Federal Court of Australia

Cathro, in the matter of Stormon Industries Pty Ltd (in liq) [2025] FCA 1604

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to section 57 of the Federal Court of Australia Act 1976 (Cth), the liquidators of Stormon Industries Pty Ltd (In Liquidation) ACN 010 737 265 (Company), Simon John Cathro and Christopher Stephen Bergin of Cathro & Partners Pty Ltd, Level 13, 333-339 George Street, Sydney NSW 2000, be appointed as joint and several receivers and managers (Receivers) (without security) of the property of the D & G Stormon Family Discretionary Trust 93 110 761 084 (D&G Stormon Trust) and any other property held by the Company on trust (Trust Property).

2.    The Receivers have all of the powers that receivers have in respect of the business and property of a company under section 420 of the Corporations Act 2001 (Cth) (Corporations Act) (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 'D&G Stormon Trust' including, without limitation:

(a)    to do all things necessary and convenient to effect the sale of the Trust Property;

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

(c)    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 D&G Stormon Trust (after payment of the costs, expenses and remuneration of the Receiver in his capacity as the Receiver and as liquidators of the Company) to any creditors of the D&G Stormon Trust; and

(d)    distribute any surplus thereafter to the beneficiaries of the D&G Stormon Trust.

3.    Pursuant to rule 1.34 of the Federal Court Rules 2011 (Cth) (Rules), the requirement for the applicants as receivers to file a guarantee under rules 14.21 and 14.22 of the Rules be dispensed with.

4.    The applicants' costs of this application be paid out of the Trust Property on an indemnity basis.

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

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

(b)    acting as the Receivers of the assets and undertakings of the D&G Stormon Trust,

be paid from the Trust Property.

6.    Any creditor of the Company, or other person with a sufficient interest in the D&G Stormon Trust, or who can demonstrate sufficient interest to vary the orders sought on the giving of reasonable notice to the applicants, have liberty to apply to vary these orders upon 3 days’ notice to the applicants.

7.    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 the chambers of Acting Chief Justice Collier.

8.    The applicant notify ASIC and creditors, whose contact details are known to the applicants of these orders within three business days.

THE COURT DIRECTS THAT:

9.    Pursuant to s 90-15 of Schedule 2 to the Corporations Act, that the Receivers are justified in treating:

(a)    all of the assets of the D&G Stormon 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 D&G Stormon Trust to secure the payment of any debts properly incurred by the Company as trustee; and

(b)    all of the debts and liabilities incurred by the Company in the conduct of its business as liabilities of the D&G Stormon Trust.

10.    The Receivers, in their capacity as liquidators of the Company and Receivers of the D&G Stormon Trust 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 5 above;

(b)    second, paying the Receivers' further expenses and remuneration in their capacity as joint and several liquidators of the Company and in their capacity joint and several Receivers of the D&G Stormon Trust, from 9 May 2025 to the conclusion of the receivership and liquidation of the Company, on a time basis according to the hours for which they, or any employee of Cathro & Partners Pty Ltd, engage or have engaged in work necessary for and relevant to the purpose of the receivership or liquidation after 9 May 2025, such remuneration to be calculated at the standard hourly rates of Cathro & Partners Pty Ltd from time to time for work of that nature, together with all reasonable out of pocket expenses and subject to Court approval; and

(c)    third, distributing the balance, after payment of the amounts in (a) - (c) above, to the admitted creditors of the Company in accordance with the priority regime established by ss 555, 556, 560 and 561 of the Corporations Act and distribute any surplus thereafter to the beneficiaries of the D&G Stormon Trust.

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

REASONS FOR JUDGMENT

COLLIER ACJ:

1    Before the Court is an application brought by Simon John Cathro and Christopher Stephen Bergin (together, Liquidators), in their capacity as joint and several liquidators of Stormon Industries Pty Ltd (in liq) (the Company). The primary relief sought by the Liquidators is that they be appointed as joint and several receivers and managers of the property of the D & G Stormon Family Discretionary Trust ABN 93 110 761 084 and any other property held by the Company on trust (Trust Property). The Liquidators seek other ancillary relief, which I will turn to in due course.

2    For the reasons that follow, I am satisfied that the relief sought by the Liquidators should be granted.

Background

3    The Company was incorporated on 17 July 1987. On and from 3 March 1995, the Company was the trustee of the Trust pursuant to a discretionary trust deed of the same date (Trust Deed).

4    On 9 May 2025, the Liquidators were appointed as joint and several liquidators of the Company in its own right and as trustee for the Trust pursuant to a resolution of the Company’s creditors that it be wound up in insolvency.

5    Under the terms of the Trust Deed, and upon the appointment of the Liquidators, the Company was removed as trustee of the Trust by operation of an ipso facto clause at cl 9.3(iv) of the Trust Deed.

6    Although the principals of the Trust have the power to appoint an additional or replacement trustee, the Liquidators gave evidence that they are not aware of any replacement trustee being appointed.

7    The Trust Deed grants the Trust the power to purchase, acquire, sell, transfer, hire, lease, dispose of, manage, divide, encumber or otherwise deal with any real or personal property of the Trust. The Liquidators gave evidence that they are unable to exercise any of the powers conferred by the Trust Deed because the company has been reduced to the status of bare trustee by operation of the ipso facto clause.

liquidators’ Evidence and submissions

8    The Liquidators gave evidence that based on their investigations, the Company operated the business, did not act in any other capacity other than as trustee of the Trust, and carried on the business solely in its capacity as trustee of the Trust.

9    The Liquidators gave further evidence that the management accounts of the Company (as trustee of the Trust) reveal that the Company’s liabilities are far greater than its debtors owing and retentions.

10    The Liquidators submitted that they should be appointed as trustees of the Trust so that they can, in summary:

(a)    recover the Trust’s debtors and retentions;

(b)    account to the creditors of the Trust; and

(c)    distribute any remaining assets to the beneficiaries of the Trust.

11    In the event that the Trust’s debtors and retentions are not recovered, the Liquidators submitted that it is unlikely there will be any significant asset recoveries through the winding up process.

12    Finally, the Liquidators submitted that orders should be made for their remuneration and disbursements for the period from 9 May 2025 to the date of this judgment, and their further costs, expenses and remuneration in acting as the Liquidators and receivers, to be paid from the Trust Property.

consideration

13    Section 57 of the Federal Court of Australia Act 1975 (Cth) (FCA Act) provides:

Receivers

(1)      The Court may, at any stage of a proceeding on such terms and conditions as the Court thinks fit, appoint a receiver by interlocutory order in any case in which it appears to the Court to be just or convenient so to do.

(2)      A receiver of any property appointed by the Court may, without the previous leave of the Court, be sued in respect of an act or transaction done or entered into by him or her in carrying on the business connected with the property.

(3)      When in any cause pending in the Court a receiver appointed by the Court is in possession of property, the receiver shall manage and deal with the property according to the requirements of the laws of the State or Territory in which the property is situated, in the same manner as that in which the owner or possessor of the property would be bound to do if in possession of the property.

14    Where a corporate trustee enters external administration, the company’s right of indemnity and accompanying equitable lien over the assets of the trust survive the appointment. Where a company is removed as trustee under the terms of the relevant trust deed, the company retains the right to hold the trust assets as bare trustee. However, the appointed administrator does not have the power to sell the trust assets to satisfy the indemnity unless they obtain orders from the Court: Re Western Peeled Pty Ltd (In Liquidation) [2024] WASC 374 at [11], citing Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40 at [44], [85]–[91] (Allsop CJ), [139], [142] (Siopis J), [198] (Farrell J); Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 [22]–[28] (Gordon J).

15    In such circumstances, the appointed administrator has two options: Re Western Peeled at [12]. First, they may apply for an order that confers power on them to deal with the assets of the trust. Second, (and as is the case here) they may apply to be appointed as receiver and manager of the trust.

16    This Court will ordinarily appoint a receiver for the protection or preservation of property for the benefit of the persons who have an interest in such property. On the evidence adduced by the Liquidators, I am satisfied that that is the purpose of the application brought by the Liquidators, and that by appointing the Liquidators as receivers of the Trust they will be able to protect and preserve Trust Property for the benefit of creditors.

17    I am also satisfied that the Australian Securities and Investments Commission – a potentially affected party – has been notified of this application. The Liquidators’ evidence demonstrates that a sealed copy of the originating application and supporting affidavit in this proceeding was served on ASIC on 3 July 2025. On 4 July 2025, ASIC wrote to the Liquidators stating its intention not to intervene in this proceeding, nor make any submissions to this Court.

18    In any event, the Liquidators seek an order that any creditor or other person with sufficient interest in the Trust have liberty to apply to vary the orders sought on the giving of 3 days’ notice to the Liquidators.

19    I am satisfied that it is just and convenient in accordance with s 57(1) of the FCA Act to make orders appointing the Liquidators as receivers and managers of the Trust, in circumstances where the Company did not act in any capacity other than as trustee of the trust; the Company is now bare trustee of the Trust; the Company is not otherwise empowered to deal with Trust Property; the Trust Property must be preserved for the benefit of creditors; and the Liquidators have no other way to deal with the Trust Property other than by orders of this Court.

20    The Liquidators also seek directions and orders concerning the distribution of Trust Property and their costs, expenses and remuneration in relation to their appointments as Liquidators of the Company and receivers of the Trust. The Liquidators gave evidence referable to the Company’s creditors approving their remuneration since their appointment, and of their work to date as Liquidators of the Company. The evidence of the Liquidators in this regard supports the making of the orders sought, and I will do so.

21    As to future remuneration, I am satisfied it is appropriate to make the order sought by the Liquidators, subject to that remuneration being approved by the Court. Given the Liquidators will be Court-appointed receivers of the Trust, it is appropriate their remuneration be approved by the Court.

conclusion

22    In the circumstances, I am satisfied that the orders sought by the Liquidators should be made, subject to further Court approval of quantum of remuneration.

23    The Liquidators seek their costs on an indemnity basis. Such an order is appropriate in the circumstances.

Associate:

Dated:    18 December 2025