Hughes, in the matter of Substar Holdings Pty Ltd (in liquidation)

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 23 December 2020
• Neutral Citation: [2020] FCA 1863
• Date: 23 December 2020

FEDERAL COURT OF AUSTRALIA

Hughes, in the matter of Substar Holdings Pty Ltd (in liquidation) [2020] FCA 1863

File number:	WAD 243 of 2020
Judgment of:	MCKERRACHER J
Date of judgment:	23 December 2020
Catchwords:	CORPORATIONS – application by liquidators to be appointed as receivers of trust assets – where trust deed disqualifies the corporate trustee upon insolvency – where corporate trustee cannot realise its right to indemnity and exoneration as bare trustee – where judicial advice sought that the liquidators are justified in treating the property in the name of the company as property of the trust
Legislation:	Corporations Act 2001 (Cth) ss 420, 420(2)(s), 420(2)(t), 420(2)(u), 420(2)(w), 555, 556, 560, 561, Sch 2 ss 90-15, 90-20 Federal Court of Australia Act 1976 (Cth) s 57 Trustees Act 1962 (WA) s 7 Federal Court (Corporations) Rules 2000 (Cth) r 2.8 Federal Court Rules 2011 (Cth) rr 14.21, 14.22
Cases cited:	Amirbeaggi, in the matter of Simpkiss Pty Ltd (in liq) [2018] FCA 2121 Brereton, in the matter of MyHouse (Aust) Pty Limited (administrators appointed) [2020] FCA 610 Caterpillar Financial Australia Limited v Ovens Nominee Pty Ltd [2011] FCA 677 Cremin, in the matter of Brimson Pty Ltd (in liq) [2019] FCA 1023; (2019) 136 ACSR 649 Jones v Matrix Partners Pty Ltd (2018) 260 FCR 310; [2018] FCAFC 40 Krejci, in the matter of Union Standard International Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 1111 Staatz v Berry, in the matter of Wollumbin Horizons Pty Ltd (in liq) (No 3) [2019] FCA 924 Taylor (Liquidator) v CJ & KL Bond Super Pty Ltd (Trustee), in the matter of CJ & KL Bond Pty Ltd (in liq) [2018] FCA 1430
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	46
Date of last submission:	10 December 2020
Date of hearing:	Determined on the papers
Counsel for the Applicants:	Mr A McDonald
Solicitor for the Applicants:	Pragma Lawyers

ORDERS

		WAD 243 of 2020
IN THE MATTER OF SUBSTAR HOLDINGS PTY LTD (IN LIQUIDATION) ACN 154 916 711
BETWEEN:	BRIAN HUGHES AND DANIEL JOHANNES BREDENKAMP IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF SUBSTAR HOLDINGS PTY LTD ACN 154 916 711 First Applicant ; SUBSTAR HOLDINGS PT LTD (IN LIQUIDATION) ACN 154 916 711 Second Applicant

order made by:	MCKERRACHER J
DATE OF ORDER:	23 DECEMBER 2020

THE COURT ORDERS THAT:

Orders

1. Pursuant to s 57 of the Federal Court of Australia Act 1976 (Cth) the liquidators of Substar Holdings Pty Ltd (in Liq) (ACN 154 916 711) (Company), Bryan Hughes and Daniel Bredenkamp, Pitcher Partners, Level 11, 12-14 The Esplanade Perth in the State of Western Australia be appointed as receivers and managers (Receivers) of the property of the Taurus Investments Trust and any other property held by the Company on trust (Trust Property).

2. The Receivers be authorised to take possession of, preserve, maintain and sell the assets comprising the Trust Property.

3. The Receivers have all the powers that a receiver has in respect of the business and property of a company under s 420 of the Corporations Act 2001 (Cth) (other than in subs 420(2)(s), (t), (u) and (w)) as if the reference in that section to ‘the corporation’ were a reference to the Taurus Investments Trust or the Taurua Investments Trust including, without limitation, the power to do all things necessary or convenient to:

(a) investigate transactions made using funds derived from the Trust Property;

(b) demand the books and records of the Taurus Investments Trust or the Taurua Investments Trust from any person;

(c) determine and make payment of any claims against the Trust Property;

(d) in accordance with the priorities set out in s 556 of the Corporations Act, distribute the proceeds of the sale of the assets of the Taurus Investment Trust or the Taurua Investments Trust (after payment of the costs, expenses and remuneration of the Receivers in their capacity as the Receivers and as liquidators of the Company) to any creditors of the Taurus Investments Trust or the Taurua Investments Trust; and

(e) distribute any surplus thereafter to the beneficiaries of the Taurus Investments Trust or the Taurua Investments Trust.

4. The costs, expenses and remuneration of the Receivers in:

(a) acting as the liquidator of the Company; and

(b) acting as the Receivers of the assets and undertaking of the Trust;

be paid from the Trust Property.

5. The Receivers be allowed remuneration for the work undertaken, over the period from 4 August 2020 to 25 November 2020, for and relevant to the purpose of the liquidation of the Company, in the sum of $74,676.50 (plus GST).

6. The need for the Receivers to file a guarantee under r 14.21 and r 14.22 of the Federal Court Rules 2011 (Cth) be dispensed with.

7. The first applicants’ costs of this application be paid out of the Trust Property.

8. Liberty be granted to any person affected by these orders, including any creditor of the Company or the Taurus Investments Trust, the Taurua Investments Trust or any beneficiary of the Taurus Investments Trust or the Taurua Investments Trust, to apply to vary or set aside these orders on 7 business days’ notice to the applicants and to the Court by sending an email to Associate.McKerracherJ@fedcourt.gov.au.

9. Liberty be granted to the applicants to apply to the Court for orders discharging and releasing the Receivers on 7 business days’ notice by sending an email to Associate.McKerracherJ@fedcourt.gov.au.

Directions

10. The Receivers are justified in treating:

(a) all of the assets of the Taurus Investments Trust as assets beneficially held by the Company, as bare trustee, subject to any charge or lien that the Company has over the assets of the Taurus Investments Trust to secure the payment of any debts properly incurred by the Company as trustee; and

(b) all liabilities incurred by the Company in the conduct of its business as liabilities of the Taurus Investments Trust.

11. The Receivers, in their capacities as liquidators of the Company and Receivers are justified in distributing the Trust Property as follows:

(a) first, paying the amount of the applicants’ costs of this application as determined in accordance with Order 7 above;

(b) second, paying the amount of approximately $74,676.50 to the Receivers for their remuneration as determined in accordance with Order 5 above;

(c) third, paying the Receivers further expenses and remuneration in their capacity as liquidators of the Company and in their capacity as the Receivers, from 26 November 2020 to the conclusion of the receivership and liquidation of the Company, on a time basis at a reasonable fee according to the hours for which they, or any employee of Pitcher Partners, engage or have engaged in work necessary for and relevant to the purpose of the receivership or liquidation after 4 August 2020, such remuneration to be calculated at the standard hourly rates of Pitcher Partners from time to time for work of that nature, together with all reasonable out of pocket expenses; and

(d)...