Brealey v Shields

[2022] FCA 863

Federal Court of Australia|2022-07-22|Before: McEvoy J

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

2022-07-22

Before

McEvoy J

Source

Original judgment source is linked above.

Judgment (10 paragraphs)

[1]

Pursuant to s 90-15(3) of the Insolvency Practice Schedule (Corporations) ("Insolvency Practice Schedule") in Schedule 2 of the Corporations Act 2001 (Cth) ("the Act"), the applicants are justified and acting reasonably in proceeding on the basis that the deeds of amendment dated 29 March 1991 and 24 March 2008 that appear as exhibits "GJS-8" and "GJS-9" of the affidavit of Glenn John Spooner affirmed on 3 June 2022 are ineffective.
Pursuant to s 90-15(3) of the Insolvency Practice Schedule, the applicants are justified and acting reasonably in executing the proposed deed of decision to appoint vesting day and the proposed deed to distribute trust fund that appears as exhibit "GJS-14" to the affidavit of Glenn John Spooner affirmed on 3 June 2022.
Pursuant to s 90-15(3) of the Insolvency Practice Schedule, the applicants are justified and acting reasonably in distributing the surplus funds in the liquidation of the Wengen Pty Ltd (in liquidation) (ACN 005 341 846) ("the Company") to Jodie Maree Robison and Emma Jane Robison.
Pursuant to s 488(2) of the Act, the applicants have special leave to distribute the surplus funds in the Company to Jodie Maree Robison and Emma Jane Robison.
Pursuant to s 90-15(3) of the Insolvency Practice Schedule, the applicants are justified and acting reasonably in retaining the amount of $12,075 from the surplus funds in the liquidation for the applicants' expenses which will be incurred in bringing an application pursuant to s 480(d) of the Act to deregister the Company.
Pursuant to r 1.32 of the Federal Court Rules 2011 (Cth) ("the Rules") and r 1.3 of the Federal Court (Corporations) Rules 2000 (Cth), compliance with the requirements of r 7.9(1) of the Federal Court (Corporations) Rules 2000 (Cth) be dispensed with.
Pursuant to r 1.32 of the Rules and reg 5.6.71(1) of the Corporations Regulations 2001 (Cth), the requirements of reg 5.6.71 of the Corporations Regulations 2001 (Cth) be dispensed with.
Costs of the originating process be costs in the liquidation of the Company.

[5]

BACKGROUND 9 The Company was incorporated on 20 June 1977. According to the records maintained by ASIC, the sole director and shareholder of the Company is Alan John Robison ("Mr Robison"). 10 On 14 February 2016, Mr Robison died. Lorraine Jones was subsequently appointed executrix and trustee of the deceased estate. 11 On 17 June 2016, Mr Bruno Anthony Secatore and Mr Glen John Spooner were appointed as joint and several liquidators of the Company pursuant to s 461(1)(k) of the Act. 12 The investigations undertaken by the liquidators reveal that: (a) on 1 April 1974 the Trust was settled, with the children of Mr Robison as its primary beneficiaries; (b) the Trust Deed provided, amongst other things, that the trustee was empowered to vary the terms of the trust, within prescribed limitations, provided any such variation was executed by the trustee and done with the consent of the guardians; (c) the guardians of the trust were Mr Robison and Joan Maree Robison ("Joan Robison"), who was Mr Robison's wife at the time of settlement; (d) on 19 July 1983 the Company replaced the initial trustees as the trustee of the Trust; (e) on 18 October 1984 the Trust Deed was varied to add a new clause 24 which granted an indemnity to the Company from trust assets for any liabilities incurred by the Company in execution of its duties as trustee ("First Variation Deed)"; (f) the First Variation Deed was executed by: (i) the Company; (ii) Mr Robison; and (iii) Joan Robison; (g) on 29 March 1991 and on 24 March 2008 further variations to the Trust Deed were purportedly executed ("Second Variation Deed" and "Third Variation Deed") respectively); (h) in summary: (i) the Second Variation Deed purports to vary the Trust Deed by including Mr Robison as a primary beneficiary and removing Joan Robison as an appointer and guardian. (ii) the Third Variation Deed purports to vary the Trust Deed by redefining the term "Vesting Day" from the date of death of the survivor of Mr Robison and Joan Robison to the date of Mr Robison's death. (i) the Second Variation Deed is executed by Raymond Patrick Rubino, the Company and Mr Robison; (j) the Third Variation Deed is executed by the Company and Mr Robison; (k) neither the Second Variation Deed nor the Third Variation Deed is executed by Joan Robison. 13 Following their appointment, the liquidators realised the assets of the Company, including the property situated at 23/43 Haines Street, North Melbourne and a share portfolio comprising shares or options in 28 companies. 14 On 8 July 2021 the liquidators called for proofs of debt, and in early September 2021 a distribution was made to all unsecured creditors, who received their claims in full, plus interest on their debts pursuant to section 563B of the Act. 15 As at 2 June 2022, the sum of $193,002.53 (i.e. the Surplus Funds) was held in the liquidation account.

[7]

Special leave under s 488(2) of the Act 18 Section 485(2) of the Act is concerned with the distribution of surplus assets in a court-ordered winding up. It provides that the Court must adjust the rights of the contributories among themselves and distribute any surplus among the persons entitled to it. Section 488(1) of the Act then permits the relevant rules or regulations to provide for the liquidator to perform specified powers and duties of the Court in respect of, amongst other things, the distribution of any surplus among the persons entitled to it, subject to the supervision of the Court. Rule 7.10 of the Federal Court (Corporations) Rules 2000 (Cth) ("the Corporations Rules") provides for a general delegation. 19 Section 488(2) of the Act operates to limit the scope of the delegation under s 488(1) of the Act and r 7.10 of the Corporations Rules. It provides that a liquidator may distribute a surplus only with the Court's special leave. The phrase "special leave" requires that an application be made to the Court, rather than the matter being dealt with as part of some other administrative process: see Maertin v Klaus Maertin Pty Ltd (in liq) (2009) 232 FLR 239 at [40] (Austin J). 20 It may be accepted that the requirement for special leave to be obtained serves two purposes. It is designed to ensure that there is in fact a surplus (i.e. that all creditor claims have been identified and paid in full). And it ensures that the correct relativities amongst the contributories have been taken into account. 21 In making an application to distribute a surplus a liquidator must comply with r 7.9 of the Corporations Rules, which provides that: (1) the affidavit in support of an application for special leave to distribute a surplus in relation to a company must state how the liquidator intends to distribute the surplus including the name and address of each person to whom the liquidator intends to distribute any part of the surplus; (2) at least 14 days before the date fixed for hearing of the application, the liquidator must publish a notice of the application in a daily newspaper circulating generally in the State or Territory where the company has its principal, or last known, place of business; (3) the notice must be in accordance with Form 15. 22 The Court may dispense with the requirements in r 7.9 of the Corporations Rules and make any order it considers just, pursuant to r 1.32 of the Federal Court Rules 2011 (Cth) ("the Rules"). 23 Regulation 5.6.71 of the Corporations Regulations 2001 (Cth) ("the Regulations") provides that: (1) an order in a winding up by the Court authorising the liquidator to distribute any surplus to a person entitled to it must, unless the Court otherwise directs, have annexed to it a schedule in accordance with Form 551; (2) the liquidator must send to each person to whom any surplus is distributed a notice in accordance with Form 552. 24 The Court may dispense with the requirements in reg 5.6.71 and make any order it considers just, particularly in a simple case where there is no need for adjustments of rights between contributories: see Re Hawden Property Group Pty Ltd (in liq) (ACN 003 528 345 (2018) 125 ACSR 355 at [63] (Gleeson JA); Re Sakr Bros Pty Ltd (in liq) [2019] FCA 547 at [26] (Griffiths J); Brealey v Shields [2009] NSWSC 1148 at [14] (Barrett J).

[8]

The application for directions in respect of the Trust 25 I accept that the Second Variation Deed and Third Variation Deed were not executed in accordance with clause 20 of the Trust Deed because they were not executed by both appointers (Alan Robison and Joan Robison). The liquidators have obtained legal advice in relation to this matter, and in light of that advice have sought directions from the Court that they would be justified and acting reasonably in proceeding on the basis that the Second Variation Deed and Third Variation Deed are ineffective. I accept that the liquidators would be so justified. 26 If the Second Variation Deed and Third Variation Deed are ineffective, then the liquidators seek a further direction that they would be justified and acting reasonably in executing two deeds: a proposed deed of decision appointing a vesting date and a proposed deed of decision to distribute trust fund. The proposed deeds: (a) have been prepared on the basis that the Second Variation Deed and Third Variation Deed are ineffective; (b) acknowledge that Joan Robison is the only surviving guardian of the Trust; and (c) would appoint a new Vesting Day under clause 1(5) of the Trust Deed, so as to enable the Surplus Funds to be distributed to the primary beneficiaries. 27 In essence, the purpose of the proposed deeds is to bring forward the Vesting Day so as to allow the Company to make a distribution to the primary beneficiaries: Jodie Robison and Emma Robison. 28 The applicants submit that it is appropriate to do so for the following reasons: (a) the Company was wound up in circumstances where there were no living directors or members to pass a resolution to appoint a new director; (b) the liquidators have now realised all of the trust assets and paid all liabilities such that there is a surplus available and it is desirable for it to be distributed so that the liquidation can be brought to an end; and (c) Joan Robison has been provided with the proposed deed of decision and has told Mr Spooner that she will execute those documents if it is necessary for her to do so to facilitate the distribution of the Surplus Funds to her children, Jodie and Emma Robison. 29 I accept that the liquidators would be justified and acting reasonably in executing the proposed deed of decision appointing a vesting date and a proposed deed of decision to distribute trust fund. 30 The liquidators seek a direction that they are justified and acting reasonably in distributing the Surplus Funds to Jodie and Emma Robison. For the reasons that follow I am satisfied that it is appropriate both to give special leave to distribute the Surplus Funds and for the final direction sought to be given.

Brealey v Shields

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