Dopking, in the matter of CHM Trading Pty Ltd [2024] FCA 1173

INTRODUCTION 1 The first plaintiff, Mr Stefan Dopking, is the liquidator of CHM Trading Pty Ltd (In Liquidation) ACN 628 555 813 (the second plaintiff, or the Company). The second plaintiff is a labour hire business involved in the provision of security services, such as security guards, and trades as "Brisbane Party Security" and "Brisbane Security Group". CHM Trading is the trustee of the CHM Security Trust ABN 15 275 980 317, which was registered on 3 September 2018. The primary beneficiary of the Trust is the director of CHM Trading, Ms Michelle Bowker. 2 On 12 June 2024, Mr Dopking was appointed liquidator of the Company on the basis of its failure to comply with a Creditors Statutory Demand for Payment of Debt dated 19 February 2024 in the sum of $819,365.70, issued by the Deputy Commissioner of Taxation. 3 By an originating application filed on 9 August 2024, the liquidator applies under s 90-15 of the Insolvency Practice Schedule (Corporations) (IPS), being Schedule 2 to the Corporations Act 2001 (Cth), s 420 of the Corporations Act, s 57 of the Federal Court of Australia Act 1976 (Cth), and rr 14.21 and 14.22 of the Federal Court Rules 2011 (Cth) for orders concerning the realisation of trust assets. 4 In broad terms, the liquidator seeks a declaration and orders in relation to CHM Trading and the Trust to the following effect: (1) that, pursuant to s 90-15 of the IPS, Mr Dopking, in his capacity as liquidator of the Company, is justified and acting reasonably in proceeding on the basis that: (a) the Company carried on business solely in its capacity as trustee of the Trust; and (b) all of the assets of the Company are properly characterised as property held by it as trustee of the Trust. (2) that, pursuant to s 57(1) of the Federal Court Act, Mr Dopking be appointed as receiver of the assets of the business of the Trust without security; (3) that pursuant to s 420 of the Corporations Act, Mr Dopking have in respect of the assets and business of the Trust the powers that a receiver has in respect of the assets and business of the Company; (4) that the costs and expenses and remuneration incurred by Mr Dopking in bringing this application and acting as the receiver of the assets and business of the Trust be paid in priority from the assets of the Trust; and (5) that the need for Mr Dopking to file a guarantee under rr 14.21 and 14.22 of the Rules be dispensed with. 5 The hearing of this application occurred before me on 8 October 2024 in my capacity as the Queensland Corporations List Judge. In support of the application, Mr Dopking relies on his affidavit dated 8 August 2024, an affidavit of service of Mr Darren Whelan dated 20 August 2024, and an affidavit of service of Ms Serena Kai Lee Tong dated 26 August 2024. Ms Bowker filed an appearance in this matter on 22 August 2024. By letter to the solicitors for the liquidator, Mills Oakley, from Ms Bowker's legal representatives, JCL Law Partners, dated 3 September 2024 (Exhibit 1), it has been indicated to the Court that Ms Bowker does not intend to appear. The affidavit of service of Ms Tong deposes to notice having been given, as is required, to the Australian Securities and Investments Commission (ASIC). No person has appeared today in opposition to the application.

BACKGROUND 6 The background facts are set out in Mr Dopking's affidavit. In summary, they are as follows. CHM Trading was incorporated on 3 September 2018, with its principal place of business being 43 Dayboro Road Petrie, Petrie, Queensland 4502, the residential address of Ms Bowker. As at the date of the liquidator's appointment, Ms Bowker held two ordinary shares in CHM Trading, valued at $2.00 each. 7 On 15 April 2024, an Originating Process to wind up CHM Trading in insolvency was filed by the Commissioner in the Federal Court of Australia, based upon a failure to comply with the Creditors Statutory Demand for Payment of Debt, in the sum of $819,365.70. On 12 June 2024, Mr Dopking was appointed liquidator of CHM Trading pursuant to orders of the Federal Court.

The liquidator's investigations 8 CHM Trading is the trustee of the Trust, registered on 3 September 2018. On 9 July 2024, Mr Dopking issued an Initial Report to Creditors of CHM Trading in which, among other things, he estimated that his total remuneration for the liquidation of CHM Trading to completion was $60,000 plus GST. 9 Based on his investigations to date, it appears to Mr Dopking that: (1) the Company operated as trustee of the Trust and did not operate in its own capacity. (2) the liabilities of the Company were incurred by the Company in its capacity as trustee of the Trust, as evidenced in part by the nature of the Debt owed to the Commissioner, being a running balance account deficit debt and superannuation guarantee charge. (3) assets held by the Company were held as trustee for the Trust as evidenced by the bank account statements of the Company in its capacity as trustee of the Trust. (4) the trust deed constituting the Trust provides, relevantly, at cl 16, that a corporate trustee is deemed to have resigned as trustee if it goes into liquidation, at which point the appointor of the trust deed will be the trustee until the appointor appoints another to be trustee. However, Exhibit 2, being a letter dated 22 August 2024 from JCL Law Partners to Mills Oakley, indicates at paragraph 10 that no new trustee has been appointed since the appointment of the liquidator. (5) clause 8 of the trust deed confers broad discretionary power on the trustee to deal with and exercise powers over the property of the Trust as if it were the sole, absolute and beneficial owner of the trust assets. 10 Further, Mr Dopking has identified that Ms Bowker was the sole director and company secretary of Loish Global Pty Ltd since its incorporation on 25 March 2013. Loish Global was wound up by order of the Federal Court on 5 October 2018. Nevertheless, since March 2020, Loish Global has maintained a loan account with CHM Trading, and based on the description of the transactions, Mr Dopking has formed the view that those transactions were in satisfaction of director penalty notices issued by the Commissioner to the director. Mr Dopking deposes that he has not been able to identify any commercial basis for CHM Trading to undertake the transactions, nor did the transactions discharge any liabilities owed by CHM Trading. The liquidator is of the view that Ms Bowker may have engaged in unreasonable director related transactions pursuant to s 588FDA of the Corporations Act. 11 As to the assets of the Trust, Mr Dopking has identified that the Trust appears to have cash at bank in the sum of $3,540,207.39, debtors in the sum of $1,029,746.20, and loan accounts totalling $272,232.47, with the following individuals or entities. The first, in the sum of $113,782.65, appears to be in respect of the director's daughter and former director and company secretary of CHM Trading; secondly, Loish Global, in the sum of $30,850; and thirdly, in respect of the director herself, in the sum of $127,599.82. 12 Mr Dopking has deposed to receiving payments totalling $3,023.90, as at 8 August 2024, from three debtors, and to reducing the amount owed by outstanding debtors through various accounting measures. Mr Dopking has also conducted investigations into a company named BSG Queensland, which appears to provide services that were previously provided by CHM Trading. Mr Dopking deposes that that Company was incorporated on 21 May 2024, and its sole director and company secretary is Ms Bowker. 13 Mr Dopking's investigations have revealed that: (1) BSG is trading as Brisbane Security Group (being one of the trading names of CHM Trading); (2) BSG is in the business of providing services much the same as those that were provided by CHM Trading, and (3) it is unclear from the invoices issued by BSG whether the services were those rendered by BSG or by CHM Trading. 14 Mr Dopking is, therefore, concerned that there may be a risk that the director may continue conduct to the detriment to creditors of CHM Trading.

The power to grant the orders sought 15 The Court has been referred to the decision of Moshinsky J in Re Cremin, Brimson Pty Ltd (in liq) [2019] FCA 1023. In that decision, Moshinsky J sets out the principles on which a court exercises its powers to make the orders currently sought by the liquidator in circumstances such as these, in particular at [48]-[51]. There is no need to restate those principles, which I gratefully adopt.

DISPOSITION 16 I am satisfied that, in order to protect and preserve the property of the assets of the Trust for the benefit of trust creditors, it is appropriate to make the orders sought by the liquidator. 17 I will therefore make orders in terms of those sought in the originating application. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Sarah C Derrington.