Proctor : July 2019
48 PROCTOR | July 2019 Notes 1 See the statistics offered in Jones (Liquidators) v Matrix Partners Pty ltd, in the matter of Killarnee Civil & Concrete Contractors Pty Ltd (in liq) (2018) 354 ALR 436;  FCAFC 40  (Jones); see also Dr D’Angelo, ‘Commercial trusts in practice: the trust as a surrogate company’, paper presented at the annual Supreme Court Commercial and Corporate Law Conference, NSW, November 2016. 2 See the primary decision of Re Amerind Pty Ltd (receivers and managers appointed) (in liq) (2017) 320 FLR 118;  VSC 127. 3 While beyond the scope of this article, there is also an interesting question regarding the treatment of circulating security interests in insolvency situations before the court. 4 Worrall v Harford (1802) 8 Ves. 4, 8; 32 ER 250, 252 per Lord Eldon; Trusts Act 1973 (Qld) s72. 5 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360, 369-370 (Octavo). 6 Belar Pty Ltd (in liq) v Mahaffey  1 Qd R 477, 488; see also Re Dalewon Pty Ltd (in liq)  QSC 311 . 7 Bankruptcy Act 1966 (Cth) s 116(2)(a); see also Octavo and Re Johnson (1888) 15 Ch D 548 (Re Johnson). 8 See n5. 9 Lewin on Trusts (19th ed.), Sweet & Maxwell, pg 888, ftn 196. 10 P Finn (ed), Essays in Equity, 1985, pp 249-250 per Sir Anthony Mason. 11 Compare Re Enhill with Re Johnson. 12 In breach of the obligations imposed in Keech v Sandford (1726) 2 Eq. Cas. Abr. 741; 25 ER 223. 13Re Suco Gold 105; see also Jones 454-455 . 14 In Re Suco Gold 109 where the court found that a liquidator is bound by the provisions of s292 of the Companies Act 1961 (Vic.) (dealing with priorities upon the winding up of a company) when paying trust debts. 15 I say two primary because of Brereton J’s “third” approach in Re Independent Contractor Services (Aust) Pty Limited (in liq) (No.2) (2016) 305 FLR 222;  NSWSC 106 (Re Independent Contractor). 16 See n1. 17 See Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485, 492; see also Farah Constructions v Say-Dee Pty Ltd (2007) 230 CLR 89, 151-152 . 18 Commonwealth of Australia v Byrnes 291 . 19 See n15. 20 This approach being favoured in JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia, LexisNexis (8th edition) pg 523-524 [21-35], B McPherson, The Insolvent Trading Trust in P Finn (ed.), Essays in Equity, 1985 and consistent with the position in Singapore in E C Investments Holdings Pte Ltd v Ridout Residence Pte Ltd  SGHC 139. 21 Re Johnson; Re Standard Insurance Co  Qd R 118. 22 B McPherson, The Insolvent Trading Trust in P Finn (ed.), Essays in Equity, 1985. 23 If not from the High Court, there is a desire for the legislature to amend the priority regime under the Corporations Act to be more explicit as to the extent it affects a trading trust: see Jones 477-478 -  per Farrell J. 24 Noting the current position as recently detailed by Crow J in Re Humphreys & Anor  QSC 241 . This article appears courtesy of the Queensland Law Society Early Career Lawyers Committee Proctor working group, chaired by Adam Moschella (firstname.lastname@example.org). Joshua Storey is a lawyer at Allens. Conclusion Given the differing landscape that each state has for this issue, guidance from the High Court is clearly desirable. 23 The case of Carter Holt provides the High Court with an excellent opportunity to reconcile the decisions of Re Enhill and Re Suco Gold and provide clarity for all courts regarding the effect of insolvency proceedings upon a corporate trustee’s right of indemnity. This would be valuable for not only providing a consistent approach for Victoria, Australia and New South Wales, but it would also provide guidance for jurisdictions such as Queensland,24 where this controversy has not yet prominently arisen. Many of the cases that have previously come before the courts have involved the less complex factual scenario where there is only a trustee of a single trust which does not trade in its own right, and there are no non-trust creditors. It is hoped that the High Court will take the opportunity to sort out the long-standing controversy, as it applies in the broader sense, once and for all. EARLY CAREER LAWYERS Different, better. email@example.com schultzlaw.com.au Sunshine Coast 07 5406 7405 Brisbane 07 3121 3240 Gold Coast 07 5512 6149 Michael Callow Travis Schultz What can your client expect when you refer them to us? As a social justice law firm, we are focused on making a positive difference in people’s lives and want affordable legal services to be accessible to all. We do this by keeping our fees lower than the industry average and charge only on the government set Federal Court Scale. 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