WHAT HAPPENED?

On 4 February 2013, Stansfield DIY Wealth Pty Ltd (in liquidation) was wound up, and a liquidator was appointed. At that time, the only function of the company was acting as trustee of a self-managed superannuation fund. It had no assets or liabilities, save in its capacity as trustee of the super fund.

BACKGROUND

Mr Featherstone was recorded as director of Ashala Pty Ltd (Ashala) from 10 March 2004 to 7 October 2005 and from 28 November 2005 to 12 December 2005. Ashala occupied premises which Mr Featherstone owned as trustee for his family trust.

On 7 October 2005, Mr Featherstone agreed to transfer his shares in Ashala and two other related companies to Ms Kristy Marks and for Ms Marks to become the sole director of the three companies. This agreement was recorded in an “agreement letter” and ASIC was notified accordingly.

In our Law-Now of 4 April 2012 (click here for link), we reported on the decision of the court in the case of Leisure (Norwich) II Limited v Luminar Lava Ignite Limited (in administration).  The detailed judgment has now been released, setting out the rationale for the decision and summarising the position on rents in administration generally.

The legal position on this issue is now:

Landlords have lost round two in the ongoing battle as to whether rent should be paid as an expense of the administration. The decision of the Court last week in the X-Leisure / Luminar case was in favour of administrators.

Following the Goldacre case, if an administrator is using the property for the purposes of the administration on the quarter day then the full quarter’s rent is payable as an expense of the administration.  What was not clear, was whether if the administrator was appointed just after the quarter day rent was payable as an expense.