In the Matter of ICS Real Estate Pty Ltd (in liquidation); and In the Matter of Independent Contractor Services (Aust) Pty Ltd (in liquidation) [2014] NSWSC 479

Supreme Court New South Wales

Medium Neutral Citation: In the Matter of ICS Real Estate Pty Ltd (in liquidation); and In the Matter of Independent Contractor Services (Aust) Pty Ltd (in liquidation) [2014] NSWSC 479 Hearing dates: Friday 11 April 2014 Decision date: 29 April 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: In proceedings 2013/381266, the Court orders that: (1) Pursuant to Corporations Act, s 511, the liquidator would not be justified in treating the amounts standing to the credit of the company ICS Real Estate Pty Ltd (in liquidation) in its bank accounts as beneficially owned by the company, nor any amounts collected by the liquidator since his appointment in respect of invoices rendered by the company as beneficially owned by the company; (2) Pursuant to Corporations Act, s 511, the liquidator would not be justified in treating the claiming contractors and agents' representatives in respect of whom invoices have been rendered by the company as unsecured creditors in the liquidation of the company; (3) The plaintiff's costs of the application be paid out of the amount standing to the credit of the company in its bank accounts or collected by the liquidator since his appointment. In proceedings 2013/381272, the Court orders that: (1) Michael Lee be added as defendant and appointed pursuant to UCPR r 7.6(2)(c) to represent the class of general beneficiaries of the Independent Contractor Services Trust; (2) Pursuant to Corporations Act, s 511, the liquidator would not be justified in treating the amounts standing to the credit of the company Independent Contractor Services Pty Ltd (in liquidation) in its bank accounts as beneficially owned by the company, nor any amounts collected by the liquidator since his appointment in respect of invoices rendered by the company as beneficially owned by the company; (3) Pursuant to Corporations Act, s 511, the liquidator would not be justified in treating the claiming contractors and agents' representatives in respect of whom invoices have been rendered by the company as unsecured creditors in the liquidation of the company; (4) The plaintiff's costs of the application be paid out of the amount standing to the credit of the company in its bank accounts or collected by the liquidator since his appointment; (5) The defendant's costs of the application be paid out of the amount standing to the credit of the company in its bank accounts or collected by the liquidator since his appointment. Catchwords: CORPORATIONS - external administration - voluntary administration - liquidator's application for judicial advice - whether judicial advice should be given where it will affect substantive rights - where parties potentially affected are notified and representative order made - held, advice should be given - whether liquidator justified in treating certain property purportedly held on trust by company as beneficial property of company - whether trust arrangement a sham - held, not a sham. TRUSTS AND TRUSTEES - Creation of trust - purpose to reduce taxation - where discretion had invariably been exercised to distribute income to those beneficiaries whose work had generated it - whether true intention that there be no discretion - whether true intention that relationship was employment not trust - held, not a sham Legislation Cited: (CTH) Corporations Act 2001, s 511 (NSW) Trustee Act 1925, s 63 (NSW) Uniform Civil Procedure Rules 2005, 7.6(2)(c) Cases Cited: Crawford v Oswald Park Pty Ltd (in liq) [2006] NSWSC 987 Dean-Willcocks v Soluble Solution Hydroponics (1997) 42 NSWLR 209 Editions Tom Thompson Pty Ltd v Pilley (1997) 77 FCR 141; (1997) 148 ALR 146; (1997) 24 ACSR 617 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471; (2004) 211 ALR 101; (2004) 79 ALJR 206 In re French Caledonia Travel Service Pty Ltd (in liq) [2003] NSWSC 1008; (2003) 48 ACSR 97 In re MF Global Australia Ltd (in liq) (No 2) [2012] NSWSC 1426 In the matter of 7 Steel Distribution Pty Limited (in liq) (receivers and managers appointed) [2013] NSWSC 669 In the matter of Dalma No 1 Pty Limited (in liquidation) (ACN 111 772 260) [2013] NSWSC 1335; (2013) 279 FLR 80; (2013) 95 ACSR 641 In the matter of Ian James Purchas as liquidator of Astarra Asset Management Pty Ltd (in liq) [2011] NSWSC 91 Karger v Paul [1984] VR 161 Lewis v Condon [2013] NSWCA 204; (2013) 304 ALR 410 Meadow Springs Fairway Resort Ltd (in liq) v Balanced Securities Ltd [2007] FCA 1443 Purchas, in the matter of RSP Group Pty Limited (in liq) [2006] FCA 1329 Re G B Nathan and Co Pty Ltd (In Liq) (1991) 24 NSWLR 674; (1991) 5 ACSR 673 Re S&D International Pty Ltd (in liquidation) (No 7) [2012] VSC 551; (2012) 92 ACSR 38 Re Southern Cross Airlines [2000] 1 Qd R 84 Re Timbercorp Limited (in liq) [2011] VSC 189 Re United Medical Protection of Queensland [2004] NSWSC 14 Re Willmott Forests Ltd (No 2) [2012] VSC 125; (2012) 88 ACSR 18 S & D International v MIG Property Services [2010] VSC 336; (2010) 79 ACSR 373 Scott v FCT (No 2) (1966) 40 ALJR 265 Sharrment Pty Ltd and Others v Official Trustee in Bankruptcy (1988) 18 FCR 449; (1988) 82 ALR 530 Category: Principal judgment Parties: Bruce Gleeson in his capacity as liquidator of ICS Real Estate Pty Ltd (in liquidation) (plaintiff, 2013/381266) Bruce Gleeson in his capacity as liquidator of Independent Contractor Services (Aust) Pty Ltd (in liquidation) (plaintiff, 2013/381272) Michael Lee as representative of the beneficiaries of the Independent Contractor Services Trust (defendant, 2013/381272) Representation: Counsel: A. Spencer (plaintiffs) S. Golledge (defendant) Solicitors: Gillis Delaney Lawyers (plaintiffs) James Conomos Lawyers (defendant) File Number(s): 2013/381266; 2013/381272