Amerind Pty Ltd acted as trustee of the Panel Veneer Processes Trading Trust which carried on business manufacturing and distributing decorative and architectural finishes. In March 2014, receivers and managers were appointed to Amerind by the Bendigo and Adelaide Bank. At the time of the appointment, the business had 174 employees. The receivers traded on before liquidating the assets. The receivers sought directions on the seven issues below on their obligations, before retiring.
First, the Court finds that Amerind was carrying on business solely as a trustee and all assets were held on trust.
Secondly, the Court finds that the receivers should not pay the Commonwealth, as a priority creditor, accrued employee entitlements, under s 433 of the Corporations Act 2001 (Cth) (the Act). The Commonwealth has paid out some $3.8m of accrued employee entitlements under their Fair Entitlement Guarantee Scheme to the employees of the business. Under s 560 of the Act, the Commonwealth has the same priority rights as the employees who received payments from the Commonwealth. Section 433 of the Act requires receivers to pay accrued employee entitlements, as a preference, out of property of the company secured by a circulating security interest. Previously, employee entitlements were to be met in priority out of assets secured by a floating charge.
The Commonwealth, supported by the receivers but opposed by Carter Holt Harvey Wood Products (Australia) Pty Ltd (a creditor of Amerind), contended that the funds held by the receivers were 'property of the company' or that the company's right of indemnity and lien over the trust assets, were 'property of the company' for the purposes of s 433, and accordingly the Commonwealth is entitled to be reimbursed from those funds.
The Court finds that the proceeds of the sale of the trust assets were not 'property of the company' nor was the trustee's right of indemnity and lien 'property of the company' and are not subject to the priority regime in s 433. The Court declines to follow the decision of the Full Court of this Court in Re Enhill Pty Ltd [1983] I VR 561 and follows Independent Contractor Services (Aust) Pty Ltd (in Liq) (No 2) [2016] 305 FLR 222, a decision of the Supreme Court of NSW. The Court finds that it is not bound to follow Re Enhill as it concerned the construction of a Victorian Act, the Companies Act 1961 (Vic) and that Re Independent correctly states the law of Australia with respect to the construction of the Commonwealth Act.
Thirdly, if the priority regime does apply, contrary to the above finding, the Court accepts the receivers' characterisation of certain proceeds of asset sales as: subject to a circulating security interest; not subject to a circulating security interest; or, subject to a circulating security interest but not otherwise subject to s 433.
Fourthly, the Court finds that, if the priority regime does not apply (as so found), the receivers are justified in paying the receivership surplus into Court, to be subject to competing claims, subject to the resolution of whether the receivers are entitled to retain trust moneys to meet their remuneration, costs and expenses.
Fifthly, the Court finds that Alpine Industries MDF Pty Ltd does not have a security interest over part of the receivership surplus. Alpine supplied materials to Amerind under an agreement with a retention of tile clause. Alpine did not register its security interest on the Personal Property Security Register under the Personal Property Security Act 2009 (Cth) until the day before the receivers appointment. The Court finds the security interest was created in 2012 and needed to have been registered 6 months prior to the appointment.
Sixthly, the Court receives certain evidence in the form of summaries pursuant to the Evidence Act 2008 (Vic) in view of the volume and complexity of the underlying material.
Seventhly, the Court reserves its decision on the appropriate apportionment of the receivers' remuneration, costs and expenses of the proceeding over the three categories of assets referred to at issue three, pending further submissions, and reserves the costs of the proceeding generally.