investment Management Unit Trust and the units in the Edge Farming Trust which The Edge TC held as trustee of the Edge Family Trust. Those receivers and managers were appointed by ADM Capital Investments as security trustee. Those receivers and managers appointed Damon Charles Petrie as a director and removed the Bankrupt as a director of The Edge TC by resolution of that company.
On 16 August 2024 the Supreme Court of New South Wales awarded judgment in favour of ADM Capital Investments against the Bankrupt in the sum of USD36,194,864.39 and costs on an indemnity basis. On 29 August 2024 the Official Receiver issued a bankruptcy notice in the sum of AUD 53,416,018.92 in respect of the judgment debt. The bankruptcy notice was served on the Bankrupt on 30 August 2024.
On 19 September 2024 John Gervas Shanahan and Matthew David Vines were appointed as joint and several trustees in bankruptcy of the Bankrupt. The Trustees were appointed after the Bankrupt presented and the Official Receiver accepted a debtor's petition under s 55 of the Bankruptcy Act.
On 18 October 2024 Mr Wight and Ms Conneely retired as receivers and managers over the property to which they were appointed including the Bankrupt's ordinary shares in The Edge TC and the relevant property that company held as trustee. On the same day, Mr Petrie and David Whyte resigned as directors of The Edge TC.
An Australian Securities Investment Commission historical company extract for The Edge TC records that on 18 October 2024 Andrea Miller was appointed a director of that company. Mr Vines deposes facts and exhibits documents to his affidavit from which he submits, and I accept, that Ms Miller is the Bankrupt's wife. Neither the retired receivers nor the Trustees exercised the Bankrupt's rights under his shares held in The Edge TC to appoint Ms Miller a director. It is, therefore, reasonably arguable that Ms Miller's appointment as a director was not in accordance with the provisions of the Corporations Act and (or) that company's constitution, if any, and, at present, The Edge TC does not have a validly appointed director.
An ASIC historical extract for The Edge Farming records the appointment of Ross Stephen Thomson as receiver and manager on 16 September 2024. It also records Mr Petrie and Mr Whyte ceasing as directors and Ms Miller being appointed a director of that company on 18 October 2024. The extent to which property of that company remains under the control of Mr Thomson as receiver and manager was not addressed in the evidence upon which the Trustees relied for the orders made on 25 October 2024. His appointment and non-retirement was not drawn to the Court's attention at the oral hearing and that resulted in a variation to the orders on 31 October 2024 described later in these reasons. In any event, there is no evidence before the Court that Mr Petrie and Mr Whyte, as directors of The Edge TC, exercised the rights of that company, as a shareholder of The Edge Farming, to appoint Ms Miller a director. Again, it is reasonably arguable that Ms Miller's appointment as a director was not in accordance with the provisions of the Corporations Act and (or) the company's constitution, if any, and, at present, The Edge Farming does not have a validly appointed director.
An ASIC historical extract for Wealthcheck Finance records that John Scott Thomson was appointed as a director of that company on 19 September 2024 and that the Bankrupt ceased to be a director on the same day. That is, the day the Trustees were appointed. The Edge TC is recorded as the sole shareholder of Wealthcheck Finance. At that time, the directors of The Edge TC were Mr Petrie and Mr Whyte. There is no evidence that they exercised their powers as directors of The Edge TC as the sole shareholder of Wealthcheck Finance to remove the Bankrupt and appoint Mr John Thomson a director of that company. Subject to the constitution of Wealthcheck Finance, a director of that company may appoint another director and that appointment must be confirmed by resolution within two months after the appointment: s 201H of the Corporations Act. There is no evidence before the Court regarding the circumstances of Mr John Thomson's appointment. However, by reason of the following matters, a reasonably arguable inference arises that his appointment was not made in accordance with the Corporations Act and (or) the company's constitution, if any, and, at present, Wealthcheck Finance does not have a validly appointed director.
A bankruptcy form the Bankrupt lodged with the Official Receiver records that Mr John Thomson of JDC Corporate Pty Ltd is the person responsible for preparation of the financial statements and tax returns of Wealthcheck Finance.
Wealthcheck Finance is involved in legal proceedings it has brought against O'Shea & Partners in the Supreme Court of Queensland. On 27 September 2024 O'Shea & Partners, who appear to represent themselves in the proceedings, wrote to the firm representing Wealthcheck Finance indicating that the Bankrupt was disqualified from acting as a director due to his bankruptcy and that the company was without a director and in breach of s 201A of the Corporations Act.
On 9 October 2024 a Form 484 was lodged with ASIC recording the appointment of Mr John Thomson as a director on 19 September 2024.
There is nothing in Mr Petrie's affidavit to suggest that the resignation of the Bankrupt and appointment of Mr John Thomson was drawn to the attention of the directors of The Edge TC.
The matters referred to later in these reasons concerning the assertion that The Edge TC had been replaced as trustee of the Edge Family Trust by S Mitchell Family Pty Ltd.
An ASIC historical extract for Mitchell River Hold Co records that Sebastian David Hams and Scott David Harry Langdon were appointed receivers and managers of that company on 17 May 2024 and it remains under external administration. It also records that Mr Whyte remains a director of that company.
ASIC historical extracts for each other company of which The Edge TC is the sole shareholder record that the Bankrupt is that company's sole director.
An ASIC historical extract for The Edge Investment Management records Mr Petrie and Mr Whyte ceasing as directors and Ms Miller being appointed a director of that company on 18 October 2024. There is no evidence to suggest that the retired receivers exercised their control over the Bankrupt's shares to appoint Ms Miller as a director. Nor have the Trustees exercised the rights of the Bankrupt vested in them to do so. It is, therefore, reasonably arguable that Ms Miller's appointment as a director was not in accordance with the provisions of the Corporations Act and (or) the company's constitution, if any, and, at present, The Edge Investment Management does not have a validly appointed director. An ASIC historical extract for Wealthcheck Funds Management records the Bankrupt as the sole director of that company.
ASIC historical extracts for The Edge Ceres and Wealthcheck Financial Services record the Bankrupt as the sole director of those companies. An ASIC historical extract for The Edge Park Management also records the Bankrupt as the sole director of that company.
Pursuant to s 206B(3) of the Corporations Act the Bankrupt is disqualified from managing any company and continuing to be a director of that company. Pursuant to s 201A of the Corporations Act a company must have at least one director. It follows that it is reasonably arguable that each of the companies to which reference has been made, other than Mitchell River Hold Co, does not have a validly appointed director and is in contravention of s 201A of the Corporations Act.

Bankrupt's alleged involvement in unauthorised director appointments

As already mentioned, it is reasonably arguable that the purported appointments of Ms Miller and Mr John Thomson as directors of certain of the companies formerly under the management and control of the Bankrupt were not valid. A reasonable inference arises that the Bankrupt, through his association with his wife and the accountant who has prepared financial statements and tax returns for Wealthcheck Finance, purported to exercise powers as shareholder and (or) director of the companies to bring about those appointments.
As already mentioned, at the time he became bankrupt the Bankrupt's property vested in the Trustees. That included his shares in The Edge TC, The Edge Ceres, The Edge Investment Management and The Edge Park Management. The Trustees have power to appoint directors of those companies under s 201F(3) of the Corporations Act. The Trustees may appoint themselves as directors in accordance with that power: s 201F(4). The Trustees have not exercised that power of appointment. In their submissions, amongst other reasons for submitting the Court should appoint receivers over the property of those companies, the Trustees submit that it may be difficult to identify a person willing to consent to that appointment. That is evidently a reason for the application to appoint receivers over the property of the companies rather than appoint directors.
Regarding the companies of which The Edge TC, The Edge Investment Management and The Edge Ceres are the sole shareholder, subject to any constitution of the subsidiary companies, a director may be removed and another person appointed by resolution of the subsidiary company or a director may be appointed by resolution: s 203C and s 201G of the Corporations Act. As the subsidiary companies have only one member, resolutions removing and (or) appointing a director may be passed by the member recording it and signing it: s 249B. It follows that if there were directors of The Edge TC, The Edge Investment Management and The Edge Ceres those directors could exercise the power under s 249B to pass resolutions to remove and appoint directors of the subsidiary companies. It may also be possible for the sole shareholder of the principal companies to pass a resolution under s 249B to appoint an agent who, in turn, is authorised under s 126 to pass and sign resolutions in respect of the subsidiary companies under s 249B to appoint directors or other agents to manage the affairs of the subsidiary companies. In that manner, the Trustees, as controllers of the Bankrupt's shares in the principal companies, have the ability to control the management of all the principal companies and each subsidiary company of which a principal company is the sole shareholder. None of the powers to which reference has been made has been exercised by the Trustees to appoint Mr John Thomson or Ms Miller as a director.

Bankrupt's alleged involvement in attempts to remove and appoint new trustees

As mentioned, the shares in the companies that are subsidiaries of The Edge TC are evidently held on trust for the Edge Family Trust. Under the terms of the Edge Family Trust a person who is the Appointor under that deed may remove and replace the trustee of the trust: cl 15.1.1. The Nominated Beneficiaries may also unanimously agree by an instrument in writing to remove and replace the trustee: cl 15.2. These powers are subject to a limitation that arose by variation to the trust deed made around the time of the Note Subscription Agreement that added a clause to the effect that until the Secured Moneys under the Note Subscription Agreement are paid in full, a trustee is not capable of resigning, being disqualified from holding office or otherwise being replaced until such time as the Noteholders have given their written consent to that resignation, disqualification or replacement: cl 15.8. The Appointor is also disqualified from holding office if that person become subject to bankruptcy laws: cl 15.5.1.3. The Bankrupt is the Appointor.
Mr Petrie deposes that ADM Capital Investments has not given its consent to the resignation, disqualification or replacement of The Edge TC as trustee of The Edge Family Trust. Likewise, the Secured Moneys have not been repaid in full. Mr Petrie also deposes to facts suggesting that a person attempted to have the identity of the trustee of The Edge Family Trust changed with the Australian Taxation Office at some time before July 2024.
In a letter dated 13 August 2024 Ben Morton, of Mendelawitz Morton Commercial Lawyers, represented that he acted for the Bankrupt and that The Edge TC had been removed and replaced as trustee of The Edge Family Trust by S Mitchell Family Pty Ltd by a deed dated 25 June 2024. Attached to that letter was a purported notice of removal and replacement of The Edge TC as trustee of The Edge Family Trust by unanimous agreement of the Nominated Beneficiaries under cl 15.2 of the trust deed. The letter also asserted that Bellevue Station LLC was an asset of The Edge TC that fell outside the scope of ADM Capital Investments' security and the retired receivers' appointment and, as such, the only person authorised to deal with that asset was S Mitchell Family.
By letter dated 16 August 2024 Hamilton Locke, the solicitors for ADM Capital Investments, disputed that the notice was effective to remove The Edge TC as trustee by reason of the operation of cl 15.8 of the trust deed, as amended. Letters were also sent to Bellevue Station and S Mitchell Family asserting that The Edge TC remained trustee of The Edge Family Trust.
As mentioned, the shares in Wealthcheck Financial Services are evidently held by The Edge Ceres on trust for the Edge Ceres Trust. The Bankrupt is also the Appointor under the terms of the Edge Ceres Trust deed. That trust deed has no express disqualification of the Appointor in the event of his bankruptcy. Further, there is authority for the proposition that the power to appoint a trustee under a trust instrument is not 'property of a bankrupt' that vests in the trustee in bankruptcy: Lewis v Condon [2013] NSWCA 204; 85 NSWLR 99 at [94]-[96]. However, a question may arise as to whether, as a matter of construction, bankruptcy is a 'disability' that would have the effect of neutralising the Bankrupt's power as Appointor for the duration of his bankruptcy in accordance with cl 15.8 of the Edge Ceres Trust deed. Notwithstanding that there is a degree of uncertainty, it appears open to the Bankrupt to, at least, attempt to appoint a new trustee of that trust.
As mentioned, the shares in Wealthcheck Funds Management are evidently held on trust by The Edge Investment Management as trustee of the Edge Investment Management Unit Trust. The trust deed is not in evidence. Nor is there any direct evidence of the beneficiaries or unit holders of that trust. There is a prospect that there is a power to remove and replace the trustee of that trust under the applicable trust instrument.
Having regard to reasonable inferences that the Bankrupt was involved in unauthorised appointments of directors and an attempt to bring about the removal and appointment of a new trustee of The Edge Family Trust, I accept that there is a real risk that the Bankrupt will attempt to exercise the power of appointment under the terms of the Edge Ceres Trust to remove The Edge Ceres as trustee and appoint a new trustee. I also accept that there is a real risk that the Bankrupt will take steps to have any available power to remove The Edge Investment Management as trustee of the Edge Investment Management Unit Trust.

Bankrupt's alleged involvement in unexplained transactions diminishing trust property

Transactions recorded on the accounting program Xero for a company identified as Wealthcheck LLC for a Citibank account was an exhibit to Mr Petrie's affidavit. That document records a number of transactions by which funds were transferred from Wealthcheck Finance and Wealthcheck Funds Management to Wealthcheck LLC. These transactions include a sum of approximately USD320,000 transferred from Wealthcheck Finance on 23 May 2024. That is, shortly after the appointment of the retired receivers. Amounts of USD90,000 and USD30,000 were transferred from Wealthcheck Funds Management on 10 May 2024. Other transfers in smaller sums took place between 3 November 2023 and 8 April 2024. Until the last three transfers the running balance of the account was negative or marginally positive. Many of the transactions have descriptions that appear to be for day-to-day expenses that may or may not be business-related. As of 29 May 2024, the account balance was increased from a near zero balance to approximately USD320,000. At the material times the Bankrupt was a director of the relevant companies involved in the transfers. It is reasonable to infer these transactions were performed by him or by others with his knowledge and authority.
While these transfers may have been legitimate and concerned genuine business transactions of Wealthcheck Finance and Wealthcheck Funds Management, the timing, amounts and change in apparent pattern of the account use are sufficient to raise an inference that money was removed from subsidiary company accounts and transferred to an account under the control of the Bankrupt or members of his family. The company to which the transfers were made has a similar name to the transferor companies and has the designation 'LLC' implying that it is a company incorporated in a State of the United States of America. There is other evidence before the Court that the Bankrupt's wife is a citizen of the USA and is, at least, temporarily residing in that country for work. Further, the Bankrupt has informed the Trustees that he is also currently in the USA for 'work reasons'. I am satisfied that a reasonable inference arises that, without further explanation, the Bankrupt has removed funds from bank accounts of Wealthcheck Finance and Wealthcheck Funds Management in Australia to a company in the USA for reasons that are unrelated to the business of the transferor companies.
The defence and counterclaim O'Shea & Partners filed in the Queensland proceedings is an exhibit to Mr Petrie's affidavit. In that pleading O'Shea & Partners assert certain facts including that on or about 28 March 2024 the Bankrupt made an agreement on behalf of The Edge TC by which O'Shea & Partners was instructed to act in relation to the sale by The Edge TC of its interest in the Wonga Ag Five Unit Trust which owned a property known as Benmara Station for the sum of AUD2,000,000. The pleading also asserts that on 9 May 2024 AUD2,000,000 was deposited into O'Shea & Partners trust account and thereafter, on 17 May 2024, The Edge TC instructed O'Shea & Partners to transfer the funds into a bank account in the name of Wealthcheck Finance. Effect was given to that instruction by crediting the funds held on trust to Wealthcheck Finance. On 21 May 2024, shortly after the appointment of the retired receivers, Wealthcheck Finance instructed O'Shea & Partners to pay AUD620,000 to Wealthcheck Financial Services and the balance to Wealthcheck Finance. On 23 May 2024 O'Shea & Partners paid the sum of AUD620,000 to Wealthcheck Financial Services, the sum of AUD923,433.33 to Wealthcheck Finance and retained the sum of AUD381,361.19 on account of certain fees.
Although the facts pleaded in the defence and counterclaim are mere assertion and not evidence, I infer from the certificate on the pleading that it is signed by solicitors and was settled by counsel, therefore, I infer those legal practitioners, considered that there was sufficient evidence to support the facts pleaded. These assertions, if true, are to the effect that large transactions were made to transfer funds from The Edge TC into companies that were under the control of the Bankrupt shortly after the appointment of the retired receivers. Further, on the day that O'Shea & Partners asserts that around AUD923,000 was transferred to Wealthcheck Finance, that company transferred USD320,000 to Wealthcheck LLC a company with a similar name evidently incorporated in the USA.
Based upon these matters I am satisfied that there is a real risk that property of companies of which the Bankrupt was a director, or of which Ms Miller and Mr John Thomson are purportedly directors, is in jeopardy of transfer to bank accounts outside Australia without the authority of those companies. Further, there is a real risk that the value of the property held on trust in the form of the ordinary shares in those companies will be diminished by dissipation of the property of those companies.

Value of the property of the Bankrupt

As already mentioned, the relevant property of the Bankrupt which has vested in the Trustees are his ordinary shares in The Edge TC, The Edge Ceres, The Edge Investment Management and The Edge Park Management. The value of those ordinary shares will be affected by the extent to which the assets exceed the liabilities of those companies.
In general, a trustee is personally liable for debts or liabilities incurred in execution of its duties and powers in the business or affairs of the trust. But, although personally liable to creditors, the 'property of the company' that is divisible amongst its creditors for the purposes of insolvency does not include property held on trust for another person. However, that exclusion does not apply to the extent that the trustee is permitted to benefit personally from the rights held on trust. One means by which a trustee is permitted to benefit personally from trust rights is the trustee's power to use trust rights to indemnify itself from liabilities to creditors. The existence of a right of indemnity means that, to the extent of the power, trust rights are no longer property held solely in the interests of beneficiaries of the trust: Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; 268 CLR 524 at [24]-[28] (Kiefel CJ, Keane and Edelman JJ).
The sources of the right of indemnity arise from equitable principles, the terms of the trust and statute. Whatever the source, there are two aspects of the right. First, if the trustee has paid the debt or discharged the liability, a right to reimbursement (or recoupment). Second, if the trustee has not paid the debt or discharged the liability, a right to apply the trust property to pay or discharge; that is, exoneration: Carter Holt at [29]. Justice Banks-Smith (with whom O'Sullivan and Feutrill JJ agreed) recently summarised the characteristics of the right of indemnity in Ridge Estate Pty Ltd v Fairfield Pastoral Holdings Pty Ltd [2024] FCAFC 17; 302 FCR 375 describing the following propositions as 'well-established': 56 First, a trustee's right of indemnity generates an equitable proprietary interest in the trust property: Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 370; Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at [47]-[48]; and Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (2019) 268 CLR 524 (Carter Holt) at [32] (Kiefel CJ, Keane and Edelman JJ). 57 The majority judgment in Carter Holt is that of Bell, Gageler and Nettle JJ, with whom Gordon J agreed in a concurring judgment. Having restated the position in Australian law (at [80]), the majority stated (at [83]) that until the trustee's right of indemnity has been satisfied: … the beneficiaries cannot compel the trustee to exercise the trustee's powers as legal owner of the trust assets for their benefit. A court of equity will assist the trustee to realise trust assets to satisfy the trustee's right of indemnity, in priority to the beneficiaries' interests, and thus it is said that the trustee has an equitable charge or lien over the trust assets. It is not, however, a charge or lien comparable to a synallagmatic security interest over property of another. It arises endogenously as an incident of the office of trustee in respect of the trust assets. (Footnotes omitted [in original].) 58 The majority continued at [84]: Possibly, the trustee's right of indemnity could be as well described as conferring a personal power (as Professor Ford argued it should be) as a proprietary interest. But the choice of description should conform to, rather than dictate, the application of fundamental principles to "solving a concrete legal problem". The trustee's right to apply trust assets in satisfaction of trust liabilities is proprietary in that it may be exercised in priority to the beneficial interests of the beneficiaries. To describe it as constituting a beneficial interest in the trust assets, and so as property, thus acknowledges the characteristic blending of personal rights and obligations with proprietary interests which is the "genius" of the trust institution. Such a beneficial interest falls naturally and ordinarily within the definition of "property" in s 9 of the Corporations Act. 59 Second, as is apparent from Carter Holt at [84], the trustee's beneficial interest takes priority over the claims of beneficiaries. 60 Third, the trustee's beneficial interest in trust assets survives the transfer of assets to a successor trustee: Rothmore Farms Pty Ltd v Belgravia Pty Ltd [1999] FCA 745 (Rothmore Farms) at [36]-[37]; Re Stansfield DIY Wealth Pty Ltd (in liq) (2014) 291 FLR 17 at [10]; Glazier Holdings Pty Ltd (in liq) v Australian Men's Health Pty Ltd (in liq) [2006] NSWSC 1240 at [38]; Bruton Holdings Pty Ltd (in liq) v Federal Commissioner of Taxation (2009) 239 CLR 346 at [43]; and Re Glenvine Pty Ltd (in liq) [2020] NSWSC 866 at [44]. This position has now been resolved by the Judicial Committee of the Privy Council consistently with the Australian position, in Equity Trust (Jersey) Ltd v Halabi [2023] AC 877 (Equity Trust) at [64], [164]. 61 Fourth, although a trustee in possession of funds may apply it in exercise of its right of indemnity without judicial intervention, the right of indemnity does not of itself confer a power of sale. An incumbent trustee may be able to exercise powers of sale under the trust instrument or statute. However, a trustee who has been removed from office but remains in possession of property, or remains the legal owner of property, will not have such powers and will have to apply to court for an order for sale or the appointment of a receiver with a power of sale: Apostolou v VA Corporation of Aust Pty Ltd (2010) 4 ASTLR 94 at [38]-[48]; Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) (2018) 260 FCR 310 at [35]-[36], [44]; and Holden v Kukuy (No 2) [2023] VSC 54 at [54]. 62 Fifth, equity will grant relief to protect a former trustee to ensure that its successor does not take steps which will destroy, diminish or jeopardise the former trustee's right of exoneration, which subsists in the trust assets after their transfer to the new trustee: Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550 at [50]; Pitard Consortium Pty Ltd v Les Denny Pty Ltd (2019) 58 VR 524 at [9]-[11]; and Jaken Properties Australia Pty Ltd v Naaman (2023) 112 NSWLR 318 (Jaken (FC)) at [4] (Bell CJ), [116] (Leeming JA, Kirk JA agreeing).
In this case, the property of the Bankrupt is not directly the property of the principal companies. However, the value of the Bankrupt's shares in those companies is necessarily affected by the property of the principal companies. The property of the principal companies which are trustees is, in turn, affected by the extent to which those trustee companies hold property on trust or in their own right. The property held in their own right includes any right of indemnity out of the property of a trust. The value of that right of indemnity may depend on the extent to which there is trust property of sufficient value to discharge the indemnity. That will depend on the value of the shares held in the subsidiary companies and the value of those shares, in turn, will depend on the property of those companies. Therefore, the value of the property of the trustee companies may be diminished by the unauthorised transfer of property out of subsidiary companies and thus, in turn, may affect the value of the Bankrupt's estate.

Reason orders were made to appoint the Interim Receivers

It is evident from the description of the relevant facts referred to earlier in these reasons that an attempt has been made to remove and replace The Edge TC as trustee of the Edge Family Trust. There has also been an attempt to appoint the Bankrupt's wife a director of The Edge TC. These are steps that may have the effect of, at least, delaying or hindering The Edge TC exercising any right of indemnity it has to payment out of the property it holds on trust. Having regard to the terms of the Edge Ceres Trust, it may be inferred that an attempt will be made, if it has not already been made, to replace The Edge Ceres as trustee of that trust to similar effect. Without having the terms of the Edge Management Investment Unit Trust before the Court, it may be inferred that there is a power within the trust instrument by which that trust is governed for the removal and appointment of trustees and that it is likely that steps will be taken to attempt, if they have not already been taken, to remove The Edge Investment Management as trustee of that trust, again, to similar effect.
The principal issue in Ridge Estate concerned whether the conveyance of trust property from a former trustee to a new trustee could be set aside under s 86 of the Law of Property Act 1936 (SA) in circumstances in which the removal of the former trustee and appointment of the new trustee, although in accordance with a power to do so in the trust instrument, had the effect of hindering or delaying the former trustee's access to trust property so as to avail itself of its indemnity. Section 86 provided that every conveyance of property made with intent to defraud creditors was to be voidable at the instance of the party prejudiced thereby. The Court concluded that for the purposes of s 86 (and, in effect the equivalent provisions in legislation of other States and Territories) the reference to an intention to defraud is be read as a reference to delay, hinder or otherwise defraud and that a trustee with a right of indemnity who has an entitlement to payment out of trust property may be considered a creditor: Ridge Estate at [103]-[111] (Banks-Smith J, O'Sullivan and Feutrill JJ, agreeing); special leave refused: Ridge Estate Pty Ltd v Fairfield Pastoral Holdings Pty Ltd [2024] HCASL 187.
Subject to the impediment to removal of The Edge TC as trustee by reason of the terms of the trust deed, if The Edge TC has been removed as trustee of the Edge Family Trust, The Edge Ceres has been removed as trustee of the Edge Ceres Trust and (or) The Edge Investment Management has been removed as trustee of the Edge Management Unit Trust and, to the extent any of the subsidiary companies were also trustees of unknown trusts and have been removed as trustees of those trusts, the circumstances referred to earlier in these reasons raise a serious question as to whether any conveyance of trust property to new trustees should be set aside as a conveyance made with the intention to defraud creditors. While it is the relevant trustee companies that would have standing to bring any proceedings to set aside any conveyance, the Trustees, or the Interim Receivers upon appointment, may be able to bring proceedings on behalf of the relevant trustee companies under Pt 2F.1A of the Corporations Act.
Otherwise, I am satisfied that there is a real risk that steps will be taken by the Bankrupt and (or) persons associated with him to attempt placing company and trust property beyond the reach of the principal companies and (or) to diminish the value of that property by dissipating the property of the subsidiary companies. The approach I have taken is similar to that which would apply when considering the risk that the Court's process may be frustrated by dissipation of assets upon an application for a freezing order. In such cases the Court need not be satisfied that there is a positive intention to frustrate a potential judgment: see, e.g., Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014; 273 ALR 194 at [8]-[13] (Kenny J) and the authorities there cited. Taking that approach, in the present case it is sufficient if a prudent sensible commercial person can properly infer a danger of dissipation or removal of assets that will have the effect of frustrating the administration of the Bankrupt's estate and defeating the scheme of the Bankruptcy Act. Put another way, there is a real danger that any right of payment for any indemnity of the trustee companies will be delayed or hindered by attempts to remove them as trustees and (or) transfer of property from the subsidiary companies to companies or entities associated with the Bankrupt that are not known or capable of control by the Trustees or that are out of the jurisdiction. Thereby, there is a real risk that the value of the property available for distribution amongst the Bankrupt's creditors will be diminished.
I take into account that, as a consequence of the bankruptcy of the Bankrupt and the matters to which I have made reference earlier in these reasons, all of the companies are without a director or arguably without a validly appointed director and, as such, are in contravention of s 201A of the Corporations Act. In these circumstances, subject to an amendment to the originating process to seek final relief under the Corporations Act, it is appropriate to appoint receivers to these companies: e.g., Allen, in the matter of North East Wiradjuri Co Limited (Administrators Appointed) [2010] FCA 1248 at [16] (Jacobson J); Sandy v Yindjibarndi Aboriginal Corporation RNTBC (No 2) [2016] WASC 75 (S) at [17] (Le Miere J). The Trustees may seek declaratory relief regarding the status of the management of the companies, their power to appoint directors and direction from the Court regarding the exercise or non-exercise of that power. The Trustees, or the Interim Receivers upon appointment, may also have standing to bring proceedings under Pt 2F.1A for, amongst other things, orders for the appointment of receivers and managers over any or all the relevant companies' property. In those circumstances, the appointment of interim receivers pending determination of final declaratory or other relief under Pt 2F.1A would be on a yet firmer footing under s 23 and (or) s 57 of the Federal Court Act: Re Allco Securities Ltd [2011] NSWSC 1113 at [11]-[18].
I also take into account that the Court may, under general equitable principles or the provisions of any applicable State trustees legislation, appoint a receiver over trust property where the affairs of a trust are in disorder and the appointment of a receiver is necessary to secure continuity of management: Martyniuk v King [2000] VSC 319 at [9] (Warren J) and the authorities there cited. For the reasons already given, the affairs of the trusts are manifestly in disorder and the trustees without proper management. Further, at least in the case of the Edge Ceres trust, the appointment of receivers will trigger a provision of the trust instrument that results in the automatic vacation of The Edge Ceres position as trustee of that trust. In that circumstance, The Edge Ceres will hold the property of that trust as bare trustee pending the appointment of a new trustee. Having regard to all the matters to which reference has already been made, it is appropriate to appoint the Interim Receivers as receivers of trust property pending the identification and appointment of a new trustee. For similar reasons, the Interim Receivers should be appointed receivers of any property any of the companies hold on trust given that existence and (or) the terms of the trust instruments are unknown.
Otherwise, there are well-established principles governing the making of orders for the appointment of receivers. These were explained in the joint reasons of Kaye, Murphy and Brooking JJ in National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 and the joint reasons of Mason CJ, Brennan and Deane JJ in National Australia Bank Ltd v Bond Brewing Holdings Ltd [1990] HCA 10; 169 CLR 271 when refusing special leave to appeal from the judgment of the Full Court of the Victorian Supreme Court. In general, the application should not be made ex parte and should be made on notice to persons affected by the proposed appointment. Further, in general, the price to be paid by the applicant for the orders is the usual undertaking as to damages. The reason for the general principle that there should be an undertaking is, as emphasised in the authorities, because of the normally drastic, intrusive and invasive nature of the appointment. But, the Full Court's explanation of the principles and reasons for them were 'not directed to the case where a company finds itself to be out of control and applies to the Court for the appointment of a receiver to safeguard the assets which the company itself is, in the extraordinary circumstances said to exist, incapable of safeguarding. That is a case of jeopardy of assets': see, e.g., Bond Brewing VSCFC at 540, 553, 559-560. Further, as Mason CJ, Brennan and Deane JJ said in Bond Brewing HCA at 277: … The damage to be apprehended by the making of an order for the appointment of a receiver and manager is not so much that the receiver and manager may so exercise his powers as to occasion loss in the business to which he has been appointed. It consists of the consequences flowing from the fact of appointment and of the defendant's loss of "its title to control its assets and affairs" (the phrase of Viscount Haldane L.C. in Parsons v. Sovereign Bank of Canada [(1913) A.C. 160. at p. 167]). …
Therefore, an undertaking as to damages while it may be seen as the usual price, is not obligatory and receivers may be appointed in the absence of an undertaking where the risk of the kind to which the High Court referred is not present: e.g., Sapphire (SA) Pty Ltd v Ewens Glen Pty Ltd (No 2) [2011] FCA 714 at [4]-[5] (Besanko J); Commonwealth v ABC2 Group Pty Ltd [2008] NSWSC 1383; 69 ACSR 228 at [28]-[32] (Barrett J).
The applicant proffered no undertaking as to damages. Nor were any written or oral submissions addressed to the question of the general need for such an undertaking as the price of the appointment. Notwithstanding these matters, I am satisfied on the evidence before me on the application that the risk of the kind to which the High Court referred in Bond Brewing HCA is not sufficiently high to warrant an undertaking as the 'price' of the orders sought. There are a number of reasons why I have reached that conclusion bearing in mind the hearing was urgent, ex parte and without notice.
The Interim Receivers are registered liquidators and are subject to the supervisory and disciplinary provisions of the Corporations Act. It is for that reason that registered liquidators are routinely not required to provide security or a guarantee upon their appointment as receivers under r 14.21 and r 14.22 of the Federal Court Rules. Here, in accordance with that practice, I made orders appointing the Interim Receivers without security.
As already mentioned, the Trustees have the right to appoint directors of The Edge TC, The Edge Ceres, The Edge Investment Management and The Edge Park Management. In practical terms, through the operation of one or more of s 201F, s 249B and s 126 of the Corporations Act, the Trustees have the ability to control the management of all the companies the subject of the orders made on 25 October 2024. Further, the relevant companies are either without a director or it is reasonably arguable that they are without a validly appointed director and are in breach of s 201A of the Corporations Act. In such circumstances, the appointment of a receiver for the purpose of identifying, preserving and securing the property of the company and reporting to the Trustees and the Court is not an appointment of a drastic, intrusive and invasive nature that results in displacement of persons with existing authority to control the property and affairs of the companies. Put another way, the persons with the authority to control the management of the companies, the Trustees, are in favour of and the applicant for the appointment of receivers. In substance, therefore, the person prejudiced by the appointment of the receivers is the person also applying for the appointment. 'Where a receiver is sought to protect property of which no-one is in actual possession, no-one will be ousted by the appointment and probably no great harm will be done': Bond Brewing VSCFC at 539. Further, it was a matter where, in effect, the companies are out of control of the property and it is in jeopardy.
Insofar as property of the companies is held on trust for the beneficiaries of trusts, in general, by the very nature of trust structures the beneficiaries do not have control over the property or affairs of the trust because the trust property is held by the trustee. Again, given the present absence of directors of the trustee companies the appointment of receivers to property of the companies that consists of trust property is not intrusive or invasive in respect of any rights the beneficiaries enjoy concerning the control of that property. To the extent that the beneficiaries or other individuals have other powers under trust instruments those powers are unlikely to be affected by the appointment of receivers over property held on trust. Trust property the subject of the interim receivership remains subject to the terms of the trusts and the beneficiaries' interests in the trusts (whatever the nature of those interests). Moreover, given that management of the trustee companies and their subsidiaries is in a state of disarray and uncertainty, the trust property is also in jeopardy. In these circumstances, it is also in the evident interests of the beneficiaries of the trusts to have trust property under the control of competent professionals who are registered liquidators. If the office of trustee is vacated by the appointment of the receivers, the beneficiaries or other interested persons may apply for the appointment of new trustees and for orders dealing with the vesting and conveyance of trust property to the new trustee. Such orders may include directions to the Interim Receivers relating to that property once a new trustee is appointed.
The orders made are not as expansive as the Trustee requested in his application. The orders are framed as an appointment of interim receivers for limited purposes and for a finite period. The purpose of the appointment is largely to aid the Trustees to identify, preserve and secure the value of the bankrupt's shareholding in the trustee companies. The Interim Receivers are required to investigate and report on that matter within 60 days. Although expressed until further order, it is intended to revisit the necessity for the continuation of the appointment after the Interim Receivers have provided their report.
As to notice, the originating process as filed has no respondent in the proceeding and is expressed to be in the matter of Mr Vines as trustee of the bankrupt estate of Mr Mitchell. Except for the companies where there has been a purported appointment of Ms Miller and Mr John Thomson as a director, none of the companies has a person who could be authorised to represent them in the proceeding. Nonetheless, an attempt was made to serve the originating process and supporting affidavits on Ms Miller, Mr John Thomson, Mr Petrie and Mr Whyte. These were sent by express post on 24 October 2024 to certain addresses thought to be addresses used by the addressees. I consider it unlikely that any addressee received the letters and enclosures within sufficient time before the hearing at 2.15pm (AWST) on 25 October 2024 to regard them as having received any real, let alone reasonable, notice of the originating process, orders sought and affidavits in support. A decision was made not to serve the originating process and supporting affidavits on the Bankrupt as there was a concern that it may prompt him to take steps to defeat the application. Therefore, the application was heard ex parte. Taking into account the lack of notice, I made orders requiring the sealed orders to be served on the companies and various individuals who are or may be associated with the companies and the Bankrupt. I also made orders allowing for a person with a sufficient interest to apply to vary or discharge the orders.
It follows that for these reasons and, having regard to the nature of the orders made, the risk of damage of the kind the usual undertaking is intended to remedy is very low. The greater risk of harm arises from the absence of directors of the companies. Therefore, the balance of convenience favours the appointment of interim receivers for limited purposes and a finite period. Last, the absence of notice is not, in the circumstances of this case, of particularly great significance.

Nature of the orders made

As mentioned earlier, the Trustee, in substance, requested the Court to make final orders for the appointment of receivers under s 57 of the Federal Court Act. For the reasons already given, I was not satisfied that I had jurisdiction or power to make final orders of that nature on the application. However, I was satisfied that I have jurisdiction and power under s 30(1)(b) of the Bankruptcy Act and (or) s 90-15 of the IPSB and s 23 and s 57 of the Federal Court Act to make an interlocutory order pending the determination of final relief or orders in the proceeding. Therefore, I made orders for the appointment of interim receivers.
The Trustee sought orders for the appointment of receivers over all the property of various companies and all the property of the Edge Family Trust, the Edge Ceres Trust and the Edge Investment Management Unit Trust. Mitchell River Hold Co was amongst the companies included in the originating process. I was not satisfied that an order should be made appointing interim receivers over the property of that company at this time for three reasons. First, it appears to be in receivership with receivers and managers appointed by a secured creditor. Second, it has at least one director who appears to have been validly appointed. Third, as The Edge TC is not the sole shareholder of that company and it holds half of its ordinary shares, The Edge TC is not in a position, by ownership of shares alone, to dictate the management and affairs of that company.
As already mentioned, the evidence indicates that attempts have been made to remove trustee companies and replace them with new trustees. That may already have taken place and, subject to setting aside conveyances to defraud creditors, may have validly vested trust property in new trustees. Therefore, I was not prepared to make orders for the appointment of receivers over the property of specific trusts. Rather, for the reasons already mentioned, I made orders appointing interim receivers over the property of the companies whether or not that property was held on trust. In that manner, the orders appoint the Interim Receivers as receivers of any property the companies held on trust at the time of their appointment, but not as receivers of property that was formerly held on trust by a company that was validly conveyed or vested in a new trustee before the orders were made.
I was also not prepared to confer the broad powers on the Interim Receivers that the Trustee sought in the originating process. I considered that, in the circumstances and given the nature of the proprietary interest that any trustee companies have in trust property, interim receivers should be appointed for the limited purpose of identifying, preserving and securing the property of the relevant companies (whether or not held on trust). Further, that the Interim Receivers should report to the Trustee and the Court within a relatively short period of time (60 days) on identification of the property of the relevant companies and the extent to which it is held on trust and is otherwise realisable or may ultimately result in a dividend or return to the Bankrupt's creditors through his ownership of the shares in the principal companies. At the time of reporting, a decision may then be made on the extent to which it is necessary to continue the interim receivership.
I was also not prepared to confer a power to sell or encumber the property on Interim Receivers given the potential for that to interfere with the rights of third parties, including the companies, and that the property in question is not property of the Bankrupt. For similar reasons, while the Interim Receivers will have general power to do all things necessary or convenient to be done in connection with or incidental to the attainment of the object for which they were appointed, the specific powers in s 420(2) of the Corporations Act conferred on them are limited to those which are plainly necessary and convenient for the attainment of that object. Those powers excluded do not fall within the powers that are self-evidently necessary and convenient given the limited nature of the object for which the Interim Receivers have been appointed.
I was also of the view that it was necessary to describe the nature of the remuneration and expenses to which the Interim Receivers will be entitled for the work performed in connection with their appointment. The Trustee sought an order that the receivers' remuneration and expenses be paid out of the property of the companies and the trusts. I was not prepared to make such an order given that primary reason for their appointment relates to the property of the Bankrupt's estate and the property the subject of the receiverships is not such property. Therefore, I made an order that the remuneration and expenses of the Interim Receivers be paid out of the property of the Bankrupt's estate and, in effect, be treated as an expense in the administration of that estate.
Given that the application was heard ex parte and without reasonable notice to a number of potentially interested parties, I made orders allowing for any interested party to apply to vary or discharge the orders. I also made orders requiring a copy of the sealed orders to be served on the companies affected by the orders, individuals known to have been or purportedly to be directors of those companies and the Bankrupt. Having regard to the nature of the orders made and the reasons for them, the absence of any respondent or obvious contradictor in the proceeding and the liberty granted to interested parties to apply, I made no order requiring an inter partes hearing to consider whether there should be a continuation of the orders. It was my intention that the Docket Judge would re-list the matter for further or other order after receiving the Interim Receivers' report.

Applications to vary or set aside the 25 October 2024 orders

After the orders were made on 25 October 2024, it came to my attention that a receiver and manger had already been appointed to property of The Edge Farming and that receiver and manager had not retired. As that was not a matter to which my attention was drawn at the oral hearing, I requested further submissions and an explanation from the Trustee regarding the extent to which the orders made on 25 October 2024 required variation.
Additionally, on 30 October 2024 the Trustee filed an interlocutory process seeking a variation to the orders made on 25 October 2024. By that application, the Trustee seeks orders to specifically appoint the Interim Receivers as receivers of the property of The Edge Family Trust, The Ceres Trust and the Edge Investment Management Unit Trust. That application has been made on the ground that the Trustee has been informed that the trustee companies of those trusts have been removed as trustees of those trusts and new trustees appointed.
The Trustee's interlocutory application was listed for hearing on 31 October 2024. Prior to that hearing the Bankrupt filed a notice of appointment of a lawyer and that he was an interested party in the proceeding. The Bankrupt appeared, through counsel, on 31 October 2024 and sought an adjournment of the interlocutory application. The Bankrupt also read, on his counsel's undertaking to file a properly attested affidavit, an affidavit of the Bankrupt. That affidavit put in issue certain of the matters that underpin the Trustee's interlocutory application. If true, these facts call into question the foundation for the interlocutory application. It also emerged that the Bankrupt may wish to make submissions and adduce evidence for the purpose of applying to set aside or vary the orders made on 25 October 2024.
The Trustee also read affidavits addressing the service of the orders of 25 October 2024 and the appointment of a receiver and manager to property of The Edge Farming. As a consequence of the facts deposed and submissions the Trustee made, I was satisfied that the orders of 25 October 2024 should be varied to take into account that certain of the property of The Edge Farming is under the control of a receiver and manager appointed by a secured creditor of that company. The amendments are reflected in the orders made on 31 October 2024. Otherwise, the Trustee's interlocutory application was adjourned to a hearing on 15 November 2024 to give the Bankrupt an opportunity to be heard on that application.

Regularising the originating process

As already mentioned, on 25 October 2024 I made orders that had the effect of treating the originating process as an application made under s 30(1)(b) of the Bankruptcy Act and (or) under s 90-15 of the IPSB. Upon reflection, I was of the view that the orders made are not sufficient to regularise the originating process in that it lacks any evident and clear claim for final relief that would usually be necessary to engage the power under s 23 or s 57 of the Federal Court Act to make an interlocutory order or an order under s 30(1)(b) of the Bankruptcy Act.
Nonetheless, I remain of the view that the absence of a claim for final relief in the originating process, as filed, is not fatal to the substance of the application for an interlocutory order or the jurisdiction and power of the Court to make orders appointing the Interim Receivers provided satisfactory amendments are made to the originating process to claim final relief. For example, r 7.01 of the Federal Court Rules makes provision for orders to be made appointing receivers urgently before proceedings are commenced, without notice, as if the proceedings have been commenced upon an undertaking to commence proceedings within 14 days after the application has been determined. Accordingly, I am of the view that if the Trustee applies to amend the originating process to claim final relief by 12 November 2024 there will have been substantial compliance with the Rules.
I am also of the view that, as Mr Vines and Mr Shanahan are joint and several trustees, Mr Shanahan ought to be joined as a party to the proceedings. Through his counsel he consented to his joinder as an applicant. Accordingly, orders were made to join Mr Shanahan as an applicant. The application to amend the originating process should also identify any appropriate respondents to the final relief claimed and apply for them to be joined to the proceeding.

Further interlocutory hearing

The Court intends to hear the Trustees' interlocutory application to vary and any application of the Bankrupt to vary or set aside the orders of 25 October 2024 and the Trustees' application to amend their originating process on 15 November 2024. I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Feutrill.

Insolvency Practice Schedule (Bankruptcy) Bankruptcy Act 1966(Cth)ss 19, 19AA, 27(1), 29(4), 30(1)(b), 55, 58, 58(1), 77(1)(g), 81, 116, 129, 134(1), 178

Corporations Act 2001(Cth)ss 126, 201A, 201G, 201H, 206B(3), 201F(3), 201F(4), 203C, 249B, 420(2)

Federal Court Rules 2011(Cth)rr 8.01(1), 8.04(1), 14.21, 14.22

(2023) 112 NSWLR 318

At a glance

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