Kumberley Stuart Wallmann and Gregory Paul Quin in their capacity as joint and several liquidators of Goldeagle Nominees Pty Ltd. - (18 Jan 2023)
When a corporate trustee enters into external administration, the company's right of indemnity and accompanying equitable lien over the assets of the trust survives the appointment
Trusts and Societies
The Plaintiffs, Kimberley Stuart Wallman and Gregory Paul Quin (collectively, the Liquidators) are the liquidators of Goldeagle Nominees Pty Ltd (Goldeagle). Prior to the appointment of the Liquidators, Goldeagle was the trustee for the Wilmot Family Trust (Trust). On 12 January 2023, the Liquidators filed an originating motion in this court seeking: (a) orders that the Liquidators be appointed as receivers and managers of the property held by Goldeagle in its capacity as trustee of the Trust, pursuant to Order 51 Rule 1 of the Rules of the Supreme Court 1971.
Where a corporate trustee enters into external administration, the company's right of indemnity and accompanying equitable lien over the assets of the trust survives the appointment. Where a company has been removed as trustee of the trust by reason of the terms of the trust deed, the company retains the right to hold trust assets as bare trustee, but the liquidator of the company does not have the power to sell those assets to satisfy that indemnity absent intervention by the court. Order 51 Rule 1 of the Rules of the Supreme Court 1971 deals with the court's power to appoint a receiver. The court also has power, pursuant to Section 25(9) of the Supreme Court Act, 1935 (WA), to appoint a receiver where it appears to be just and convenient. In the absence of any relevant conflict, it is commonly the case that the court will appoint the liquidator of the corporate trustee as receiver without security.
Appointing a liquidator or administrator of a corporate trustee as a receiver of a trust's assets facilitates and simplifies the external administration of the corporate trustee by providing for the trust's business and assets to be under the same control as the corporate trustee while it is in external administration. This aids in the vindication of the trustee company's right of indemnity out of the trust's assets. By reason of clause 16.3 of the Trust deed, on the appointment of the Liquidators, Goldeagle was automatically removed as Trustee of the Trust. As a consequence, Goldeagle is now a bare trustee of the Trust's assets and does not have the power to sell or otherwise deal with the assets of the Trust. Present Court accept that the proposal to appoint the Liquidators as receivers of the Trust without security is in accordance with the legal principles outlined above and will protect the trustee company's right of indemnity as well as the position of creditors. There are advantages with the proposal that the plaintiffs as liquidators be appointed as receivers and managers of the Trust.
It is appropriate to make orders appointing the Liquidators as receivers and managers of the Trust's assets with the powers of a receiver and manager in respect of the business and property of a company under Section 420 of the Act, as if the reference in that section to 'property of the corporation' is a reference to the 'property of the Trust'. This includes, without limitation, the power to do all things necessary and convenient to secure the assets of the Trust.
Tags : CORPORATE TRUSTEE RIGHT OF INDEMNITY