Property held by insolvent company brief summary as per Re PBS Building (Qld) Pty Ltd.^[1]

In Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (‘Carter Holt’) it was held that a property on trust by an insolvent company or individual would be normally excluded from the division between creditors.^[2] A primary purpose of the liquidator was to have regard to ‘the benefit of the personal estate of the bankrupt or insolvent person’.^[3] Notably, the Court has acknowledged that the trustee may benefit personally from a trust under the right of exoneration.^[4] Based on the Australian Securities and Investment Commission v Marco (No 9) case,^[5] the applicant in Re PBS Building (Qld) Pty Ltd expressed that a ‘stand-alone right of entitlement’ is not limited under the Corporations Act in regards to property exceptions and may under the IPS extend to trust assets.^[6] This proposition was rejected due to the proposed construction was not supported in the BIF Act and the terms in the BIF Act strictly denies administrators or liquidators the right of exoneration.^[7]

[1] Re PBS Building (Qld) Pty Ltd [2024] QSC 108 (‘PBS Building’).

[2] Ibid [49]; (2019) 268 CLR 524 (‘Carter Holt’).

[3] Carter Holt [27] per Kiefel CJ, Keane and Edelman JJ.

[4] Ibid [28].

[5] (2021) 399 ALR 735.

[6] PBS Building  (no 1) [49].

[7] Ibid [50, 51].