Jones (Liquidator) v Matrix Partners Pty Ltd, in the matter of Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40

FEDERAL COURT OF AUSTRALIA

Jones (Liquidator) v Matrix Partners Pty Ltd, in the matter of Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40 File number: WAD 181 of 2016

Judges: ALLSOP CJ, SIOPIS AND FARRELL JJ

Date of judgment: 21 March 2018

Catchwords: TRUSTS AND TRUSTEES – trustee's right of indemnity – nature of the right of exoneration – application of right of exoneration against trust assets in circumstances where corporate trustee is insolvent CORPORATE INSOLVENCY – company that carried on business as trustee of trading trust – trustee company now in liquidation – application of trustee's right of exoneration against trust assets in circumstances where corporate trustee is insolvent – whether right of exoneration is property of the trustee company – whether proceeds of right of exoneration available only to pay trust creditors on insolvency CORPORATE INSOLVENCY – priorities regime to be applied to proceeds of realisation of trust assets through the right of exoneration and to proceeds of unfair preference claim – whether priorities regime established by ss 555, 556, 560 and 561 of the Corporations Act 2001 (Cth) to be applied CORPORATE INSOLVENCY – trustee company disqualified from acting as trustee upon entering into liquidation – sale of trust assets by liquidator – whether proprietary character of the trustee's right of exoneration meant the liquidator had power under s 447(2)(c) read with s 447(2)(m) of the Corporations Act 2001 (Cth) to sell the trust assets

Legislation: Bankruptcy Act 1966 (Cth), ss 5, 116, 122 Corporations Act 2001 (Cth), ss 9, 433, 436A, 439C, 477, 499, 500, 501, 511, 555, 556, 560, 561 Fair Entitlements Guarantee Act 2012 (Cth), ss 29, 31 Companies Act 1893 (WA), ss 154, 155, 163 (repealed) Companies Act 1961-1975 (Qld), s 293 (repealed) Trustee Act 1898 (Tas), s 27 Trustee Act 1925 (ACT), s 59 Trustee Act 1925 (NSW), s 59 Trustee Act 1936 (SA), s 35 Trustee Act 1958 (Vic), s 36 Trustee Act 1980 (NT), s 26 Trustees Act 1962 (WA), ss 71, 89 Trusts Act 1973 (Qld), s 72 Companies Act 1862 (UK) Law of Property Amendment Act 1859 (UK), s 31 Preferential Payments in Bankruptcy Amendment Act 1897 (UK) Preferential Payments in Bankruptcy Bill 1888 (UK) Trustee Act 1893 (UK), s 24 Trustee Act 1925 (UK), s 30 Trustee Act 1956 (NZ), s 38