SUPREME COURT OF QUEENSLAND

CITATION:	Kelly & Anor v Dun-Movin’ Holdings Pty Ltd (In Liquidation) as Trustee for Dun-Movin’ Trust [2023] QSC 186	
PARTIES:	TODD WILLIAM KELLY
(first applicant)
and
BENJAMIN SCHIERHUBER
(second applicant)
v
DUN-MOVIN’ HOLDINGS PTY LTD (IN LIQUIDATION) ACN 111 700 648
(respondent)	
FILE NO/S:	428 of 2023	
DIVISION:	Trial Division	
PROCEEDING:	Application	
ORIGINATING COURT:	Supreme Court at Cairns
	
DELIVERED ON:	21 August 2023	
DELIVERED AT:	Cairns	
HEARING DATE:	11 August 2023	
JUDGE:	Henry J	
ORDERS:	1.	With effect on and from 29 August 2023, the applicants, Todd William Kelly and Benjamin Schierhuber (“Receivers”), are appointed jointly and severally, as receivers and managers over all present and after-acquired property, rights and undertaking of the Dun-Movin’ Trust, including the proceeds of any such property.
2.	The Receivers have such of the powers specified in s 420(2) Corporations Act 2001 (Cth), as the circumstances permit.
3.	The requirement for security pursuant to r 268 Uniform Civil Procedure Rules 1999 (Qld) is, by this order, waived.
4.	The Receivers are to be remunerated in accordance with the scale of costs which is exhibit “TWK5” to the affidavit of Todd William Kelly filed 27 July 2023.
5.	The applicants, in their capacity as Receivers of the property of the trust, and in their capacity as liquidators of Dun-Movin’ Holdings Pty Ltd (in liquidation) (“Company”), may have recourse to:
(a)	the property of the Dun-Movin’ Trust for their costs, expenses and remuneration in respect of work undertaken to render that property available to meet the claims of creditors whose debts were incurred by the Company as trustee of the trust; and
(b)		the property of the Dun-Movin’ Trust for their costs, expenses and remuneration properly incurred in the winding-up of the Company generally.
6.	Subject to order 5 hereof, the Receivers as liquidators of the Company, are justified in treating all proceeds of the property of the Dun-Movin’ Trust received in the winding-up of the Company pursuant to these orders, as being available for distribution to creditors in accordance with the order of priorities provided for in div 6 pt 5.6 Corporations Act 2001 (Cth).
7.	Kathryn Campbell is to serve a copy of this judgment upon Alana Campbell by 4.00pm 23 August 2023.
8.	Alana Campbell has liberty to apply by no later than 28 August 2023, conditioned upon her giving two business days’ notice in writing.	
CATCHWORDS:	CORPORATIONS – RECEIVERS, CONTROLLERS AND MANAGERS – APPOINTMENT – where liquidators of a trustee company need to realise its mortgaged properties to meet the claims of creditors and expenses of the liquidation, which is opposed by the trust’s principal beneficiary – where the liquidators seek appointment as receivers and managers of the trust for which the company held the property – where a new trustee was appointed after the filing of the application – whether it is just or convenient to appoint the liquidators
Civil Proceedings Act 2011 (Qld) s 12(2)
Corporations Act 2001 (Cth) s 420
Trusts Act 1973 (Qld) s 72
Uniform Civil Procedure Rules 1999 (Qld) rr 27, 268, 269, 272
Bastion v Gideon Investments [2000] NSWSC 939
Carter Holt v The Commonwealth (2019) 268 CLR 524
Connelly, in the Matter of Gregorski Investments Pty Ltd (in liq) v 320 Nominees Pty Ltd as Trustee of the Gregorski Property Trust [2019] FCA 1400
Freeman, in the Matter of Blue Oasis Holdings Pty Ltd (In Liquidation) [2018] FCA 822
Hosking, in the matter of business Aptitude Pty Ltd (in liquidation) [2016] FCA 1438
Hundy (Liquidator); In the Matter of Enviro Friendly Products Pty Ltd (In Liq) [2013] FCA 852
Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360
Re Mali Nominees Pty Ltd (In Liq) [2022] VSC 28
Singh & Ors v Brisbane Sikh Temple (Gurdwara) Inc [2022] QSC 151
	
COUNSEL:	T McGrath (sol) for the applicant
P Kimpton (sol) for the interested party Kathryn Campbell
	
SOLICITORS:	Miller Harris for applicant
Kibri Law for the interested party Kathryn Campbell	
[1]	Liquidators of Dun-Movin’ Holdings Pty Ltd need to realise its mortgaged properties to meet the claims of creditors and expenses of the liquidation.  To that end they seek appointment as receivers and managers of the trust for which the company held the property, the Dun-Movin’ Trust.  That course is opposed by the trust’s principal beneficiary.
The liquidators need to assure good title to secured property
[2]	The applicants were appointed joint and several liquidators of the company on 20 February 2023, when it went into voluntary winding up.  All the business and investment activities of the company had been undertaken in its capacity as trustee of the Dun-Movin’ Trust.  All assets held by the company were held by it as trustee of the Dun-Movin’ Trust.  All liabilities of the company were incurred by it in its capacity as trustee of the Dun-Movin’ Trust.  
[3]	Such liabilities exist in connection with its principal assets, namely a farm property and four residential properties at Ravenshoe, all of which are owned by the company as trustee.  The farm property is subject to a number of registered security interests, including a first-ranking mortgage in favour of ANZ Bank.  The four residential properties are subject to a first-registered mortgage in favour of Westpac Banking Corporation.  The residential properties are currently being marketed for sale by the applicants, in cooperation with Westpac Banking Corporation.
[4]	The properties’ certificates of title record the registered owner as the company, with the word “Trustee” appearing after its name.  The dilemma this creates and the solution to it was neatly explained as follows by Austin J in Bastion v Gideon Investments [2000] NSWSC 939 at [66]:
“[I]f I leave the liquidator to discharge the company’s duty as trustee by realising the assets for the purpose of making distributions, he is likely to have difficulty in persuading buyers, especially in the case of the real estate, that he has good title to the assets.  The problem will be overcome if I appoint him receiver and manager with an express power of sale as well as the powers contained in s 420 of the Corporations Law.”
A new trustee emerges
[5]	That dilemma was not aided by the death on 1 April 2023 of Peter McFarlane, the company’s sole member, director and shareholder and one of the trust’s two named primary beneficiaries.  The trust’s other primary beneficiary is his widow, Kathryn Campbell.  
[6]	Clause 27.7 of the Dun-Movin’ Trust Deed provides a trustee will automatically be removed if the trustee, being a corporation, enters into liquidation. However, cl 27.4 of the deed provides that in those circumstances the company’s removal will only be effective when a new trustee is appointed.  No trustee had been appointed between the appointment of the liquidators and Mr McFarlane’s death nor had one been appointed by the date of filing of the present application on 30 June 2023.  
[7]	It is against that background that the liquidators filed an application for their appointment as receivers and managers over the trust property.  After the application was filed Kathryn Campbell, acting under her powers as its principal per cl 27.1 of the trust deed, appointed her daughter Alana Campbell as the trustee for the trust.  Her solicitor Mr Kimpton appeared at the hearing “on behalf of the interested party Kathryn Adele Campbell” and opposed the application.  
No evidence or appearance by the new trustee
[8]	Kathryn Campbell’s interest in the proceeding derives from her status as a beneficiary of the trust.  The sole evidence advanced in opposition to the application was the affidavit of Kathryn Campbell.  Curiously, no affidavit by the new trustee of the trust, Alana Campbell, was filed and no appearance was entered on her behalf.  
[9]	Alana Campbell only became trustee after the filing of the application.  At neither the first return date nor the hearing date did Mr Kimpton submit she needed to be served with the application.  The fact that she did not appear and what if anything should be done about that was not addressed by submissions at the hearing.  However, three circumstances compel the inference, which I draw, that she has knowledge of the application.  Firstly, she is the daughter of Kathryn Campbell.  Secondly, her appointment was obviously prompted by the making of this application.  Thirdly, Mr Kimpton’s outline of submissions included assertions of facts about what she will do in carrying out her role as trustee; facts which do not appear in the affidavit of Kathryn Campbell and which Alana Campbell is unlikely to have asserted without knowledge of the application.  
[10]	I am not disposed to postpone determining the application and require formal service of Alana Campbell.  Even if she were to now be considered a respondent for the purposes of the service requirements of r 27 Uniform Civil Procedure Rules 1999 (Qld) (UCPR), I conclude it is just to hear and decide the application in circumstances where I infer she knew of it and am satisfied per r 27(3)(b) that, the sole principal beneficiary who appointed her having been heard, she will suffer no prejudice.  In reaching that conclusion I also take into account the objective strength of the merits of the application and the adverse cost consequences of a further hearing upon the liquidation and the interests of the company’s financially interested creditors. 
[11]	Accordingly, I will proceed to determine the application but out of an abundance of caution delay the material order taking effect until after seven days; require service within two days of a copy of these reasons upon Alana Campbell by Kathryn Campbell, she being the person who changed the trustee after the application was made; and give liberty to Alana Campbell to apply within no more than seven days of judgment on the giving of two days’ notice in writing.  This affords the new trustee a short period to elect to appear and oppose the orders which will otherwise activate.  Her obligation as trustee in these circumstances would of course require her to consider the cost ramifications of electing to oppose without a reasonably arguable basis for doing so.  
The merits of the application
[12]	Turning to the merits, it is convenient to consider the application’s prima facie merit before returning to the opposition advanced to it on Kathryn Campbell’s behalf.
[13]	The power to appoint a receiver and manager, which originated in equity, is now sourced in statute.  Rule 272(1) UCPR permits the Court to appoint a receiver and manager on conditions it specifies.  Whether such an appointment should be made is informed by the test imposed for the appointment of a receiver per s 12(2) Civil Proceedings Act 2011 (Qld), namely whether it is “just or convenient” to do so.  The just or convenient test falls to be applied with an appreciation that such an appointment is a significant intervention which ought not be preferred where a less interventionist remedy is appropriate – see Singh & Ors v Brisbane Sikh Temple (Gurdwara) Inc [2022] QSC 151, [21]-[24].
[14]	An appreciation of the merits of the present application is exposed by some trite propositions flowing from the role of the company as trustee.  Its obligation was to manage the trust in the beneficiary’s best interests.  That role was not performed in a vacuum.  If incurring debt in the interests of the trust, which it must be assumed to have done in holding mortgaged real estate in its sole corporate role as trustee of the trust, then its obligation was to ensure that debt was properly serviced.  In the event it was necessary to liquidate assets held by it as trustee so as to repay such debt then its duty was to do so.  If such repayment was made by the company without using trust assets it would have been a corollary of it having done so on the trust’s behalf that it was entitled to be indemnified for that cost from the assets of the trust.  Indeed, the trustee is empowered by s 72 Trusts Act 1973(Qld) to reimbursement out of the trust property for all expenses reasonably incurred in execution of the trustee’s role.  While surplusage in this context, the trustee’s right of indemnity is additionally recorded at cl 23(b) of the trust deed.
[15]	The trustee’s right of indemnity does not vanish merely by reason of the trustee’s removal, as has belatedly occurred here.  In Hosking, in the matter of business Aptitude Pty Ltd (in liquidation) [2016] FCA 1438, [18], Gleeson J, as her Honour then was, explained that a removed trustee retains a right of indemnity from the trust assets, secured by an equitable charge over them for its liabilities incurred by reason of acting as trustee.  Further her Honour held at [21]:
“[I]t is well-established that a receiver and manager can be appointed over trust property to secure the trustee’s right of indemnity out of the assets of the trust.”
[16]	It is also well established the liquidators of a corporate trustee may properly be appointed as receivers of the property of the trust in order to effect a sale in enforcing a trustee’s equitable charge over the trust assets – see for example Hundy (Liquidator); In the Matter of Enviro Friendly Products Pty Ltd (In Liq) [2013] FCA 852, [47]; Freeman, in the Matter of Blue Oasis Holdings Pty Ltd (In Liquidation) [2018] FCA 822, [18]-[19]; Connelly, in the Matter of Gregorski Investments Pty Ltd (in liq) v 320 Nominees Pty Ltd as Trustee of the Gregorski Property Trust [2019] FCA 1400, [25].
[17]	It is in one sense inadequate to refer to the assets merely as trust property given the right of indemnity is a propriety interest – see Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360, 370.  That inadequacy is particularly obvious in respect of the real estate the liquidators want to sell so as to repay debt.   The equitable charge which the company and thus the liquidators have over those properties is not the only interest in them.  There also exists the secured interests in the properties of the mortgagee creditors to whom the liquidators owe statutory obligations.  
[18]	The proper conduct of the liquidation of the company requires that the trust assets be realised and the proceeds applied towards the costs and expenses of liquidation and the claims of creditors.  The applicants, as liquidators of the company, cannot give effect to the company’s equitable charge over the trust assets without their appointment as receivers and managers of the trust.  The circumstances appear to compel the conclusion it is just and convenient to so appoint them. 
The opposition of the principal beneficiary 
[19]	What then of the evidence and argument advanced against such appointment on behalf of the principal beneficiary Kathryn Campbell?  Her affidavit blamed her belated action in appointing a new trustee on others, as if there had been some legal difficulty in the absence of a new appointment which she had been unaware of or misled about.  To the extent she imputed that blame upon the applicants and their representative no credible foundation was provided for doing so.  In any event, there was no legal difficulty: as already explained the effect of cl 27.4 of the trust deed was that the company remained a trustee until such time as a new appointment occurred.  It was only Kathryn Campbell who could make such an appointment.  
[20]	Kathryn Campbell makes some other allegations in her affidavit.  It is sufficient to observe she does so without providing sufficient detail to convey their substance or relevance.  
[21]	The main theme of her solicitor’s submission was that there is no justification to appoint receivers and managers given the appointment of a new trustee.  It was submitted the new trustee’s intention as trustee is to realise the property of the trust expeditiously at market value and to ensure any creditors of the trust receive any monies owing from the assets of the trust.  This, it was submitted, would occur without incurring professional fees.
[22]	The submissions as to what Alana Campbell intends to do were unsupported by any evidence to that effect.  Nor was there evidence to support a submission on Kathryn Campbell’s behalf that “the beneficiaries of the trust will benefit from the sale of the assets of the trust at market value rather than at heavily discounted prices which would be attained at a forced sale”.  In fairness to Alana Campbell, there is no reason to assume she would not do her duty as trustee but equally there is no reason to assume the applicants would not endeavour, as is their duty, to realise assets at market value.
[23]	Ultimately, the submissions resisting the application distil to the complaint that the applicants will charge for their professional services in selling the properties whereas Alana Campbell will not.  The comparison is of itself insufficiently supported by evidence.  It will be recalled there is no evidence from Alana Campbell as to her intentions.  Further, there is no evidence about what cost ramifications Alana Campbell’s appointment would have, for instance the cost of what if any paid professional services Alana Campbell would engage if she did attempt the process of marketing and selling the real properties.  The comparison is also not of like to like, for the liquidators would still be obliged to safeguard their interests and those of the company’s creditors by incurring the cost of supervising that process.
A just and convenient appointment
[24]	More significantly, the submissions did not confront the force of the considerations favouring the appointment of the liquidators as receivers and managers.  The liquidators were appointed some seven months ago.  The filed ASIC records show they have taken a variety of steps in that time and their present application is the latest logical step in the process of liquidation of the company.  Their involvement in that process inevitably leaves them more familiar than the new trustee with the financial affairs of the company and thus the trust, including obligations to creditors in connection with the real properties.  
[25]	Further, notwithstanding the recent appointment of a new trustee it remains that it is the former trustee company in whose name the mortgaged properties are held.  The liquidators’ appointment as receivers and managers will remove any doubt about their ability to convey good title to properties held in the name of the company they are liquidators for as trustee for a trust they are receivers and managers of.  
[26]	In contrast, the position of resistance advanced by Kathryn Campbell was not only unaided by evidence from the new trustee of her intentions regarding the real property.  It was also unaccompanied by any application or explanation positing any convenient pathway by which the new trustee could readily set about selling the real property.  This was despite the challenging complication that it remains held in the name of the company as trustee and remains subject to the secured interests of the company’s mortgagees and the former trustee’s equitable charge.  
[27]	The liquidators are not only entitled to enforce the trustee’s equitable charge over the trust assets, making it just that they be appointed.  They are also clearly best, if not uniquely placed to resolve the present imbroglio, making it convenient that they are appointed.  The application should be granted.  
Logistical and consequential matters
[28]	There are some associated logistical and consequential requirements to be considered.   
[29]	The applicants consent to their appointment as required by r 267(1) UCPR.  They are professionally qualified and properly insured to cover risks associated with the duties of a kind which will be undertaken as receivers and managers.  Against that background it is appropriate to dispense with the requirement otherwise imposed by r 268(1) that security be provided.  
[30]	The applicants seek an order that they are justified in treating all proceeds of the property of the Dun-Movin’ Trust received in the winding-up as being available for distribution to creditors in accordance with the order of priorities provided for in div 6 pt 5.6 Corporations Act 2001 (Cth).  The company’s right of indemnity against trust assets confers property for the purposes of the Corporations Act 2001 (Cth) – see Carter Holt v The Commonwealth (2019) 268 CLR 524, 559 [80]. In circumstances where the company’s right of indemnity against trust assets includes all liabilities incurred in its capacity as trustee, the aforementioned order of priorities should apply to the company’s right of indemnity against trust assets.  
[31]	The applicants should be remunerated for the work to be done in the receivership.  Their proposed rates of remuneration are within common bounds for such work and the orders should set their remuneration under r 269 UCPR at those rates.  Their costs and expenses (including of this necessary proceeding) and remuneration as liquidators and receivers and managers should be paid from the assets of the trust in circumstances where the corporate trustee had no other assets than the trust assets over which it continues to hold an equitable charge – see for example Re Mali Nominees Pty Ltd (In Liq) [2022] VSC 28 at [37].
[32]	Finally, s 420(1) Corporations Act 2001 (Cth) empowers receivers of property of a corporation to do all things necessary or convenient to be done in attaining the objectives of their appointment.  Section 420(2) lists particular powers for the purpose of attaining the objectives for which the receiver was appointed.  To overcome any doubt the applicants may encounter as to whether the trust property has ceased being the property of a corporation it should be ordered they have such of the powers specified by s 420(2) as the circumstances require.  
Orders
[33]	My orders are:
1.	With effect on and from 29 August 2023, the applicants, Todd William Kelly and Benjamin Schierhuber (“Receivers”), are appointed jointly and severally, as receivers and managers over all present and after-acquired property, rights and undertaking of the Dun-Movin’ Trust, including the proceeds of any such property.
2.	The Receivers have such of the powers specified in s 420(2) Corporations Act 2001 (Cth), as the circumstances permit.
3.	The requirement for security pursuant to r 268 Uniform Civil Procedure Rules 1999 (Qld) is, by this order, waived.
4.	The Receivers are to be remunerated in accordance with the scale of costs which is exhibit “TWK5” to the affidavit of Todd William Kelly filed 27 July 2023.
5.	The applicants, in their capacity as Receivers of the property of the trust, and in their capacity as liquidators of Dun-Movin’ Holdings Pty Ltd (in liquidation) (“Company”), may have recourse to:
a.	the property of the Dun-Movin’ Trust for their costs, expenses and remuneration in respect of work undertaken to render that property available to meet the claims of creditors whose debts were incurred by the Company as trustee of the trust; and
b.	the property of the Dun-Movin’ Trust for their costs, expenses and remuneration properly incurred in the winding-up of the Company generally.
6.	Subject to order 5 hereof, the Receivers as liquidators of the Company, are justified in treating all proceeds of the property of the Dun-Movin’ Trust received in the winding-up of the Company pursuant to these orders, as being available for distribution to creditors in accordance with the order of priorities provided for in div 6 pt 5.6 Corporations Act 2001 (Cth).
7.	Kathryn Campbell is to serve a copy of this judgment upon Alana Campbell by 4.00pm 23 August 2023.
8.	Alana Campbell has liberty to apply by no later than 28 August 2023, conditioned upon her giving two business days’ notice in writing.