general principles
12 The Court may, at any stage of a proceeding, appoint a receiver on such terms and conditions as it thinks fit if it is just and convenient to do so: Federal Court of Australia Act 1976 (Cth) (FCA), s 57(1).
13 Rule 14.21 of the Federal Court Rules 2011 (Cth) provides that a party may apply to the Court for the appointment of a receiver to have the powers of a receiver and manager.
14 The principles relevant to an application for the appointment of a liquidator of a corporate trustee as a receiver of trust property were recently summarised in Re Hughes (in their capacity as joint and several liquidators of Substar Holdings Pty Ltd (in liq)) and Anor [2020] FCA 1863; (2020) 149 ACSR 185 by McKerracher J (at [26]-[29]):
[26] The liquidator of a corporate trustee is entitled to apply assets of the trust to satisfy debts properly incurred by the company in performance of its duties as trustee. The company as trustee has a right of indemnity or exoneration out of trust assets secured by an equitable lien or charge over those assets: Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 per Gordon J (at [14] and the authorities cited therein).
[27] Where a corporate trustee is removed by operation of a disqualification clause in the trust deed (here, cl 7.6), the company assumes the position of a bare trustee. Its powers are limited to protecting the trust assets. The right of indemnity or exoneration persists, albeit that the company's lien does not confer a power of sale to realise that right: Re Brereton (in their capacities as joint and several voluntary administrators of MyHouse (Aust) Pty Ltd (admins apptd)) [2020] FCA 610 per Farrell J (at [30]). In Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (in liq), Kane Retail Group Pty Ltd (in liq) and Teal Retail Group Pty Ltd (in liq)) (2019) 136 ACSR 649; [2019] FCA 1023 (Cremin), Moshinsky J summarised the current state of the law (at [49]):
There has, until recently, been a difference of opinion as to whether, in such circumstances, the liquidator's power to sell the "property of the company" in s 477(2)(c) of the Corporations Act permits him or her to sell trust assets: see Re Aced Kang Investments Pty Ltd (in liq) [2017] FCA 476 at [12]. It is now settled that the liquidator of an insolvent (former) corporate trustee cannot sell the trust's property without order of the Court, or by appointment of a receiver over the trust assets: see Jones & Matrix at [44] per Allsop CJ (Farrell J agreeing at [196]); Re Stansfield DIY Wealth Pty Ltd (in liq) (2014) 291 FLR 17; 103 ACSR 401 at [10]; Apostolou (as trustee of the VA Unit Trust & Vasiliou Family Trust) v VA Corporation of Aust Pty Ltd [2011] FCAFC 103 at [45]. The rationale for this position is that, on a proper understanding, the trust assets are not the "property of the company", but are instead trust property in which the corporate trustee has a proprietary interest by way of lien or charge to secure its right of exoneration: see Jones & Matrix at [89]. Thus, to the extent that the subject of a sale is the whole of a trust asset, rather than merely the company's lien or charge in respect of that asset, it is not authorised by the power of sale in s 477(2)(c). (emphasis added)
[28] In Amirbeaggi (in her capacity as liquidator of Simpkiss Pty Ltd (in liq)) v Simpkiss Pty Ltd (in liq) [2018] FCA 2121 (Amirbeaggi), Markovic J encountered similar facts to those in the present case and, consistent with the above passages from Cremin, considered the specific position with respect to the appointment of receivers (at [27]-[30]):
27 Upon the appointment of Ms Amirbeaggi as administrator, Simpkiss was removed as trustee of the Trust by operation of cl 11(e) of the Trust Deed and became a bare trustee. While it may have still held the assets, Simpkiss' powers in that capacity were limited to protecting the trust assets. It retained its right of indemnity or exoneration and its lien over the assets of the Trust and had the right to hold the assets but not to sell them: Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 at [22]-[28]….
28 In those circumstances, that is where upon the appointment of a liquidator or administrator the company becomes a bare trustee, 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 (in his capacity as liquidator of Killarnee Civil and Concrete Contractors Pty Ltd (in liq)) v Matrix Partners Pty Ltd (2018) 260 FCR 310; 354 ALR 436; 124 ACSR 568; [2018] FCAFC 40 at [44] per Allsop CJ (Jones).
29 Section 57(1) of the Federal Court Act 1976 (Cth) empowers the Court at any stage of a proceeding and on such terms and conditions as it thinks fit to appoint a receiver by interlocutory order in any case in which it appears to be just or convenient to do so. In Re Business Aptitude Pty Ltd (in liq) [2016] FCA 1438, a case similar to the present case, Gleeson J noted that the "general ground upon which the Court appoints a receiver is the protection or preservation of property for the benefit of those who have an interest in it": at [17].
30 Here, as noted above, the office of trustee of the Trust became vacant as a result of Ms Amirbeaggi's appointment as administrator. There was no suggestion that a new trustee would be appointed. It was thus necessary to appoint Ms Amirbeaggi as receiver and manager to permit her to further deal with any remaining Trust assets, bring certainty to the process of finalising the liquidation and secure Simpkiss' right of indemnity out of the assets of the Trust for the benefit of Simpkiss' (and the Trust's) creditors.
[29] Although in certain circumstances, particularly where all the trust property will be exhausted by the liabilities, it is appropriate for the liquidator to be given a discrete power of sale, the common course is to appoint the liquidators as receivers over all trust property for the purpose of realising the assets for the benefit of creditors: Cremin (at [50]) citing Amirbeaggi; Jones (in his capacity as liquidator of Killarnee Civil & Concrete Contractors Pty Ltd (in liq)) v Matrix Partners Pty Ltd (2018) 260 FCR 310; 354 ALR 436; 124 ACSR 568; [2018] FCAFC 40 per Siopis J (at [142]); Taylor (in his capacity as liquidator of CJ & KL Bond Super Pty Ltd (in liq)) v CJ & KL Bond Pty Ltd (as trustee for the CJ & KL Bond Superannuation Fund) [2018] FCA 1430; Staatz (as liquidator of Wollumbin Horizons Pty Ltd (in liq)) v Berry (No 3) (2019) 138 ACSR 231; [2019] FCA 924.
15 In the present context, where the Company was acting as the Trustee of an SMSF at the time the Liquidator was appointed, it is also relevant to have regard to the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act).
16 In Deputy Commissioner of Taxation, in the matter of The Mai Family Pty Ltd (in liq) v The Mai Family Pty Ltd (in liq) [2019] FCA 865; (2019) 136 ACSR 638, Besanko J encountered similar facts to those in the present case and considered the specific position with respect to the appointment of a receiver to trust property in circumstances where the corporate trustee was the trustee of a SMSF and in liquidation ([13]-[16]):
13 Section 120(2)(e) of the SIS Act provides that for the purposes of Pt 15 of the Act, a body corporate is a disqualified person if the body corporate has begun to be wound up. The defendant is a disqualified person for the purposes of Pt 15 of the SIS Act. Section 126K of the SIS Act provides that a person commits an offence if the person is a disqualified person and "is or acts as a trustee … of a superannuation entity".
14 In Re Stansfield DIY Wealth Pty Ltd (in liq) [2014] NSWSC 1484; (2014) 291 FLR 17 (Re Stansfield), Brereton J said (at [35]):
By operation of Superannuation Industry (Supervision) Act 1993, s 120(2)(e), upon the commencement of the winding up the [trustee] became a disqualified person for the purposes of that legislation and thereafter commits an offence under s 126K if it is or acts as trustee of a superannuation entity. However, nothing in the Act provides that upon becoming a disqualified person a trustee thereupon ceases to be trustee.
15 By reason of s 126K of the SIS Act, the defendant commits an offence, not only acting as a trustee, but also in being a trustee.
16 The SIS Act does not provide that upon becoming a disqualified person, the defendant ceases to be the trustee of the superannuation fund. If it acts as a trustee it commits an offence, and of concern to the liquidator in this case, is Brereton J's observation in Re Stansfield (at [36]) that a liquidator of a company which acts as a trustee may be liable as an accessory.
17 In Mai Family, the liquidator brought an application for directions or orders under s 90-15 of the Insolvency Practice Schedule (Corporations) (IPS), Schedule 2 to the Corporations Act 2001 (Cth) and for the appointment of a receiver under s 57(1) of the FCA. An application under s 90-15 of the IPS has not been made in the present case.
18 In Re Stansfield DIY Wealth Pty Ltd [2014] NSWSC 1484; (2014) 103 ACSR 401 Brereton J (as his Honour then was) concluded that (at 411 [38]):
…while the company in liquidation remains the trustee of the super fund, it commits an offence by doing so, and would more conspicuously do so if it exercised its power of sale. If, as would be prudent, it resigned as trustee, it would have no power of sale.
19 The SIS Act imposes obligations in relation to the conduct of self-managed superannuation funds including a duty to notify the Commissioner of Taxation when the fund ceases to be a self-managed fund: SIS Act, ss 106A, 17A and 17B. The Commissioner may then take action including issuing notices (s 253A) and accepting and enforcing undertakings (s 262A).
20 In Re Stansfield the Court required the receiver to deliver a report to the Commissioner at the conclusion of the realisation of the trust assets and payment of costs and expenses, to facilitate any further regulatory steps which might prove necessary as a consequence of the corporate trustee's liquidation.