Bruton Holdings Pty Ltd (in liq) v Federal Commissioner of Taxation

Statutory framework 6 The Liquidator seeks orders pursuant to s 81 of the Trustee Act 1925 (NSW) (Trustee Act) and directions pursuant to s 479(3) of the Corporations Act 2001 (Cth) (Corporations Act). 7 Section 81 of the Trustee Act relevantly provides: Advantageous dealings (1) Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release, or disposition, or any purchase, investment, acquisition, expenditure, or transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the instrument, if any, creating the trust, or by law, the Court: (a) may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions, including adjustment of the respective rights of the beneficiaries, as the Court may think fit, and … 8 Section 479(3) of the Corporations Act, prior to its repeal by the Insolvency Law Reform Act 2016 (Cth) (ILR Act), provided: Exercise and control of liquidator's powers (3) The liquidator may apply to the Court for directions in relation to any particular matter arising under the winding up. 9 I pause here to note that s 479 of the Corporations Act was repealed by Item 151 of Sch 2 to the ILR Act. While that repeal was stated to commence from 1 March 2017, the commencement date of certain amendments to the Corporations Act made by the ILR Act has been deferred, such that the repeal will not become effective until 1 September 2017: r 10.25.02(3)(h) of the Corporations Regulations 2001 (Cth). Item 151 of Sch 2 to the ILR Act is included in those amendments that have been deferred. Accordingly, the Liquidator can rely on s 479. 10 A detailed explanation of the date upon which the repeal of, relevantly, s 479 of the Corporations Act will become operative has been undertaken by Robb J in In the matter of Glengrant Civil Pty Ltd (in liq) [2017] NSWSC 843 at [11]-[26]. In that case Robb J also came to the conclusion that s 479 of the Corporations Act remains in effect until 1 September 2017.

consideration 11 The first issue that arises for determination concerns whether orders can be made permitting the Company and the Liquidator to deal with the assets of the Accserv Fund. 12 Upon the appointment of the Liquidator to the Company, the Company ceased to be the trustee of the Accserv Fund. It became a bare trustee of the assets of the Accserv Fund and held, and continues to hold, those assets for the beneficiaries of the Fund. As bare trustee the Company has limited powers to deal with the assets held on trust and has a "duty to maintain and protect the trust property and to refrain from active management that does not fall within this duty": Bruton Holdings Pty Ltd (in liq) v Federal Commissioner of Taxation (2011) 193 FCR 442 at [21]. 13 As noted above, on 31 August 2016 orders were made by this Court appointing the Liquidator as Receiver. In that capacity the Liquidator realised the assets of the Accserv Fund and applied those assets to the payment of liabilities incurred by the Company in its capacity as trustee of the Accserv Fund and to the costs of the receivership, including his remuneration as Receiver. The balance of the funds obtained from realisation of those assets has been placed into a bank account. 14 There are two outstanding matters that the Liquidator must address going forward. First, he must have assessed and pay the tax that the Company is liable to pay under s 295-5(2) of the Income Tax Assessment Act 1997 (Cth) (Income Tax Assessment Act) on the income and gains of the Accserv Fund; and, secondly, after the Company's liability for income tax has been established and discharged, he must transfer the remaining assets of the Accserv Fund to another superannuation fund for the benefit of the sole beneficiary, Mr McGregor. 15 The Liquidator made detailed submissions in relation to the Company's income tax liability. Insofar as those submissions are concerned I note that: (1) the trustee of a superannuation fund is liable to pay tax on the taxable income of the fund; (2) as the liability attaches to the person who was the trustee at the time the liability arose, the Company is liable to pay the tax on the taxable income of the Accserv Fund for the years up to and including the year ending 30 June 2015; (3) for the years after the Company ceased to be the trustee of the Accserv Fund, that is, the years ended 30 June 2016, 30 June 2017 and 30 June 2018, it is unclear who is liable to pay the tax. That is a matter that will need to be resolved as between the Liquidator and the Commissioner of Taxation; (4) section 260-45 of Sch 1 to the Taxation Administration Act 1953 (Cth) (Tax Administration Act) titled "Liquidator's obligation" relevantly provides: … (3) The Commissioner must, as soon as practicable, notify the liquidator of the amount (the notified amount) that the Commissioner considers is enough to discharge any outstanding tax-related liabilities that the company has when the notice is given. (4) The liquidator must not, without the Commissioner's permission, part with any of the company's assets before receiving the Commissioner's notice. … (6) After receiving the Commissioner's notice, the liquidator must set aside, out of the assets available for paying amounts covered by paragraph 5(a) or (b) (the ordinary debts), assets with a value calculated using the following formula: … (7) The liquidator must, in his or her capacity as liquidator, discharge the outstanding tax-related liabilities, to the extent of the value of the assets that the liquidator is required to set aside. (8) The liquidator is personally liable to discharge the liabilities, to the extent of that value, if the liquidator contravenes this section. (5) the Commissioner of Taxation cannot provide the notice required by s 260-45(3) of Sch 1 to the Tax Administration Act until such time as the tax liabilities have been quantified. As the Company has not filed any tax returns since 2002 the quantification of the liabilities is a matter that must be addressed by the Liquidator, who has commenced corresponding with the Commissioner of Taxation about the issue. 16 As submitted by the Liquidator, in complying with the obligations imposed on him to discharge the Company's tax liabilities, he will be acting in his capacity as official liquidator of the Company rather than in his capacity as Receiver. Thus his actions in finalising the tax affairs of the Company will not be covered by the powers conferred on him by the Court's orders made on 31 August 2016. In addition, any income tax payable for the years after the appointment of the Liquidator will relate to a period when the Company was no longer trustee of the Accserv Fund. The discharge of those liabilities may not, prima facie, be within the power of the Company as bare trustee of the assets of the Accserv Fund. Accordingly, the Liquidator seeks orders on behalf of the Company pursuant to s 81 of the Trustee Act and on his own behalf pursuant to s 479(3) of the Corporations Act to permit him to deal with the assets of the Accserv Fund in his capacity as official liquidator of the Company. 17 In Caterpillar Financial Australia Limited v Ovens Nominees Pty Ltd [2011] FCA 677 (Caterpillar Financial) Gordon J considered an application under, among other provisions, s 479(3) of the Corporations Act and s 63 of the Trustee Act 1958 (Vic), the Victorian equivalent of s 81 of the Trustee Act. In that case a company was wound up and a liquidator appointed. The company, whose principal asset was real property, was trustee of the Ovens Trust. It acted in no other capacity. As is the case here, pursuant to the applicable trust deed, the company ceased to be trustee of the Ovens Trust upon the appointment of an official liquidator and no replacement trustee was appointed. Consequently, the company held the trust's assets, including the real property, as bare trustee and, because of the limited powers of a bare trustee to deal with trust assets, made the application for powers necessary to deal with the assets. At [26], after noting that there was no likelihood that a new trustee would be appointed, Gordon J observed that: … The Company is and will remain a bare trustee. It may still hold the assets of the Trust. Its duties, powers and rights are limited to protecting the Trust assets: see, by way of example, Commissioner of Taxation v Bruton Holdings Pty Limited (in liq) [2008] FCAFC 184 at [79]; Commissioner of Taxation v Bruton Holdings Pty Limited (in liq) [2010] FCA 978 at [52] and Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 at 281. However, the bare trustee retains its right of indemnity or exoneration and its lien over the assets of the Trust. 18 After setting out s 63 of the Trustee Act 1958 (Vic), Gordon J noted at [30] that this Court had power to authorise the company as a bare trustee to deal with trust assets. At [35]-[36] her Honour said: 35 As is apparent, there are two questions. First, is it appropriate despite the absence of any power vested in the Company to sell assets of the Trust, for the Court to confer upon the Company the power of sale of the assets of the Trust (s 63 of the Trustee Act) … 36 The answer to the first question is yes. The Company became a bare trustee of the assets of the Trust immediately upon the winding up of the Company and the appointment of the Liquidator: see [26] above. Next, the Company acted only as trustee of the Trust and in no other capacity and all assets owned by the Company are held by it as trustee of the Trust and all liabilities incurred by the Company were incurred by it in its capacity as trustee of the Trust: see [3] above. Thirdly, where, as has occurred here, the appointor is unwilling for whatever reason to appoint a new trustee, it is appropriate for the Court to confer upon the Company the power of sale of the assets of the Trust pursuant to s 63 of the Trustee Act subject, of course, to the duties prescribed by that Act. 19 Re Suncoast Restoration Pty Ltd (in liq) (2013) 211 FCR 203 (Suncoast Restoration) concerned a company that was the trustee of a superannuation fund. The company was placed into administration and subsequently into liquidation. Upon the appointment of the administrators the company was automatically removed from its role as trustee of the fund. The liquidators only became aware of that fact some eight months later and, at that time, approached the Court for relief including orders concerning sale of the fund's assets. In relation to that issue Reeves J said at [61]-[62]: 61 Suncoast does not have a power of sale in respect of the Trust Assets, and it has not had that power since it entered administration on 15 February 2012 (see at [1] and [14] above). To ensure the validity of the sales of the Trust Assets (described above at [16]), the joint liquidators submitted that those sales should be deemed to be within the powers of Suncoast as a trustee of the Trust Fund. They contended that the Court had power to make such an order under s 94 of the Trusts Act. That section provides: (1) Where in the opinion of the court any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, retention, expenditure or other transaction is expedient in the management or administration of any property vested in a trustee, or would be in the best interests of the persons, or the majority of the persons, beneficially interested under the trust, but it is inexpedient or difficult or impracticable to effect the disposition or transaction without the assistance of the court, or it (sic) or they can not be effected by reason of the absence of any power for that purpose vested in the trustee by the trust instrument (if any) or by law, the court may by order confer upon the trustee, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions (if any) as the court may think fit, and may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne, and as to the incidence thereof between capital and income. (2) The court may from time to time rescind or vary any order made under this section, or may make any new or further order; but such a rescission or variation of any order shall not affect any act or thing done in reliance on the order before the person doing the act or thing became aware of the application to the court to rescind or vary the order. (3) An application to the court under this section may be made by the trustees, or by any of them, or by any person beneficially interested under the trust. 62 Section 94(1) gives the Court a very wide discretion to confer upon a trustee the power to deal with trust property. In Caterpillar at [29]-[30], in the context of an equivalent provision in the Victorian Trustee Act, Gordon J considered this power applied equally to a bare trustee, such as Suncoast. So much is also clear from a plain reading of that provision. Consistent with this view, I have already made orders pursuant to s 94 to provide the joint liquidators with the power to proceed with the sale of the Woorim property (see at [4] above). That order does not, of course, address the joint liquidators' earlier entry into the contract of sale for that property. However, given the breadth of the discretion conferred by s 94 of the Trusts Act, I consider it does extend to allow me to make retrospective orders in relation to that sale and to the sales of the other Trust Assets. I would also interpolate that, even though I have already determined to make orders to excuse the joint liquidators for any personal liability they may have incurred in making those sales, those orders do not cover the validity of those sales. 20 In Theobald, in the matter of Finplas Pty Ltd [2014] FCA 31 Siopis J made orders pursuant to s 89 of the Trustees Act 1962 (WA) and s 479(3) of the Corporations Act. Those orders permitted Finplas Pty Ltd (Finplas) and its liquidators to realise the assets of Finplas in circumstances where Finplas had been the trustee of the Finplas Trading Trust but, by operation of a clause in the applicable trust deed, had been removed upon the appointment of the liquidators. This fact only came to the attention of the liquidators a short time after their appointment and after a sale of Finplas' plant and equipment had been effected. Siopis J set out the position of Finplas and its liquidators at [23], including: … (c) Pursuant to the operation of cl 16.3 of the Finplas Trading Trust deed, Finplas was removed as trustee of the Finplas Trading Trust on the appointment of the liquidators on 15 March 2013. The consequence was that from that date Finplas held the trust assets as a bare trustee. … (e) Notwithstanding its removal as trustee of the Finplas Trading Trust, Finplas continued, thereafter, to have the benefit of its right of indemnity and/or exoneration in respect of liabilities which Finplas had incurred in the conduct of the trust business. Finplas also enjoyed the continuing benefit of the equitable lien over the trust assets in support of its rights of indemnity and/or exoneration. (f) Furthermore, by reason of its equitable lien, Finplas had a right to retain possession of the trust assets as against the beneficiaries of the Finplas Trading Trust, even after its removal as trustee of that trust. … (g) On their appointment, the liquidators acquired the benefit of the trustee's right of indemnity and/or exoneration and the equitable lien which supported these rights. However, as a bare trustee of the trust assets, the Finplas did not have a power to sell trust assets. Nor, as I have mentioned, did Finplas have the right to sell the assets by reason of its entitlement to an equitable lien over the assets, save with the assistance of a court. This is because Finplas's rights pursuant to its entitlement to an equitable lien was confined to applying to court for a judicial sale of the assets, or for the appointment of a receiver. (h) It follows, therefore, that in March 2013, when they arranged for Grays Auctioneers to sell the Finplas plant and equipment, the liquidators did not have the power to sell those assets in that manner. 21 After referring to the decisions in Caterpillar Financial and Suncoast Restoration, Siopis J determined that it was appropriate to make the orders sought by the liquidators because it was "plain that the sale of the Finplas plant and equipment was expedient in the administration of the property vested in Finplas and that the assistance of the Court [was] necessary to effect the disposition of the property": at [28]. 22 My attention was also drawn to the decision in Re Stansfield DIY Wealth Pty Limited (in liq) (2014) 291 FLR 17; [2014] NSWSC 1484 (Re Stansfield). At [41] Brereton J cast doubt on the effectiveness of s 81 of the Trustee Act to empower the Court to authorise a trustee to sell trust assets because, among other things, "after the company ceases to be a trustee, a former trustee is not a trustee to whom s 81 could apply". In that case the trustee remained in office despite the appointment of a liquidator but, because of the operation of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act), could not exercise any of the trustee's powers under the trust deed as to do so would contravene that Act. The application in Re Stansfield was made pursuant to s 312 of the SIS Act, s 479(3) of the Corporations Act and s 63 of the Trustee Act. I do not consider myself bound to follow the comments of his Honour insofar as he addressed s 81 of the Trustee Act. 23 In this case, in contrast to the respective positions of the liquidators in Caterpillar Financial and Suncoast Restoration, the Liquidator does not seek orders pursuant to s 81 of the Trustee Act or directions pursuant to s 479(3) of the Corporations Act for the purpose of selling the assets of the Accserv Fund, nor because he has in fact sold those assets without the power to do so. Rather he seeks the orders to enable him to deal with the assets of the Accserv Fund for the purpose of discharging the fund's income tax liabilities, paying any other liabilities or expenses and paying his remuneration, an issue which is addressed more fully below. In my opinion it is appropriate that orders be made and directions given for that purpose. 24 The Company is liable for the income tax liability assessed on the income and gains of the Accserv Fund until the date of its removal as trustee of the fund. Thereafter it is the Liquidator's position that it is not clear who is liable for the income tax liability of the Accserv Fund. But it is sufficiently clear that, as bare trustee, with its limited powers and duties, the Company has no power to deal with the assets of the Accserv Fund to discharge any such liability. Its inability to do so will create issues for the ongoing administration of the Accserv Fund and the finalisation of its winding up, including the transfer of the remaining assets to a new superannuation fund. 25 As has been found to be the case with equivalent provisions in other State legislation relating to the conduct of trustees, s 81 of the Trustee Act gives the Court a wide discretion to confer on a trustee the power to deal with trust property. That discretion has been exercised to confer power upon a bare trustee: see Suncoast Restoration at [62]. It is appropriate that the discretion be exercised to make the orders sought in this instance by the Liquidator. Such orders will permit the Company to apply the assets to the discharge of income tax liabilities, once assessed, and other liabilities, should there be any, as well as costs and expenses. 26 The directions sought under s 479(3) of the Corporations Act will enable the Liquidator to deal with the assets in order to achieve an orderly winding up of the Company by, once again, applying the assets to any income tax liabilities, and paying any other liabilities, expenses and the Liquidator's remuneration. Those directions are appropriate to be made. 27 It is necessary to separately address the issue of the Liquidator's remuneration. The Liquidator claims relief in relation to payment of his remuneration as liquidator and the expenses of the liquidation from the assets of the Accserv Fund. The Liquidator submitted that there were three alternative bases on which that relief could be granted, as follows: (1) first, on the basis of the principle elucidated by King CJ in Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 (Re Suco Gold) at 110; (2) secondly, on the basis of the principle in Re Universal Distributing Company Limited (in liq) (1933) 48 CLR 171 (Universal Distributing) at 174-175, known as the "salvage principle"; and (3) thirdly, on the basis of the principle of equitable compensation adopted by Black J in Re Dungowan Manly Pty Ltd (in liq) (2015) 105 ACSR 648; [2015] NSWSC 491 (Re Dungowan). 28 In Re Suco Gold a Full Court of the Supreme Court of South Australia considered whether directions should be made permitting a liquidator to apply moneys resulting from the sale of assets held by Suco Gold Pty Ltd as trustee of two unit trusts in paying and discharging the costs and expenses of the winding up, including the liquidator's remuneration. On that issue King CJ said at 110: … It is part of the duty of the trustee company to incur debts for the purposes of the trust businesses and, of course, to pay those debts. Upon winding up those debts can only be paid in accordance with the provisions of the Companies Act. This requires necessarily that there be a liquidator and that he incur costs and expenses and be paid remuneration. Section 292 provides that there be paid the costs and expenses of winding up, the taxed costs of the petitioner and the remuneration of the liquidator "in priority to other unsecured debts" (italics mine). The expression "other unsecured debts" appears to imply that the costs and expenses of winding up, the petitioner's costs and the liquidator's remuneration are regarded by the statute as debts of the company. As the company's obligation as trustee to pay the debts incurred in carrying out the trust cannot be performed unless the liquidation proceeds, it seems to me to be reasonable to regard the expenses mentioned above as debts of the company incurred in discharging the duties imposed by the trust and as covered by the trustee's right of indemnity. If that reasoning is wrong, I would, like Lush J. in Re Enhill Pty. Ltd., be prepared to rely on the principle enunciated by Dixon J. in In re Universal Distributing Co. Ltd. (In Liquidation). (footnotes omitted) 29 The approach in Re Suco Gold is, in effect, that the liquidator's costs, expenses and remuneration incurred in the winding up of a trustee company can be recovered under the right of exoneration that the trustee has against the trust assets, provided that they relate to the trustee's obligations as trustee or his or her performance of duties related to the trust. 30 In Caterpillar Financial at [15]-[18] Gordon J said: 15 What then is the position of the creditors of the corporate trustee in the winding up of that company? Creditors of the corporate trustee are entitled to claim in the winding up of the corporate trustee and to rank on the basis of any provable claim they have against the corporate trustee. This claim will be met by the corporate trustee out of the trust assets through the trustee's right of indemnity (subject always to the availability of assets to meet the claim). 16 The trustee's right of indemnity and/or exoneration is not automatically lost in the event that a corporate trustee is wound up in insolvency. Of course, to be payable out of the trust assets, the trust creditor's claim must relate to a liability incurred by the corporate trustee in its capacity as trustee of the trust in respect of which the right of indemnity or right of exoneration attaches. 17 In addition, a liquidator has an entitlement to claim the costs and expenses incurred in winding up the affairs of the corporate trustee provided these relate to the performance of trust duties and, in respect of any liability incurred, the liquidator has a right of indemnity against trust assets and, in respect of any prospective liability, a right of exoneration against those assets. 18 The right of the corporate trustee to have recourse against trust assets to satisfy creditors' claims and the liquidator's costs of winding up when dealing with trust assets continues after the resignation or removal of the corporate trustee. However, as noted above, the authorities are in conflict where the trustee is removed as trustee consequent upon the winding up, by virtue of a disqualification clause in the trust deed. 31 In Woodgate, in the matter of Bell Hire Services Pty Ltd (in liq) [2016] FCA 1583 Farrell J considered an application by the liquidator of a trustee company for directions pursuant to s 479(3) of the Corporations Act, including a direction as to the order of payment from trust assets of the petitioning creditor's costs, his costs of making the application for directions and his remuneration. On the issue of the petitioning creditor's costs and whether they should be paid in priority to the liquidator's remuneration her Honour referred to Re Suco Gold, saying at [33]-[34]: 33 Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 is a case which dealt with the winding up of a company whose sole business was to act as trustee of a trading trust. The Full Court of the Supreme Court of South Australia (SASC) found that the costs of the creditor's petition are costs of the company which are covered by the trustee's right of indemnity on the basis that the company's obligation to pay debts incurred in carrying out the trust cannot be performed unless the liquidation proceeds. The Court also found that the trust assets should be paid according to the statutory order of priority in a winding up: see King CJ at 110. 34 The Court's view that the costs of the winding up application are trust debts may be open to question since winding up is about the status of the company as such, not its functions as trustee. An available view is that the costs of the winding up application are a debt imposed on, and personal to, the company under the Corporations Act. If Mr Vercoe had exercised his right to appoint a new trustee of the Trust, there is no obvious reason why the costs of the winding up application of a company that was the former trustee should be treated as a debt which should be recovered out of trust assets. If that view is right, trust assets could not be used to pay the costs of the winding up. Having not had the benefit of submissions and despite my doubts, I am not persuaded that the view adopted in Re Suco Gold is plainly wrong on the issue of whether the costs of winding up are to be regarded as a trust debt. I would follow it on that issue. 32 Combis, in the matter of Reehal Holdings Pty Ltd (in liq) (Trustee) v Reehal Holdings Pty Ltd (in liq) (Trustee) [2017] FCA 793 (Reehal Holdings), a recent decision of this Court to which I was not taken, concerned, among other things, an application by liquidators of a trustee company for an order that their costs, expenses and remuneration in acting as liquidators be paid from the assets of the Reehal Property Trust and, if those assets were insufficient, from any assets of the company. There was some doubt, based on the applicable trust deed, about whether the company continued as trustee upon its winding up. In relation to that issue Derrington J said at [24]-[28]: 24 Certainly, some of the authorities which I have ascertained have followed Re Suco Gold Pty Ltd (in liquidation) (1983) 33 SASR 99, which adopted a broad and pragmatic approach to the effect that the costs, expenses and remuneration of a liquidator of a corporate trustee incurred in winding up of the affairs of a trustee can be recovered from the right of exoneration which a trustee has as against trust assets, so long as the costs, expenses and remuneration relate to the performance of the trust duties. Those cases include Caterpillar Financial Australia Limited v Ovens Nominees Pty Ltd [2011] FCA 677 [17]-[18]; Garra Water Investments Pty Ltd (in liquidation) v Ourback Yard Nursery Pty Ltd [2012] SASC 44 [31], [38] and [43] and Woodgate, in the matter of Bell Hire Services Pty Ltd (in liquidation) [2016] FCA 1583 [33]- [34], just to name a few. 25 The difficulty with the approach adopted by those authorities is that the court is effectively "regarding", to use the expression of King CJ in Suco Gold, the costs, expenses and remuneration as debts of the trust owed to the trustee and thereby, "trust debts" which were incurred in carrying out the trust. If that is correct, it must necessary (sic) follow that the liquidator's claims would rank equally with other trust creditors and that would necessarily have the consequence that the liquidator would participate pari passu with those creditors. That is, in fact, not how the orders of various courts have applied and indeed, it would appear that in a number of those cases, including Suco Gold, the liquidators have been afforded priority over other trust creditors in relation to their costs, expenses and remuneration. 26 Mr Fitzgerald briefly referred to the decision of Robson J in Re Amerind Pty Ltd (in liquidation) [2017] VSC 127, a decision which is currently under appeal to the Court of Appeal in Victoria. As I understood the submission it was suggested that Re Amerind has the effect that the liquidator must rank pari passu for costs, expenses and remuneration. I cannot ascertain that from Robson J's decision even if he did determine that the trust assets should be distributed pari passu among the trust creditors (see [372]). 27 It is apparent that the diverse state of the authorities has the consequence that clear principles concerning the ability of a liquidator to apply trust assets or a trustee's right of exoneration to meet the claims of liquidators of the trustee company have not yet crystallised. Nor does it seem that there is any authority which is necessarily binding on this Court, although that may be open to debate. 28 Nevertheless, the position appears to be that as between the rights of a liquidator of a trustee company and the claims of trust creditors, the trust creditors will seek to retain an advantage by reason of their rights of subrogation to the equitable right of indemnity held by a trustee. In order to prosecute that claim and obtain that advantage, the trust creditors are obliged to rely upon equity for assistance as, outside of equity, their claims lie only against the trustee in its personal capacity. That being so, in seeking equity the trust creditors would be required to "do equity". For the purposes of any liquidation of a corporate trustee, it is necessary for liquidators to ascertain the nature and scope of the liabilities of the trustee company, to ascertain the assets of the trustee company from which the right of indemnity or exoneration might be utilised and, in doing that, undertake substantial administration of the trust. That work results in a pool of funds within the trust which are capable of being used via the right of exoneration to meet the claims of trust creditors. The generally parallel principles in Re Universal Distributing Co (in liquidation) (1933) 48 CLR 171, 174 - 175 and in Re Berkeley Applegate Investment Consultants Ltd (in liquidation) [1989] Ch 32, provide a justification for permitting the liquidator of the insolvent trustee to recover its costs, expenses and remuneration incurred in the administration of the insolvent trustee company as identified in priority to the claims of the trust creditors. Regardless of how the matter is considered, the expense of having the trust creditors identified, the trust assets identified and realised and a fund of money created for distribution would necessarily fall upon the trust creditors if they pursued recovery action themselves. Without that work the trust creditors would not ever be paid … 33 The principle referred to by Derrington J at [28] is the second alternative basis upon which the Liquidator seeks the orders in relation to his remuneration. That principle was set out by Dixon J in Universal Distributing at 174-175, where his Honour said: … The debenture-holders are creditors who have a specific right to the property for the purpose of paying their debts. But if it is realized in the winding up, a proceeding to which they are thus parties, the proceeds must bear the cost of the realization just as if they had begun a suit for its realization or had themselves realised it without suit … . In applying this principle, only those expenses appear to have been thrown against the fund belonging to the debenture-holders which have been reasonably incurred in the care, preservation and realization of the property. In the present case the liquidator has employed a material part of his time and energies in recovering moneys, both uncalled capital and debts, which enure for the debenture-holder, and in so far as these services increase the remuneration which he receives, I see no reason why the burden should not be thrown upon the proceeds. The question is not whether moneys available for unsecured creditors should be relieved at the expense of the security. In such a case it may be said that the service of collecting enough to discharge the debenture must in any event be performed in order that a surplus may then arise in which the unsecured creditors may participate. The question in the present case is whether the liquidator can charge against the fund passing through his hands as between himself and the person to whom it is payable, so much of the remuneration fixed for work done in the winding up as is referable to the calling in and conversion of the assets producing the fund. I see no reason why remuneration for work done for the exclusive purpose of raising the fund should not be charged upon it. (footnotes omitted) 34 As identified by Derrington J in Reehal Holdings, the authorities concerning the ability of a liquidator to apply trust assets or a trustee's right of exoneration to meet the claims of liquidators of a trustee company are diverse. But the principles set out in Universal Distributing permit the order now sought by the Liquidator to be made: see also Kite v Mooney, in the matter of Mooney's Contractors Pty Ltd (in liq) (No 2) [2017] FCA 653 at [144]-[149]. 35 In my opinion, without the work of the Liquidator the liquidation could not be progressed, assets and creditors could not be identified (indeed, the liability to what appears to be Accserv Fund's sole remaining creditor, the Commissioner of Taxation, could not be crystallised and paid) and the remaining assets could not then be transferred to a new superannuation fund for the benefit of its sole beneficiary, Mr McGregor. In those circumstances I am satisfied that the Liquidator should be paid his remuneration and expenses from the assets of the Accserv Fund. 36 Given this conclusion I do not propose to address the third alternative basis proposed by the Liquidator for recovery of his remuneration.

Conclusion 37 For the reasons set out above I made the orders sought by the Liquidator. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.