McCabe as Syndic for the Victor Chang Cardiac Research Institute Ltd (ACN 068 363 235) v The Baltins Superannuation Fund

Circumstances Prompting the Plaintiff's Trustee Act, ss 70 and 71 Application

1. If due to the Company's deregistration the Fund were to be without a trustee, the situation would ordinarily be rectified either by the appointment of a new trustee or trustees or by the reinstatement of the Company under Corporations Act, s 601AH. The plaintiff's principal application is that because of complications in relation to the reinstatement of the Company, two new trustees, the plaintiff, Mr Terrence McCabe and Ms Janina Ruth Jancu, should be appointed as trustees in place of the Company. Mr McCabe is a senior solicitor. Ms Jancu is the Chief Operating Officer of the Institute.
2. But the Court does not accept the plaintiff's assumption that the Fund is presently without a trustee. When the Company was dissolved in 2015, the statutory regime applicable under the Corporations Act appears to make the Commonwealth the trustee of the Fund: Corporations Act, s 601 AD (1A). Subject to its obligations as trustee of the Fund, from the date of the Company's deregistration the Commonwealth has all the powers of an owner over property vested in it: Corporations Act, s 601 AD (3A). The position is that upon deregistration the Fund's property vests in the Commonwealth but impressed with the trusts on which the Fund is held: Danich Pty Ltd Re Cenco Holdings Pty Ltd [2005] NSWSC 293; (2005) 53 ASCR 484 ("Cenco") at [21] - [22].
3. When the Commonwealth acts as a trustee in such circumstances, ASIC may perform all the duties and exercise all the powers of the Commonwealth in respect of property held on trust by the Commonwealth: Australian Securities and Investments Commission Act 2001 (Cth) ("ASIC Act"), s 8(6). Here therefore ASIC was appropriately served on behalf of the Commonwealth with notice of these proceedings and has not appeared to oppose the relief sought.
4. But a question arises as to whether the Commonwealth has actually assumed the office of trustee of the Fund in the events that have occurred. In Cenco Barrett J (at [24]) suggests that the Commonwealth may need to positively exercise a power under Corporations Act, s 601AE (1) (a) "to continue to act as trustee" before it actually becomes a trustee of property held on trust by a deregistered company. Apart from ASIC receiving some unclaimed moneys (see below), the evidence does not disclose that the Commonwealth has exercised any such power or duty in this case. So if Barrett J's statement is accepted the Commonwealth may not be the trustee.
5. But some other judges have taken different views about the correctness of these statements of Barrett J in Cenco: see for example Mullins J in Thorne Developments Pty Ltd v Thorne [2015] QSC 156 ("Thorne") at [24] - [38]. The Court does not have to decide the merits of these differences of view on this application. But the differences of view at least throw up uncertainty about whether the Commonwealth is the trustee of the Fund and thereby add impetus to the arguments that the Court should simply exercise its powers under the Trustee Act ss 70, 71 to appoint a replacement trustee and vest the trust property of the Fund in that trustee.
6. The Commonwealth may under Corporations Act, s 601AE (1) (b) "apply to the Court for the appointment of a new trustee". Nothing in the Corporations Act suggests that only the Commonwealth may make such an application. In Cenco Barrett J (at [39]) makes clear that the Corporations Act does not prevent beneficiaries exercising their rights under the Trustee Act ss 70, 71 to appoint a replacement trustee and vest the trust property of the Fund in that trustee.
7. It is expedient here to appoint a new trustee under Trustee Act, ss 70 and make a vesting order. The current governing rules of the Fund were adopted in 2008 ("the 2008 Rules"). The 2008 Rules, clause 9.4 provide for the appointment, removal and replacement of trustees with the unanimous agreement of the members of the Fund. But the deceased was the only member of the Fund. She never married. She had no children. No other members of the Fund have been identified. But the 2008 Rules, clause 2.12.1 provide that a person ceases to be a Member when the person dies. There is no provision in the 2008 Rules conferring upon the legal personal representative of the estate of a deceased member the power to appoint a trustee in place of the Member. There is thus a gap in the 2008 Rules preventing the appointment of replacement trustees in this situation.
8. These circumstances attract the Court's jurisdiction under Trustee Act, s 70 which allows for the appointment of new trustees "wherever it is expedient to appoint a new trustee or new trustees and it is inexpedient, difficult or impracticable to do so without the assistance of the court": Trustee Act, s 70(2). The Trustee Act does not provide for an out of court appointment of a new trustee in circumstances such as the present, involving as it does the deregistration of an existing corporate trustee: Trustee Act, s 6(2). For the reasons briefly discussed in the next section there are complications associated with reinstatement of the Company as trustee. For that reason, in my view it is both expedient to appoint new trustees and inexpedient, difficult or impracticable to do so without the Court's assistance.
9. The Court's broad power to make appointments in these circumstances is extensively discussed in J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis) at [1546] to [1572]. In my view this is a classic case to engage this jurisdiction. The plaintiff (see below) has satisfied the formal requirements for the appointment of Mr McCabe and Ms Jancu. The Court will accordingly make the appointment.
10. The Court will also make a vesting order in favour of the new trustees under Trustee Act, s 71. This jurisdiction is attracted because the Court is appointing new trustees and the previous trustee being a corporation was dissolved: Trustee Act s 71(2)(a) and (h).

Difficulties in Reinstating the Former Trustee.

1. Mr Finnane drew the Court's attention to a potential impediment to the deceased's estate applying for re-registration of the Company. In Cenco, Barrett J held that a beneficiary of the Trust, the trustee of which has been deregistered, would not ordinarily be "a person aggrieved" for the purposes of applying for re-registration under Corporations Act, s 601AH. His Honour reasoned that the beneficiary lacks the status of "a person aggrieved for the purposes of s 601AH because deregistration of the trustee corporation does not diminish the rights of the beneficiary in relation to the trust property, which continue to subsist against the Commonwealth: Cenco at [31]-[39].
2. That there may be arguable difficulty in having the Company reinstated, further supports the conclusion that the Court should take the course here of appointing new trustees rather than ordering the reinstatement of the company. The appointment of new trustees avoids the Cenco "person aggrieved" issue. The appointment of new trustees avoids the cost, expense and inconvenience of re-instating the company.
3. The SIS Act permits the appointment of non-corporate trustees to an SMSF with one member, such as the Fund, but the member must be one of the trustees for the Fund for it to be a compliant SMSF: SIS Act, s 17A(2)(b). Here the member is deceased. It may well be arguable on behalf of the Fund in future exchanges with the regulator, that the plaintiff as the deceased's legal personal representative can represent the member for the purposes of s17A(2): see SIS Act, s 17A(3). But if that is not possible, it is difficult to see how the Company could be a trustee, because the member must also be one of its directors for the Fund to be a compliant SMSF: SIS Act, s 17A(2)(a). If the Fund becomes non-compliant for some other reason and needs to continue in some other form, or to be wound up, the trustees will to make that decision.
4. But at least the bare possibility exists that the new trustees may need to return to the issue of the reinstatement of the Company. As the Court is already familiar with the affairs of the Fund through this application, liberty to apply will be granted, in case such an issue were to arise.
5. In the circumstances, the alternative relief sought in the Amended Summons need not be further considered. It is not necessary to make orders to reinstate the Company to the register of companies. Nor is it necessary to give further judicial advice.

The Unclaimed Monies

1. The plaintiff discovered two sums of unclaimed monies of the Company, with a total value of $90,764.35, in October 2017. The monies are a sum of $4,140 and another sum of $86,624.35, both of which have been paid to ASIC.
2. The sum of $4,140 appears to have been paid to ASIC as the unclaimed consideration from a takeover of shares held by the Fund. The payment occurred pursuant to the provisions of Corporations Act, ss 668A and 668B. Under the latter provision a company is required to transfer unclaimed consideration to ASIC, which is then required to deal with it under Corporations Act, Part 9.7. ASIC has an obligation under Corporations Act, s 1341(1) to pay any unclaimed monies to a person who claims to be entitled to that amount, if ASIC is satisfied that the person is entitled.
3. The other sum of unclaimed money is $86,624.35, which was paid to ASIC in consequence of the deregistration of the Company. Pursuant to Corporations Act, s 601AD the property held on trust immediately before deregistration vests in the Commonwealth.
4. These unclaimed monies are all trust property and constitute the property of the Fund. Correspondence with ASIC suggests that to avoid uncertainty these funds should be specifically identified in the orders to be made, which they are.

The Formal Requirements for Appointment

1. The plaintiff has satisfied the formal requirements for the appointment of two trustees as claimed. Uniform Civil Procedure Rules 2005, r 55.6 ("UCPR") stipulates the required evidence on an application for the appointment of a trustee. UCPR, r 55.6 provides as follows: "55.6 Evidence generally The evidence in support of a Part 3 application must show each of the following: (a) the nature of the trusts still subsisting, (b) the nature and value of the trust property, (c) whether any and, if so, what part of the trust property is subject to the Real Property Act 1900, (d) the person beneficially entitled, (e) the fitness of the proposed new trustee, (f) the consent of the proposed new trustee."
2. The plaintiff's compliance with the components of UCPR, r 55.6 may be briefly recorded. The evidence shows that the Fund is an SMSF established under a trust deed dated 19 June 2007. The trust property comprises the shares and bank accounts listed fully in the evidence and recorded in summary form in the orders below but which do not need to be detailed further in this judgment. So far as the plaintiff is aware, none of the Fund's trust property is subject to the Real Property Act 1900.
3. A search to identify the person or persons beneficially entitled to the Fund shows the following. The 2008 Rules contemplate the possibility of monies held in the Fund being distributed in the event of the death of a Member in accordance with a binding death benefit nomination to Designated Beneficiaries or other Dependents of the Member or to the estate of the member.
4. The plaintiff has searched through and considered the papers and records of the deceased and made enquiries of her accountant. Despite those inquiries, no binding death benefit nomination has been found. Moreover, the evidence discloses that the deceased did not marry and had no children and no dependents. The Court accepts the plaintiff's contention that the proper inference in these circumstances is that there is no real likelihood of there being any person with a beneficial interest in the Fund apart from the estate of the deceased.
5. Each proposed trustee has consented to being appointed (Exhibit A for Mr McCabe and Exhibit B for Ms Jancu) and the evidence establishes that his and her consents were respectively executed before persons known to them.
6. Finally, the plaintiff has established the fitness of the two proposed new trustees. Mr Andrew Lacy has sworn an affidavit of fitness of Mr McCabe. Mr Lacey is a solicitor of this Court who deposes to Mr McCabe being a solicitor personally known to Mr Lacey for a period of 17 years. Mr McCabe has been in practice as a solicitor for 40 years and is the principal solicitor at McCabe Lawyers. Mr Lacey knows him to be person of good credit and good standing those good character repute and business habits make him suitable to act as a trustee of the fund.
7. Mr Kiran Narsey, the chief financial officer of the Institute, has affirmed an affidavit of fitness of Ms Jancu. Ms Jancu has been personally known to Mr Narsey for a period of four years. She is the Chief operating Officer of the Institute and has been for four years. I accept Mr Narsey's evidence that Ms Jancu is a person of good credit and good character, repute and business habits and a suitable person to act as a trustee of the Fund.

Conclusions and Orders

1. For the reasons given, the Court makes the following orders: 1. Order pursuant to Trustee Act 1925, s 70 that Terence Sean McCabe of Level 38, 19 Martin Place, Sydney and Janina Jancu of 405 Liverpool Street, Darlinghurst, be appointed trustees of the Fund in place of the deregistered former trustee, I Baltins Pty Limited (ACN 126 014 079) ("the Former Trustee"). 2. Order pursuant to Trustee Act, s 71, that the property now subject to the Fund vest in the said Terence Sean McCabe and Janina Jancu, including but not limited to: 1. The monies in Commonwealth Bank Account No. 06 2589 50268973; 2. The monies in Commonwealth Bank Account No. 06 2589 50275081; 3. The monies in Commonwealth Bank Account No. 06 2589 10703168; 4. The shares in AWE Limited; 5. The shares in Bannerman Resources Limited 6. The shares in Diatreme Resources Limited; 7. The shares in Icon Energy Limited; 8. The shares in Matsa Resources Limited; 9. The shares in Mirvac Group Limited; 10. The shares in Oz Minerals Limited; 11. The shares in Peako Limited; 12. The shares in Rio Tinto Limited; 13. The shares in Sabre Resources Limited; 14. The shares in Tap Oil Limited; 15. All unclaimed monies of the Former Trustee, including but not limited to. 1. The unclaimed monies of the Former Trustee being the monies with original transaction number 394826065243; 2. The unclaimed monies of the Former Trustee from ROC Oil Company Limited and/or Transcendent resources Limited being the monies with original transaction number 086194935443; and 3. Any further monies formerly held by the Former Trustee being now unclaimed monies within the meaning of the Banking Act 1959 (Cth) s 69(7); and 1. Any other assets held subject to the Fund, which is known as "The Baltins Superannuation Fund". 1. Order that the plaintiff's costs of this application be paid out of the assets of the Fund; and 2. Grant liberty to apply.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 December 2017