Rathner (liquidator), in the matter of Garrows Close Pty Ltd (in liq) [2021] FCA 505

Rathner (liquidator), in the matter of Garrows Close Pty Ltd (in liq) [2021] FCA 505

It is appropriate and within the power of the Court to confer on liquidators of a company acting as bare trustee the necessary powers under s 63(1) of the Trustee Act 1958 (Vic) to complete the winding up, including powers to deal with and distribute trust assets. Liquidators are entitled to remuneration and costs from the trust property, and directions as to the application of Parts 5.5 and 5.6 of the Corporations Act to such distribution are justified.

Parties
First Plaintiff: Gideon Isaac Rathner and Matthew Brian Sweeny in their capacity as joint and several liquidators of Garrows Close Pty Ltd (in liquidation) (ACN 072 231 782); Second Plaintiff: Garrows Close Pty Ltd (in liquidation) (ACN 072 231 782); Beneficiary: Ms Regina Patricia Cohen; Beneficiary: Mr Gerard Harrington; Notified Party: Australian Securities and Investments Commission
Jurisdiction
Australia
Judgment Date
12 May 2021
Procedural Posture
Application by Liquidators for Directions and Orders in External Administration / Judgment on Application for Directions
Outcome
Orders granted as sought. Application successful.
Legal Topics
Corporate Insolvency, Bare Trust, Trustee Powers, Distribution of Trust Assets, Liquidators' Powers, Remuneration of Liquidators
Corporations Equity and Trusts Insolvency Corporate Insolvency Bare Trust Trustee Powers Distribution of Trust Assets Liquidators' Powers +1 more

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Parties

Gideon Isaac Rathner and Matthew Brian Sweeny in their capacity as joint and several liquidators of Garrows Close Pty Ltd (in liquidation) (ACN 072 231 782)

First Plaintiff

Garrows Close Pty Ltd (in liquidation) (ACN 072 231 782)

Second Plaintiff

Ms Regina Patricia Cohen

Beneficiary

Mr Gerard Harrington

Beneficiary

Australian Securities and Investments Commission

Notified Party

Procedural Posture

Application by Liquidators for Directions and Orders in External Administration / Judgment on Application for Directions

Legal Issues

  1. 1 Whether liquidators can be empowered to deal with and distribute trust property held by insolvent corporate trustee
  2. 2 Whether trustee’s remuneration and costs can be paid out of trust property
  3. 3 Whether it is appropriate to confer powers on liquidators instead of appointing them as receivers

Ratio Decidendi

It is appropriate and within the power of the Court to confer on liquidators of a company acting as bare trustee the necessary powers under s 63(1) of the Trustee Act 1958 (Vic) to complete the winding up, including powers to deal with and distribute trust assets. Liquidators are entitled to remuneration and costs from the trust property, and directions as to the application of Parts 5.5 and 5.6 of the Corporations Act to such distribution are justified.

Court Disposition

Orders granted as sought. Application successful.

Orders

  • Liquidators are justified and acting reasonably in conducting the winding up of the company on the basis that all assets are held in its capacity as bare trustee for Ms Cohen and Mr Harrington as tenants in common as to half each.
  • Liquidators are conferred powers under s 63(1) of the Trustee Act 1958 (Vic) to carry on business of the trust, sell the company's property including Lot S2 and/or Lot S3, compromise claims, and execute necessary documents, for the purpose of winding up the Trust.