The recent case of Re Dalewon Pty Ltd  QSC 311
has served as a useful reminder of the circumstances in which a
liquidator of a corporate trustee can recover their remuneration
and expenses from trust assets. The decision also considers what a
liquidator must establish where the liquidator is winding up a
corporate trustee who administers multiple trusts.
Dalewon Pty Ltd (the company) was wound up in
insolvency. The company was the trustee of two trusts. In each
case, the company was the legal owner of the trust assets.
The company's liquidators applied for declarations that they
were entitled to a charge over any and all assets of the company
and that they were entitled to realise those assets, in order to
meet their fees and outlays of approximately $200,000 (including
McMurdo J of the Queensland Supreme Court stated the principles
of the trustee's indemnity, namely that a trustee is entitled
to be indemnified against those liabilities that arise in the
course of the discharge of its trust. The trustee holds an
equitable charge or lien over the assets of the trust for this
purpose. In the event that the trustee is wound up, the
company's creditors "subrogate to the beneficial interest
enjoyed by the trustee" and the right to the trustee's
indemnity vests in the trustee's liquidator.
Justice McMurdo made it clear that a liquidator's
entitlement to have his/her fees and expenses paid from trust
moneys was dependent on the fees and expenses being incurred for
the purpose of performing or administering the trust. McMurdo J
referred to the requirement of a "clear nexus" between
the work for which payment is sought and the performance of the
trust or the administration of certain property of the trust.
Therefore it may be difficult to recover costs incurred for general
work associated with the winding up, from the assets of a
In the event of a trustee administering multiple trusts, McMurdo
J stated that in order to recover costs from the assets of a trust,
the liquidator must show a clear connection between the work
performed and the administration of that particular trust.
His Honour assessed that most of the liquidators' work
related to one of the two trusts and in particular participation in
litigation in the administration of that trust.
However, the court was not willing to make the declarations
sought for the reasons that the amounts claimed by the liquidators
had not yet been approved by creditors and there was the potential
for a costs order being made in related proceedings which may
impact on the costs sought by the liquidators. And McMurdo J held
that irrespective of these two reasons, it would not be appropriate
to make the declarations sought as the liquidators' application
had failed to recognise the distinct interests of the respective
trusts and the required connection between the liquidators'
fees and expenses and the administration of one trust or the
This decision confirms that when liquidators of corporate
trustees who administer multiple trusts are applying for their
remuneration and expenses, the liquidators must clearly delineate
which trust the costs were incurred in relation to. Where there is
not a clear link between the work completed and the administration
or performance of a specific trust, it may be difficult for the
liquidators to recover their costs for that work from the assets of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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When determining if a DOCA is to be terminated, public interest can, and often will, outweigh any benefit to creditors.
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