FEDERAL COURT OF AUSTRALIA

Hosking (Liquidator); In the Matter of Business Aptitude Pty Ltd (In Liq) [2017] FCA 1417

ORDERS

THE COURT ORDERS THAT:

1.    Philip Raymond Hosking (in his capacity as liquidator of Business Aptitude Pty Ltd (ACN 003 378 658) (In Liquidation) (the Company)) (the Receiver) forthwith be discharged and released from acting as receiver and manager of the Crosby Family Trust (the Trust).

2.    Leave be granted to the Receiver to dispense with the requirement to pass his final accounts for acting as receiver and manager of the Trust.

3.    The Receiver be authorised to retain possession of all documents of the Trust in his capacity as liquidator of the Company.

4.    The costs of the Interlocutory Process filed by the plaintiff on 19 September 2017 be paid out of the assets of the Trust or, if there are insufficient assets in the Trust, out of the assets of the Company.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

FOSTER J:

1    On 4 November 2016, a judge of this Court appointed the plaintiff as receiver and manager without security over the property, assets and undertaking of the Crosby Family Trust (the Trust). Later, on 30 November 2016, her Honour published Reasons explaining why she had made that order (Hosking; In the Matter of Business Aptitude Pty Ltd (In Liq) (2016) 34 ACLR 16-044; [2016] FCA 1438).

2    After the plaintiff took up his function as receiver and manager of the Trust, he set about realising the assets of the Trust as he was required to do. The evidence discloses that he took the following steps:

(1)    He wrote to National Australia Bank Limited requesting it to close the Trust’s bank account and to transfer to an account controlled by him the balance remaining in that account which, at the time, was an amount of $31.98.

(2)    He obtained a refund of certain overpaid fees from IP Australia.

(3)    He arranged for the sale of two motor vehicles, realising total net proceeds of $9,949.43 plus GST.

(4)    He sold certain items of IT equipment, realising a total net proceeds of $385.58 plus GST.

(5)    He sold 50 shares in a company called “What Product Pty Limited”, realising an amount of $2,200.00.

(6)    He arranged for the transfer of certain intellectual property for the total net proceeds of approximately $3,000.

(7)    He recovered a total amount of $3,173.00 from trade debtors.

(8)    He investigated and arranged for the reconciliation, by the director of the corporation which is the trustee of the Trust, of the beneficiary loan accounts of the Trust. He then sought repayment of the loans from each of the beneficiaries and subsequently formed the view that none of the beneficiary loans were recoverable.

3    To date, the plaintiff has received an amount of $9,922.20 plus GST on account of his remuneration for acting as receiver and manager of the Trust. That amount was arrived at and paid in accordance with Order 4 made by the Court on 4 November 2016.

4    The remaining funds realised in the manner which I have described at [2] above have been transferred to the trustee, pursuant to its right of indemnity against the Trust assets.

5    The plaintiff has formed the view that there are no creditors of the Trust other than the trustee itself.

6    The plaintiff has endeavoured to bring to the attention of all beneficiaries of the Trust the fact that the present application is before the Court today. Included within the evidence tendered today is the affidavit of Mr Blackie sworn yesterday. Mr Blackie is the plaintiff ’s solicitor. In his affidavit, Mr Blackie sets out in detail the steps taken by him to bring to the attention of the beneficiaries of the Trust the fact that the present application was being made and the responses which he received to his communications. It is not necessary to traverse that material in detail, save that it is relevant to note that only one of the beneficiaries indicated any likelihood of opposition to the order which the plaintiff seeks. That beneficiary is Mrs Dorothy Crosby, who indicated to Mr Blackie in emails in October and November 2017 that she was likely to oppose the present application unless and until she received certain documents and information from him relevant to the plaintiff’s conduct as receiver and manager of the Trust.

7    It appears that Mrs Crosby may be seeking this material for purposes unconnected with the present application. I say this because, as Mr Blackie pointed out to Mrs Crosby in his email of last Friday (24 November 2017), Mrs Crosby had sought similar documentation as she is now seeking from the plaintiff in the present matter in connection with another proceeding, the detail of which is referred to in that email. Whether this is so or not does not matter as Mrs Crosby has not appeared this morning nor has any other beneficiary attended at Court to oppose the orders which the plaintiff seeks.

8    In a written submission filed with the Court, the plaintiff made (inter alia) the following submissions:

There is authority for the proposition that a court appointed receiver may be discharged where the object of the appointment has been achieved: Lunn v Savage [2006] NSWSC 240 per Campbell J at [27]; Kerr, in the matter of Angel’s Castle Pre-School Pty Ltd (in liq) (No 2) [2012] FCA 57 per Jacobson J at [2], [4].

The object of Mr Hosking’s appointment as receiver and manager of the Trust was to realise the assets of the Trust and apply the proceeds of the same to discharge the liabilities of the Company incurred solely in its capacity as trustee: Hosking, in the matter of Business Aptitude Pty Ltd (in liquidation) [2016] FCA 1438 per Gleeson J at [23].

Mr Hosking submits that this object has been achieved by reason of the matters set out at paragraphs 5(a) to (g) above and respectfully requests that the Court exercise its power to discharge him as receiver and manager of the Trust.

In respect of the passing of final accounts, courts have dispensed with the requirement of passing final accounts in cases where the cost of complying with the formal procedure exceeds any benefit that may accrue from doing so: Ide v Ide [2004] NSWSC 751 at [sic] Young CJ in Eq at [24] and [26]; Kerr, in the matter of Angel's Castle Pre-School Pty Ltd (in liq) (No 2) [2012] FCA 57 per Jacobson J at [5].

Mr Hosking has sold all of the assets of the Trust and the net proceeds of the sale of those assets (less legal expenses and Mr Hosking’s receiver’s remuneration and expenses) have been transferred to the sole creditor of the Trust, being the Company pursuant to its right of indemnity against the Trust.

There is currently an amount of $280 held in the Trust’s receivership bank account and a further amount of $3,000 is held in the liquidation account. There are currently insufficient funds recovered in the liquidation of the Company to declare a dividend to any class of creditor in the liquidation (page 6 of the Report).

In the circumstances, Mr Hosking respectfully submits that adhering to the requirement to pass final accounts will incur additional costs, which will outweigh any benefit that would accrue from the formal passing of accounts.

9    These submissions correctly state the law and appropriately assist the Court to apply the law to the facts of the present case.

10    In the circumstances, I am satisfied that this is an appropriate case for the Court to make the orders sought by the plaintiff.

11    Accordingly, I make the orders set out in the Interlocutory Process filed by the plaintiff on 19 September 2017.

Dated:    6 December 2017