Stimpson, as liquidator of Suncoast Pipelines Plant Hire Pty Ltd (In Liq) v Suncoast Pipelines Plant Hire Pty Ltd

GREENWOOD J: 1 This is an application made under s 57(1) of the Federal Court of Australia Act 1976 (Cth) for an order that the applicant be appointed as receiver without security over the property, assets and undertaking of Suncoast Pipelines Plant Hire Pty Ltd (In Liquidation) in its capacity as trustee of the Suncoast Pipelines Unit Trust by which it was constituted trustee by a Deed of Trust dated 16 June 2008. 2 The application also comprehends an application for an order that the applicant be appointed with powers under s 420 of the Corporations Act 2001 (Cth) (the "Act") as if the references in that provision to the corporation were references to the trust, together with the powers that a liquidator has in respect of a company pursuant to s 477 of the Act. 3 The application also seeks an order that the applicant, in his capacity as the liquidator and/or as receiver of the property of the trust, be entitled to remuneration in respect of work done as liquidator and/or receiver in respect of the subject matter set out at subparas (a) to (h) of proposed Order 4. 4 The background to the application is that, at a meeting of the members of Suncoast Pipelines Plant Hire Pty Ltd on 16 October 2020, a resolution was passed that the company be placed into liquidation and that David Michael Stimpson be appointed as liquidator of the company. Mr Stimpson has filed an affidavit in support of the application affirmed on 16 October 2020. In that affidavit, he attaches a copy of the Trust Deed, which established a Unit Trust, by which Suncoast Pipelines Plant Hire Pty Ltd acts as the trustee of the Trust. Clause 4.1(b) of the Trust Deed provides that the trustee will only be removed in one of the following circumstances: If it goes into liquidation (except bona fide for the purpose of amalgamation or reconstruction) or if a receiver is appointed of the undertaking of the Trustee or any part of the Trustee. 5 The company, of course, has now gone into liquidation. 6 No other trustee has yet been appointed to the role of trustee of the Unit Trust. 7 Section 477(2)(c) of the Act provides that: Subject to the section, a liquidator of a company may sell or otherwise dispose of, in any manner, all or any part of the property of the company. 8 A difficulty has arisen in the authorities in relation to the possible scope of that power in circumstances where the company in liquidation is the trustee of a trust and the entity is removed as the trustee of that trust, although it may continue to hold title to assets in its name as former trustee. Because there was some degree of uncertainty about the scope of the powers of the liquidator in those circumstances, applications have been made to resolve any possible dilemma in the scope of the powers by seeking an order that the company in liquidation be appointed as a receiver. 9 Section 57(1) of the Federal Court of Australia Act 1976 (Cth) provides that: The Court may, at any stage of a proceeding on such terms and conditions as the Court thinks fit, appoint a receiver by interlocutory order in any case in which it appears to the Court to be just or convenient so to do. 10 It is, of course, clear that the company in liquidation, when acting as trustee of the trust, is entitled to a right of indemnity out of the assets of the trust in respect of liabilities and obligations incurred in the management and administration of the trust. However, once the entity is displaced as trustee, a question might arise about whether it has power, in terms of s 477(2)(c), to sell assets which remain registered in its name, although as bare trustee. This dilemma was referred to by Moshinsky J in the matter of Aced Kang Investments Pty Ltd (in liq) in the matter of Aced Kang Investments Pty Ltd (in liq) [2017] FCA 476, in these terms at [12] and [13] of his Honour's reasons: 12 In circumstances where a company that is the trustee of a trust goes into liquidation, and thereupon ceases to be the trustee of the trust, does the liquidator's power of sale of the property of the company in s 477(2)(c) of the Corporations Act 2001 (Cth) extend to trust assets that remain registered in the company's name? The answer is uncertain on the present state of the authorities. There is no issue that, in such cases, the company holds the real property registered in its name as a bare trustee. Nor is there any issue that the company, as a former trustee, has a right of indemnity from the trust assets, secured by an equitable charge over those assets. However, a difference of opinion has emerged as to whether the power of sale of the property of the company in s 477(2)(c) extends to trust assets in such circumstances: see Apostolou (as trustee of the Vasiliou Family Trust) v VA Corporation of Australia Pty Ltd (2010) 77 ACSR 84 at [48]-[50] per Finkelstein J; Re South West Kitchens (WA) Pty Ltd (2014) 224 FCR 408 at [30]-[31] per McKerracher J; Re Stansfield DIY Wealth Pty Ltd (in liq) (2014) 291 FLR 17; 103 ACSR 401 at [28]-[30] per Brereton J. 13 Given the state of the authorities, in a number of cases in the category described above liquidators have applied for appointment as receiver and manager of the trust property: see, eg, Kite v Mooney, in the matter of Mooney's Contractors Pty Ltd (in liq) [2016] FCA 886. 11 His Honour cites Kite v Mooney, in the matter of Mooney's Contractors Pty Ltd (in liq) [2016] FCA 886. The uncertainty to which his Honour is referring was identified by Brereton J in Re Stansfield DIY Wealth Pty Limited (in liq) [2014] NSWSC 1484; (2014) 291 FLR 17. The particular paragraph where that uncertainty is mentioned is at [10] of his Honour's reasons. It is not necessary to quote that paragraph. The point made by Brereton J is identified by Moshinsky J in the observations I have already quoted. The solution to the problem is that the power conferred on the Court under s 57(1) of the Federal Court of Australia Act 1976 be exercised to make orders to appoint the applicant as a receiver in the terms proposed by the orders. 12 I am satisfied that it is appropriate to do so in this case. 13 Accordingly I make orders in terms of the draft orders as proposed. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Greenwood.