Calabretta & Anor v Wiltshire [2020] QSC 103

SUPREME COURT OF QUEENSLAND CITATION: Calabretta & another v Wiltshire [2020] QSC 103 PARTIES: DOMENIC CALABRETTA AS LIQUIDATOR OF WILTSHIRE LAWYERS PTY LTD (IN LIQUIDATION) ACN 132 100 255 (first applicant) WILTSHIRE LAWYERS PTY LTD (IN LIQUIDATION) ACN 132 100 255 (second applicant) v ALANNA WILTSHIRE AS TRUSTEE FOR THE WILTSHIRE FAMILY TRUST (respondent) FILE NO/S: BS No 4033 of 2020 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: 7 May 2020 DELIVERED AT: Brisbane HEARING DATE: 1 May 2020 (on the papers) JUDGE: Williams J ORDER: 1. The first applicant be appointed, without security, as the receiver and manager (“the Receiver”) of the trust known as the Wiltshire Lawyers Trust ABN 82 878 583 650 (“the Trust”). 2. The Receiver is granted all the powers provided for by s 420 of the Corporations Act 2001 (Cth) as if the reference therein to “the corporation” were a reference to the Trust. 3. The Receiver’s reasonable costs, expenses, and remuneration in acting as receiver and manager to the Trust are to be paid from the assets of the Trust. 4. The remuneration of the first applicant as liquidator of the second applicant for the period from his appointment until 1 May 2020 is to be paid from the assets of the Trust. 5. The costs of the application be paid from the assets of the Trust. -- 1 of 7 -- 2 6. The first applicant has liberty to apply, including for approval of his remuneration in acting as receiver and manager. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – MOTIONS, INTERLOCUTORY APPLICATIONS AND OTHER PRE-TRIAL MATTERS – OTHER MATTERS – where applicants sought determination of application without an oral hearing – whether it is appropriate for application to be dealt with without an oral hearing pursuant to r 489 Uniform Civil Procedure Rules 1999 (Qld) (UCPR) CORPORATIONS – RECEIVERS, CONTROLLERS AND MANAGERS – APPOINTMENT – GENERALLY – where first applicant is the liquidator of the company – where first applicant applied to be appointed as receiver and manager of the former corporate trustee – whether appropriate in the circumstances Civil Proceedings Act 2011 (Qld), s 12 Corporations Act 2001 (Cth), s 420 Federal Court of Australia Act 1976, s 57 Legal Profession Act 2007, s 498 Uniform Civil Procedure Rules 1999 (Qld), r 489 Hosking, in the matter of Business Aptitude Pty Ltd (in liq) [2016] FCA 1438, considered Kite v Mooney [2016] FCA 886, cited Re Hundy (as liquidator of Enviro Friendly Products Pty Ltd) (in liq) [2013] FCA 582, cited QBE Insurance (Aust) Pty Ltd v WA Metal Recycling Pty Ltd [2016] FCA 238, cited COUNSEL: SC Russell for the applicants No appearance for the respondent SOLICITORS: CJM Lawyers for the applicants [1] The first and second applicants are applying to the court for the following orders: (a) Pursuant to r 489 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) that this application be decided without an oral hearing. (b) Pursuant to s 12 of the Civil Proceedings Act 2011 (Qld): (i) That the first applicant be appointed as receiver and manager, without security, of the assets and undertakings of the trust known as the Wiltshire Lawyers Trust ABN 82 878 583 650 (the Trust); (ii) The first applicant be granted all the powers that are provided for by s 420 of the Corporations Act 2001 (Cth) as if the reference therein to “the corporation” were a reference to the Trust; -- 2 of 7 -- 3 (iii) The first applicant’s reasonable costs, expenses and remuneration in acting as receiver and manager be paid from the assets of the Trust. (c) The remuneration of the first applicant as liquidator of the second applicant for the period from his appointment until the date of the orders sought by this application be payable from the assets of the Trust. (d) The costs of this application be paid from the assets of the Trust. [2] The application was listed on the papers on 1 May 2020. [3] Two affidavits were filed in support of the application: (a) An affidavit of Domenic Calabretta as liquidator of the second applicant affirmed on 2 April 2020; and (b) An affidavit of service of Jeffrey Patrick Lucas affirmed on 20 April 2020. Determination without oral hearing [4] The first issue to be determined is whether it is appropriate to determine this application without an oral hearing. [5] Rule 489 UCPR states as follows: “(1) A party making an application, including an application in a proceeding, may propose in the application that it be decided without an oral hearing. (2) If the applicant proposes the application be decided without an oral hearing, the court must decide the application without an oral hearing unless— (a) under rule 491, the court considers it inappropriate to do so; or (b) under rule 494, the respondent requires an oral hearing; or (c) under rule 495, the applicant abandons the request for a decision without an oral hearing; or (d) the Chief Justice or Chief Judge suspends the operation of this rule by direction.” [6] The exceptions outlined in subparagraphs (b), (c) and (d) are not relevant to the current application. [7] Rule 491 UCPR in relation to exception in subparagraph (a) states as follows: “(1) The court may decide at any time that an application is inappropriate for decision without an oral hearing. (2) If the court decides this before the date set for deciding the application, the court— (a) must immediately notify the parties to the application of the decision by telephone or in some other way; and -- 3 of 7 -- 4 (b) may set a date for hearing.” [8] The applicants, in their written submissions dated 7 April 2020 (Submissions), submit that:1 “It is not inappropriate to decide this application without an oral hearing because: (a) The COVID notice requests that petitioners endeavour to make applications on the papers where that is feasible; (b) Applications of this type, while not a mere formality, are nevertheless relatively straightforward and the course proposed by the application is one which the authorities establish as the orthodox approach.” [9] The affidavit of service of Jeffrey Lucas establishes that on 15 April 2020 an email was sent to the address of Mrs Alanna Wiltshire, who is the wife of Mr Andrew Wiltshire, the former director of the second applicant in these proceedings, inquiring as to whether she was willing to accept service by email in these proceedings. Further, on 15 April 2020, Mrs Wiltshire responded advising of her willingness to accept service via email.2 [10] On 20 April 2020, an email was sent to Mrs Wiltshire with a copy of the originating application, the affidavit of Domenic Calabretta and the applicants’ submissions.3 [11] The originating application attached the relevant notice proposing the application be dealt with without an oral hearing. Further, the originating application dated 9 April 2020 is endorsed with a handwritten annotation that the matter would be listed on 1 May 2020.4 [12] The respondent has not filed and served a Form 50 requiring an oral hearing. Further, the respondent has not filed and served any response, including written submissions or evidence at least three days before the date set for deciding the application. By the notice attached to the originating application, the respondent was on notice that if these steps were not taken then the orders sought could be made without further notice. [13] In these circumstances, I consider that it is appropriate to determine the application without an oral hearing. Appointment of receivers and remuneration and costs [14] The first applicant is the liquidator of Wiltshire Lawyers Pty Ltd ACN 132 100 255 (in liquidation). The first applicant applies to be appointed as receiver and manager of the assets and undertakings of the Wiltshire Lawyers Trust ABN 82 878 583 650 (Trust). 1 Submissions dated 7 April 2020 [CFI 3] at [5]. 2 See Exhibit JPL-01 of affidavit of Jeffrey Lucas affirmed 20 April 2020. 3 See Exhibit JPL-02 of affidavit of Jeffrey Lucas affirmed 20 April 2020. 4 See Originating Application filed 9 April 2020 [CFI 1]. -- 4 of 7 -- 5 [15] The applicants submit that the appointment of the first applicant as receiver and manager of the Trust is “well recognised as a course open to liquidators of former corporate trustees so as to overcome any problems associated with the former trustee’s lack of a power of sale in respect of the trust assets.”5 [16] Paragraph 6 of the affidavit of Domenic Calabretta sets out relevant background as follows: “(a) The second applicant had carried on the business of a law firm, trading under the name ‘Wiltshire Family Lawyers’ from premises at Benowa, Queensland; (b) The second applicant had carried on that business as trustee for the Trust; (c) The Trust operated as a trading trust, with numerous assets and expenses relating to the operations of the second applicant being recorded in the Trust’s books and records; (d) The Trust was governed by deed, a true copy which is annexed hereto and marked ‘DC-02’; (e) The Second Respondent had not carried on any other undertaking in its own right or as trustee for any other trust; and (f) The Second Respondent did not does not [sic] have any assets or liabilities in its own right or as trustee for any other trust.” [17] The affidavit of Mr Calabretta also annexes a copy of the financial statements for the 2018 financial year for the second applicant and the Trust.6 [18] The applicants, in their submissions, state that “[t]he most recent financial statements of the Trust suggest that there will be assets which the company holds on Trust which will need to be sold.”7 [19] In this regard, the applicants’ submissions refer to property, plant and equipment with the book value of $283,477.00 as at 30 June 2018.8 [20] At paragraph 8 of his affidavit, Mr Calabretta states his belief that clause 28 of the Trust Deed operates to remove the second applicant as trustee of the Trust and, as a consequence, the liquidator considers that he is unable to deal with the assets of the Trust. [21] Exhibit “DC-01” to the affidavit of Mr Calabretta shows that the liquidator was appointed in a creditors’ voluntary winding up of the company on 13 March 2020. Subsequent to that appointment, the liquidator has taken the steps outlined in paragraph 9 of the affidavit of Mr Calabretta. [22] This includes liaising with the Queensland Law Society in relation to the liquidation and the management of regulated property of the Trust. 5 Submissions dated 7 April 2020 [CFI 3] at [1]. 6 See Exhibit DC-03. 7 Submissions dated 7 April 2020 [CFI 3] at [9]. 8 Submissions dated 7 April 2020 [CFI 3] at [9], footnote 7. -- 5 of 7 -- 6 [23] Further, at paragraph 16 of his affidavit, Mr Calabretta refers to the Queensland Law Society passing a resolution in respect of appointing receivers of the regulated property of the Trust and exhibits the notice of appointment of receivers dated 26 March 2020 in respect of the law practice.9 This shows the appointment of several members of CPA Australia employed by the Queensland Law Society, two solicitors employed by the Queensland Law Society and two accountants employed by the Queensland Law Society jointly and severally as receivers of the regulated property of the incorporated legal practice of Wiltshire Lawyers Pty Ltd trading as Wiltshire Family Lawyers pursuant to s 498(2)(c) of the Legal Profession Act 2007. [24] The receivers appointed by the Queensland Law Society will deal with the regulated property of the practice and wind up and terminate the affairs of the practice. Once the steps to be undertaken by the Queensland Law Society have been finalised then there will be outstanding assets that will need to be dealt with. [25] The applicants submit that it is appropriate on the authorities to appoint the liquidator of a former corporate trustee as receiver and manager of the Trust in order to protect the company’s right of indemnity pending distribution of the assets of the Trust.10 [26] Further, it is submitted that once the Queensland Law Society receivers have dealt with the regulated property then it will be necessary for the liquidator to cause the company to get in assets and to apply those assets in satisfaction of the company’s right of indemnity: that is, by applying those Trust assets to discharge liabilities the company incurred as trustee.11 [27] The liquidator, as the liquidator of a former trustee, lacks the power to do so. In these circumstances, it is submitted that appointing the liquidator as receiver of the assets and undertakings of the Trust is a well-recognised solution.12 [28] References is made to various cases which support the proposed approach of appointing a liquidator as receiver and manager. This is based on the general legal principles as follows:13 (a) The general ground upon which the court appoints a receiver is for protection or preservation of property for the benefit of persons who have an interest in it. (b) Where a trustee is removed, it retains a right of indemnity from the trust assets secured by an equitable charge over them for its liabilities incurred by reason of acting as trustee. (c) There is a conflict of authority as to whether the liquidator of a corporate trustee, which has ceased to be trustee, has power to sell assets to enforce the (former) trustee’s right of indemnity. [29] The submissions refer to a number of Federal Court authorities that support the proposition that “notwithstanding this conflict of authority, it is well-established that 9 See Exhibit DC-06. 10 Submissions dated 7 April 2020 [CFI 3] at [7]. 11 Submissions dated 7 April 2020 [CFI 3] at [17]. 12 Submissions dated 7 April 2020 [CFI 3] at [18]. 13 See Hosking, in the matter of Business Aptitude Pty Ltd (in liquidation) [2016] FCA 1438 per Gleeson J at [17] to [19] (‘Hosking’). -- 6 of 7 -- 7 a receiver and manager can be appointed over trust property to secure the trustee’s right of indemnity out of the assets of the trust”.14 (references omitted) [30] The applicants also seek orders: (a) Permitting the first applicant’s reasonable costs, expenses and remuneration to be paid from assets of the Trust in an amount which will need to be proved as reasonable by the court; (b) Permitting his remuneration as liquidator for the period from his appointment to the hearing of his application to be paid from the Trust, once fixed in the ordinary course. [31] In the circumstances, I am satisfied that it is appropriate to make the orders sought and accordingly the court orders as follows: 1. The first applicant be appointed, without security, as the receiver and manager (“the Receiver”) of the trust known as the Wiltshire Lawyers Trust ABN 82 878 583 650 (“the Trust”). 2. The Receiver is granted all the powers provided for by s 420 of the Corporations Act 2001 (Cth) as if the reference therein to “the corporation” were a reference to the Trust. 3. The Receiver’s reasonable costs, expenses, and remuneration in acting as receiver and manager to the Trust are to be paid from the assets of the Trust. 4. The remuneration of the first applicant as liquidator of the second applicant for the period from his appointment until 1 May 2020 is to be paid from the assets of the Trust. 5. The costs of the application be paid from the assets of the Trust. 6. The first applicant has liberty to apply, including for approval of his remuneration in acting as receiver and manager. 14 Hosking [2016] FCA 1438 per Gleeson J at [21]. See also Kite v Mooney [2016] FCA 886 (Yates J); Re Hundy (as liquidator of Enviro Friendly Products Pty Ltd) (in liq) [2013] FCA 852 (Foster J); QBE Insurance (Aust) Pty Ltd v WA Metal Recycling Pty Ltd [2016] FCA 238 (Farrell J). -- 7 of 7 --