Re Gingerboy Pty Ltd [2024] VSC 368 (26 June 2024)

Last Updated: 27 June 2024

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2024 03118

IN THE MATTER OF GINGERBOY PTY LTD (IN LIQUIDATION) (ACN 118 886 730) and the GINGERBOY UNIT TRUST (ABN 58 634 582 754)

BRENT MORGAN IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF GINGERBOY PTY LTD (in Liquidation) (ACN 118 886 730)	First Plaintiff
and
SHANE CREMIN IN HIS CAPACITY AS JOINT AND SEVERAL LIQUIDATOR OF GINGERBOY PTY LTD (in Liquidation) (ACN 118 886 730)	Second Plaintiff

---

JUDGE:	Gorton J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 June 2024
DATE OF JUDGMENT:	26 June 2024
CASE MAY BE CITED AS:	Re Gingerboy Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 368

---

CORPORATIONS – Insolvency – Trusts – Where liquidators appointed to trustee company – Where liquidators of trustee company applied to be appointed receivers of trust assets - Where ipso facto provision in trust deed provides for removal of trustee if placed into liquidation – Where trust was trustee’s only business activities – Where trustee company has right of exoneration from trust assets and liabilities probably exceed value of trust assets – Where corporate trustee in liquidation holds property as bare trustee of unit trust – Where ‘more common course’ to appoint plaintiffs’ as receivers – Liquidators appointed as receivers of all of trust assets – Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liquidation) [2018] FCAFC 40; (2018) 260 FCR 310 – Re Amerind Pty Ltd; Commonwealth v Byrnes & Hewitt [2018] VSCA 41; (2018) 54 VR 230 – Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (in liquidation) [2019] FCA 1023; (2019) 136 ACSR 649 – Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 – Re Cloud Nine Melbourne Pty Ltd [2024] VSC 357 – Trustee Act 1958 (Vic) s 63(1) – Supreme Court (General Civil Procedure) Rules 2015 (Vic) ord 39 – Supreme Court Act 1986 (Vic) s 37.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Ms R Malone	Becketts Lawyers Pty Ltd

HIS HONOUR:

Introduction

1 Gingerboy Pty Ltd is or was the trustee of The Gingerboy Unit Trust, and in that capacity operated the well-known restaurant Gingerboy (‘the business’), at 27-29 Crossley Street in Melbourne’s Central Business District. Brent Leigh Morgan and Shane Justin Cremin, the plaintiffs, have been appointed liquidators of Gingerboy Pty Ltd. They wish to sell its business and seek orders appointing them as joint and several receivers of the assets of the trust pursuant to s 63(1) of the Trustee Act 1958, s 37 of the Supreme Court Act 1986 and/or r 39.02 of the Supreme Court (General Civil Procedure) Rules 2015.
2 The application was made on notice to Mr Teage Walter Ezard (and his wife, an ex-director).^[1] Mr Ezard has been since 19 February 2024 the sole director and secretary of Gingerboy Pty Ltd. He is also the sole director and secretary of Jasmyn Enterprises Pty Ltd, which is the sole unitholder of the trust. Neither Mr Ezard nor Jasmyn Enterprises Pty Ltd appeared to oppose the application.
3 Mr Morgan has deposed, and I accept, based on his investigations and to the best of his belief, that:

(a) Gingerboy Pty Ltd did not engage in any activities other than conducting business in its capacity as trustee of the Gingerboy Unit Trust; and
(b) Gingerboy Pty Ltd is insolvent, with liabilities incurred as trustee in excess of $523,000; and
(c) the assets of the trust are no more than $200,000.

4 The winding up in insolvency of a trustee company, such as Gingerboy Pty Ltd, has complications. A trustee company is personally liable for debts it incurs,^[2] but holds assets on trust. Because of this, liquidators of a trustee company do not have power under s 477 of the Corporations Act 2001 (Cth) simply to sell the trust property and to distribute the proceeds to creditors under the insolvency regime.^[3] However, for debts incurred by it as trustee, a trustee company has a personal right of exoneration out of the trust assets supported by a proprietary right or lien over those assets.^[4] That right of exoneration together with the proprietary right or lien over trust assets take priority over any interest in those assets held by the trust beneficiaries. In a winding up, the trustee company’s personal right of exoneration and associated proprietary rights are assets to be realised and distributed by its liquidators to its creditors.^[5] (Because Gingerboy Pty Ltd only incurred liabilities in its capacity as trustee, it is not necessary to consider whether assets realised in this way must be applied to trust creditors before other creditors.^[6]) In this way, the liquidators of a trustee company are, ultimately, able to access trust assets to meet the trustee company’s liabilities. More particularly, and although the lien itself does not confer a power of sale,^[7] and if the trust deed does not expressly give the trustee a power of sale in these circumstances, the Court may grant a power of sale under s 63 of the Trustee Act 1958 which provides as follows:

63 Power of Court to authorize dealings with trust property

(1) Where in the management or administration of any property vested in trustees, any sale ... or other disposition ..., is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument (if any) or by law, the Court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose on such terms and subject to such provisions and conditions (if any) as the Court thinks fit and may direct in what manner any money authorized to be expended, and the costs of any transaction are to be paid or borne as between capital and income.

5 Further difficulties arise, however, if the trustee company has ceased to be the trustee of the trust. That is probably the case here. The trust deed provided that Gingerboy Pty Ltd ‘shall ... be removed’ as trustee of the trust ‘if it shall go into liquidation’:

6. Removal and Retirement of Trustee

6.1 The Trustee shall only in any one of the following circumstances be removed:
...

(b) if it shall go into liquidation ... or if a receiver shall be appointed of the undertaking of the Trustee of any part thereof;

...
whereupon in any of these events the Trustee covenants that it will retire from office as Trustee.
6.3 On the removal or retirement of the Trustee under any of the foregoing provisions of this clause the Unit Holders shall thereupon by an Ordinary Resolution of Unit Holders appoint some other person to be a Trustee of the Trust.

6 There is a tension between the first part of the clause, which suggests that the Trustee is automatically ‘removed’, and the second part of the clause, which suggests that the removal would only follow a subsequent retirement. Presumably, either Gingerboy Pty Ltd has ceased to be trustee, or is now obliged to retire from that office. Either way, Gingerboy Pty Ltd is probably now only a ‘bare trustee’, with the right or obligation to hold the trust assets but stripped of its powers under the trust deed, until such time as a new trustee is appointed by the unit holders. ^[8] For so long as it remains a bare trustee, the Court would still have the power, under s 63 of the Trustee Act 1958, to confer on it a power of sale. That said, in circumstances where Gingerboy Pty Ltd’s status as a trustee at all is dependent on the unit holders not appointing a new trustee, it seems undesirable to use s 63 of the Trustee Act 1958 to confer a power of sale if another practical method may be employed that allows the liquidators to take advantage of Gingerboy Pty Ltd’s right of exoneration.^[9] For completeness, I note that Gingerboy Pty Ltd’s right of exoneration would survive its removal as trustee.
7 Section 37 of the Supreme Court Act 1986 provides as follows:

37 Injunctions and receivers

(1) The Court may by order, whether interlocutory or final, ... appoint a receiver if it is just and convenient to do so.

(2) An order made under subsection (1) may be made either unconditionally or on such terms and conditions as the Court thinks just.

8 The appointment of the liquidators of a trustee company as receivers of trust property for the purpose of selling that trust property and applying it in satisfaction of the company’s right of exoneration out of trust assets is a recognised way of overcoming the difficulties that arise in a case such as this. Indeed, Moshinsky J described an application to be appointed a receiver as a ‘more common course’ than applying for a power of sale under the Trustee Act 1958.^[10]
9 Gingerboy Pty Ltd has two accounts with Westpac Banking Group that are both named ‘Gingerboy Pty Ltd as trustee for the Gingerboy Unit Trust’. Westpac has not allowed Mr Morgan or Mr Cremin to access those accounts on the grounds that they are accounts of the trust and, by reason of their appointment, Gingerboy Pty Ltd is no longer the trustee of that trust. Mr Morgan and Mr Cremin are dealing with potential purchasers of the trust’s business but say, and I accept, they ‘cannot progress those sale negotiations in any genuine way given the position adopted by Westpac’ and the possibility that Gingerboy Pty Ltd is no longer the trustee of the trust.
10 In the circumstances of this case, I am satisfied, for the purpose of s 37 of the Supreme Court Act 1986, that it is just and convenient to appoint Mr Morgan and Mr Cremin as receivers of trust assets for the purpose of selling the trust assets and distributing the proceeds amongst trust creditors in accordance with the order of priority contained in pt 5.6 of the Corporations Act 2001 (Cth). As noted above, Mr Morgan has deposed that the liabilities incurred by Gingerboy Pty Ltd in operating the trust exceed the value of the trust assets. In those circumstances, I consider it appropriate to appoint Mr Morgan and Mr Cremin as receivers of all the trust assets.
11 Order 39 of the Supreme Court (General Civil Procedure) Rules 2015 requires that, unless the Court otherwise orders:

(a) a proposed receiver must file a written consent to their appointment before they are appointed; and
(b) a receiver shall give security approved by the Court that the receiver will account for what the receiver receives and deal with it as the Court directs.

12 Those requirements are particularly applicable when a receiver is being appointed, for example, to prevent assets in dispute being dissipated. I consider them unnecessary in circumstances, such as those under consideration here, where the persons to be appointed are already liquidators of a trustee company and are being appointed in order to facilitate the orderly winding up of that company. Accordingly, I will dispense with those requirements.
13 I will order that:

(a) Pursuant to s 37 of the Supreme Court Act 1986, Brent Leigh Morgan and Shane Justin Cremin be appointed as receivers (‘the Receivers’) of the business and assets of The Gingerboy Unit Trust established by Deed of Trust dated 20 March 2006 (‘the Trust’) for the purpose of realising those assets and distributing them in accordance with the priorities contained in pt 5.6 of the Corporations Act 2001 (Cth);
(b) The requirements of rr 39.04 and 39.05 of the Supreme Court (General Civil Procedure) Rules 2015 be dispensed with.
(c) The Receivers have, in respect of the assets of the Trust, the powers that a receiver has in respect of the business and property of a company under s 420 of the Corporations Act 2001 (Cth) as if the reference in that section to ‘the corporation’ were a reference to the Gingerboy Unit Trust (ABN 58 634 582 754), including without limitation, the power to do all things necessary or convenient to:

(i) investigate transactions made using funds derived from the assets of the Trust;
(ii) demand the books and records of the Trust from any person;
(iii) sell the assets of the Trust;
(iv) bring or continue any claim or Court proceeding against any party on behalf of the Trust;
(v) determine and make payment of claims against the assets of the Trust;
(vi) distribute the proceeds of sale of the assets of the Trust (after payment of the remuneration, costs and expenses of the plaintiffs as the liquidators of Gingerboy Pty Ltd (in Liquidation) (ACN 118 886 730) and as the Receivers of the Trust) to pay the creditors of the Trust pursuant to the priorities described under the provisions of the Corporations Act 2001 (Cth);
(vii) distribute any surplus to the new trustee of the Trust, or, if there is no trustee, to the beneficiaries of the Trust; and
(viii) execute any documents relating to the Trust.

(d) The remuneration, costs and expenses of the Receivers as liquidators of Gingerboy Pty Ltd (in Liquidation) (ACN 118 886 730) and as the Receivers of the assets of the Trust, be paid from the assets of the Trust.
(e) The Receivers may apply to the Court for orders discharging and releasing themselves as receivers of the assets of the Trust on 7 business days’ notice by sending an email to the Commercial Court Registry; and
(f) Any persons who can demonstrate sufficient interest to modify or discharge any of these orders have liberty to apply on 48 hours’ notice to the plaintiffs.

---

^[1] Ms Tina Ezard was a director of Gingerboy Pty Ltd from 26 July 2023 to 19 February 2024.

^[2] Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360, 367 (Stephen, Mason, Aickin and Wilson JJ).

^[3] Re Amerind Pty Ltd; Commonwealth v Byrnes & Hewitt [2018] VSCA 41; (2018) 54 VR 230, 245-246 [62] (Ferguson CJ, Whelan, Kyrou, McLeish and Dodds-Streeton JJA); Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (in liquidation) [2019] FCA 1023; (2019) 136 ACSR 649, 655-656 [49] (Moshinksy J); In the matter of Urban Property Melbourne Pty Ltd [2021] VSC 847, [30] (M Osborne J).

^[4] Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360, 367 (Stephen, Mason, Aickin and Wilson JJ); Re Amerind Pty Ltd [2018] VSCA 41; (2018) 54 VR 230, 236 [22] (Ferguson CJ, Whelan, Kyrou, McLeish and Dodds-Streeton JJA);

^[5] Octavo Investments v Knight [1979] HCA 61; (1997) 144 CLR 360, 367, 369-370 (Stephen, Mason, Aickin and Wilson JJ); Re Amerind Pty Ltd; Commonwealth v Byrnes & Hewitt [2018] VSCA 41; (2018) 54 VR 230, 253 [96], 287 [269], 289 [281]; Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liquidation) [2018] FCAFC 40; (2018) 260 FCR 310, 333-334 [91], 339 [109] (answering question 2 on page 334); 339 [110] (answering question 3); 341 [121] (Allsop CJ); [196] (Farrell J); Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (in liquidation) [2019] FCA 1023; (2019) 136 ACSR 649, 655 [49] (Moshinksy J).

^[6] Cf Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (in liquidation) [2019] FCA 1023; (2019) 136 ACSR 649, 656 [51] (Moshinksy J).

^[7] Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liquidation) [2018] FCAFC 40; (2018) 260 FCR 310, 323 [44], 333 [89], [91] (Allsop CJ).

^[8] Ronori Pty Ltd v ACN 101 071 998 Pty Ltd [2008] NSWSC 246, [6] (Barrett J); Bruton Holdings Pty Ltd (in liq) v Federal Commissioner of Taxation [2009] HCA 32; (2009) 239 CLR 346, 358; Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (in liquidation) [2019] FCA 1023; (2019) 136 ACSR 649, 653 [34] (Moshinsky J); Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677, [24] (Gordon J); Jones v Matrix Partners [2018] FCAFC 40; (2018) 260 FCR 310, 344 [142] (Siopis J), 350 [182] (Farrell J); Re Cloud Nine Melbourne Pty Ltd [2024] VSC 357, [16] (Delany J). I note that in Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd, the trust deed itself provided that the trustee on removal remained as ‘bare trustee’ until property had vested in the new trustee, and also that the old trustee held as bare trustee for the new trustee (not the trust beneficiaries).

^[9] Cf Re Cloud Nine Melbourne Pty Ltd [2024] VSC 357, [22] (Delany J).

^[10] Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (in liquidation) [2019] FCA 1023; (2019) 136 ACSR 649, 656 [50] (Moshinsky J).