Posted by: Angelo Venardos | Date: 12 August 2014
The answer is no.
In the recent Federal Court of Australia decision of Kitay, in the matter of South West Kitchens (WA) Pty Ltd  FCA 670 (“the decision of Kitay”) the Federal Court held that a liquidator of a corporate trustee could sell the trust assets without first obtaining a court order.
In the decision of Kitay the facts were:
Prior to the decision of Kitay a liquidator of a corporate trustee had to apply to the court for an order authorising the sale of trust assets. Obtaining such orders are inconvenient, time consuming and costly – usually consuming a significant proportion of the assets of the insolvent corporation. This reduced the frequency of orders sought by liquidators to sell trust assets.
However, the decision of Kitay provides authority for the liquidator to exercise the power of sale pursuant to section 477(2)(c) of the Corporations Act 2001 (“the Act”). In other words, now, a liquidator does not have to obtain express authority from the court to sell trust assets in straight forward cases.
The decision of Kitay may affect you if the following circumstances are present:
Once a liquidator is appointed, the liquidator will be able to sell the assets of the trust without obtaining a court order. This has the potential to reduce asset protection and should be remembered when appointing a company as trustee of a trust.
If you are unsure as to whether or not your trust assets are safe, it is important to speak to an experienced lawyer as soon as possible. Please contact me if you have any questions with respect to the above.