What happened
Simpkiss Pty Ltd carried on a franchise business trading as Bridgestone Select Dural from two premises. Its sole director was Damon Purkiss. On 7 December 2017 Shabnam Amirbeaggi was appointed voluntary administrator under s 436A of the Corporations Act 2001 (Cth). At that moment, by operation of cl 11(e) of the Purkiss Family Trust Deed dated 21 June 2016, the office of trustee vacated and Simpkiss became a bare trustee of the Trust. The Trust's beneficiaries were Mr Purkiss, his wife and their two children; Mr Purkiss was also the appointor.
The administrator immediately took control of the business, secured assets, attempted to sell the business as a going concern, and continued trading on a limited basis. When a going-concern sale proved impossible she decided to sell the stock, plant and equipment by public online auction conducted by Grays Online between 18 and 29 December 2017. The auction realised net proceeds of $218,372.42, a sum materially higher than the pre-appointment valuation. Throughout the process the administrator kept Mr Purkiss informed; he raised no objection. Rent liabilities were managed to permit the auction to occur before 31 December 2017.
At the time of the sale the administrator did not possess an executed copy of the Trust Deed. An unsigned copy had been provided on 6 December 2017, but an executed version was not supplied until 15 January 2018. Further inquiries with the ATO, the company's accountant (Peter Knight) and Mr Purkiss confirmed that Simpkiss had never traded in its own right, held no assets beneficially, and had incurred all liabilities in its trustee capacity. On 23 January 2018 creditors resolved that the company be wound up and Ms Amirbeaggi was appointed liquidator.
By early 2018 it had become clear that the December sale had occurred at a time when Simpkiss, as bare trustee, lacked power of sale. The liquidator therefore commenced proceedings seeking multiple forms of relief: a declaration under s 1318 of the Corporations Act that she had acted honestly and should be excused; an order under s 81 of the Trustee Act 1925 (NSW) deeming the sale to have been within power; her appointment as receiver and manager of the Trust under s 57 of the Federal Court of Australia Act 1976 (Cth); approval of remuneration for the administration, receivership and liquidation periods; and judicial directions as to the character of assets and liabilities and the order of distribution. All creditors, Mr and Mrs Purkiss and the Department of Jobs and Small Business were served. No person appeared to oppose the orders.
On 20 April 2018 Markovic J made the declaration, orders and directions sought. Written reasons were published on 19 February 2019. The reasons traverse the factual chronology (paras 2-21), identify the legal consequences flowing from the Trust Deed (paras 22-26), and then deal seriatim with the receiver appointment (paras 27-31), validation of the sale (paras 32-38), remuneration (paras 39-42), distribution directions (paras 43-44) and the s 1318 relief (paras 45-54).
Why the court decided this way
Markovic J began from the proposition that the Trust Deed operated automatically on 7 December 2017 to remove Simpkiss as trustee, leaving it as bare trustee (para 23). Citing Caterpillar Financial Australia Limited v Ovens Nominees Pty Ltd [2011] FCA 677 at [22]-[28], her Honour noted that a bare trustee's powers are limited to protecting the assets and preserving its equitable lien for indemnity; there is no power of sale (para 27). Consequently the December auction had been conducted without power (para 24). That factual conclusion necessitated each head of relief.
The appointment of the liquidator as receiver and manager under s 57(1) of the Federal Court of Australia Act was justified because it was "just or convenient" to protect trust property once the office of trustee had become vacant and no new trustee was proposed (para 30). The Court adopted Gleeson J's observation in Hosking that the "general ground" for such an appointment is preservation of property for those interested in it (para 29). The receiver was given adapted s 420 powers, expressly including investigation of transactions, demands for books and records, determination of claims, distribution to creditors after costs, and distribution of any surplus to beneficiaries (order 5). The need for a guarantee was dispensed with.
Validation of the past sale rested on s 81 of the Trustee Act 1925 (NSW). The Court accepted the plaintiffs' submissions that it remained incumbent on the bare trustee to realise assets to satisfy the right of indemnity, that clarification of title removed uncertainty, and that there had been no opposition from the appointor or beneficiaries (para 35). Markovic J held that s 81 confers a "very wide discretion" analogous to the Queensland provision considered in Pleash, in the matter of Suncoast Restoration Pty Ltd (in liq) (2013) 211 FCR 203 (para 37). Reeves J's reasoning in Suncoast that the power extends to bare trustees and permits retrospective validation was adopted. Because the sale had produced value above valuation, had been conducted on professional advice, minimised ongoing costs and enjoyed stakeholder acquiescence, it was expedient to deem the sale within power (order 2).
Remuneration was approved on the basis of detailed evidence of work performed, hourly rates, recoveries achieved and the resolutions passed by creditors at the second meeting (paras 40-41). The Court invoked its inherent jurisdiction for the pre-receivership periods and r 14.24 of the Federal Court Rules 2011 (Cth) for the receivership. All remuneration, costs and expenses were ordered to be paid from trust assets (order 6), reflecting the trustee's right of indemnity.
Directions on distribution followed the majority reasoning in Jones (Liquidator) v Matrix Partners Pty Ltd, in the matter of Killarnee Civil and Concrete Contractors Pty Ltd (in liq) (2018) 354 ALR 436. In a "straightforward case" of a company operating only as trustee of a single trust, the Corporations Act priority regime applies (para 44). Directions were therefore given that all assets were beneficially owned by the company as bare trustee subject to its lien, that all liabilities were trust liabilities, and that distribution should occur in the statutory order after payment of application costs, fixed administration remuneration of $88,857 (plus GST), and further capped remuneration and expenses (direction 12).
Finally, relief under s 1318(2) was granted because an objective basis existed to apprehend a future claim by a beneficiary, the sale could constitute a breach of trust, and the liquidator had acted honestly (paras 50-53). Honesty was established by the absence of knowledge of the executed Trust Deed at the time of sale, the steps taken to maximise value, prompt disclosure once the position was clarified, creditor endorsement and the lack of opposition from the appointor and major creditor. The declaration was made in broad terms covering any breaches, failures or omissions in dealing with trust property (declaration 1).
Before and after state of the law
Prior to the decisions in Jones and this matter, practitioners faced material uncertainty when a corporate trustee entered external administration. Trust deeds commonly contain clauses vacating the office of trustee upon insolvency events. Once a company becomes a bare trustee its powers of sale disappear, yet administrators must act urgently to preserve value. There was doubt whether a liquidator could rely on the trustee's right of indemnity without first obtaining court sanction, whether past sales could be regularised, and—most critically—whether the distribution of realised trust assets was governed by equitable tracing and trust priorities or by the statutory waterfall in s 556 of the Corporations Act.
The Full Court in Jones (applied at para 44 of this judgment) resolved the distribution question for "straightforward" single-trust cases: the Corporations Act regime applies. This judgment illustrates the practical machinery that follows. It confirms that s 57 of the Federal Court of Australia Act supplies a convenient route to receiver appointment (para 29), that s 81 of the Trustee Act supplies a flexible, retrospective validation power (paras 36-37), and that s 1318 remains available to protect honest insolvency practitioners who sell first and discover the trust structure later (paras 46-54). The pre-receivership remuneration approval rests on the Court's inherent jurisdiction (para 41), a position unchanged but now more clearly signposted.
After this decision, the law is clearer for New South Wales corporate trustees. Provided the liquidator can demonstrate expediency, honesty, value preservation and stakeholder non-opposition, the Court is likely to grant a bundled suite of orders that simultaneously validates past conduct, authorises future conduct, fixes remuneration on a time-cost capped basis, and directs distribution under the Corporations Act. The decision also underscores the importance of early inquiries into trust status; had the executed deed been available in December 2017 the receiver appointment could have preceded the sale.
Key passages with plain-English translation
Paragraph 23: "given the operation of the Trust Deed, it is apparent that Simpkiss is and has been since 7 December 2017 … a bare trustee of the Trust."
Plain English: The moment the administrator was appointed the company stopped being a full trustee and became a bare trustee with almost no powers.
Paragraph 28: "if a sale is necessary the liquidator or administrator must obtain a court order to sell or an order for the appointment of a receiver: Jones … at [44]."
Plain English: You cannot simply sell trust assets once the company is a bare trustee; you must ask a judge first.
Paragraph 37: "Section 81 of the Trustee Act … gives the Court a very wide discretion to confer upon a trustee the power to deal with trust property."
Plain English: The judge can look back and say the sale that should not have happened is nevertheless treated as valid if it was a sensible thing to do.
Paragraph 44: "in a straightforward case such as this one, where a company in liquidation operated as trustee of a single trust only, the regime in s 556 of the Corporations Act applies."
Plain English: In ordinary cases the money goes to creditors in the order set out in the Corporations Act, not according to pure trust law.
Paragraph 53: "Ms Amirbeaggi acted honestly. She undertook the sale … based on the information she had at the time which did not indicate that those assets were Trust assets. That only became apparent after the sale had been concluded. Upon becoming aware of that fact Ms Amirbeaggi acted diligently…"
Plain English: She did not know the legal problem when she sold the assets, she sold them to help creditors, and as soon as she learned the truth she came straight to Court. That is honest conduct.
These passages, read together, form a practical checklist for practitioners confronting similar facts.
What fact patterns trigger this precedent
The precedent is engaged whenever four elements coincide. First, the company must be the trustee of a trust whose deed contains an ipso facto vacancy clause triggered by administration or liquidation. Second, the insolvency practitioner must realise, or wish to realise, trust assets before the precise trust status has been confirmed by production of an executed deed and supporting financials. Third, the sale must have been conducted in good faith on professional advice to preserve value and minimise costs, without opposition from the director, appointor or major creditors. Fourth, the company must have no assets or liabilities outside the trust, presenting a "straightforward" single-trust case.
Typical triggers include franchise operations, trading trusts, family companies that have never lodged separate trust tax returns, and situations where the only documents initially available are unsigned deeds or accountant summaries. The precedent is not limited to New South Wales; the reasoning on receiver appointment and s 1318 relief is of general application, although the s 81 analysis is tied to the New South Wales Trustee Act.
The fact pattern does not require actual loss to beneficiaries; the mere patent breach arising from sale by a bare trustee is sufficient to create the "apprehension" of a claim that enlivens s 1318 (para 50). Conversely, if a new trustee has already been appointed or if there is active opposition from beneficiaries, the discretionary factors may shift.
How later courts have treated it
Although the reasons were delivered in 2019, the judgment sits squarely within the line of authority commenced by Caterpillar, developed in Suncoast, clarified by the Full Court in Jones, and applied in Hosking. Markovic J expressly followed Jones on the distribution question (para 44) and applied the Suncoast reasoning to both s 81 validation and s 1318 relief (paras 36-37, 46-53). The decision therefore operates as a single-judge working example of the principles articulated by the Full Court.
Subsequent single-judge decisions in the Corporations and Corporate Insolvency sub-area have treated the bundled relief granted here—retrospective validation, receiver appointment, capped remuneration orders, s 1318 declaration and Jones-distribution directions—as the standard suite for bare-trustee liquidations. The emphasis on "expediency" under s 81 and the objective test for apprehension of a claim under s 1318 have been cited as guiding the width of the respective discretions. The judgment's detailed recitation of service on all creditors and beneficiaries, coupled with the liberty-to-apply clauses (orders 9 and 10), has become a model for ensuring procedural fairness in ex parte or low-opposition applications.
The case also reinforces the practical utility of obtaining creditor resolutions approving remuneration before approaching the Court; Markovic J placed weight on those resolutions when fixing the $88,857 figure and the subsequent cap (para 41). Later courts have likewise treated such resolutions as strong but not conclusive evidence of reasonableness.
Still-open questions
Several narrower questions remain unresolved on the face of the reasons. First, the precise boundaries of "expedient" under s 81 where the sale price is below valuation or where a beneficiary can point to a materially better price obtainable by a properly appointed trustee. The judgment notes the sale exceeded valuation and enjoyed stakeholder acquiescence, but does not explore the outer limits.
Second, the interaction between the trustee's lien and employee entitlements under ss 560 and 561 of the Corporations Act where the trust assets are insufficient to meet both the liquidator's remuneration and priority employee claims. The directions assume sufficiency after costs; the position if a shortfall exists is not addressed.
Third, the extent to which a s 1318 declaration can extend to breaches that are not merely technical but involve positive misrepresentations to third parties. The declaration here was broadly framed to cover "any breaches, failures or omissions" (declaration 1), yet the underlying facts involved an honest mistake rather than deliberate concealment.
Fourth, the judgment assumes no new trustee will be appointed. Where the appointor actively seeks to appoint a replacement trustee after the liquidator has been appointed receiver, questions of comity between the receiver's powers and the new trustee's duties may require further elucidation.
Finally, the decision leaves open whether the same suite of orders would be granted if the trust deed lacked an automatic vacancy clause and the trustee remained technically in office. In such cases the liquidator might argue that the full trustee powers remain available, altering the need for receiver appointment or s 81 relief. Practitioners should therefore still obtain early legal advice on the exact terms of the trust instrument rather than assume the Simpkiss pathway will always apply.