IN THE SUPREME COURT OF VICTORIA	Not Restricted	
AT MELBOURNE
Commercial Court
Corporations List

S ECI 2024 03532

IN THE MATTER of ALL PURPOSE LABOUR PTY LTD (IN LIQUIDATION) 
(ACN 641 262 204) as Trustee for the ATC UNIT TRUST

BETWEEN:

ADRIAN JOHN WARRY and SHANE LESLIE DEANE in their capacity as joint and several liquidators of ALL PURPOSE LABOUR PTY LTD (IN LIQUIDATION) (ACN 641 262 204)	First Plaintiff	
		
and		
		
ALL PURPOSE LABOUR PTY LTD (IN LIQUIDATION) (ACN 641 262 204) as Trustee for the ATC UNIT TRUST	Second Plaintiff	

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JUDGE:	Sloss J	
WHERE HELD:	Melbourne	
DATE OF HEARING:	2 September 2024	
DATE OF JUDGMENT:	2 September 2024 (ex tempore)	
CASE MAY BE CITED AS:	Re All Purpose Labour Pty Ltd (in liq)	
MEDIUM NEUTRAL CITATION:	[2024] VSC 547	
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CORPORATIONS – Liquidation of trustee company – Trust deed contained an ‘ipso facto’ clause which operated to render trustee company a ‘bare’ trustee upon liquidation – Application by liquidators for appointment as receivers and managers pursuant to s 37 of the Supreme Court Act 1986 (Vic), alternatively for power to deal with trust assets pursuant to s 63 of the Trustee Act 1958 (Vic) – Trustee’s right of indemnity – Principles in Re Brimson (2019) 136 ACSR 699 considered – Liquidators appointed receivers and managers over trust property – Re Waratah Group Pty Ltd (in liq) [2020] VSC 523 considered – Requirement for security pursuant to r 39.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) dispensed with as the liquidators were already subject to obligations under the Corporations Act 2001 (Cth) – Re Pires Consulting Holding Pty Ltd (In Liquidation) [2019] VSC 384 applied – Liquidators relieved from liability for dealing with trust property before appointment as receivers and managers pursuant to s 1318 of the Corporations Act 2001 (Cth).
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APPEARANCES:
	Counsel	Solicitors	
For the First and Second Plaintiffs	Ms A V M Carruthers	Milton Lawyers	

TABLE OF CONTENTS

Introduction	1
Background	3
The Company	3
The Trust	4
Assets	5
Creditor position	7
The Trust Deed	8
The trading of the business	9
Tasks undertaken since the Liquidators’ appointment	9
Service on unitholder of the Trust	12
Reasons for orders sought	12
Applicable principles	12
The trustee’s right of indemnification	12
Whether to appoint Liquidators as receiver pursuant to the Supreme Court Act (or the Rules), or to confer relevant powers pursuant to the Trustee Act	15
Whether receiver is to provide security	18
Whether to make an order under s 1318 of the Corporations Act or s 67 of the Trustee Act	18
Consideration	18
Conclusion	21
Orders	21

HER HONOUR:
Introduction
1	This proceeding is brought by the first named plaintiff, Adrian John Warry and Shane Leslie Deane (the Liquidators) in their capacity as joint and several liquidators of All Purpose Labour Pty Ltd (In Liquidation) (ACN 641 262 204) (the Company).  The Liquidators were appointed liquidators of the Company on 28 September 2023, pursuant to s 491 of the Corporations Act 2001 (Cth) (Corporations Act).
2	The Company, in its capacity as the trustee of the ATC Unit Trust (the Trust), is the second named plaintiff.  At all relevant times the Company, acting in its capacity as the corporate trustee for the Trust, provided staff and direct recruitment to clients from leased premises at South Melbourne in Victoria, Northgate in Queensland and Canning Vale in Western Australia.  However, as the trust deed for the ATC Unit Trust (Trust Deed) contains an ‘ipso facto’ clause (cl 12.5(b)), upon the Company being placed in liquidation, that clause operated to ‘determine and vacate’ the office of trustee, rendering the Company a bare trustee of the Trust.  As a result, the Liquidators lack the powers necessary to deal with the assets and undertaking of the Trust for the benefit of creditors, and they now seek the assistance of the Court to empower them to do so.
3	By Originating Process filed on 9 July 2024, the Liquidators apply under ss 90-15 and 90-20 of the Insolvency Practice Schedule (Corporations) (Insolvency Practice Schedule), s 1318 of the Corporations Act, s 37 of the Supreme Court Act 1986 (Vic) (Supreme Court Act), rr 39.02 and 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules), ss 63 and 67 of the Trustee Act 1958 (Vic) (Trustee Act), and the inherent jurisdiction of the Court, for orders appointing them as receivers over the property of the Trust or, alternatively, for such orders or directions as may be necessary to enable the realisation of trust assets and to pay their remuneration and expenses from the Trust property.  Broadly, the Liquidators seek:
(a)	orders pursuant to s 37(1) of the Supreme Court Act appointing the Liquidators as receivers and managers of the Trust assets, together with ancillary orders affording them powers to deal with those assets; or
(b)	alternatively, orders pursuant to s 63(1) of the Trustee Act conferring powers on the Company to enable it to deal with the assets of the Trust, together with ancillary orders granting the Liquidators power to deal with the Trust assets.
4	In support of the application, the Liquidators filed:
(a)	an affidavit of Adrian John Warry affirmed on 5 July 2024 (and exhibits thereto) (First Warry Affidavit);
(b)	an affidavit of service of Adrian John Warry affirmed on 14 August 2024 (and exhibits thereto) (Second Warry Affidavit); and
(c)	their written outline of submissions filed on 14 August 2024.
5	The matter first came before me for directions on 16 August 2024, at which I ordered that the plaintiffs were to file and serve a further affidavit from the Liquidators together with any additional outline of submissions:
(a)	outlining relevant tasks undertaken by the Liquidators since their appointment;
(b)	addressing the factual basis for any orders sought, pursuant to s 1318 of the Corporations Act and/or s 67 of the Trustee Act, to relieve the Liquidators from any liability for dealing with the property of the Trust between the date of their appointment and the date of any order made on the Originating Process;
(c)	identifying the assets held by the Company as trustee for the Trust that the Liquidators believe will be available to use for the benefit of creditors of the Company, and identifying which (if any) of those assets would require the Court to confer on the Liquidators a power of sale so as to realise those assets for the benefit of creditors; and
(d)	proof of service of the relevant Court documents on the (sole) unitholder of the Trust.
6	Subsequently, on 26 August 2024, the plaintiffs filed the further affidavit of Adrian John Warry affirmed that day (Third Warry Affidavit).
7	No appearance has been filed by any person or entity (including the Australian Securities and Investment Commission (ASIC)) served with notice of the application, nor has any person or entity given notice of any intention to be heard in this proceeding.
Background
8	The affidavit material upon which the plaintiffs rely sets out the following background facts regarding the application. 
The Company
9	The Company was registered on 27 May 2020.
10	Prior to liquidation the Company, in its capacity as trustee of the Trust, operated a labour hire business providing staff and direct recruitment to clients from leased premises at 101 Moray Street, South Melbourne, Victoria.  The Company had (prior to liquidation) additional leased premises situated at 1/58 Frederich Street, Northgate, Queensland, and at 15-16/64-66 Bannister Road, Canning Vale, Western Australia.
11	The sole director and secretary of the Company since inception has been Mr Ricky David Barkla.  Mr Barkla is also the sole shareholder of the Company, holding 12 fully paid ordinary shares as beneficial owner.
12	As indicated earlier, on 28 September 2023 the Liquidators were appointed liquidators of the Company pursuant to s 491 of the Corporations Act.  Their appointment took place at a General Meeting of Members held that day, attended solely by Mr Barkla and chaired by him, at which the following special resolution was put and passed unanimously:
The company be wound up voluntarily as a creditors voluntary winding up and that Adrian John Warry and Shane Leslie Deane, Registered Liquidators, both of 165 Camberwell Road, Hawthorn East 3123, be appointed Joint and Several Liquidators of the Company.
13	In the Report on Company Activities and Property (ROCAP) provided to ASIC, Mr Barkla, in his capacity as director, stated that the Company commenced trading on 27 May 2020 and ceased trading on 27 September 2023, when it was in liquidation.  Mr Barkla listed several factors as reasons for the failure of the business, namely:
•	Client failed owing $250K;
•	Downturn in business;
•	Increase in WorkCover premiums;
•	Client struggles;
•	Rising tax requirements;
•	Economy/Interest rates;
•	Competition;
•	Third Party payroll issues.
14	In the ROCAP Mr Barkla also confirmed that the Company is the trustee of a trust, being the ‘ATC Unit Trust ABN 17 712 813 353’, and that it holds assets and property on trust. 
The Trust
15	The Trust Deed was made on 8 October 2019.  First Step Hospitality Pty Ltd (ACN 636 674 701) (First Step Hospitality) was the original trustee of the Trust.  No appointor was specified.  Mr Jesse Rhys Bilkey was (and remains) the sole unitholder.
16	On 27 May 2020, a Deed of Appointment and Retirement in respect of the ATC Unit Trust (Deed of Appointment) was entered into and executed as a Deed between Mr Bilkey (in his capacity as the sole officer of First Step Hospitality Pty Ltd, the ‘Retiring Trustee’), Mr Barkla (in his capacity as the sole officer of the Company, which was to become the ‘New Trustee’) and separately Mr Bilkey, in his capacity as the ‘Sole Unit Holder’ of the Trust.  Under the Deed of Appointment, First Step Hospitality Pty Ltd retired as trustee of the Trust, and the ‘Sole Unit Holder’, Mr Bilkey, appointed the Company as a new trustee of the Trust pursuant to the powers conferred under cl 12.2 of the Trust Deed.
17	Based on investigations undertaken to date, the Liquidators’ view is that the Company:
(a)	traded exclusively in its capacity as Trustee of the Trust and did not operate any business or endeavour in its own right;
(b)	accumulated debts solely from its operations as trustee of the Trust; and
(c)	has an overall deficiency, as its liabilities exceed its assets.
Assets
18	Since their appointment, the Liquidators have undertaken investigations into the financial position of the Company and the Trust.  Mr Warry deposes to having made relevant enquiries and being provided with books and records relating to the financial affairs of the Company and the Trust, including:
(a)	the Trust Deed (albeit that he was not able to obtain a signed copy);
(b)	a signed copy of the 27 May 2020 Deed of Appointment and Retirement, (executed by the retiring Trustee, the Company, and the unitholder);
(c)	the ROCAP;
(d)	information pertaining to the Company’s bank account obtained from the National Australia Bank (NAB) (with whom the account was held);
(e)	financial statements for the Company for the financial years ending 30 June 2021 and 2022; and
(f)	a balance sheet and profit and loss statement extracted at the time of his appointment. 
19	The Company’s Profit and Loss Statement for the period ending 20 September 2023, when the Company ceased trading, indicates an expected trading loss of $44,036.60.  
20	The Company’s Balance Sheet, as at 20 September 2023, indicates that at that time the Company held ‘deficit equity’ of $1,119,160.14.
21	Assets of the ATC Unit Trust, as listed in the Company’s Balance Sheet, include $49,441.44 at bank, $150 cash on hand, a rental bond of $7,480 and $139,166.46 owing by trade debtors.
22	The Liquidators intend to use the proceeds of funds held in bank accounts and obtained via debtor recoveries for the benefit of the creditors of the Company.
23	In the Third Warry Affidavit, Mr Warry points to potential statutory claims for the benefit of the Company’s creditors, including:
(a)	an insolvent trading claim against the director (estimated at around $1,120,000);
(b)	unfair preference payments totalling $668,958 against the ATO and CHR Group Pty Ltd; and
(c)	an unreasonable director related transaction claim against RBD Investments (Vic) Pty Ltd (estimated at around $23,250).
24	The Liquidators’ investigations regarding the potential claims listed above are ongoing.
Creditor position
25	Mr Warry has received proofs of debt totalling $1,036,000, from creditors including the Australian Taxation Office (ATO).
26	In the course of the Liquidators’ investigations, the ATO has provided:
(a)	an integrated client account statement in respect of the ABN of the Trust;
(b)	a super guarantee statement in respect of the ABN of the Trust; and
(c)	a Formal Proof of Debt dated 8 December 2023 (Formal Proof of Debt).
27	The Formal Proof of Debt discloses tax debts owed by the Company to the ATO of $935,335.87.  This sum is comprised of:
(a)	a Running Balance Account deficit in respect of BAS amounts as at 28 September 2023 of $735,050.48; and 
(b)	a superannuation guarantee charge for the period from 1 April 2022 to 31 December 2022 in the amount of $200,285.39.
28	Attachment 2 to the Formal Proof of Debt lists that the Company (in its own capacity) has outstanding tax return lodgments for the financial years ending in 2020, 2021, 2022, 2023 and 2024, and the Company as trustee for the Trust has outstanding tax return lodgments for the years ending in 2023 and 2024, in addition to an Activity statement for the quarter ended 30 September 2023 and a ‘Single Touch Payroll finalisation declaration for the year ended 30 June 2024.  Given the outstanding taxation lodgments, Mr Warry expects the ultimate debt to be claimed by the ATO to be greater than the abovementioned value.
The Trust Deed
29	As noted above, cl 12.5(b) of the Trust Deed, which contained the ‘ipso facto’ clause, operated to remove the Company as trustee upon it being placed in liquidation, rendering it a ‘bare trustee’.  As a bare trustee of the Trust, the Company is unable to exercise powers pursuant to the Trust Deed, and has only limited powers.
30	Mr Warry has been informed by the Company’s director and believes that there has been no appointment of a new trustee to the Trust.  Further, he deposes in the First Warry Affidavit:
I have not in my investigations identified or been informed of any attempt by any person to appoint a new trustee to the Trust. 
31	Clause 12.6 of the Trust Deed provides that the Company, as a result of it going into Liquidation, has been released from all obligations apart from providing any assurance necessary or desirable to vest the trust fund in the new trustee.
The trading of the business
32	As mentioned above, the Liquidators consider that the Company’s liabilities were incurred by the Company in its capacity as trustee for the Trust.  In those circumstances, the Company enjoys a right of indemnity from Trust assets.
Tasks undertaken since the Liquidators’ appointment
33	Since the Liquidators were appointed, they have completed the following tasks as part of the liquidation of the Company:
(a)	undertaken steps to obtain a copy of the Trust Deed;
(b)	investigated whether the Company traded solely as trustee of the Trust.  This required the submission of a ‘Request for Documents’ (RFD) to the ATO.  Two responses were received from the ATO on or around 19 January 2024.  The first confirmed that ‘the ATO did not have any evidence of the Company trading in any other capacity than as trustee of the Trust, as no financial documents had been lodged with the ATO’, and the second advised Mr Warry that a copy of the Trust Deed would need to be provided to the ATO in order to answer the RFD.  Subsequently, Mr Warry gained access to information from the ATO Portal, and on 30 January 2024 obtained, amongst other things, a record of the income tax returns for the 2021 and 2022 financial years;
(c)	interviewed the director and obtained his assistance, including in obtaining the ROCAP and questionnaire, and books and records;
(d)	conducted searches of public records for assets and security interests regarding the Company and related entities and persons;
(e)	made enquiries with the offices of relevant state and federal commissioners of taxation to ascertain what monies and/or lodgments of the Company may be outstanding;
(f)	made enquiries with the Department of Human Services to ascertain whether the Company was a paid parental leave employer prior to his appointment and if any debt remained outstanding;
(g)	contacted banking institutions to freeze pre-appointment bank accounts held by the Company in the Company’s name;
(h)	issued requests under s 530B of the Corporations Act to obtain records of the Company (including from the Company’s former accountants); and
(i)	invited stakeholders and creditors to inform Mr Warry’s office of any other matter which they are aware of, and consider should form part of his investigations.
34	Mr Warry has not been able to obtain a signed copy of the Trust Deed – although he did obtain a signed copy of the later executed Deed of Appointment.
35	As liquidator Mr Warry has taken steps to recover debts owed to the Company, including:
(a)	writing to the NAB requesting that a freeze be placed on the account, but to enable it to remain active so as to receive further payments from debtors;
(b)	obtaining access to the Company’s records maintained by software service providers, to obtain documents necessary to establish and pursue the Company’s claims against its debtors;
(c)	identifying 21 claims the Company has against third parties, totalling $226,729.14;
(d)	performing a reconciliation of deposits made by debtors of the Company to account for payments made, and any deductions for bank fees, etc;
(e)	writing to the NAB to receive periodic transfers of funds recovered from the Company’s debtors; and
(f)	on 10 January 2024, writing to the NAB to seek closure of the account and remittance of the balance of the account to the liquidation account.
36	At the time of affirmation of the Third Warry Affidavit, $208,608.49 had been recovered by the Liquidators, and two outstanding debts were being pursued, worth approximately $11,513.80.  The debt recovery steps taken by Mr Warry required the issuance of numerous letters of demand to debtors, consideration of write-offs of various debts for payments made by debtors prior to his appointment and determination of claims from debtors for overpayments and credits.  
37	The Liquidators also disclaimed leases of office premises in South Melbourne, Victoria, Canning Vale in Western Australia, and Northgate in Queensland.
38	While Mr Warry does not point to any action taken as part of the external administration for which the Liquidators may be liable or subject to criticism, the Liquidators nevertheless take the prudent course of seeking relief from liability for any dealing with the Trust property pursuant to s 1318 of the Corporations Act or, alternatively, s 67 of the Trustee Act.
Service on unitholder of the Trust
39	As referred to in the First and Third Warry Affidavits, the Liquidators are of the belief that Mr Bilkey is the sole unitholder of the Trust.  Mr Warry notes that Mr Bilkey is also the contact person for two of the Company’s known creditors – Complete HR Solutions Pty Ltd and Fredrick Harold Pty Ltd.  He has been served using contact details for his respective positions within those companies, and given notice of the directions hearing, and the hearing has taken place against that background.  In those circumstances, I am satisfied that the unitholder is on notice of this application.
Reasons for orders sought
40	The Liquidators’ reasons for bringing this application are essentially as follows:
(a)	as the Company ceased to be trustee of the Trust upon liquidation, it holds the assets of the Trust (including any as yet unidentified choses in action) as a bare trustee, with limited powers; and
(b)	they seek to realise the assets of the Company held as trustee for the Trust to maximise the return to creditors, but in circumstances where their status is that of a bare trustee, they lack the requisite full range of powers to conduct an orderly and effective realisation of the assets of the Trust. 
Applicable principles
The trustee’s right of indemnification
41	In Cremin, Re Brimson Pty Ltd (In Liq) (Re Brimson), Moshinsky J conveniently summarised the relevant principles concerning the indemnification of a corporate trustee from trust assets, including in circumstances where the company goes into liquidation and has been removed as trustee and only holds the trust assets as a bare trustee, which I extract below:
(a)	a company that is a trustee of a trading trust has a right of indemnity to resort to the trust assets to vindicate its right to be exonerated from liabilities that it incurred in the course of carrying out trust business by reason of acting as trustee; 
(b)	where a company that is the trustee of a trading trust goes into liquidation, ‘its right of indemnity and accompanying equitable lien over the trust assets endures, notwithstanding that the company has been removed as trustee of the trust and only holds the trust assets as a bare trustee’;
(c)	it is now settled that ‘the liquidator of an insolvent (former) corporate trustee cannot sell the trust’s property without order of the Court, or by appointment of a receiver over the trust assets’.  The rationale for this position is that, on a proper understanding, the trust assets are not the ‘property of the company’, but are instead trust property in which the corporate trustee has a proprietary interest by way of lien or charge to secure its right of exoneration.  Thus, to the extent that the subject of a sale is the whole of a trust asset, rather than merely the company’s lien or charge in respect of that asset, it is not authorised by the power of sale in s 477(2)(c) of the Corporations Act;
(d)	‘the courts are generally willing, upon an appropriate application, to make orders permitting the liquidator of a (former) corporate trustee to sell trust assets’;
(e)	where a liquidator is appointed as receiver ‘for the purpose of selling the trust assets and distributing the proceeds among trust creditors’, orders ‘may be made nunc pro tunc to authorise the sales of trust assets that have already occurred’;
(f)	‘[t]he proceeds from an exercise of a corporate trustee’s right of exoneration may only be applied in satisfaction of the trust liabilities to which that right relates’, and this ‘includes the costs of the liquidation (including the liquidator’s remuneration)’;
(g)	‘where a company has only ever acted as a trustee of one trust and that has been the totality of its affairs, no issue arises as to the application of trust assets to general creditors because all of the company’s creditors are trust creditors’, and proceeds ‘are to be distributed to the trust creditors in accordance with the order of priority prescribed by the Corporations Act’.
42	In addition, counsel for the plaintiffs relies on the following further legal principles:
(a)	the trustee’s right of exoneration generates a supporting lien or charge, being a beneficial proprietary interest in the trust assets in favour of the former trustee of the Trust; 
(b)	the former trustee holds title to the trust assets as bare trustee with limited powers to deal with those assets, but the ability to retain possession (as against beneficiaries) for the purpose of achieving its right of indemnity;
(c)	a liquidator’s costs are payable out of the trustee’s right of indemnity over trust assets, especially where the company in liquidation acted solely as corporate trustee.  Orders being sought providing for the Liquidators’ costs in line with s 556(1) of the Corporations Act are also now routinely sought and made.
43	Further, the plaintiffs submit that the conferral of statutory powers under each of s 37(1) of the Supreme Court Act and s 63(1) of the Trustee Act are broad.
Whether to appoint Liquidators as receiver pursuant to the Supreme Court Act (or the Rules), or to confer relevant powers pursuant to the Trustee Act
44	As already identified, there are two pathways that may be taken to achieve the Liquidators’ aims – either the appointment of them as receiver pursuant to the Supreme Court Act (or the Rules), or the conferral of power pursuant to s 63 of the Trustee Act.  As recently stated by Delany J in Re Waratah Group Pty Ltd (in liq) and M Osborne J in Re Urban Property Melbourne Pty Ltd, there is no ‘bright line’ distinguishing whether to appoint a receiver pursuant to the Supreme Court Act or to confer power pursuant to the Trustee Act.
45	Section 37 of the Supreme Court Act provides that the Court may appoint a receiver if it is ‘just and convenient’ to do so.  Similarly, r 39.02 of the Rules provides that the Court may appoint a receiver at any stage of a proceeding.
46	Section 63 of the Trustee Act, on the other hand, provides that where, in the management or administration of property vested in trustees any sale or other transaction is expedient but cannot be effected, given the absence of power in the trust instrument or by law, the Court may confer on the trustees the necessary power.  In Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd (Caterpillar), Gordon J observed that the court would confer a power of sale over assets of a trust pursuant to s 63 of the Trustee Act where:
(a)	 ‘the company [has become] a bare trustee of the assets of the Trust … upon … the appointment of the Liquidator’;
(b)	‘the Company acted only as trustee of the Trust and in no other capacity’;
(c)	‘all assets owned by the Company are held by it as trustee of the Trust and all liabilities incurred by the Company were incurred by it in its capacity as trustee of the Trust’; and
(d)	‘no new trustee has been appointed’.
47	More recently, in Re Brimson, to which I have already referred, Moshinsky J described the appointment of a liquidator as receiver as the ‘more common course’.  In that case, his Honour justified the appointment of a receiver on the basis that the relevant trustees had been removed by operation of trust deeds, and there had been the prospect of the business continuing to trade.  In Jones & Matrix, another Federal Court case referred to earlier, although not considering an application under s 63 of the Trustee Act, Siopsis J said that the usual way for a trustee to vindicate its right to exoneration (in reliance upon its equitable lien) is to ask the court to appoint a receiver.  
48	In Re Waratah Group Pty Ltd (in liq), where Delany J was faced with the same question as arises in the present case, his Honour ultimately determined to appoint a receiver pursuant to s 37 of the Supreme Court Act.  In so doing his Honour gave consideration to the principles espoused by Warren J (as her Honour then was) in Yunghanns v Candoora No 19 Pty Ltd.  Delany J said:
[t]he circumstances in which an appointment might be made include where to do so is necessary for the protection or preservation of trust property for the benefit of persons who have an interest in that property.
49	Delany J was concerned to ‘protect’ and ‘preserve’ trust property in a situation where there was a potential for a replacement trustee to be appointed.  If a replacement trustee were appointed, his Honour said this would (potentially) compromise the liquidators’ capacity (as former trustee) to enforce their right to be indemnified.  In his discussion of this issue, his Honour referred to Pitard Consortium Pty Ltd v Les Denny Pty Ltd, where McDonald J determined (after consideration of conflicting authorities) ‘that if a new trustee is appointed the former trustee does not have the right to retain trust assets as security for an accrued right of indemnity.’  Although it ‘seem[ed]’ to Delany J that McDonald J’s analysis was correct, his Honour expressed the view that a conflict of authorities in this area may impinge upon the Liquidators’ capacity to protect and preserve the trust assets.  As Delany J said, if a replacement trustee were appointed:
the liquidators would be faced with a very real problem, due to conflicting authority, as to whether they would have power to retain trust property as against the new trustee in order to enforce their right to be indemnified.
50	In this context, his Honour also cited the decision of Rees J in Re Parkway One Pty Ltd (No 2), where her Honour found that:
the appointment of the liquidator now, as receiver and manager of the trust assets, serves to address in advance difficulties that may arise if a replacement trustee were to be appointment to the Trust at an unknown time in the future.  
51	More recently, in Re Windsor Development Co Pty Ltd (In Liq) (No 2), Matthews J in the Commercial Court reiterated and endorsed Delany J’s cautionary note that ‘the appointment of the liquidator as receiver of trust assets may pre-empt potential difficulties arising.’  
Whether receiver is to provide security
52	Rule 39.05 of the Rules provides that unless the Court otherwise orders, a receiver shall give security, approved by the Court, that the receiver will account for what it receives as receiver, and deal with it as the Court directs.  
53	In Re Pires Consulting Holding Pty Ltd (In Liquidation), Kennedy J applied the reasoning of Besanko J in Sapphire (SA) Pty Ltd v Ewens Glen Pty Ltd, where his Honour did not order that security be paid essentially because ‘the receivers and managers were joint and several liquidators and, therefore, already subject to obligations under the Act.’
Whether to make an order under s 1318 of the Corporations Act or s 67 of the Trustee Act
54	In Re Mandeville Group Pty Ltd (in liq), I made an order under s 63 of the Trustee Act nunc pro tunc, which, in my view, rendered ‘it unnecessary for the Court to make any associated “relieving” order under s 1318 of the Corporations Act or s 67 of the Trustee Act.’  In Re Waratah Group Pty Ltd (in liq), Delany J adopted this approach in ordering that the appointment of the liquidators as receivers and managers take effect nunc pro tunc.
Consideration
55	Against the background of those principles and authorities the question before me is whether to appoint the Liquidators as receivers and managers pursuant to s 37 of the Supreme Court Act or to confer powers pursuant to s 63 of the Trustee Act.  The Liquidators submit that their appointment as receivers and managers to the assets and undertaking of the Trust is probably the most straightforward method in the circumstances.
56	The principles in Gordon J’s decision in Caterpillar (as enunciated above) having been satisfied, it is also open to me to make orders pursuant to s 63 of the Trustee Act.  However, in the circumstances of the present case, I propose to make orders appointing the Liquidators as receivers and managers over the Trust property.
57	A reason to prefer the appointment of the Liquidators as receivers and managers over the Trust property rather than to make orders pursuant to s 63 of the Trustee Act is that there is the potential, albeit very minimal, for the unitholder unilaterally to appoint a new trustee, which would result in the Liquidators (as former trustee) potentially losing their right to retain trust assets as security for their accrued right of indemnity.  This is because cl 12 of the Trust Deed provides for the appointment of a new trustee by the unitholder in the following situations:
12.  APPOINTMENT AND REMOVAL OF TRUSTEE
12.1 	The Trustee may at any time:–
(a) 	resign as Trustee hereof;
(b)	appoint an additional Trustee;
(c) 	appoint a new Trustee or Trustees in its place in the event of it retiring or resigning as Trustee or ceasing to be a Trustee by operation of law or pursuant to the provisions of this Trust Deed.
12.2 	The Voting Unit Holders may at any time and from time to time by deed or by notice in writing delivered to the Trustee:–
(a) 	appoint a new trustee in place of an existing trustee; or
(b) 	appoint a new trustee in addition to and jointly with an existing trustee;
in their absolute and unfettered discretion. Such removal or appointment shall require the consent of those Unit Holders holding not less than three–quarters of the Voting Units and shall take effect from the date of such notice.
…
58	As the Company is in liquidation, and given the Liquidators are of the view that the Company has an overall deficiency (as its liabilities exceed its assets), the Company’s resources may be insufficient to cover the Liquidators’ remuneration and expenses, and therefore I share the sentiments expressed by Delany J in Re Waratah Group Pty Ltd (in liq) that ‘all that can be done to minimise future costs and disputes and to aid the conduct the administration in insolvency should be done.’
59	Given that orders will be made to appoint the Liquidators as receivers and managers of the Company, it is appropriate, in my view, to dispense with any requirement for security to be provided pursuant to r 39.05 of the Rules.  As in Re Pires Consulting Holding Pty Ltd (In Liquidation) – where Kennedy J endorsed the approach taken by Besanko J in Sapphire (SA) Pty Ltd v Ewens Glen Pty Ltd – the persons seeking appointment as receivers and managers are joint and several liquidators and therefore already subject to obligations under the Corporations Act.  Accordingly, this is an appropriate case to ‘otherwise order’ that the liquidators be appointed receivers and managers without security.
60	As indicated above, the Liquidators’ costs are payable out of the trustee’s right of indemnity.  Like Kennedy J in Re Pires Consulting Holding Pty Ltd (In Liquidation) (discussed above) – and in light of the Company’s sole function being to act as trustee of the Trust – I accept that the costs, expenses and remuneration arising from the receivership and liquidation are incurred by the Liquidators in their capacity as liquidators and receivers.  Those costs should be payable from Trust property, such payments being made in accordance with the statutory priorities in s 556 of the Corporations Act.
61	As regards the making of an order pursuant to s 1318 of the Corporations Act (or s 67 of the Trustee Act), I was initially minded to abide the course I followed in Re Mandeville Group Pty Ltd (in liq) and which Delany J followed in Re Waratah Group Pty Ltd (in liq), and to appoint the Liquidators as receivers and managers over the Trust property nunc pro tunc, and thereby dispel the need to make any order under these provisions.  However, during the course of submissions, when I raised the issue with counsel for the plaintiffs, a concern was raised that there may be some further enquiries made by the Liquidators which later reveal a need for a relieving order to be made under s 1318 and, in the circumstances of this case, it would be useful for the Liquidators to have the ability to not have to return to Court to seek further orders pursuant to s 1318.  In those circumstances, I am satisfied that it is appropriate to make an order of the kind sought under s 1318 of the Corporations Act. 
Conclusion
62	In the circumstances, I propose to make orders essentially along the lines outlined in the plaintiff’s minute of proposed orders, however I will ask Ms Carruthers of counsel to bring forward a proposed form of order which reflects the reasons I have announced in Court.
63	Once that is done I will make and authenticate orders, including that there be liberty to apply to any person who can demonstrate sufficient interest to modify any directions, orders and/or declarations made pursuant to the Originating Process on not less than 72 hours’ notice to the first plaintiff.
Orders
64	The following orders were made:
1.	Pursuant to s 37(1) of the Supreme Court Act 1986 (Vic), Adrian John Warry and Shane Leslie Deane, liquidators, be appointed nunc pro tunc as receivers and managers (Receiver) to the assets and undertakings of the ATC Unit Trust (Trust). 
2.	The need for the Receiver to file a guarantee under r 39.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) be dispensed with. 
3.	The Receiver is authorised to have possession of, call in, preserve, maintain and sell the assets comprising the Trust property. 
4.	The Receiver will have the following powers:
a.	to do all things necessary or convenient to effect the sale or realisation of the Trust property, with the powers that a liquidator has in respect of property of a company pursuant to section 477(2) of the Corporations Act 2001 (Cth) (Corporations Act); 
b.	to compromise any claim made against the second plaintiff in its capacity as trustee of the Trust or against any of the Trust property on any terms the second plaintiff sees fit;
c.	to bring any claim against any party on behalf of the Trust; 
d.	to apply the proceeds from the sale or realisation of Trust property to discharge the liabilities of the second plaintiff (all of which were incurred by it in its capacity as trustee) in accordance with the priorities set out in s 556 of the Corporations Act; 
e.	to distribute any surplus proceeds from the sale of the Trust property (if any) to a new trustee of the Trust or, if there is no new trustee, to the beneficiaries of the Trust.
5.	Pursuant to sections 90-15 and 90-20 of Schedule 2 Insolvency Practice Schedule (Corporations) of the Corporations Act (Schedule 2) that:
a.	the first plaintiff is entitled to be paid from the Trust property their remuneration, costs, and expenses properly incurred as liquidators in preserving, realising or getting in the Trust property, or in distributing the Trust property (once realised), or in conducting the administration and winding up of the Company (Remuneration and Expenses); and 
b.	the Remuneration and Expenses include the remuneration, costs and expenses of and incidental to this application and are to be paid in accordance with the priority specified in s 556(1) of the Corporations Act.
6.	Pursuant to sections 90-15 and 90-20 of Schedule 2, the first plaintiff may:
a.	rely on their statutory powers as liquidators of the second plaintiff pursuant to s 477 of the Corporations Act to take all necessary steps to wind up the Trust pursuant to order 5 above; and 
b.	be justified in paying the following from the property of the Trust: 
i.	the costs and expenses of the first plaintiff and second plaintiff in winding up the Trust; and
ii.	the creditors of the Trust.
7.	Pursuant to s 1318 of the Corporations Act, the first plaintiff be relieved from any liability for dealing with the Trust property between the date of their appointment as liquidators and the date of this order. 
8.	The costs, expenses and remuneration incurred by the first plaintiff in acting as Receiver and those of and incidental to this application be costs and expenses in the liquidation of the second plaintiff and paid in priority from the property of the Trust. 
9.	Liberty to apply is granted to any person who can demonstrate sufficient interest to modify any directions, orders and/or declarations made pursuant to this Originating Process on not less than 72 hours' notice to the first plaintiff.
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