FEDERAL COURT OF AUSTRALIA

Scott, in the matter of ACN 129 328 490 Pty Ltd (in liquidation) (formerly Solar Australia Pty Ltd) [2019] FCA 314

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 57(1) of the Federal Court of Australia Act 1976 (Cth), Mr Andrew John Scott (Receiver), an official liquidator, be appointed without security as receiver and manager over the business and assets of the Solar Newcastle Unit Trust (Trust).

2.    The Receiver have, in respect of the business and assets of the Trust, 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 ss 420(2)(s), (t), (u) and (w)) as if the reference in that section to “the corporation” were a reference to the Trust.

3.    The costs, expenses and remuneration incurred by Mr Scott in acting as the Receiver of the Trust, including the costs of this application, be paid from the assets of the Trust.

4.    The parties and any person with a sufficient interest under the Trust be granted liberty to apply on 24 hours’ notice.

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

6.    Pursuant to section 601AH(3) of the Corporations Act 2001 (Cth):

(a)    Mr Andrew John Scott be reappointed as liquidator of ACN 129 328 490 Pty Ltd (formerly Solar Australia Pty Ltd) (the Company) on and from 9 November 2018 as if the Company had not been deregistered and all acts done by him from that date to the date of these orders as liquidator be validated to the extent it is necessary to do so; and

(b)    all acts done by the Company during the period from 12 October 2018 to 9 November 2018, being the period in which the Company was deregistered, be validated to the extent it is necessary to do so.

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

REASONS FOR JUDGMENT

(Revised from transcript)

YATES J:

1    The first plaintiff, Mr Scott, was appointed liquidator of the second plaintiff, ACN 129 328 490 Pty Ltd (in liquidation) (the company), on 4 July 2018. He replaced Mr Chad Rapsey, who had been appointed as liquidator of the company on 3 May 2018 in a creditors’ voluntary winding up. Through what appears to have been an administrative error, not of Mr Scott’s causing, but of the former liquidator’s causing, the company was deregistered by the Australian Securities and Investments Commission (ASIC) on 12 October 2018. On 17 October 2018, Mr Scott sought reinstatement of the company’s registration by ASIC, and this was effected on 9 November 2018. However, this did not mean that his appointment as liquidator was “reinstated”: Re ERB International Pty Ltd (deregistered) (2014) 98 ACSR 124 at [40]. The plaintiffs now move the Court, pursuant to s 601AH(3) of the Corporations Act 2001 (Cth) (the Corporations Act), for an order that Mr Scott be reappointed as liquidator of the company, as if the company had not been deregistered, an order that all acts done by him in his capacity as liquidator of the company from 9 November 2018 until today’s date be validated, and a similar order that all acts done by the company during the period 12 October 2018 to 9 November 2018 be validated to the extent necessary.

2    The plaintiffs also seek an order pursuant to s 57 of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) that Mr Scott be appointed, without security, as receiver and manager of the business and assets of the Solar Newcastle Unit Trust (the Trust). This is because, since 21 January 2008, the company has been the trustee of the Trust and clause 17.11(b) of the Trust Deed provides:

The office of trustee is determined and vacated:

(a)     …

(b)     if the Trustee, being a company, enters into liquidation, whether compulsory or voluntary (not being a voluntary liquidation for the purposes of amalgamation or reconstruction), or have an administrator, receiver or official manager or receiver and manager appointed.

3    The effect of this clause was that, upon Mr Rapsey’s earlier appointment as liquidator of the company, the company was disqualified from office as the trustee of the Trust and, having not been replaced, holds the trust property as a bare trustee. As the cases show, there is doubt that a liquidator’s powers under s 477 of the Corporations Act can be exercised over trust property where the company in liquidation is the trustee: see Tonks, in the matter of PWG Holdings Pty Ltd (in liquidation) [2017] FCA 246 at [11] and the cases there cited. The procedure that has been used to overcome any gap in the liquidator’s powers in this regard is to appoint a liquidator as the receiver and manager of the trust property. In the present case, the evidence is that, from Mr Scott’s review of the company’s records, the company only ever traded in its capacity as trustee of the Trust, and all of its assets are held beneficially for the Trust.

4    I am satisfied that both orders are appropriate. This is particularly so given that there appears to be a contest between the company and another company, Solar & Batteries Australia Pty Ltd (in liquidation) (SABA), which traded from the same premises as the company, as to the ownership of certain assets. A number of these assets have been sold recently and Mr Scott wishes to investigate whether the assets involved were, and remained, assets of the Trust. He has expressed concern as to whether, as liquidator, he would have the power to recover, realise or deal with any of the assets of the Trust, including engaging in any dealings with SABA’s liquidator in relation thereto.

5    There are two matters of concern which I expressed when this matter first came before me on 6 March 2019 as Commercial and Corporations Duty Judge. First, the company’s deregistration was known by the plaintiff on 17 October 2018 and while he took immediate steps to seek reinstatement of its registration, he took no steps, until 6 March 2019, to seek his reappointment as liquidator. His original affidavit in support of the present application provided no explanation for the delay in approaching the Court to seek his reappointment as liquidator.

6    Mr Scott has now filed a further affidavit in which he deposes that, on being informed by ASIC on 9 November 2018 that the company’s registration had been reinstated, he understood ASIC’s statement that the company “is taken to have continued in existence as if it had not been deregistered” to mean that his appointment as liquidator on 4 July 2018 had not ceased. He said that he remained of that view until around 26 February 2019 when he received advice from his solicitors that he would be required to seek an order from the Court to validate his actions as liquidator during the period the company was deregistered.

7    Secondly, the fact that the company was trustee of the Trust must have been apparent from at least 11 May 2018 when the former liquidator, Mr Rapsey, was provided with a copy of the Trust Deed. As I have noted, Mr Scott was appointed liquidator on 4 July 2018. In his original affidavit in support, no explanation was provided for the delay in approaching the Court to fill the perceived gap in his powers in respect of trust property. In his further affidavit, Mr Scott has now explained that, upon his appointment as liquidator, the former liquidator (Mr Rapsey) did not alert him to the existence of the Trust. Further, the record keeping practices of the company’s officers has been such that it was not immediately clear to Mr Scott what assets were assets of the company, SABA or the Trust—indeed, whether the Trust had any assets at all. Mr Scott says that, in the period 17 September 2018 to 17 January 2019, he was unable to obtain from SABA’s liquidator full access to a virtual desktop on which the company’s and, it seems, SABA’s management accounting system was to be found, in order to progress his investigation.

8    Mr Scott also says that the uncertainty around the assets of the Company and, similarly, the Trust, was compounded by the uncertainty arising from a purported sale of assets by the Company to SABA, said to have been effected on 1 July 2017. By way of further information, Mr Scott also says that, on 20 February 2019, he met with the liquidator of SABA and discussed the possible division of the proceeds of sale of a number of the disputed assets. I note that, following the sale of the disputed assets, the net proceeds were deposited in a trust account maintained by SABA’s solicitors.

9    Mr Scott’s further affidavit provides some, but not complete, justification for the delay to which I have referred. I cannot stress enough the need to move with due expedition in approaching the Court when circumstances, such as those in the present case, have arisen. That said, it is nevertheless appropriate that the orders sought should now be made to provide for Mr Scott’s reappointment as liquidator, to regularise the acts he has purported to take in that capacity since the company’s deregistration, and to provide him with the powers he might need in dealing with the property of the Trust.

10    The two directors of the company, John Dalby and Adam John Dalby (Adam Dalby), who also appear to hold the units issued in the Trust, have been served with the originating process, Mr Scott’s affidavit in support (other than the exhibit referred to therein), and a copy of the Court’s orders made on 6 March 2019.

11    In the case of Adam Dalby, I made orders on 6 March 2019 dispensing with the requirements of r 2.7 of the Federal Court (Corporations) Rules 2000, thereby abridging time for service on him. I also made orders providing for an alternative to personal service on him. I made these orders because the evidence then before me showed that, despite numerous attempts, Mr Scott had been unsuccessful in effecting personal service on Adam Dalby in other proceedings relating to the liquidation of the company, in circumstances which indicated that he was avoiding personal service. These orders have been complied with. Neither John Dalby nor Adam Dalby sought to appear at the hearing this morning.

12    Orders as sought will be made.

Associate:    

Dated:    15 March 2019