Re Jennifer Elizabeth Low as liquidator of Midwest marine Pty Ltd.; Ex parteMidwest marine Pty Ltd. (In Liquidation) - (20 Dec 2023)

Court has power under Section 25(9) of the Supreme Court Act, to appoint a receiver where it appears to be just and convenient

Company

In facts of present case, the first Plaintiff, Jennifer Elizabeth Low, was appointed as liquidator of the second plaintiff, Midwest Marine Pty Ltd (Liquidator). Prior to the appointment of Ms. Low as liquidator, Midwest Marine Pty Ltd (Company) was the trustee of the Midwest Marine Trust (Trust).

On 23 November 2023, the Plaintiffs filed an originating process in this Court seeking, among other things, orders that the Liquidator: (a) be appointed as receiver and manager of the assets of the Trust; (b) in acting as receiver and manager, have the powers under Section 420 of the Corporations Act, 2001, as if the reference to 'corporation' in that section was a reference to the Trust; and (c) is entitled to be paid remuneration, costs, disbursements, and expenses out of the property of the Trust assets.

Where a corporate trustee enters external administration, the company's right of indemnity and accompanying equitable lien over the assets of the trust survives the appointment. Where a company hasbeen removed as trustee of the trust by reason of the terms of the trust deed, the company retains the right to holds trust assets as bare trustee. However, the liquidator of the company does not have the power to sell those assets to satisfy that indemnity absent intervention by the court.

The liquidator, in essence, has two options. First, to apply for an order that confers power on the liquidator to deal with the assets of the trust or, second, to apply to be appointed as receiver and manager of the trust. The court also has power, pursuant to Section 25(9) of the Supreme Court Act, 1935, to appoint a receiver where it appears to be just and convenient. Orders may be made nunc pro tunc to authorise any sale of assets that have already occurred. 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

As per clause 20.3(a) of the Trust deed, on the appointment of Ms. Low as Liquidator, the Company was required to retire as trustee of the Trust and was immediately disqualified from acting as trustee. As a consequence, the Company 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. No new trustee has been appointed. The Company only acted as trustee of the Trust and in no other capacity, and that all Trust assets held by the Company were held in its capacity as trustee of the Trust.

It is expedient for Ms. Low to have the power to sell the property of the Trust and that orders be made nunc pro tunc from the time of her appointment as Liquidator. It is appropriate to make orders that the first plaintiff will be acting properly and is justified in proceeding to conduct the affairs of the Trust on the basis that the business and assets of the Company comprised the assets of the Trust.

Tags : APPOINTMENT LIQUIDATOR POWER