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Thresher, Kate --- "The Duties And Powers Of A Disqualified Trustee: Are They Adequate?" [2020] WAStuLawRw 5; (2020) 4 Western Australian Student Law Review 81


THE DUTIES AND POWERS OF A DISQUALIFIED TRUSTEE: ARE THEY ADEQUATE?

KATE THRESHER[*]

TRUSTS LAW— DISQUALIFIED TRUSTEE—BARE TRUSTEE—DUTIES AND POWERS OF A DISQUALIFIED TRUSTEE—CORPORATIONS ACT 2001 (CTH) —SECTIONS 479(3) AND 1318—TRUSTEES ACT 1962 (WA) SECTIONS 75 AND 89

ABSTRACT

In 2009, Lindgren J in Re Mad Canoe Advertising Pty Ltd (in liq) [2009] FCA 625 questioned whether a trustee who has been disqualified from holding office can continue to validly act as a trustee. Since then, a clear answer has emerged: a trustee who is disqualified becomes a bare trustee under the common law. In this position, a bare trustee has duties to get in and protect the trust property as well as vindicate the rights attached to it. A disqualified trustee does not have the power to sell trust property or hold it against a new trustee. These limited powers under the common law are necessary in the context of disqualification, however, they may, in practice, restrict the trustee from appropriately dealing with the trust property. This could be problematic where a new trustee cannot be appointed, or in situations where a liquidator is winding up the corporate trustee. However, the common law is complemented by the Corporations Act 2001 (Cth) and Trustees Act 1962 (WA). These statutes provide a flexible statutory overlay allowing courts to grant any necessary orders to deal with the trust property and excuse the trustee from breaches of trust where they have acted honestly and reasonably. This article will argue that the common law’s focus on protecting the trust property, taken with the flexible statutory overlay creates an adequate legal regime.

I INTRODUCTION

Since Lindgren J questioned the position of a disqualified trustee in Re Mad Canoe Advertising Pty Ltd (in liq) (‘Re Mad Canoe’),[1] a clear consensus appears to have emerged under the common law, establishing that a trustee who is disqualified becomes a bare trustee.[2] A bare trustee is a trustee with no interest in the trust assets other than that existing by reason of the office of trustee and the holding of legal title.[3] In this position, a bare trustee has duties to get in and protect the trust property as well as vindicating the rights attached to it.[4] There is some uncertainty about the exact powers of a bare trustee,[5] however, it is clear that their powers are limited and do not include a power of sale.[6] The law in this respect needs to be clarified in order to provide certainty to bare trustees who are, in many cases, liquidators. Nevertheless, the limited powers and duties of a bare trustee are appropriate in circumstances of disqualification. While the trustee’s limited ability to deal with the trust property may cause issues in some circumstances, these difficulties are alleviated by the complimentary statutory framework which allows courts to grant any necessary orders and excuse the bare trustee of any breaches.[7]

II THE POSITION OF A DISQUALIFIED TRUSTEE

In Re Mad Canoe, Lindgren J first questioned whether a trustee who has been disqualified from holding office can continue to validly act as a trustee. After going into voluntary administration, the liquidators of Mad Canoe Advertising made an application under s 482(1) of the Corporations Act 2001 (Cth) (‘Corporations Act) to terminate the winding up order.[8] In the course of this application, the issue arose as to whether Mad Canoe Advertising, carrying on its business exclusively as a trustee of a unit trust, could validly continue to act as a trustee after being disqualified under the unit trust deed.[9]

In obiter, Lindgren J noted the ‘correct analysis’ seemed to be that, after disqualification, Mad Canoe Advertising would cease to exercise its powers and duties under the unit trust deed but would continue to hold the trust property on constructive trust by operation of general law principles.[10] Lindgren J also questioned what the terms of the constructive trust would be but was not called upon to resolve these issues in considering the application.[11] As Principal Registrar Melville later remarked, the High Court in CGU Insurance Ltd v One.Tel Ltd (in liq) (‘CGU v One.Tel’)[12] has since ‘answered the unanswered questions posed by Lindgren J’ as to the position of a disqualified trustee.[13]

A Summary of CGU

In CGU v One.Tel, former director of One.Tel, Mr Greaves, was required to pay compensation to One.Tel and ASIC. While acting as a director of One.Tel, Mr Greaves was insured under a directors and officers liability policy of insurance (‘the Insurance Policy’) with the appellant, CGU Insurance.[14] Mr Greaves sought to claim against the Insurance Policy in respect of the compensation owed to One.Tel and ASIC, however, CGU Insurance purported to avoid the Insurance Policy.[15] Upon being declared bankrupt Mr Greaves entered into a deed of arrangement with a trustee to assign his rights under the Insurance Policy. As such, the trustee pursued Mr Greaves’ cause of action, commencing proceedings against CGU Insurance to claim under the Insurance Policy in respect of the compensation order.[16]

The trust deed included a clause which provided for automatic termination after three years since the execution of the deed.[17] The three-year mark passed, automatically terminating the deed, before the proceedings had concluded.[18] The termination of the trust deed raised the question of whether the trustee could continue to validly act as a trustee over the chose in action; that is, whether the trustee was entitled to continue the proceedings against CGU Insurance under the Insurance Policy.[19]

The High Court held that when the trust deed was terminated, ‘the title on which the trustee had held the benefit of the equitable interest in the chose in action did not vanish into thin air’.[20] Instead, it remained with the trustee and continued to be held on trust for the benefit of the beneficiary.[21] The High Court approved the primary judge’s conclusion, that upon termination of the trust deed the trustee became a bare trustee.[22] While the term ‘bare trust’ has been ‘plagued by terminological indeterminacy’,[23] the High Court echoed the ‘usually accepted meaning’[24] that ‘the trustee of a bare trust has no interests in the trust assets other than those which exist by reason of the office of trustee and the holding of legal title.’[25]

The approach by the High Court in CGU v One.Tel has since been applied consistently, for the most part, confirming the analysis offered by Lindgren J that upon disqualification a trustee continues to hold the trust property on constructive trust by operation of general law principles.[26] The High Court also elaborated on another important aspect of this constructive trust, namely the duties and powers of the bare trustee, directly answering the question posed by Lindgren J.[27]

III DUTIES AND POWERS OF A DISQUALIFIED TRUSTEE

In the administration of a trust, trustees have powers and duties. Duties are acts which a trustee must do or refrain from doing, whereas powers are acts which the trustee may do if they see fit.[28] The nature of a bare trust is not prescribed by the settlor but is left to the construction of the law.[29] As such, upon disqualification a trustee is disqualified from performing the duties and exercising the powers prescribed under the trust deed.[30] However, the trustee continues to hold duties and power under the general law outside the deed.[31]

A Duties

The absence of active duties is generally understood to be one of the key criteria of a bare trust.[32] However, as Meagher JA pointed out, this cannot be interpreted too strictly as there is almost no situation where the trustee would not have at least some active duties in certain circumstances.[33] Gummow J found that a bare trustee has no ‘duty or further duty to perform, except to convey [the trust property] upon demand to the beneficiary or beneficiaries or as directed by them’.[34] As such, a disqualified trustee that continues to hold trust property is under an ‘ongoing obligation to vest that property in any new trustee appointed to replace it’.[35] According to Stone, Jacobson and Edmonds JJ in Bruton Holdings Pty Ltd (in liq) v Commissioner of Taxation (‘Bruton’),[36] a bare trustee must maintain and protect the trust property but cannot engage in active management beyond those duties.[37] Finally, in CGU v One.Tel the High Court elaborated that a bare trustee:

has no active duties to perform other than those which exist by virtue of the office of the trustee ... One obligation of a trustee which exists by virtue of the very office is the obligation to get the trust property in, protect it, and vindicate the rights attaching to it.[38]

What is required of the bare trustee to discharge these duties will depend on the nature of the trust property and whatever may threaten it.[39] Where the trust property is not challenged, the bare trustee may remain passive.[40]

In Bruton, the trustee of the Bruton Educational Trust, Bruton Holdings, became a bare trustee after going into liquidation.[41] Shortly after, the Commissioner of Taxation issued a notice of assessment on Bruton Holdings calling for a tax payment. The trustee’s solicitor, who held funds in their trust account for the trust, was also issued with a notice to pay.[42] Bruton Holdings commenced proceedings to obtain a declaration that the notice of assessment was invalid.[43] The Court found that while litigation was initially unnecessary, once the ‘Commissioner sought to invoke the garnishee regime it then became the only way of protecting the asset against an invalid exercise of power’.[44] According to the Court, the primary proceeding was ‘essentially a defensive action’ that was necessary to ‘protect the trust property against unauthorised appropriation’.[45]

Bruton can be compared with Re Mathew Forbes Pty Ltd (in liq),[46] where the corporate trustee held all of its assets and conducted a wholesale bakery business as a trustee. In these circumstances, the Court found that the bare trustee’s duty to protect the goodwill of the company, arguably involved maintaining staff employment, the business premises and generally carrying on the business.[47]

In CGU, the Court found that continuing proceedings in pursuit of the rights under the insurance policy was ‘the only way of protecting the chose in action, vindicating the rights attached to it and getting in its fruits.’[48] While in Transtate Property Group Pty Ltd (in liq) v Commissioner of Taxation,[49] where the trust property was a right to recover a debt, the disqualified trustee brought proceedings to recover the debt in order to comply with its duty ‘to vindicate the rights connected with the trust property’.[50] Thus, a disqualified trustee’s duties are focused on protecting the trust assets and vindicating the rights that attach to them.

B Powers

The powers of a bare trustee under general law are limited. In ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue,[51] Barret J remarked that ‘an “active power” (as opposed to an “active duty”) regardless of its significance, will be sufficient to render the trust something other than a bare trust’.[52] However, in that case the Court was considering whether the trustee could be considered a bare trustee under an express trust deed.[53] According to Barret J, the inclusion of ‘express incidents’ in the trust deed, going beyond terms implied by law, rendered it an active trust.[54]

As highlighted above, a disqualified trustee no longer has the powers conferred upon them under the trust deed.[55] In Bruton, the Court found that upon disqualification, the trustee’s ‘powers were limited to those that under the general law or statute are the powers of a bare trustee’.[56] In Caterpillar Financial Australia Limited v Ovens Nominees (‘Caterpillar’),[57] Gordon J held that a bare trustee has limited powers to deal with the assets of the Trust.[58] In other cases the powers were found to be limited to protecting trust assets.[59] Therefore, it appears that a disqualified trustee, upon becoming a bare trustee, has limited powers. However, those exact powers have not yet been elucidated in the case law.

What is clear, is that a bare trustee does not have the power of sale.[60] In Caterpillar, a corporate trustee was disqualified by a clause in the trust deed upon the appointment of an official liquidator.[61] The liquidator, unaware of his limited powers as a bare trustee,[62] sold some of the trust property, namely a BMW motor vehicle. As a result, the liquidators sought relief from the Court as well as orders to deal with the remaining trust property.

In considering the application, Gordon J concluded that the powers of a bare trustee are limited and do not include power of sale.[63] In reaching this conclusion, Gordon J found that the liquidators had acted outside their authority as a bare trustee by selling the BMW.[64] While a bare trustee retains the right to indemnification,[65] they cannot sell trust assets[66] or hold trust assets against a new trustee[67] to enforce that right. The High Court has recently noted the right to indemnification can more accurately be described as ‘powers to indemnification.’[68] It is unclear, however, whether a bare trustee retains the power to indemnification insofar that it empowers them to direct trust funds to reimburse themselves.[69]

IV COMPLIMENTARY STATUTORY FRAMEWORK

The law on disqualified trustees needs further clarification but is overall appropriate. The disqualification of a trustee indicates the trustee is unfit or was not intended to continue to hold the position of trustee under the terms of the trust deed. It is appropriate in that situation that the powers and duties of the trustee are limited to those that are of upmost importance, namely the protection of the trust assets and vindication of the rights attaching to them.[70] Although, as noted above, the powers of a bare trustee under general law, apart from being limited,[71] remain unclear. Further clarification is needed around the exact powers of a disqualified trustee.

Additionally, the limited powers of a disqualified trustee can create difficulties where the appointor is unwilling or unable to appoint a new trustee.[72] In particular, this can cause issues where a liquidator, acting on behalf of a disqualified corporate trustee, needs to deal with trust assets to bring certainty to the process of finalising the liquidation.[73] The general law, however, is complemented by statute. Section 89 of the Trustees Act 1962 (WA) (‘Trustees Act’) provides that where a trustee, including a bare trustee, does not have the power to do something that would be expedient or in the best interests of the beneficiaries, the Court can confer the necessary powers upon the trustee.[74]

Further, legislation provides for recourse where the bare trustee has acted outside of their powers. Section 75 of the Trustees Act allows the court to relieve a trustee from personal liability for breach of trust where the trustee acted honestly and reasonably and ought fairly to be excused for the breach of trust and failure to obtain directions from the court. Section 1318 of the Corporations Act provides a similar provision for corporate trustees and their liquidators. This legislative framework has been utilised in several cases.[75] This statutory framework provides an avenue to deal with the trust property, thereby diminishing the difficulties that may arise as a result of the restrictions placed on disqualified trustees.

In Caterpillar, for example, the liquidator was excused for selling a BMW motor vehicle outside of his powers as bare trustee. In that case, Gordon J was satisfied that the liquidator had acted reasonably and honestly as they sold the BMW for a reasonable price before they became aware of the disqualification from the trust deed.[76] The liquidator was also granted powers under s 479(3) of the Corporations Act[77] and the Victorian equivalent of s 75 of the Trustees Act to sell the remainder of the trust property.[78] While challenging to navigate, the lack of clarity surrounding the powers of a bare trustee is not fatal. The courts still have the statutory power to provide directions and relief. In this way, the general law, when complemented by the statutory overlay, creates a workable framework which safeguards the trust property.

V CONCLUSION

In Re Mad Canoe, Lindgren J correctly observed that a trustee who has been disqualified from holding office can continue to validly act as a bare trustee. The duties and powers conferred by the trust deed no longer apply.[79] In their capacity as bare trustees, disqualified trustees have no active duties, except those which exist by virtue of the office of trustee.[80] One such obligation is to get in, protect the trust property and vindicate rights attached to it.[81]

At common law, a bare trustee does not have the power to sell trust property or to hold it against a new trustee.[82] Past these limitations, the powers of a disqualified trustee are not clear.[83] Duties focused on the protection of trust property and limitations on a disqualified trustee’s powers are appropriate given the trustee’s disqualification. Although, the limited powers of the bare trustee could cause issues by restricting the trustee from appropriately dealing with the trust property where a new trustee cannot be appointed or in situations where a liquidator is winding up the corporate trustee. Further, the lack of clarity on the exact powers of the bare trustee could leave the bare trustee unsure as to whether they can validly act.

However, the general law is complemented with flexible legislation. As explained above, the Trustees Act and Corporations Act give the bare trustee the opportunity to apply to the court for directions and any necessary orders.[84] The court may also excuse the trustee for any breaches of trust where the trustee acted honestly and reasonably. In light of these findings, it appears the overall legal regime is satisfactory when the necessarily restrictive common law is taken with the flexible legislative overlay providing appropriate judicial oversight.

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[*] Final year LLB student at Murdoch University, Murdoch.

[1] [2009] FCA 625, 9 [35] ('Re Mad Canoe').

[2] CGU Insurance Ltd v One.Tel Ltd (in liq) [2010] HCA 26; (2010) 242 CLR 174, 182 [36] (French CJ, Heydon, Crennan, Kiefel and Bell JJ) ('CGU v One.Tel’).

[3] Ibid.

[4] Ibid.

[5] See, eg, the comments of Gordon J in Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 67 [10] ('Caterpillar') on the powers of a corporate trustee in winding up, and the comments of Lindgren J in Re Mad Canoe (n 1) [34]-[36] that were the catalyst for this paper.

[6] See, eg, Mohen (Liquidator), Re Willco Breads Pty Ltd (in liq) [2019] FCA 1539 [14] (Banks-Smith J) ('Re Willcco Breads'); Re Stansfield DIY Wealth Pty Limited (in liq) [2014] NSWSC 1484; (2014) 291 FLR 17, 21 (Brereton J); Caterpillar (n 5) [26], [28] (Gordon J).

[7] See, eg, Corporations Act 2001 (Cth) s 1318; Trustee's Act 1962 (WA) s 75 and s 89. These provisions are discussed in more detail below.

[8] Re Mad Canoe (n 1) [2]-[3] (Lindgren J).

[9] Ibid [34] (Lindgren J).

[10] Ibid [35].

[11] Ibid [36].

[12] [2010] HCA 26; (2010) 242 CLR 174.

[13] Transtate Property Group Pty Ltd (in liq) v Commissioner of Taxation [2018] WADC 143 [13] (‘Transtate Property’).

[14] CGU v One.Tel (n 2) 177 [2] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[15] Ibid 177 [3] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[16] Ibid 177 [5], [16] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[17] Ibid 179 [17] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[18] The deed was also terminated by virtue of s 235(d) of the Bankruptcy Act 1966 (Cth). The consequences of termination through the Bankruptcy Act 1966 (Cth) is beyond the scope of this paper.

[19] CGU v One.Tel (n 2) 182 [29] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[20] Ibid 182 [34] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[21] Ibid 182 [34] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[22] Ibid 182 [36] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[23] Fischer v Nemeske Pty Ltd ([2016] HCA 11; 2016) 257 CLR 615, 653 [107] (Gageler J).

[24] Herdegen v Federal Commissioner of Taxation [1988] FCA 419; (1988) 84 ALR 271, 281 (Gummow J) (‘Herdegen’). See also Corin v Patton (1990) 169 CLR 540, 579 (Deane J); Corumo Holdings Pty Ltd v C ITOH Ltd (1991) 24 NSWLR 370, 399 (Meagher JA) (‘Corumo Holdings’).

[25] CGU v One.Tel (n 2) 183 [36] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[26] Bruton Holdings Pty Ltd (in liq) v Commissioner of Taxation [2011] FCAFC 79 [4] (Stone, Jacobson and Edmonds JJ) (‘Bruton Holdings’); Caterpillar (n 5) [7] (Gordon J); Re Independent Contractor Services (Aust) Pty Ltd (in liq) (No 2) (2016) FLR 222, 238 [44] (Brereton J); Kite v Mooney, in the matter of Mooney’s Contractors Pty Ltd (in liq) (No 2) [2017] FCA 653; (2017) 121 ACSR 158, 173 [57] (Markovic J); Transtate Property (n 13) [13] (Principal Registrar Melville); In the matter of St George’s Development Company Pty Ltd (in liq) [2018] VSC 595 [13] (Kennedy J); Re Mathew Forbes Pty Ltd (in Liq) [2018] VSC 331 [17] (Riordan J); Re Mamounia Pty Ltd (in liq) (No 3) [2018] VSC 65 [66] (Robson J). cf Garra Water Investments Pty Ltd (in liq) v Outback Yard Nursery Pty Ltd & Anor [2012] SASC 44 (Gray J) where the trustee was disqualified but was only considered a bare trustee when a new trustee was appointed.

[27] CGU Insurance (n 2) 182 [2] (French CJ, Heydon, Crennan, Kiefel and Bell JJ)

[28] J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (LexisNexis Butterworths, 7th ed, 2006) 335-6.

[29] Paul Vivian Baker, Snell’s Equity (Sweet & Maxwell, 29th ed, 1990) 103.

[30] Re Mad Canoe (n 1) 9 [35] (Lindgren J).

[31] CGU v One.Tel (n 2) 183 [37] (French CJ, Heydon, Crennan, Kiefel and Bell JJ). See also Transtate Property (n 13) [12] (Principal Registrar Melville); In the Matter of Innovateq Pty Ltd [2018] VSC 124 [73] (Kennedy J).

[32] Chief Commissioner of Stamp Duties (NSW) v ISPT Pty Ltd (1998) 45 NSWLR 639, 651 (Mason P). See also Hergeden (n 24) 281 (Gummow J); Corumo Holdings (n 24) 398 (Meagher JA); Schalit v Joseph Nadler Ltd [1933] 2 KB 79, 81-82 (Goddard J); J D Heydon and M J Leeming (n 30) 48.

[33] Corumo Holdings (n 24) (Meagher JA). However, it should be noted that in this case the court considered the meaning of a bare trustee under statue which may have ‘coloured’ the court’s definition: J D Heydon and M J Leeming (n 30) 48; Mercier Rouse Street Pty Ltd v Burness [2015] VSCA 8 [97] (Santamaria JA).

[34] Herdegen (n 24) 281 (Gummow J).

[35] Ronori Pty Ltd v can 101 071 998 Pty Ltd [2008] NSWSC 246 [6] (Barrett J) ('Ronori').

[36] [2011] FCAFC 79.

[37] Bruton Holdings (n 28) [16] (Stone, Jacobson and Edmonds JJ).

[38] CGU v One.Tel (n 2) 183 [36] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[39] Bruton Holdings (n 28) [16] (Stone, Jacobson and Edmonds JJ).

[40] Ibid.

[41] Ibid [4] (Stone, Jacobson and Edmonds JJ).

[42] Ibid [5] (Stone, Jacobson and Edmonds JJ).

[43] Bruton Holdings (n 28) [6] (Stone, Jacobson and Edmonds JJ)

[44] Ibid. See also Putney Group Pty Ltd v Royal Rehabilitation Centre Sydney [2009] NSWSC 424 [46]-[51] (Forster J).

[45] Bruton Holdings (n 28) [23] (Stone, Jacobson and Edmonds JJ).

[46] Re Mathew Forbes Pty Ltd (in Liq) [2018] VSC 331.

[47] Ibid [17] (Riordan J).

[48] CGU v One.Tel (n 2) 183 [37] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[49] [2018] WADC 143.

[50] Transtate Property (n 13) [13] (Principal Registrar Melville).

[51] (2003) 59 NSWLR 196; [2003] NSWSC 697.

[52] Ibid [280] (Barret J). Note that the authorised report of this case[2003] NSWSC 697; , (2003) 59 NSWLR 196, does not include Barret J’s analysis of bare trustees [280]-[281]. See also Mercier Rouse Street Pty Ltd v Burness [2015] VSCA 8 [98] (Santamaria JA).

[53] ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 697 [280] (Barret J).

[54] Ibid.

[55] CGU v One.Tel (n 2) 183 [37] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[56] Ibid.

[57] [2011] FCA 67.

[58] Ibid [8] (Gordon J).

[59] Kite v Mooney, in the matter of Mooney’s Contractors Pty Ltd (in liq) (No 2) [2017] FCA 653; (2017) 121 ACSR 158, 173 [57] (Markovic J); Amirbeaggi, in the matter of Simpkiss Pty Ltd (in liq) [2018] FCA 2121 [27] (Markovic J).

[60] Re Stansfield DIY Wealth Pty Limited (in liq) [2014] NSWSC 1484; (2014) 291 FLR 17, 21 (Brereton J); Transtate Property (n 13) [18] (Principal Registrar Melville); Fletcher, in the matter of Starrit Pty Ltd (in liq) [2012] FCA 803 [34] (Collier J); Kitay in the matter of South West Kitchens (WA) Pty Ltd [2014] FCA 670; (2014) 224 FCR 408, 410 [14] (McKerracher J) (‘Kitay’); Re Suncoast Restoration Pty Ltd (in liq) and Others [2013] FCA 355; (2013) 211 FCR 203, 209 [14] (Reeves J); Federal Commissioner of Taxation v Bruton Holdings Pty Ltd (in liq) [2008] FCAFC 184; (2008) 173 FCR 472, 498 [79] (Ryan, Mansfield and Dowsett JJ); Caterpillar (n 5) [26], [28] (Gordon J).

[61] Caterpillar (n 5) [6], [26] (Gordon J).

[62] The liquidators acing in that capacity have the same duties and powers of the company as bare trustee.

[63] Caterpillar (n 5) [26], [28] (Gordon J).

[64] Ibid [34]-[37] (Gordon J).

[65] Kitay (n 64) 410 [13] (McKerracher J); Caterpillar (n 5) [20] (Gordon J); Theobald, in the matter of Finplas Pty Ltd [2014] FCA 31 [23(e)] (Siopis J) (‘Theobald’); Apostolou v VA Corporation of Aust Pty Ltd [2010] FCA 64; (2010) 77 ACSR 84, 94 [49] (Finkelstein J) ('Apostolou’).

[66] Kitay (n 64) 410 [14] (McKerracher J); Caterpillar (n 5) [24] (Gordon J); Theobald (n 69) [23(g)] (Siopis J); Apostolou (n 69) [2010] FCA 64; (2010) 77 ACSR 84, 92 [39] (Finkelstein J).

[67] Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344 [50] (Brereton J); Ronori (n 37) [16]-[18] (Barrett J). cf Re Suco Gold Ltd (in liq) (1983) SASR 99.

[68] Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; (2019) 93 ALJR 807, 819 [30] (Kiefel CJ, Keane and Edelman JJ).

[69] See, eg, Transtate Property (n 13) [18] (Principal Registrar Melville). Principal Registrar Melville found that upon vindicating the rights associated with the trust property the bare trustee could create a fund from which it may be entitled to be indemnified against any liabilities it has incurred in dealing with the trust assets.

[70] CGU v One.Tel (n 2) 182 [36] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[71] Caterpillar (n 5) [10] (Gordon J).

[72] Commissioner of Taxation v Bruton Holdings Pty Limited (in liq) [2008] FCAFC 184 [80].

[73] See, eg, Amirbeaggi, in the matter of Simpkiss Pty Ltd (in liq) [2018] FCA 2121; Caterpillar (n 5).

[74] For equivalent provisions in other States see, eg, Trustees Act 1958 (VIC) s 63; Trustees Act 1925 (NSW) s 81..

[75] See, eg, Fletcher, in the matter of Starrit Pty Ltd (in liq) [2012] FCA 803; Gleeson, in the matter of Kingston Property Holdings Pty Limited (No 2) [2017] FCA 974; Caterpillar (n 5).

[76] Caterpillar (n 5) [41] (Gordon J).

[77] Section 479(3) Corporations Act 2001 (Cth), which allowed liquidators to apply to the Court for directions in relation to any particular matter arising from the winding up, has now been repealed. However, liquidators appear to be adequately protected by s 1318 of the Corporations Act 2001 (Cth): See, eg, Mohen (Liquidator), Re Willco Breads Pty Ltd (in liq) [2019] FCA 1539 [14] (Banks-Smith J).

[78] Trustees Act 1958 (VIC) s 67.

[79] CGU v One.Tel (n 2) 182 [34] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[80] Ibid 182 [36] (French CJ, Heydon, Crennan, Kiefel and Bell JJ).

[81] Ibid.

[82] Re Willco Breads (n 6) [14] (Banks-Smith J); Ronori (n 37) [6] (Barrett J).

[83] See, eg, the comments of Gordon J in Caterpillar (n 5) [10] on the powers of a corporate trustee in winding up, and the comments of Lindgren J in Re Mad Canoe (n 1) [34]-[36] that were the catalyst for this paper.

[84] See Corporations Act 2001 (Cth) s 1318; Trustee's Act 1962 (WA) s 75 and s 89.


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