IN THE MATTER OF AUSTRALIAN COSMETIC AND LASER CLINIC PTY LTD ACN 164 706 183 (ADMINISTRATOR APPOINTED)
[2]
RICHARD TRYGVE ROHRT IN HIS CAPACITY AS ADMINISTRATOR OF AUSTRALIAN COSMETIC AND LASER CLINIC PTY LTD ACN 164 706 183 (ADMINISTRATOR APPOINTED)
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An order pursuant to s 57 of the Federal Court Act 1976 (Cth), that Mr Richard Rohrt of Kennedy Ryan Advisory Level 4, 15 Queen Street, Melbourne Victoria be appointed, without security, as receiver and manager of all the property, assets and undertaking of the Australian and Cosmetic and Laser Clinic Unit Trust (the Trust).
The plaintiff have, in respect of the Trust's assets and undertaking, all of the powers provided by s 477 of the Corporations Act 2001 (Cth) as if the reference to the corporation therein were to the Trust, including, without limitation, the power to do all things necessary and convenient to effect the sale of the assets and undertaking of the Trust.
Pursuant to r 1.34 of the Federal Court Rules 2011 (Cth) (Rules) the requirement for the plaintiff as receiver to file a guarantee under rr 14.21 and 14.22 of the Rules be dispensed with.
The plaintiff, as receiver, is not to distribute the assets of the Trust to creditors or to beneficiaries without the direction of the Court.
The costs, expenses and remuneration, such remuneration to be calculated in accordance with the Pre Appointment Disclosure of Proposed Basis of Remuneration being Annexure C to the affidavit of Richard Trygve Rohrt filed 21 May 2025, incurred by the plaintiff in acting as receivers and managers of the Trust, be paid from the assets of the Trust and, if they be insufficient, from the assets of Australian Cosmetic and Laser Clinic Pty Ltd ACN 164 706 183 (Administrator Appointed) (Company).
Any creditor of the Company, or other person with a sufficient interest in the Trust, or who can demonstrate sufficient interest to vary the orders sought on the giving of reasonable notice to the plaintiffs, have liberty to apply to vary these Orders upon 3 days' notice to the plaintiffs.
The plaintiff is to notify ASIC and creditors, whose contact details are known to the plaintiff, of these Orders within three business days.
The plaintiff's costs of this application be costs in the winding up.
Mr Richard Rohrt (the Liquidator) is the liquidator of Australian Cosmetic and Laser Clinic Pty Ltd (the Company). By an originating process filed 21 May 2025, the Liquidator (albeit in his prior capacity as the voluntary administrator of the Company) seeks orders pursuant to s 57 of the Federal Court Act 1976 (Cth) (Federal Court Act) that he be appointed as receiver over the property, assets and undertaking of the Australian Cosmetic and Laser Clinic Unit Trust (the Trust). In short, the need for the present application is said to flow from the operation of a trust deed (the Deed) that, inter alia, appointed the Company as trustee of the Trust in July 2013.
[6]
The Company was incorporated on 8 July 2013. It has since acted as the trustee of the Trust and carried on business as the provider of cosmetic and laser clinic services in Victoria.
On 4 April 2025, Mr Rohrt was appointed as the administrator of the Company pursuant to s 436A of the Corporations Act 2001 (Cth) (Corporations Act). He has since undertaken various investigations into the affairs of the Company, including into, inter alia, its role and operations as trustee of the Trust. He has reviewed its books and records and conferred with its (sole) director and secretary (Mr Jim Kostakis), and conducted all appropriate searches in respect of it. During that process, the Liquidator was furnished with a copy of the Deed.
[7]
The Deed is of some hindrance to the administration of the Company and now, more accurately, its liquidation. I pause to mention the liquidation because today, 22 May 2025, Mr Rohrt was appointed as the liquidator of the Company, and he holds that position in the stead of his role as administrator. The Deed was entered into on 24 July 2013. It relevantly provides, at cl 39.2, for the disqualification of trustees of the Trust (here, the Company) in various circumstances, including where the trustee is insolvent. Clause 39.2 is drafted in the following terms:
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A Trustee is disqualified from holding office if:
39.2.1 being an individual, the Trustee:
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(a) becomes insolvent or of unsound mind; or
(b) does or suffers anything which would disqualify the Trustee from holding office as a director of a company under the Corporations Act 2001; or
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39.2.2 being a company:
(a) has had an order made or a resolution is passed for the winding up of the Trustee;
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(b) if the Trustee enters into any compromise with its creditors;
(c) a receiver or receiver and manager of any of its assets or undertaking or a provisional liquidator administrator, controller or similar officer is appointed; or
(d) has a mortgagee take possession of any of its assets or undertaking.
[12]
The operation of cl 39.2 is the source of much consternation for Mr Rohrt, particularly in light of the fact that (a) any trustee of the Trust will be "disqualified from holding office" if it enters administration (see cl 39.2.2(c)); (b) the trustee of the Trust, the Company, entered voluntary administration in April 2025; (c) there is no evidence that any new trustee has been appointed over the Trust; and (d) the Company appears only to have acted as a trustee (of the Trust). The latter conclusion is predicated upon several matters deposed to in the Liquidator's affidavit filed 21 May 2025. For instance, not only was Mr Rohrt informed of such by Mr Kostakis, but (a) the payments made by the Company to its employees; (b) the indebtedness of the Company with the Australian Taxation Office (being a major unsecured creditor in the sum of $59,268); (c) the lease agreement in respect of the principal place of business of the Company; and (d) the financial information and tax returns in respect of the business of the Company, were in the name of the Trust. Furthermore, there exist three Personal Property and Security Registrations which have the Trust as being the grantor and the National Australia Bank (NAB) as the secured party. All this is compelling evidence that the Company acted solely as the trustee of the Trust and that any debts incurred by it were incurred in such capacity.
In this context, Mr Rohrt is concerned that, as a result of his appointment(s), the Company no longer has the capacity to exercise the powers of a trustee of the Trust. That being so, he will not be in a position (as liquidator) to properly deal with the assets of the Trust, they no longer being, in effect, the Company's to deal with, and his observations there are entirely correct. The Company, as trustee, no doubt acquired rights of indemnity and exoneration from the Trust assets. It also has a lien in respect of those rights, although, necessarily, it would require an attendance at court and an action to exercise those rights: see, generally, Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd[2011] FCA 677 [26].
This concern is said to be heightened by the fact Mr Rohrt is currently in the midst of drafting an advertisement (and other associated documents) that calls for expressions of interest for the sale of the business of the Company. In a similar vein, counsel for the plaintiff, Mr Rodgers, also notes that (a) the business of the Company has been closed from 4 April 2025; (b) there are two entities who have expressed interest from time to time in such business, but "are waxing [and] waning given the closure"; and (c) the intellectual property of the business (being its customer list) has been compromised, though a quick sale will help mitigate any consequential loss.
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The present application is pressed under s 57 of the Federal Court Act. That section relevantly provides:
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(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.
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The legal principles in relation to the exercise of such power - namely, to appoint external controllers of companies (here, the Liquidator) as receivers of the assets of any trust of which the relevant company was trustee - are not in doubt. In short, and as was recently observed by Halley J in Lakomy, In the matter of Bennett Murada Pty Ltd[2024] FCA 245 at [18] (citing Freeman, in the matter of Blue Oasis Holdings Pty Ltd (in liquidation)[2018] FCA 822 [10] - [11]; see also QBE Insurance (Australia) Ltd v WA Metal Recycling Pty Ltd[2016] FCA 238 [13]), the power conferred by s 57 is "not confined to any closed class of case" and is designed to both "protect and preserve the property of the [relevant] trust for the benefit of those persons who are interested in the outcome of the proper administration of the assets and obligations in relation to them".
In the course of his submissions, Mr Rodgers drew the Court's attention to the exercise of the same power in respect of administrators and, in particular, to the decision of Jackman J in Xu, in the matter of Sydney Carlingford Pty Ltd (Administrators Appointed)[2024] FCA 799 (Xu).
That decision dealt with the appointment of administrators as receivers and managers of assets, and, in many respects, bears a close homogeny with the circumstances that are presently before the Court. Amongst other things, it identifies the width of the Court's power to appoint persons as receivers - for example, "to permit them to deal with the trust assets and to bring certainty to the process of administration" (Xu [10]). That is but a reflection of the breadth of the power.
In this case, where the administrator-turned-liquidator, Mr Rohrt, has formed the view that the Company did not operate other than as trustee, and it is likely the assets and proceeds of the Trust will be difficult to realise absent the order of a court, it is appropriate that an appointment be made naming him as the receiver of the assets of the Trust, in a bid to maximise any return to creditors. Mr Rodgers also pointed out in his written outline of submissions that orders of this nature are convenient to minimise the cost and duplication of work that would transpire were the appointment of the receiver of the assets of the Company be of another person. That is plainly correct, and does not, at this particular juncture, warrant any further exposition.
The Liquidator also seeks an order that he be appointed without the need for a guarantee, citing Morton (as liquidator of Best Golf Balls Pty Ltd (in liq)) v Best Golf Balls Pty Ltd (in liq)[2024] FCA 793 and Re Vines (as trustee of Bankrupt Estate of Mitchell)[2024] FCA 1276. Each of those decisions identify that it is now routinely the case that persons who are appointed receivers in circumstances such as the present are not usually required to provide security or a guarantee upon their appointment. It is appropriate to adopt that approach in the present case.
I should mention that all persons interested in the application were identified by Mr Rohrt and notified of the application. One entity in particular, the NAB, might have some interest. It is a secured creditor and has been given notice of these proceedings expressly. It, however, has not expressed any intention of attending today, and the evidence shows that the indebtedness to it is well secured by real property securities. It is understood that the NAB will be paid its full debt with some remaining amounts left over. It is also relevant that notice has been given to the unit holders of the Trust, both who support the application.
In those circumstances, it is appropriate to make the orders sought by Mr Rohrt today in the originating process, subject to an amendment to paragraph 2, which will elide "s 420 of the Corporations Act" and replace it with "s 477 of the Corporations Act".
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These are the amended and revised reasons for judgment given on 22 May 2025. Whilst the reasons given above refine and develop those that were delivered ex tempore, the substance of what was said on 22 May has not been changed nor has any other material change been made.
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I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington.