Federal Court of Australia

Di Carlo v Rossi Group Pty Ltd (In Liq) [2020] FCA 1337

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to section 57 of the Federal Court of Australia Act 1976 (Cth) and section 63 of the Trustee Act 1958 (Vic), and without prejudice to the rights of any prior secured creditors of the Respondent, the Applicants be appointed as receivers, without security, over the property, assets and undertaking of The Rossi Childrens Trust constituted by the trust deed dated 24 March 2003 referred to in the affidavit of Renee Sarah Di Carlo sworn on 13 July 2020 and filed in this proceeding.

2.    The Applicants be appointed with the powers provided by section 420 of the Corporations Act 2001 (Cth) as if the reference therein to "the corporation" were to The Rossi Childrens Trust together with the powers that a liquidator has in respect of property of a company (in their role as legal owner and trustee) pursuant to section 477(2) of the Corporations Act 2001 (Cth).

3.    The need for the Applicants, as receivers, to file a guarantee under Rules 14.21 and 14.22 of the Federal Court Rules 2011 (Cth) be dispensed with.

4.    The Applicants, in their capacity as liquidators of the Respondent and/or as receivers of the property of The Rossi Childrens Trust, are entitled to be paid their costs, expenses and reasonable remuneration from the assets of The Rossi Childrens Trust.

5.    Pursuant to section 90-15 of the Schedule 2 of the Corporations Act 2001 (Cth), the Applicants’ costs of the application be their costs in the winding up and be paid from the assets of The Rossi Childrens Trust in priority to the creditors of The Rossi Childrens Trust.

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

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from transcript)

ANASTASSIOU J:

1    Before the Court is an application by the applicants (the Liquidators) to be appointed as receivers of The Rossi Childrens Trust. The application is made pursuant to section 90-15 of schedule 2 of the Corporations Act 2001 (Cth), section 1318 of the Corporations Act, section 57 of the Federal Court of Australia Act 1976 (Cth), section 63 and 67 of the Trustee Act 1958 (Vic), and section 79 of the Judiciary Act 1901 (Cth).

2    This application arises because the Deed of Settlement of Discretionary Trust dated 24 March 2003 (trust deed) provides in clause 16.3 that upon a corporate trustee of the Trust going into liquidation, the office of the trustee shall ipso facto be determined and vacated. The liquidators were appointed by orders of the Supreme Court of Victoria on 15 January 2020, and as a result of the operation of clause 16.3 of the trust deed, the liquidators stand in the shoes of the company as mere bare trustees. It is appropriate, therefore, that the liquidators be appointed as receivers, and in these circumstances, that their appointment be made without the requirement of any security being given.

3    The liquidators have given notice to all unsecured creditors of this application, and there has been no objection raised to the application. The application is not opposed by one of the major secured creditors, namely Westpac, and is consented to by the other secured creditor, the National Australia Bank. I am satisfied that the requirements for the appointment of the liquidator as a receiver, in this context, have been satisfied following the matters identified as relevant in Mutton (Liquidator), in the matter of Balsub Pty Ltd (in liquidation) [2020] FCA 741; 145 ACSR 342 at [25], namely:

(a)    the relevant company became a bare trustee of the assets of the trust upon the appointment of the liquidator;

(b)    the relevant company had acted only as trustee of the trust and in no other capacity;

(c)    all assets owned by the relevant company were held by it as trustee of the trust and all liabilities incurred by it were incurred in its capacity as trustee of the trust; and

(d)    no new trustee had been appointed.

4    Westpac, as an interested party, has rightly pointed out that the appointment of a receiver, effectively at the suit of an unsecured creditor, should be made on terms expressly to the effect that the appointment is without prejudice to the rights of any prior secured creditor: see National Australia Bank Limited v Bond Brewing Holdings Limited [1991] 1 VR 386 at 553. I accept the correctness of the decision of the Supreme Court of Victoria and propose to follow it accordingly. The appointment of the liquidator will be on terms that it is without prejudice to the rights of prior secured creditors.

Disposition

5    For those reasons, I have made the orders proposed by the applicants, save for an order relieving the liquidator from liability on the basis that, if necessary, the liquidators are not prevented from seeking to rely on section 1318 of the Corporations Act and s 67 of the Trustee Act.

Associate:

Dated:    5 October 2020