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  4. The Presbyterian Church of Queensland Incorporated by Letters Patent v Attorney-General for the State of Queensland - [2022] QSC 306

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The Presbyterian Church of Queensland Incorporated by Letters Patent v Attorney-General for the State of Queensland[2022] QSC 306

The Presbyterian Church of Queensland Incorporated by Letters Patent v Attorney-General for the State of Queensland[2022] QSC 306

SUPREME COURT OF QUEENSLAND

CITATION:

The Presbyterian Church of Queensland Incorporated by Letters Patent v Attorney-General for the State of Queensland [2022] QSC 306

PARTIES:

THE PRESBYTERIAN CHURCH OF QUEENSLAND INCORPORATED BY LETTERS PATENT

(applicant)

v

ATTORNEY-GENERAL FOR THE STATE OF QUEENSLAND

(respondent)

FILE NO/S:

5437 of 2021

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

19 December 2022, ex tempore

DELIVERED AT:

Brisbane

HEARING DATE:

14 December 2022

JUDGE:

Brown J

ORDER:

Order as per draft.

CATCHWORDS:

CORPORATIONS – RECEIVERS, CONTROLLERS AND MANAGERS – DUTIES AND LIABILITIES – DUTIES – GENERALLY – where the applicant is a body corporate established by letters patent issued under the Religious Educational and Charitable Institutions Act 1861 (Qld) – where receivers have been appointed on an interlocutory basis with a power of sale – where the receivers and managers have been appointed as receivers and managers of the assets, property and undertaking of the applicant – where the receivers and managers seek directions – whether the receivers are justified and authorised in causing the applicant to enter into and complete a contract for the sale of property and to cause the applicant to enter into two commercial tenancy agreements – whether the receivers are justified and authorised in applying the proceeds received by the applicant from the sale of property in payment of remuneration and costs and expenses

Corporations Act 2001 (Cth)

Religious Educational and Charitable Institutions Act 1861 (Qld)

Uniform Civil Procedure Rules 1999 (Qld)

13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) [1990] 30 ACSR 377

COUNSEL:

A J H O'Brien for the applicant

A L Wheatley KC and B J McEniery for the respondent

S J Webster for the receivers and managers

SOLICITORS:

Neumann & Turnour Lawyers for the applicant

Crown Law for the respondent

Allens for the receivers and managers

  1. [1]
    Mr Carter and Mr Owen were appointed as joint and several receivers and managers of the assets, property, and undertaking of the applicant, the Presbyterian Church of Queensland Incorporated by Letters Patent (“PCQ”), by this Court on 12 May 2021. They seek directions from this Court pursuant to rule 272 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) or the Court’s inherent jurisdiction that they are justified in causing PCQ to enter into and complete a contract of sale dated 4 November 2022 with A Future QTC Limited (“AFQTC”), a public company limited by guarantee incorporated, to acquire a property at Spring Hill presently owned by PCQ, and then to cause PCQ to enter into two commercial tenancy agreements: one on behalf of PCQ on a standalone basis and one by PCQ on behalf of the Queensland Theological College (“QTC”).
  2. [2]
    The receivers further seek directions that they are justified in applying the proceeds received by PCQ from the sale of the Spring Hill property for payment of: their remuneration, costs and expenses, including payment of the costs and expenses incurred in connection with the sale of the Spring Hill property; pursuant to paragraph 6(b) of the appointment order any of the receivers’ remuneration in connection with the receivership; and pursuant to paragraph 7(b) of the appointment order any costs and expenses in connection with the receivership. 
  3. [3]
    The receivers seek the advice of the Court that they are not only justified in taking each of the proposed steps but that they are authorised to do so. 
  4. [4]
    PCQ bought the Spring Hill property in 2016.  QTC is a tertiary institution owned and operated by PCQ and has been operating from the Spring Hill property since its acquisition.  Since late 2020, the property has also been used as a location for PCQ’s head office as well as for storage.
  5. [5]
    I have previously set out the background that led to the appointment of the receivers in judgments that I have given in relation to this matter. 
  6. [6]
    Similarly, I have discussed in two earlier judgments the complexities surrounding PCQ’s position, particularly in terms of its status as a Religious Educational and Charitable Institutions Act 1861 (Qld) (“RECI Act”) corporation and a trustee of a charitable trust.  The status of property held by it, and whether the property is held on a specific trust or a general trust, has been the subject of extensive investigation by the receivers.  That has been the subject of a report which has been provided by the receivers to the Court.  The orders sought by the receivers are supported by PCQ and the Attorney-General of Queensland, who has a relevant role given that PCQ is a charitable trust. There is, however, some departure in submissions as to the basis upon which the particular orders sought should be made by reference to the order of 12 May 2021, but there is no issue that the order is justified and that the Court should authorise the sale and entry into the commercial tenancies and the use of the proceeds in the terms requested by the receivers. There is provision in paragraph 10 of the order of 12 May 2021 for its variation, giving the parties liberty to apply in that regard. 
  7. [7]
    The order of 12 May 2021 is an interlocutory order, not a final one.  As such, counsel for the receivers submitted that the Court does not need to finally determine which particular paragraph of the order of 12 May 2021 necessarily authorises the steps which the receiver wishes to take in relation to the sale of the property and the commercial tenancies, as the order is supported by both the Attorney-General and PCQ and therefore the Court is empowered under paragraph 10 of the order of 12 May 2022 to vary the order.
  8. [8]
    As I have indicated, PCQ is a charitable trust, but the extent to which it holds property in that capacity is contentious in relation to proceedings presently involving the Catalyst Group.  The receivers made extensive investigations, as was required by the order of 12 May 2021, to determine whether PCQ held property pursuant to any trusts.  The results of those investigations were delivered on 1 April 2022, pursuant to the order of 12 May 2021, and identified some property which, in the receivers’ opinion, was held on specific trusts and some which was held for general purposes of the church under what is referred to as a general charitable trust. 
  9. [9]
    Consistent with the view of the receivers that the Spring Hill property is most likely held for the purposes of the general charitable trust, one of the bases upon which the receivers seek direction from this Court is that, as I have discussed in earlier judgments, there is a line of authority suggesting that when a charitable trust is intending to alienate property it would normally be imprudent for a charitable trust to dispose of property without first obtaining the sanction of the Court.  The receivers are also concerned to ensure that given the interlocutory nature of their appointment, they obtain the sanction of the Court.  That, of course, does not mean that it is appropriate for the receivers to seek judicial advice in relation to every step which they propose to take when the power is clear and the decision is a commercial one.  It is, however, well recognised in the case law that it is proper for receivers or external administrators to obtain directions from the Court in relation to the sale of property of the entity in relation to the property in respect of which the receivers have been appointed. 
  10. [10]
    In any event, as the property is, as a result of the receivers’ investigation, clearly non-PresCare property, the receivers under paragraph 2(c) of the order of 12 May 2021 are limited insofar as that order provides that until further order, they are not authorised to mortgage, encumber, sell or dispose of any part of the applicant’s property that is not PresCare property, other than for the purposes of subparagraph 2(a)(i) above.  Subparagraph 2(a)(i) provides for the receivers to be authorised to take possession or preserve, maintain, insure, and repair the applicant’s property and PresCare property.
  11. [11]
    The Court has broad powers to provide directions to the receivers.  The power to do so is also expressly referred to in rule 272(3) of the UCPR, with respect to Court appointed receivers.  It is also recognised as part of the Court’s general equitable jurisdiction.  The relevant principles in that regard were summarised in my previous reasons; see for example, the Presbyterian Church of Queensland Incorporated by Letters Patent v the Attorney-General for the State of Queensland [2021] QSC 136 at [11] to [13].  I will not repeat them. 
  12. [12]
    Further, given the possibility that it may be subsequently determined that the property which is the subject of the present application may be found to be property which is impressed with a charitable trust or at least constrained by the provisions of the RECI Act, the Court must be satisfied that the receivers have at least taken into account the relevant considerations that would apply in that instance and have acted consistently with those constraints, should the matter be resolved in that way.  I should clarify what is meant by that.  The Spring Hill property is not the subject of any proceedings on foot with the Catalyst Group where the question of whether property is held on trust or otherwise is the point in dispute.  However, as has been canvassed in previous applications, the result of those proceedings may well affect the characterisation of other property held by PCQ.
  13. [13]
    It is therefore appropriate that the directions are sought to ensure that the receivers act consistently with the requirements of PCQ being found to hold property on charitable trust, as on the evidence of the receivers which has been investigated, it appears likely, in the present case for the Spring Hill property.
  14. [14]
    Extensive evidence has been provided by Mr Owens on behalf of the receivers as to the results of the receivers’ investigations into the Spring Hill property, including the steps leading up to the proposed sale and the proposed terms. 
  15. [15]
    Mr Owens has also set out in detail the proposed terms of the commercial tenancies and valuations that he has taken in that regard, deposing as to why he considers entry into the commercial tenancies is in the best interests of the company.  The sale has been instigated by the fact that one of the operation arms of PCQ, known as PresCare, no longer has sufficient assets to meet the remuneration, costs and expenses of the receivers which have already been incurred in investigating the assets of PresCare.  Work of the receivers has not, however, been limited to that and they have also investigated property held on other specific trusts. 
  16. [16]
    The Spring Hill property has been identified by the receivers on the evidence available to them as being intended to be held by PCQ for the purposes of the general charitable trust, and that it intended to use funds held on the general charitable trust for the purchase of the property.  The purchase was instigated by the need to find a property for the operation of QTC.  The document trail that the receivers have been able to find supports the fact that the Spring Hill property was to be held for the general purposes of the church.  While it was acquired for use by QTC, it was expressly on the basis that it was not to become an asset of QTC, which is not in fact a separate entity per se, and that it would become a “denominational asset”. 
  17. [17]
    The treatment of the property after it was acquired is consistent with it being a general purpose asset of PCQ.  The position is not, however, clear cut.  Although the evidence as to the funds used for the purchase is incomplete, there is evidence that the property may have been purchased using funds from accounts where trust funds have been mixed.  The receivers do not consider that the trusts involved can now be practically identified, given the state of the records, and a full investigation into historical transactions and an attempted reconciliation of all of the transactions is impractical. 
  18. [18]
    Neither PCQ nor the Attorney-General dispute the receivers’ conclusion that it now appears impractical and impossible to determine the full extent and timing of the mixing of funds.  Both support the underlying basis of the order sought by the receivers, namely that the property is to be regarded or best characterised as property of the general charitable trust. 
  19. [19]
    While QTC is not a separate legal entity, it has been conducted as a self-contained operation and has functioned separately with its own bank accounts, board, constitution, and financial accounting.  It has paid all outgoings connected with the Spring Hill property and was responsible for repaying an interest free loan advanced by PCQ for the fit-out, which was not an insignificant amount, until 2020 when PCQ moved in to share the premises. No lease was entered into with QTC, and it was otherwise permitted to occupy the premises rent free.  From their investigations, the receivers consider the undertaking of QTC is held on a specific trust by PCQ for the purpose of establishing and operating the theological college for the Church. 
  20. [20]
    It is evident from the receivers’ financial analysis of PCQ that PCQ does not presently have sufficient available funds to pay the remuneration, costs and expenses incurred by the receivers to date, which the receivers have deferred claiming, and which will be incurred in the future, either funded by the sale of PresCare property or from liquid funds. 
  21. [21]
    The receivers have indicated they cannot continue to conduct the receivership without the funds that will be obtained from the sale, and understandably, have indicated they are not prepared to continue to conduct the receivership without payment for their remuneration, costs and expenses.  Mr Owen has deposed to the fact that the payment of future remuneration and costs will be managed by them carefully, in light of other demands on the funds of PCQ.  Mr Owen has deposed to the fact that he selected the Spring Hill property as the most appropriate property to sell given that the receivers had concluded it was not held on a specific trust, notwithstanding the mixed funds issue, and was a single asset which could be sold to presently meet the various costs required.  If the sale of the Spring Hill property did not occur, PCQ has submitted that other properties of PCQ would have to be sold which may have a more detrimental effect on the conduct of PCQ’s ministry. 
  22. [22]
    The sale price that has been obtained for the Spring Hill property is above the valuation obtained by the receivers for the present market.  It followed a public marketing and sales campaign conducted by Ray White.  That campaign was conducted following consultation with both PCQ and the Attorney-General.  The purchaser, AFQTC, made the highest offer.  PCQ has entered into a contract for sale with AFQTC, but the contract of sale is conditional upon the receivers receiving Court approval.  As such, the advice sought is not retrospective. 
  23. [23]
    AFQTC was specifically incorporated to acquire the Spring Hill property, it appears with a view to transferring ownership to PCQ in the future.  It is also contemplated that the operations of QTC may be transferred to AFQTC in the future.  AFQTC’s board consists of amongst other people, four individuals who also hold positions with QTC.  It is proposed after the sale that two commercial tenancy agreements be entered into with AFQTC, one by PCQ and one by PCQ as trustee for QTC, so it may continue to conduct theological education on behalf of PCQ, consistent with its ministry.  The initial term of the tenancy is proposed to be for 12 months. 
  24. [24]
    The receivers identify the sale of AFQTC to have an additional benefit over and above the fact that it offered the highest purchase price.  The sale to AFQTC will enable the premises to continue to be used by QTC and PCQ if the Court makes the orders that are sought.  That will avoid PCQ incurring considerable relocation costs and the operations of both PCQ and QTC being disrupted.  Mr Owen has deposed to the fact that the terms of the commercial tenancy are generally standard commercial terms that one would find in such a situation. 
  25. [25]
    However, some terms are more favourable to PCQ than standard commercial terms.  PCQ is not required to provide a bank guarantee, there is no rent review clause, and the rent payable is at the lower end of the market range in respect of both tenancies, if not below it, based on valuations provided by Herron Todd White.
  26. [26]
    At the hearing, an affidavit of Mr Brock Morgan was provided updating the state of negotiations of the commercial tenancy.  Further terms had been updated or amended from those considered by Mr Owen that had been negotiated through one of the partners of PCQ.  In particular, the commercial tenancy to be entered into by PCQ on behalf of QTC provides for an upfront payment of the first year’s rent.  It has been confirmed on behalf of those negotiating on behalf of the receivers with the principal of QTC that QTC would have sufficient funds to meet that payment.  The partner dealing with the negotiations is satisfied that the amendment requiring the upfront payment will not adversely affect them, and given the other benefits to QTC, it is said it would not materially alter Mr Owen’s assessment of the proposed tenancy agreement for QTC set out in his affidavit. 
  27. [27]
    Mr Owen was satisfied that both PQC as trustee for QTC and PCQ have financial capacity to pay the rent, particularly given the amounts they have historically paid in respect of the premises. 
  28. [28]
    The proposed amendments to the commercial tenancy agreements that have been summarised by Mr Morgan in his affidavit did not cause either PCQ or the Attorney-General to alter their support for the orders sought in relation to the entry to the commercial tenancies. 
  29. [29]
    In the case of both the sale of the Spring Hill property and the entry into the commercial tenancies, the parties have identified some uncertainty as to whether or what powers they would fall within as provided in the order of 12 May 2021. 
  30. [30]
    Under paragraph 1 of the orders made on 12 May 2021, the receivers’ appointment was made on an interlocutory basis pending the determination of the relief sought in the proceedings and the distribution of surplus property and the undertaking of PresCare. The timing of those further orders contemplated by the originating application is presently in the hands of PCQ.  It presently supports the receivership continuing, notwithstanding that the receivers have delivered the report contemplated under the order of 12 May 2021 and the final relief contemplated in the originating application.  Obviously, the receivership of the assets of PCQ cannot be an open-ended one.  But the receivers are continuing to act and maintain the assets of PCQ in the conduct of PCQ’s operations, including in relation to litigation by the Catalyst Group which was supported by PCQ and the Attorney-General.  As such, presently, the receivers continue to have the role provided for them under the order of 12 May 2021. 
  31. [31]
    Unlike previous applications to this Court for directions, the receivers seek to enter into a sale agreement to sell non-PresCare property.  That said, considerations in relation to non-PresCare arose in the decision made by Justice Freeburn.
  32. [32]
    As set out by the above, the receivers consider that the Spring Hill property is denominational property and held on a general charitable trust by PCQ.  Given the investigations of the receivers, there is, on the evidence that has been set out by them, a proper basis for that characterisation.  Similarly, the receivers’ view that it is impractical and impossible to determine the trusts that may have had funds mixed with the general charitable trust when the property was purchased is well founded, given the matters that have been set out by the receivers.
  33. [33]
    Although the primary reason for the receivers’ appointment was circumstances that had arisen in relation to the conduct of aged care facilities by PresCare, and particularly, exposure arising as a result of default under contracts entered into by PCQ operating as PresCare, the appointment of the receivers, as I have indicated above, was broader and extended to all assets, property, and undertaking of PCQ.
  34. [34]
    The primary purpose of the appointment of receivers was reiterated by Justice Jackson in Fordyce v Ryan [2017] 2 Qd R 240 at [60].  In particular, his Honour stated that the appointment of a receiver is made for a purpose, often to protect the property in dispute in a proceeding or to facilitate the sale and realisation of property for a particular purpose, or for winding up of a partnership. 
  35. [35]
    The receivers submit that given the sale of the Spring Hill property is necessary to pay the costs of the receivership and given the purpose of the receivership is in part to preserve and maintain PCQ’s property, the sale of the Spring Hill property may be characterised as being for the purpose of preserving or maintaining the assets, property, and undertaking of PCQ. 
  36. [36]
    Unlike paragraph 2(b) of the orders made on 12 May 2021, which permits the sale of PresCare property, paragraph 2(c) constrains the receivers’ power to sell non-PresCare property until further order unless it is necessary for the purposes set out in paragraph 2(a)(i). 
  37. [37]
    The receivers submit that the narrower wording of paragraph 2(c) of the order as compared to paragraph 2(b) might be taken to limit the power of sale to circumstances in which the sale is necessary directly to preserve, maintain, insure, or repair specific property of PCQ.  In the present case, the sale of the Spring Hill property is necessitated by the need to pay receivers’ remuneration, expenses and costs which have been incurred to date, and which will be incurred in the future.  While the sale may not be directly to preserve or maintain the specific property of PCQ, in the sense referred to in paragraph 2(a)(i) of the orders of 12 May 2021, the sale is to facilitate the continuation of the receivership which is presently directed to preserving and maintaining the property, assets, and undertaking of PCQ, including all of the assets, property, and undertaking of PresCare property. 
  38. [38]
    It is evident from Mr Owen’s affidavit that the receivers cannot continue to conduct the receivership without the sale of property of PCQ in order for funds to be made available to meet the receivers’ remuneration and costs and expenses incurred and to be incurred by the receivers in the conduct of the receivership.
  39. [39]
    As I have stated, both PCQ and the Attorney-General support the orders sought by the receivers.  Both submit that the Court should make orders which authorise the sale of the Spring Hill property in addition to determining that the sale is justified.  The Attorney-General submits that the sale requires the authorisation of the Court under paragraph 2(c) of the orders made on 12 May 2021, and that the reference “until further order” implicitly provides for the receivers to seek the Court’s approval. 
  40. [40]
    In my view, the present case is one which requires the application to be made to the Court for the authorisation of sale.  The better view is that the reference to a sale or disposal of assets under paragraph 2(c) for the purposes of paragraph 2(a)(i) is confined to the circumstance of the disposal or sale of the asset with a more direct causal link, being directly for the purpose of preserving and maintaining the assets and undertaking of PCQ, such as a rationalisation of assets no longer required by PCQ but which otherwise are costing and draining other assets of PCQ or where the maintenance of an asset is proving too costly to be reasonably maintained without it being to the detriment of other assets and property of PCQ.  While the present sale supports the preservation and maintenance of the assets, property and undertaking of PCQ by supporting the receivers to continue to carry out their role provided under the order of 12 May 2021 to preserve and maintain the assets, the causal link is a more indirect one and is a matter which would require a further Court order as contemplated by the words “until further order” in paragraph 2(c). 
  41. [41]
    I consider that the better view is that the receivers can be authorised to sell non-PresCare property under paragraph 2(c) by a Court order which is contemplated by the words “until further order” in paragraph 2(c) and is consistent with the scope of the receivers’ appointment in paragraph 1 of the order. 
  42. [42]
    In any event, it is not a matter which I have to finally decide.  I am satisfied that the sale of the Spring Hill property is consistent with the purpose for which the receivers have been appointed in ensuring the continued preservation and maintenance of the property, assets, and undertaking of PCQ, and that it is in the interests of PCQ because it presently assists with providing the required funds for the receivership, for work and costs already incurred and for it to continue in the future, where it is subject to appropriate applications being made to the Court, where required, to determine that the receivership continues and the proposed conduct continues to be in the interests of PCQ. 
  43. [43]
    PCQ particularly supports the continuation of the receivership, and the receivers being able to take appropriate steps in the best interests of PCQ.  The continuation of the receivership is also consistent with the direction by the Court that the receivers are justified in continuing the Catalyst Group proceedings. 
  44. [44]
    The justification for the sale of the Spring Hill property has already been canvassed by me in the reasons above.  It is canvassed in far greater detail in the affidavit of Mr Owen. 
  45. [45]
    As I said, I do not need to finally decide the scope of paragraph 2(c) because the order of 12 May 2021 is an interlocutory order with provision for variation in paragraph 10 of the order, and the present orders in relation to the sale are supported by PCQ and the Attorney-General.  The order can be made consistently with paragraph 10 of the order of 12 May 2021. 
  46. [46]
    In the present case, given the uncertainty that surrounded the power of the receivers, it is appropriate for the Court to make an order in terms of the authorisation of the sale. 
  47. [47]
    As to the justification for the sale, the evidence supports Mr Owen’s opinion that the sale is in PCQ’s best interest, for the reasons which are particularly summarised in paragraphs 105, 123 and 140 of his affidavit.  In assessing that evidence, I have adopted a cautious view, given the receivers’ intended use of the funds received from the sale of the property includes payment of their own remuneration and costs and expenses incurred. 
  48. [48]
    I have carefully reviewed the steps, set out by Mr Owen in his affidavit, taken in relation to the sale, including valuations obtained, the sale’s conduct, how the sales campaign was conducted, and the assessments that were made in reaching the view that it was in the best interests of PCQ to enter into a sales contract with AFQTC.  I am satisfied, having regard to the reasons set out by the receivers as to the necessity to sell the property and how the sales process has been conducted, as well as the fact that the sale to AFQTC is not only for the highest offer but will also enable PCQ and QTC to continue to operate from the  premises without having to incur considerable relocation costs and disruption to the conduct of their undertaking, that the sale is justified.
  49. [49]
    As the sale is conditional on the Court giving the orders sought, and completion is still to occur, it is appropriate to provide an order in terms of paragraphs 1 and 2 of the order made on 16 December 2022 with the reasons to be provided, both in respect of the entry into the contract of sale and for the completion of sale, for the reasons that were particularly addressed by PCQ in their submissions. 
  50. [50]
    As a result of the reasons that I have set out above, I determined that it was appropriate for me to make the order in terms of paragraph 1 and 2 of the draft order made on 16 December 2022. 
  51. [51]
    The second aspect of the transaction proposed by the receivers was that the receivers proposed to enter into two commercial tenancy agreements with PCQ standing alone, and PCQ as trustee of QTC.  The receivers believe that PCQ will have sufficient financial resources to pay the proposed rent under the commercial tenancy agreement based on the ongoing income being received by PCQ for the purposes of the general charitable trust.
  52. [52]
    As set out above, assurances have also been obtained by the principal officer of QTC that QTC will have sufficient funds to be able to pay the required rent and outgoings under the commercial tenancy agreement. 
  53. [53]
    As noted by both PCQ at paragraph 19 of its outline of submissions, and the Attorney-General at paragraph 21 of her counsel’s submissions, the sale enables the property to continue to be used for charitable purposes by PCQ.
  54. [54]
    The receiver has set out the reasons why he believes that the preservation and maintenance of PCQ’s property and undertaking is best served by the receivers executing the commercial tenancy agreements on terms no less favourable to PCQ than the proposed commercial tenancy agreement at paragraph 150 of his affidavit.  As I have stated earlier, no party considers that the updated terms of the commercial tenancy agreements proposed by Mr Morgan alter that conclusion in any material way.
  55. [55]
    I am satisfied, for the reasons set out by the receivers, that the entry into the commercial tenancy agreements is consistent with the best interests of the PCQ and for the preservation and maintenance of PCQ’s property and undertaking.  As I have stated, as to the orders sought in relation to commercial tenancies by PCQ and the Attorney-General, the entry into the commercial tenancy agreements is justified.
  56. [56]
    As to the question of the authorisation to enter into the commercial tenancy agreements, there is considerable uncertainty in relation to the receivers’ power to enter into such agreements under the terms of the order of 12 May 2021.  On one view, the receivers have the power to execute any document or do any other act or thing in the name of, or on behalf of, PCQ, and to pay the costs and expenses incurred in the ordinary course of trading business or businesses of PCQ, which supports the entry of the commercial tenancy agreements which support both the business of PCQ and the business of PCQ as trustee of QTC.
  57. [57]
    There is, however, no express power given in the appointment order to enter leases.  Subparagraph (2)(e) of the order made on 12 May 2021 gives the receiver power by virtue of section 420(2)(j) of the Corporations Act 2001 (Cth) to “take on lease … any property necessary or convenient in connection with the carrying on of a business”.  That power, however, is limited to the assets and undertaking of PresCare.
  58. [58]
    Given that express referral to the entry into the leases in the context of PresCare, as opposed to the more general powers to which I have referred, under paragraphs 2(a)(vi) and (vii) of the order of 12 May 2021, there is uncertainty as to the extent of the receivers’ powers to enter into commercial tenancy agreements such as those proposed. 
  59. [59]
    The entry into the commercial tenancy agreements are, however, for the reasons set out, consistent with the continuation of the undertaking of PCQ, both for the general purposes of the Church and also for QTC.
  60. [60]
    The entry into the commercial tenancy agreements also have long-term benefits, given the relationship between AFQTC and PCQ, to ensure the continuation of that ministry. I note the commercial tenancy agreements contain three options to renew the lease to support that continuation at least for the period of those options.  I was therefore satisfied that it was appropriate to make the orders both that the receivers are authorised and justified to enter into the commercial tenancy agreements as provided in paragraph 3 of the orders.
  61. [61]
    Finally, the receivers sought an order that they were justified and were authorised in applying the proceeds received by the applicant for the sale of the land, in payment of any of the remuneration costs and expenses in accordance with the order of Justice Ryan dated 12 May 2021, including the payment of the costs and expenses incurred in connection with the sale of the Spring Hill property, any of the receivers’ remuneration in connection with the receivership, which the receivers are at any time entitled to pay themselves in accordance with paragraphs 6(b) to (f) of the order of 12 May 2021, and any costs and expenses in connection with the receivership.
  62. [62]
    The circumstances in which the order is sought by the receivers are set out in paragraph 53 of the submissions by the receivers’ counsel. The receivers had previously sought and obtained an order that they were justified in using the proceeds of sale of certain assets to pay the remuneration costs and expenses in PCQ (No. 3) and PCQ (No. 4).  In PCQ (No. 3), Justice Freeburn adopted the statement of Justice Finkelstein in 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) [1990] 30 ACSR 377 at 381.
  63. [63]
    Those passages focussed on a receiver’s entitlement to be paid his or her costs in cases in which the ownership of particular monies or property was uncertain.  The receivers, however, submit that the reasoning is apposite in the present case because all of the assets to which the receivers have been appointed are assets over which the Court has, in effect, assumed control.  Further, they submit that during the period in which the receivers remain appointed to take possession of, preserve, maintain, insure and repair the applicant’s property, and PresCare property, the receivers’ entitlement to have resort to the assets and property to which they have been appointed should not be made to depend on a determination and resolution of every complicated question related to the precise trust or trusts on which the property is or was held.
  64. [64]
    In that regard, I note the circumstances in relation to the mixed funds used to purchase the Spring Hill property are not such that the receivers consider that it is practical or possible to determine which funds of which precise trust were used, as well as funds of the general charitable trust, when the property was purchased.  The receivers also note that the bank account which was affected by the mixed funds issue and used to pay the deposit for the Spring Hill property in December 2015 and February 2016 had been overdrawn prior to this on 22 October 2015, which was likely to limit the claims, if any, that any specific trust may have on the Spring Hill property. 
  65. [65]
    Mr Owen, at paragraph 161 of his affidavit, has set out the reasons why he considers the proposed use of the sale proceeds to pay the outstanding amounts is appropriate.
  66. [66]
    The Attorney-General, at paragraphs 25 to 30 of her counsel’s submissions, sets out reasons supporting the terms of the orders sought by the receivers.  In particular, noting the general principle that a trustee may only use trust assets to pay trust debts, otherwise a trustee will be in breach of trust, which is reflected in paragraphs 6(a) and 7(a) of the order made of 12 May 2021, the Attorney-General submits consistently with the approach of Justice Freeburn in PCQ (No. 3), that regard should also be had to what Justice Finkelstein stated in 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) [1990] 30 ACSR 377. The Attorney-General contends that that appears to be given force by the terms of paragraphs (6)(b) and (7)(b) of the appointment order, which permit the receivers to pay their remuneration and costs and expenses from the denominational property or such other asset, property or fund as ordered by the Court.
  67. [67]
    The Attorney-General observes that at the time the appointment order was made, the particular trusts upon which PCQ held property were not known, and that the terms of the orders in paragraphs 6(b) and 7(b) have not been appealed by any party, nor varied by any subsequent order.  As is noted by the Attorney-General, Mr Owen’s opinion is that it is not practically feasible to pay outstanding amounts incurred for the receivership work in connection with certain specific trusts from property held on each specific trust, as set out at paragraph 60(d) of his affidavit.
  68. [68]
    That position is further complicated by the mixed fund issue.  PCQ also submits that it would be appropriate for the Court to make the order in terms of both the receivers being justified and also authorised to use the sale proceeds as provided, for the reasons set out in paragraph 24 of its submissions.  I note no amendment was sought as contemplated in paragraph 25 of PCQ’s submissions.  PCQ supports the proposed sale of the Spring Hill property to fund the continuation of the receivership, including the payment of reasonable remuneration and expenses.
  69. [69]
    I determined that it was appropriate for the Court to make the orders in relation to the sale proceeds from the Spring Hill property, consistent with paragraph 4 of the draft order, due to particularly the mixed funds issue in relation to the Spring Hill property, but also for the reasons that were set out particularly by the receivers and the Attorney-General in their submissions and for the reasons that were set out in detail in Mr Owen’s affidavit, which was supported by Mr Carter, the other receiver.  I was satisfied that the receivers were justified in applying the proceeds as contemplated and it was appropriate to make the order in paragraph 4 of the draft order.
  70. [70]
    The material that was provided to the Court for the purposes of this application contained commercially sensitive confidential information, as well as reference to other confidential information, which resulted in me making the orders contained in paragraphs 5 and 6 of the draft order. These reasons, once revised by me, will be provided to the parties prior to publication to determine whether the content discloses any confidential information which was the subject of the order for redaction.  When the reasons are provided to the parties they will be provided with a reasonable time, namely three business days, to respond to the Court as to whether there is any confidential information in the reasons which may require redaction.
  71. [71]
    For all of the reasons which I have canvassed, I made the orders on 16 December 2022. 
Close

Editorial Notes

  • Published Case Name:

    The Presbyterian Church of Queensland Incorporated by Letters Patent v Attorney-General for the State of Queensland

  • Shortened Case Name:

    The Presbyterian Church of Queensland Incorporated by Letters Patent v Attorney-General for the State of Queensland

  • MNC:

    [2022] QSC 306

  • Court:

    QSC

  • Judge(s):

    Brown J

  • Date:

    19 Dec 2022

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Coromandel Place Pty Ltd v C L Custodians Pty Ltd (in liq) (1990) 30 ACSR 377
3 citations
Jump To
Cite 1 - (1990) 30 ACSR 377
Cite 2 - (1990) 30 ACSR 377
Cite 3 - (1990) 30 ACSR 377
Fordyce v Ryan[2017] 2 Qd R 240; [2016] QSC 307
1 citation
Jump To
Cite 1 - [2017] 2 Qd R 240
The Presbyterian Church of Queensland Incorporated by Letters Patent v Attorney-General for the State of Queensland(2021) 7 QR 794; [2021] QSC 136
1 citation
Jump To
Cite 1 - [2021] QSC 136

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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