In the matter of Antpet Pty Ltd (in liq) [2024] NSWSC 155

FACTUAL BACKGROUND

1. Antpet was ordered to be wound up in insolvency on 29 September 2021 and Mr Natkunarajah was appointed as the liquidator of Antpet on that occasion.
2. Antpet held a property in Moorebank, New South Wales (Property) as bare trustee for the trustees of the Zamattia Superannuation Fund (Super Fund), which is a self-managed superannuation fund.
3. In addition to holding the Property on bare trust, Antpet received income from leasing the Property solely for the benefit of the Super Fund.
4. The Security Trust Deed dated 18 November 2010 (Trust Deed) sets out the terms by which Antpet held the Property as bare trustee. Amongst the terms contained in the Trust Deed is a term that, to the maximum extent permitted by law, Antpet had no right to indemnification with respect to the Property. It also does not contain a term conferring on Antpet any power of sale with respect to the Property, nor does it contain any clause providing for the termination of Antpet's appointment as trustee upon the appointment of a liquidator.

EVIDENCE

1. On the application, the following affidavits were read: 1. affidavit of Nicarson Natkunarajah sworn 20 December 2023; 2. affidavit of Toni Murtanovski sworn 15 February 2024; and 3. affidavit of Nicarson Natkunarajah sworn 16 February 2024.
2. The evidence reveals that whilst performing its function as trustee of the Property, Antpet has been incurring liabilities, including strata levies, taxation liabilities relating to rental income from the Property which are owed to the Australian Taxation Office (ATO), and council rates relating to the Property.
3. The evidence also reveals that there are, at present, two outstanding income tax returns that need to be lodged, which may cause an increase in those liabilities.
4. As I mentioned earlier, NAB is the secured creditor that holds a registered mortgage over the Property and the secured liability in respect of the registered mortgage.
5. Mr Natkunarajah has identified in the evidence that a rollover request has been lodged by the first defendant, who is a beneficiary of the Super Fund. He has also given evidence that he is unsure whether that request represents a competing claim to the proceeds of the sale of the Property.
6. In addition, the first defendant has recently lodged a proof of debt, which appears to have been incurred on behalf of the Super Fund. As a result, there is a potential dispute over what is to be done with whatever funds might exist upon the sale of the Property, and it is proposed by the plaintiffs that those funds, after the payment of the liabilities to which I will come to in due course, should be paid into court.

LEGAL PRINCIPLES

1. The legal principles for the reimbursement of a trustee, including a bare trustee, for expenses that have been properly incurred, where the trustee also has the benefit of an equitable lien to enforce that right of indemnity, are well-settled.
2. The question of the power of a liquidator of a trustee company to realise trust assets to pay creditors of the liquidated trustee company are also now relatively well-settled.
3. The principles that are applicable to this application are those that are set out in In the matter of Stansfield DIY Wealth Pty Ltd (in liq) (2014) 291 FLR 17; [2014] NSWSC 1484, which is a decision of Brereton J, who said at [33]: Accordingly, if the company has ceased to be trustee of the super fund, it can no longer exercise the trustee's power of sale under the trust instrument or at general law (because it is not the trustee), and Corporations Act, s 477(2)(c), does not empower the liquidator to sell assets held by the company on trust. In such circumstances, the appropriate remedy for a liquidator is to seek appointment as a receiver of the trust assets, by way of enforcement of the (former) trustee's right of indemnity.
4. That decision has been applied in subsequent cases including in Cremin, in the matter of Brimson Pty Ltd (in liq) (2019) 136 ACSR 649; [2019] FCA 1023 by Moshinsky J at [49] and also in Sprowles, in the matter of Triumph N Triumph Pty Limited (in liq) [2019] FCA 1461 by Yates J at [50].

CONSIDERATION

1. I am satisfied that, upon the application of those legal principles, this is an appropriate case in which the orders sought should be made.
2. It is appropriate in the present case that there be an order appointing a receiver for the purpose of selling the Property and distributing the sale proceeds amongst the creditors.
3. At the present time, it has been made clear that the liquidator does not yet seek orders for the payment of his remuneration, given that there is going to be further work to be done on his appointment as the receiver of the Property.
4. In light of that, it is appropriate that there be an order entitling the liquidator as receiver to retain the sum of $250,000 on account of current and future remuneration expenses and also for the discharge of any liability to the ATO that is likely to arise upon the lodgement of tax returns which have not yet been lodged.
5. In light of the fact that there are issues concerning the way in which the amount of funds remaining after sale of the Property should be paid to those who may be making a claim to them, it is also appropriate that an order be made that any such funds be paid into court.
6. I am also satisfied that it is appropriate to make an order that the second plaintiff's costs of the application be paid out of the trust assets.

CONCLUSION

1. In those circumstances, I propose to make the orders in accordance with the short minutes of order, in keeping with the reasons that I have just given.

ORDERS

1. The court makes the following orders: 1. The second plaintiff, Nicarson Natkunarajah, be appointed without security as receiver of the property held at 3/15 Cunningham Place, Moorebank, NSW 2170 (the Trust Property) held by the first plaintiff as bare trustee in favour of the RSF Trustee (the Trust). 2. The second plaintiff has in respect of the Trust Property the powers that a liquidator has in respect of the property of a company under the Corporations Act 2001 (Cth) s 477(2). 3. A declaration that the first plaintiff is entitled to be indemnified for those liabilities properly incurred as trustee of the Trust. 4. The second plaintiff to retain $250,000 from any net proceeds of the sale of the Trust Property (following the payment of secured liabilities payable to the NAB, including enforcement expenses, as identified at order 6.a. below) to discharge any liability to the ATO that may arise from the lodgement of outstanding income tax returns, as well as for the remuneration of the second plaintiff as liquidator of the first plaintiff and receiver appointed over the Trust Property and associated disbursements as may be approved. 5. The second plaintiff may pay from the assets of the trust the debts described at Schedule A, together with any interest accrued thereon. 6. The remainder of the funds from the sale of the Trust Property following: 1. payment of amounts owing to the NAB (including enforcement expenses) as secured creditor over the Trust Property under its mortgage, 2. those payments at orders 4 and 5 above, and be paid into court. 1. An order that subject to any further order of the court, the second plaintiff be paid or retain out of the Trust Assets, the second plaintiff's costs and disbursements of this application.

Schedule A Creditor Sum Australian Taxation Office $6,375.30 Independent Unit Management Pty Ltd $61,175.63 Liverpool City Council $7,663.60

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