Case: 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (In Liq) (1999) 30 ACSR 337
Outcome: applied
The issue for determination is whether, as the Company has only acted as a corporate trustee, the liquidator is entitled to have his remuneration costs, charges and expenses paid out of Trust assets. In 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (In Liq) (1999) 30 ACSR 337. Finkelstein J considered a number of authorities in which this issue had arisen and said at 385: "These cases establish, clearly enough in my opinion, that provided a liquidator is acting reasonably he is entitled to be indemnified out of trust assets for his costs and expenses in carrying out the following activities: identifying or attempting to identify trust assets; recovering or attempting to recover trusts assets; realising or attempting to realise trust assets; protecting or attempting to protect trust assets; distributing trust assets to the persons beneficially entitled to them. The position is a little more involved as regards work done and expenses incurred in what may be described as general liquidation matters. If that work is unrelated to the beneficiaries and their claims it is difficult to see how the cost could be charged against their assets. In the case of a company that has carried on the business of trustee it might be that much of the work involved in the liquidation is chargeable against trust assets if it can be shown that the liquidation is necessary for the proper administration of the trust. But it is unlikely that this will be so where the company did not act solely as trustee or at least did not act in that capacity to a significant extent. In that event, the liquidator will be required to estimate those of his costs that are attributable to the administration of trust property and only those costs will be charged against the trust assets." 33 In the present case, the Company has acted solely as a trustee, so no issue of apportionment of costs and expenses and remuneration arises. 34 The present case is further complicated by the fact that although the liquidator may have preserved the Trust assets, at relevant times, to the knowledge of the liquidator, the Company was not the trustee of the Trust, the assets of which the liquidator was protecting. Nevertheless, I consider that the principles applied by Finkelstein J in 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (In Liq) (supra) apply in circumstances where there has been confusion or difficulties in relation to the activities of the true trustee of the Trust and where the liquidator has filled a lacuna and acted in the absence of the ability of the true trustee to do so for the purposes of securing and preserving trust assets. The liquidator was inevitably drawn into the proceeding commenced by the Commission as the Company was an initial defendant in that proceeding. 35 At the time the Scheme was being wound up, although the Company was not then the trustee of the Trust, it was inevitably involved in the winding up of the Scheme process because it had been one of the participating parties when the Scheme was established in June 1999. It was the contracting party entitled on a winding up of the Scheme to receive the distribution of the return of investment funds. In short, the participation of the Company in the winding up process of the Scheme was an essential part of that winding up. The liquidator was a necessary party involved in the winding up of the Scheme. Further, so far as the management fees were concerned, the Company, and therefore the liquidator, was the contracting party entitled to recover it. The compromise of that claim could not have occurred without the participation of the liquidator. 36 In these circumstances it is proper and appropriate that the liquidator's remuneration and his costs, charges and expenses incurred in the winding up of the Company be paid out of the assets of the Company and the assets of the Company which are held in trust for the Trust including the funds held by him in the Macquarie account.