Federal Court of Australia

Johnstone, In the matter of McLean Property Management Pty Ltd (in liquidation) [2025] FCA 1003

ORDERS

THE COURT ORDERS THAT:

1.    A direction pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) at Schedule 2 of the Corporations Act 2001 (Cth) (Corporations Act) that the first and second plaintiffs in their capacities as joint and several liquidators of the third plaintiff (Liquidators) are justified and acting reasonably in proceeding on the basis that:

(a)    the third plaintiff carried on business solely in its capacity as trustee of the McLean Property Management Trust ABN 83 601 044 573 being the trust established by deed dated 2 June 2015 between Brendan Collins as settlor and the third plaintiff as trustee (the Trust);

(b)    all of the assets of the third plaintiff are properly characterised as property held by it as trustee of the Trust; and

(c)    the creditors of the third plaintiff are creditors whose debts have been incurred by the third plaintiff in its capacity as trustee of the Trust.

2.    An order pursuant to s 57(1) of the Federal Court of Australia Act 1976 (Cth), that the Liquidators be appointed nunc pro tunc without security as receivers and managers over the business and assets of the Trust (Receivers).

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

4.    The Receivers 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 pursuant to s 420 of the Corporations Act (other than ss 420(2)(s), (t), (u) and (w)) as if the reference in that section to “the corporation” were a reference to the Trust including, without limitation, the power to do all things necessary or convenient to:

(a)    carry on the business of the Trust;

(b)    employ any person in connection with the business of the Trust;

(c)    sell the assets of the Trust;

(d)    pay the creditors of the Trust from the proceeds of the assets, pursuant to the priorities prescribed under the provisions of the Corporations Act;

(e)    compromise any claim made against the third plaintiff in its capacity as trustee of the Trust or against any of the Trust property on any terms the Receivers see fit;

(f)    bring any claim against any party on behalf of the Trust; and

(g)    execute any tax returns, financial statements or other documents relating to the Trust.

5.    The remuneration, costs and disbursements (including legal costs) incurred by the first and second plaintiffs in their capacity as Liquidators and also and as the Receivers, including the costs of this application, be paid in priority from the Trust assets (including from any proceeds from the sale of the business of the Trust) on an indemnity basis.

6.    There be liberty to apply to:

(a)    the Receivers for further orders and/or directions including in relation to the Receivers’ remuneration; and

(b)    any person who can demonstrate sufficient interest to modify or discharge Orders 1 to 5 above on not less than 48 hours’ written notice to the Liquidators.

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

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    The first and second plaintiffs (the Liquidators) are the joint and several liquidators of the third plaintiff, McLean Property Management Pty Ltd (in liq) (the Company).

2    On 2 June 2015, the Company was appointed as trustee of the McLean Property Management Trust (the Trust) by a “Discretionary Trust Deed of Establishment” (the Deed). Amongst other things, the Deed identifies certain persons as “Appointors” who, by virtue of that position, hold “the power to appoint and remove the Trustee of the Trust” if, for example, they “so desire[]”.

3    In that context, the Liquidators, by an Originating Process filed 8 July 2025, seek appointment as receivers and managers of the assets of the Trust so that they can perform their duties without risk of the Company being removed as trustee without notice. Specifically, they seek orders:

(1)    that they are justified in proceeding upon the basis that all assets and liabilities of the Company are assets held, and liabilities incurred, in its capacity as trustee of the Trust (per s 90-15(1) of the Insolvency Practice Schedule (Corporations) (the IPSC));

(2)    that they be appointed as receivers and managers, without security and nunc pro tunc, over the business and assets of the Trust (per s 57 of the Federal Court Act 1976 (Cth) (the Federal Court Act));

(3)    that they be granted powers as receivers analogous to those which are specified in s 420 of Corporations Act 2001 (Cth) (the Corporations Act);

(4)    that they be entitled to remuneration as receivers in accordance with their rates charged as liquidators; and

(5)    that the Company is indemnified, and the Liquidators can pay their remuneration and expenses and the liabilities of the Company, from the property of the Trust.

Some short context

4    The Company was incorporated on 27 May 2015. As trustee of the Trust, it carried on business as a real estate agency in Brisbane (the Business). Two persons have served as its sole director and secretary, namely a Mr Patrick McClean (from 27 May 2015 to 24 July 2017) and his son, a Mr Lachlan McClean (from 24 July 2017 to 16 October 2024).

5    The Liquidators were appointed on 16 October 2024. In an affidavit filed 4 July 2025 (the July Affidavit), they depose to the view that the Company (a) did not operate any business in its own right; (b) holds any assets on trust for the Trust (with the primary asset being the Business); and (c) operated the business of the Trust in its capacity as trustee of the Trust. On the evidence that is before the Court, that understanding is the product of a careful and diligent investigation.

The Advances

6    The Business traded until October 2022, when its assets – including its rent roll, sales portfolio, telephone number, domain name and certain plant and equipment – were sold to a third party.

7    Thereafter, the Company advanced some (a) $24,000 to Mr Lachlan McClean; (b) $92,000 to a Ms Rossana Bernardo; and (c) $230,000 to Vavavoom Pty Ltd (Vavavoom), being an entity controlled by the son of Ms Bernardo (the Advances). It did so notwithstanding the existence of an unpaid superannuation guarantee charge of $227,094.23 (as at 31 December 2022).

Financial position of the Company

8    There are several unsecured creditors of the Company. Their claims total some $1.147m.

9    The sole asset of the Company, at 16 October 2024, was cash at bank in the sum of $24,165.87.

10    Several debts are owed to the Company by related entities. For instance, Mr Lachlan McClean, Ms Bernardo and Vavavoom owe some $46,000, $250,000 and $535,000 (respectively). These amounts incorporate the Advances that were made following the sale of the Business in 2022.

11    Mr Narayan, who appeared for the Liquidators at the hearing of the application on 8 August 2025, drew my attention to some disputation that may exist as to the nature of that indebtedness. Although it was entirely proper and appropriate for him to do so, the veracity of the claims and whether they should be pursued are matters for the Liquidators in the fullness of time.

12    The Liquidators have been unable to identify any “commercial basis” for the Advances. In the July Affidavit, they depose that the “only result” of such “was to reduce the cash at bank of [the Company]” and benefit the recipients – the director of the Company, Mr Lachlan McClean, his step-mother, Ms Bernardo, and an entity, Vavavoom, controlled by his step-brother.

13    As such, the Liquidators perceive there to be good claims which they may pursue. Those claims are, in effect, trust claims, in that they arise in light of the conduct or administration of the Trust by the Company. They may also comprise “voidable transactions” under the Corporations Act.

14    To pursue such claims (for the benefit of the creditors of the Company), the Liquidators must possess the power to realise and distribute the property of the Company, including its rights as trustee of the Trust. They need to be able to pursue those tasks without concern that, at any point in time, the ability of the Company to exercise the powers of a trustee will be withdrawn.

The Deed and that which the Liquidators do not know

15    The Deed relevantly establishes three things. First, Messrs McClean and Ms Bernardo are the “Appointors”; second, Mr Patrick McClean is the primary beneficiary of the Trust, along with various other persons; and third, the Company may be removed as trustee of the Trust if “the Appointor in its absolute discretion so desires”. Conversely, the Deed does not make provision for the disqualification of a corporate trustee upon the happening of a defined insolvency event.

16    The Liquidators have not been (a) provided with books or records pertaining to the replacement of the Company as trustee of the Trust; or (b) notified of the removal of the Company as trustee of the Trust. Indeed, they are unaware of the status of the Company as trustee and that raises, in light of the above, a legitimate concern for them in the due administration of the insolvency.

Some general propositions

17    The general principles that concern the rights of trustees to exoneration and recoupment of debts incurred in the course of the trusteeship are set out in the careful and thoughtful written outline of submissions produced by the solicitors for the Liquidators. They are as follows:

20.     A trustee is personally liable for liabilities incurred in the execution of the trust but is entitled to be indemnified out of the trust assets against those liabilities, whether by recoupment or exoneration (Re Jacks Corner Pty Ltd (in Liq) [2023] NSWSC 1340 [60]). The indemnity arises by contract, statute, or general law (Trustee Act 1958 (Vic) s 36(2); Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319, 324 – 325). It is secured by an equitable lien or charge on the trust assets, which takes priority over beneficiaries’ interests (Naaman v Jaken Properties Australia Pty Ltd (2025) 99 ALJR 295 [1], [13], [51]; Chief Commissioner of Stamp Duties v Buckle (1998) 192 CLR 226 [48]).

21.     Upon being ejected from office, a corporate trustee ceases to be trustee of the trust but continues to hold the assets as a bare trustee. The bare trustee’s duties, powers, and rights are limited to protecting the trust assets, and transferring the trust assets at the direction of the beneficiaries (Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 [23], [24], [26]). Even though a corporate trustee being wound up has been ejected from office, its right of indemnity and accompanying equitable lien over the trust assets endures (Jones v Matrix Partner Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) (2018) 260 FCR 310 [85], [142], [198]) and is secured by way of an equitable charge over those assets, for liabilities incurred by reason of its acting as trustee (In the matter of Aberdeen All Farm Pty Ltd (in liquidation) [2020] NSWSC 770 [47], citing Re Stansfield DIY Wealth Pty Ltd (in liq) [2014] NSWSC 1484).

22.     The right of exoneration only permits the company to realise assets of a trust to satisfy debts owed to creditors of that trust, and not to any other creditors. The Court must be satisfied that the appointment of a receiver will not deprive persons who are not creditors of the trust of their right to enforce liabilities against company assets. That is usually established by evidence indicating that the company did not carry on business in any capacity other than as trustee (Donnelly (Liquidator), in the matter of Dunjey Property Pty Ltd (in liq) [2023] FCA 1254 [17]).

23.     No issue arises as to the application of trust assets because all creditors are trust creditors and the proceeds from the exercise of the trustee’s right of exoneration will be distributed in accordance with the statutory priorities contained within the Act (Cremin, in the matter of Brimson Pty Ltd (in liq) [2019] FCA 1023 [51]). Likewise, where a company only operated as trustee, its liquidator may be paid from the trust assets their costs and expenses, whether for administering the trust assets or for “general liquidation work” (Re AAA Financial Intelligence Ltd (in liq) [2014] NSWSC 1004 [13]; Park & Muller (liquidators of LM Investment Management Ltd) v Whyte No 2 [2018] 2 Qd R 413 [93]; Re Martar Pty Ltd (In Liq) and Quinmar Pty Ltd (In Liq) [2024] VSC 239 [80]).

18    With respect to the powers conferred on the Court by s 90-15 of the IPSC, it suffices to observe that, on the petition of a person with a financial interest in the external administration of a company (amongst other things), the Court may make such orders as it thinks fit in relation to the administration: see ss 90-15(1), 90-15(2)(b), 90-20(1)(a) of the IPSC. Here, the Company is in external administration: s 5-15(c) of the IPSC; and the present application is pressed by the Liquidators who, by reason of ss 5-30(a)(iii) and 5-20(c) of the IPSC, hold a “financial interest” in that administration. As such, the power under s 90-15(1) is available to the Court.

19    It is plain that that power is broad. As was observed by the plaintiffs, a liquidator, desirous of appointment as receiver, will often seek directions under s 90-15(1) to confirm the capacity in which the relevant company held assets and incurred liabilities (citing Donnelly (Liquidator), in the matter of Dunjey Property Pty Ltd (in liq) [2023] FCA 1254; Morton (as liquidator of Best Golf Balls Pty Ltd (in liq)) v Best Golf Balls Pty Ltd (in liq) [2024] FCA 793; Holland, in the matter of BCN Culinary Arts Pty Ltd (in liq) [2024] FCA 752). That course is taken “to confirm that the trust assets might be applied towards debts and the costs of the winding up”. Such observations give colour to the first set of orders that are now pressed by the Liquidators.

20    They also give colour to the second limb of orders now pressed, by which the Liquidators seek appointment as receivers and managers over the business and assets of the Trust pursuant to s 57(1) of the Federal Court Act. By that section, the Court may appoint, on terms and conditions as it sees fit, a receiver in circumstances where it appears “just or convenient to do so”.

21    The discretion conferred by s 57(1) is broad and not confined to any closed class of case. For instance, it has been exercised where a company, in administration or liquidation, has been removed as trustee upon the happening of a disqualification event: see, eg, Rohrt, in the matter of Australian Cosmetic and Laser Clinic Pty Ltd (administrator appointed) [2025] FCA 797; Xu, in the matter of Sydney Carlingford Pty Ltd (Administrators Appointed) [2024] FCA 799. Were it otherwise, the relevant liquidator(s) or administrator(s) would be enjoined from causing the company, as trustee, to deal with any assets which it held in that capacity.

Consideration

22    The Liquidators have sought to establish that the Company operated solely as the trustee of the Trust (such that any debts and liabilities incurred, or assets acquired, were those of the Trust).

23    Reliance was placed upon the following considerations. First, the Deed identifies the Company to be the trustee of the Trust, and the Liquidators are not aware of any replacement of said trustee; certainly, they have not been given notice by any party that the Company did not operate in that manner. Second, the Trust maintained an Australian Business Number (ABN) (which was registered for GST purposes) whereas the Company did not, in its own right, maintain an ABN or business name and was not registered for GST. Third, the bank accounts of the Trust were maintained in the name of the Company as trustee of the Trust; the Liquidators have not identified any other bank accounts held solely in the Company’s name. Fourth, the Company incurred all tax liabilities as trustee of the Trust, and the Commissioner of Taxation (being the Company’s primary unsecured creditor) has not lodged a claim against the Company in its own right. Fifth, the Company only employed employees in its capacity as trustee of the Trust. Sixth, Mr Lachlan McClean confirmed, in his Report on Company Affairs and Property (dated 5 November 2024), that the Company traded in its capacity as trustee of the Trust. Seventh, the PPSR registration, which was in place at the date of the appointment of the Liquidators (but subsequently discharged), was registered against the Trust’s ABN.

24    As such, there is at least a reasonable basis to conclude that (a) the Business was carried on by the Company as the trustee of the Trust; (b) all income and revenue obtained by the Company was obtained in its capacity as trustee; (c) all debts and liabilities accrued to the Company as trustee; and, ultimately, (d) the Company only carried on business as trustee of the Trust.

25    That conclusion leads inexorably to the result that the Company is entitled to indemnities by operation of statute and the general law, which is, in this case, also conferred by the terms of the Deed. That right of indemnity lies in the assets of the Trust for any loss, damage or reward against the trustee arising from their role as trustee of the Trust.

26    The foregoing provides a sufficient, if not cogent, basis for the directions sought, both as to the existence of the Company’s rights of indemnity and the appointment of the Liquidators as the receivers and managers over the business and assets of the Trust. That being so, it is appropriate that the Liquidators be appointed as the receivers and managers over the Trust property under s 57(1) of the Federal Court Act; in turn, ancillary orders concerning the conferral of powers under the Corporations Act and their right to remuneration should be made. Such course will, in effect, permit the Liquidators to appropriately deal with the Trust assets and bring certainty to the administration.

27    Further directions are sought, pursuant to s 90-15 of the IPSC, that the Liquidators are justified and acting reasonably in proceeding upon the basis that (a) the Company carried on business solely in its capacity as trustee of the Trust; (b) all of the assets of the Company are properly characterised as property held by it as trustee of the Trust; and (c) the creditors of the Company are creditors whose debts have been incurred by the Company in its capacity as trustee. The evidence before the Court establishes that the Liquidators were, indeed, so justified and, accordingly, the orders sought should be made.

28    In the ordinary course, the Court appoints liquidators as receivers and managers without the need for the provision of security by way of a guarantee. There is no reason why that should not occur in this case. Accordingly, and for the reasons outlined above, it is appropriate to make the orders sought by the plaintiffs in the draft that has been provided to the Court.

Note

29    These are the amended and revised reasons for judgment given on 8 August 2025. Whilst the reasons given above refine and develop those that were delivered ex tempore, the substance of what was said on 8 August has not been changed nor has any other material change been made.

Associate:    

Dated:    22 August 2025