Buchler v Talbot

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 44 of 2014

IN THE MATTER OF GREAT SOUTHERN LIMITED (ACN 052 046 536) (IN LIQUIDATION) BETWEEN: ANDREW JOHN SAKER, MARTIN BRUCE JONES, DARREN GORDON WEAVER AND JAMES HENRY STEWART IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF GREAT SOUTHERN LIMITED (ACN 052 046 536) (IN LIQUIDATION)

JUDGE: MCKERRACHER J DATE: 24 JULY 2014 PLACE: PERTH

NATURE OF THE APPLICATION 1 The plaintiffs as liquidators of Great Southern Limited (in liquidation) (GSL) seek directions from the Court pursuant to s 511(1)(a) and s 1337B(1) of the Corporations Act 2001 (Cth) (CA) for determination of questions arising in the winding up of GSL. Substantial affidavit material is filed in support of the application. Widespread notice of the application was apparently given by the plaintiffs but only two former employees of GSL attended the hearing and one made capable oral submissions. Another employee, with leave, also filed quite detailed written submissions some weeks after the hearing. 2 The plaintiffs, in essence, want to know if they are bound by an obligation to hold certain funds 'on trust' and how those funds should be treated if they are not so bound.

RELEVANT FACTS 3 GSL and its subsidiaries engaged in the promotion and conduct of a number of agricultural managed investment schemes prior to 16 May 2009. GSL employed all of the personnel engaged in the activities of GSL and its subsidiaries. As part of its business activities, it granted to a number of banks by way of security for financial accommodation from the banks 'floating charges' within the meaning of that expression as defined in s 9 CA over its assets, present and future. 4 Substantial financial difficulties arose. On 16 May 2009, the entity (ANZ Fiduciary Services Pty Ltd) (ANZFS) which held those floating charges as security trustee for three banks described as the 'Club Banks', appointed the plaintiffs as administrators of GSL. The amount then due to the Club Banks was a total of about $380 million. 5 Two days later, the trustee, ANZFS, appointed receivers and managers to GSL's property which was charged under the floating charges. The receivers then assumed control of all the books, records and assets of GSL. A little over six months later, the plaintiffs were then appointed as the liquidators of GSL. 6 Following the appointment of the liquidators, the affairs of GSL were complex and protracted. With some assistance from the plaintiffs, the receivers recovered all of the debt due to the Club Banks. They also charged and recovered, I am told, over $6 million for their own fees and disbursements. As part of the total exercise, in November 2011, the receivers applied to the Supreme Court of Western Australia (Receivers' Proceeding) for directions as to how, in respect of GSL, they may comply with, amongst other things, s 561 CA. In the Receivers' Proceeding orders were made by Master Sanderson in Re Great Southern Ltd (in liq);Ex Parte Thackray (2012) 260 FLR 362 (23 February Orders) which, amongst other things and to the extent that they are relevant to the present proceeding in this Court, provided that: in the event that, and for so long as, [the receivers] are unable to determine whether the property of [GSL] available for payment of creditors other than secured creditors will be insufficient to pay the priority debts and amounts referred to in section 561 [CA], [the receivers] will: (i) for so long as they remain in office, be entitled to hold on trust, for the purpose of section 561 [CA], sufficient floating charge property to pay the priority debts and amounts referred to in section 561 [CA]; and (ii) in the event that the receivership of [GSL] … is to be terminated or otherwise brought to an end, be entitled to: (A) subject to the liquidators first consenting to accept the trust obligations thereby arising, pay to the liquidators of [GSL] sufficient floating charge property to pay the priority debts and amounts referred to in section 561 [CA], which property might be held on trust by the liquidators of [GSL] for the purposes of section 561 [CA]; and (B) finalise the receivership of [GSL] on the basis that the payment referred to … constitutes a discharge of any obligation that may arise pursuant to section 561 [CA]. (emphasis added) 7 At the time the Receivers' Proceeding was pursued, it was not known whether there would be sufficient property of GSL available to pay all of the claims and amounts referred to in s 561 CA. 8 Almost a year later, on 18 January 2013, the plaintiffs received correspondence from the receivers in which they indicated that they proposed to transfer to the plaintiffs certain funds pursuant to the 23 February Orders. They also sought the plaintiffs' consent to accept the 'trust' obligation to which reference was made in the 23 February Orders. 9 On behalf of the plaintiffs, Mr Andrew Saker informed the receivers on 22 January 2013 that the plaintiffs would accept the 'trust' obligation referred to in the 23 February Orders. 10 Shortly after, on 7 February 2013, Mr Saker received from the receivers further correspondence in which the receivers confirmed that: (a) 'the receivers remain unable to determine whether GSL holds insufficient property to pay amounts receiving priority under s 561 [CA]. Accordingly, the receivers continue to hold $1,174,938 on trust pursuant to the Orders'; and (b) payments of an aggregate sum (including the $1,174,938.30) 'have now taken place by Electronic Funds Transfer' to the plaintiffs' trust account. 11 That amount was duly credited to the plaintiffs' trust account on about 12 February 2013. 12 As at 18 December 2013, no money secured by the floating charges remained due and outstanding to the Club Banks and the receivers were fully paid out. As at the same date, the receivers' appointment over assets of, amongst others, GSL was terminated. 13 Mr Saker, in his affidavit in support, refers to the relevant funds in these terms: 25. On or about 12 February 2013, the sum of $1,297,160.70 was credited to the plaintiffs' trust account. 26. Of the funds referred to in paragraph 25 above, on 27 February 2013 the plaintiffs caused: (a) $122,222.40 to be transferred to a business cheque account named "s433 funds" (this comprised the sum of cheques apparently sent by the Receivers to former GSL employees - but which were unpresented and cancelled in February 2013); and (b) $1,174,938.30 to be placed in a term deposit account named "s561 funds". 27. Since 27 February 2013, the plaintiffs have paid an amount of $55,613.90 from the funds referred to in paragraph 26(a) above to certain persons named in Annexure C to the letter which is Annexure AJS-16, leaving a balance of $66,608.50. 28. As at 26 February 2013, $34,234.25 of net interest has accrued on the sum referred to in sub-paragraph 26(b) above. As at 26 February 2014, the balance of the term deposit named "s561 funds" was $1,209,172.55.

A LEGISLATIVE REQUIREMENT 14 Section 561 CA provides as follows: 561 Priority of employees' claims over circulating security interests So far as the property of a company available for payment of creditors other than secured creditors is insufficient to meet payment of: (a) any debt referred to in paragraph 556(1)(e), (g) or (h); and (b) any amount that pursuant to subsection 558(3) or (4) is a cost of the winding up, being an amount that, if it had been payable on or before the relevant date, would have been a debt referred to in paragraph 556(1)(e), (g) or (h); and (c) any amount in respect of which a right of priority is given by section 560; payment of that debt or amount must be made in priority over the claims of a secured party in relation to a circulating security interest created by the company and may be made accordingly out of any property comprised in or subject to the circulating security interest. (emphasis added) 15 Insofar as s 561(a) is concerned, s 556 relevantly provides: 556 Priority payments (1) Subject to this Division, in the winding up of a company the following debts and claims must be paid in priority to all other unsecured debts and claims: (a) first, expenses (except deferred expenses) properly incurred by a relevant authority in preserving, realising or getting in property of the company, or in carrying on the company's business; (b) if the Court ordered the winding up - next, the costs in respect of the application for the order (including the applicant's taxed costs payable under section 466); … (e) subject to subsection (1A) - next: (i) wages, superannuation contributions and superannuation guarantee charge payable by the company in respect of services rendered to the company by employees before the relevant date; or (ii) liabilities to pay the amounts of estimates under Division 268 in Schedule 1 to the Taxation Administration Act 1953 of superannuation guarantee charge mentioned in subparagraph (i); … (emphasis added) 16 Thus it can be seen that s 561 CA provides that employees' claims will have priority over circulating security interests. (By s 51C CA a 'circulating security interest' includes a floating charge. A 'floating charge' in turn, by s 9 CA, includes a charge that conferred a floating security at the time of its creation but has since become a fixed or specific charge.)

TWO QUESTIONS 17 The two questions raised for determination in the plaintiffs' application are: (a) whether any 'trust obligation' that existed in respect of the funds remitted by the receivers is at an end?; and (b) whether the plaintiffs would be acting properly and otherwise justified in treating those funds as funds to be applied in meeting the unsecured debts of GSL and claims made against GSL in the order of priority established by s 556 CA. 18 The plaintiffs submit that the answer to each of those questions is 'yes', although in substance they contend there never was a 'trust' as such.

THE ISSUES 19 In this instance, the secured creditors (the Club Banks) were paid out in full by the receivers before the balance of the company's funds (less the receivers' fees), were transferred to the liquidators. The fees the plaintiffs propose charging (about $1.9 million to the date of the hearing of the application) exceed the amount of cash presently available. The plaintiffs, however, point to the fact that there is a possibility of recovery of other funds in preference actions. The debts due to the employees (totalling about $1.2 million), would be subordinate under the priorities regime to the costs of the liquidation such that, unless there is any obligation on the part of the liquidators to hold the funds on the 'trust' referred to in the exchange with the receivers, and in turn, the 23 February Orders, the liquidators would ordinarily recover their costs of the liquidation and proceed in due course to effect dissolution of the company, if their duties were fully discharged. 20 Needless to say, some, if not all, of the employees are not happy with that outcome. For the liquidators, the point is made that the costs of the liquidation are always dealt with in priority to the employees' wages. The two employees who made submissions make clear that their impression as to the effect of the reference to 'a trust' in the 23 February Orders and other communications was that it was always intended to protect their entitlements. The liquidators argue, despite their response to the receivers, that there never was any 'trust' as such.

What is the nature of the 'trust', if any? 21 The source of the reference to a 'trust' under s 561 stemmed from the careful decision of Finkelstein J in Cook Italiano Family Fruit Company Pty Ltd (in liq) (2010) 190 FCR 474 which, as his Honour observed (at [1]), arose in respect of a disproportionately small amount of money having regard to the importance of the principles at stake. In that decision his Honour noted (at [67]) that like s 561 CA, s 175 of the Insolvency Act 1986 (UK) provides for the payment of priority debts out of floating charge assets so far as the assets of the company available for payment of general creditors may be insufficient to meet them. His Honour referred to Buchler v Talbot [2004] 2 AC 298 where Lord Millett explained (at [57]), that the "free" assets of the company remain the primary source of payment for preferential debts. According to Lord Millett, if, however, there are insufficient free assets to pay the preferential debts after the expenses of the winding up have been paid or provided for, then the preferential debts are to be paid out of the charged assets. 22 Finkelstein J continued (at [69]-[70]) saying: 69 The right to have recourse to charged assets under s 561 is conditional on there being insufficient property of the company available to meet preferential debts. When is this assessment of the company's property to be made? The question is of considerable importance in this case because at the time the company's employees were paid, the company's realised assets were insufficient to pay priority creditors. It was only later, when the company received the settlement proceeds, that the liquidators had some funds out of which to meet those claims. 70 In my view, there is to be only one assessment of the sufficiency of a company's assets and that is to be made when enough is known about the company's affairs. The assessment must take into account all actual and potential realisations. That is to say, the liquidator should not, as has occurred here, make an interim assessment of the company's financial position, an assessment which only looks at the position at a single point in time. This is for several reasons. (emphasis added) 23 His Honour went on to explain the problem with an interim assessment saying (at [71] and [73])): that: 71 … perverse results can arise if the sufficiency of the company's assets is for the purposes of s 561 assessed on an interim basis. It is clear that, at the very least, the assessment cannot take place until the value of the priority debts payable under s 561 is known, as well as the value of those priority debts which, under s 556, have precedence over debts payable under s 561. … 73 It follows that s 561 only mandates payment of priority claims out of floating charge assets when it is clear that the liquidation will not realise free assets sufficient to meet those claims (after taking into account other claims which, under s 556, have precedence). In some windings up, it may become obvious at an early stage that there will be a deficiency in the company's free assets. In other windings up, it may take much longer. In those cases the controller of the floating charge assets must make adequate provision for the payment of the priority debts before making any payment to the secured creditor. (emphasis added) 24 Finally, in Cook, Finkelstein J went on to consider whether a failure to meet these obligations could constitute a breach of trust saying: 78 Section 561 imposes a duty on a controller of floating charge assets to pay priority debts out of floating charge assets if the relevant conditions are satisfied. It necessarily follows that the controller is required to withhold funds from the secured creditor that are sufficient to pay priority creditors if it appears that the company's property is likely to be insufficient. In these respects, s 561 mandates an incursion into the proprietary rights of the secured creditor. But s 561 does not permit a controller to appropriate the floating charge assets to pay out priority claims until the relevant condition (ie the deficiency in the company's free assets) is satisfied. 79 A liquidator who has realised floating charge assets and has him/herself retained the proceeds (necessarily in an account established pursuant to reg 5.6.06 of the Corporations Regulations 2001 (Cth) and s 538(1)(a)) of the Corporations Act) is a trustee of them for the purposes of s 561. The proceeds are to be held on trust until it is determined whether the company's free assets are insufficient to meet priority debts. The chargee is a beneficiary, or at least a contingent beneficiary, of the trust. Its rights, though, are subject to the claims of priority creditors. The priority creditors may also be contingent beneficiaries of the trust; the contingency being a deficiency in the company's free assets. If not beneficiaries, at least the priority creditors have a contingent statutory right against the fund. (emphasis added) 25 The key point made concerning the need to make the assessment only when the affairs of the company are sufficiently well known must make sound commercial sense, with respect. How else can compliance with s 561 be guaranteed? The difficulty with the present situation is that, although enough provision was made for the priority creditors (the employees), that provision is insufficient once the costs of the liquidation are first paid as the legislation dictates. It is not clear on the evidence that sufficient inquiry was made to take this into account before payment out in full was made by the receivers to the Club Banks and for their own fees and expenses. 26 The origins of s 561 CA may be traced back to s 2 of the Preferential Payments in Bankruptcy (Amendment) Act 1897 (UK). Lord Nicholls described the history of that legislation in Buchler (at [21]) to which Finkelstein J referred to in Cook (at [68]). In Buchler, Lord Nicholls observed that in the United Kingdom successive consolidating statutes had reproduced the effect of the provisions without relevant amendment. 27 It is well established that the interests of a debenture holder whose only interest is that of a floating charge may have to be postponed. In Westminster Corporation and United Travellers Club Company Limited v Chapman [1916] 1 Ch 161 where Younger J said (at 168): The effect of these sub-sections read together appears to me to be that the costs and expenses of the winding up of the company are payable out of the assets of the company not comprised in the debenture security before any payment is made by the liquidator in respect of what may be called preferential debts. But if the general assets after discharge of the costs and expenses of the winding up are insufficient for the payment of these preferential debts, then to the extent to which they are insufficient the amount must be made up by the debenture-holder whose security creates a floating charge upon the property of the company out of the property comprised in or subject to that charge, or in other words, whether a creditor be an unsecured creditor or a debenture-holder whose only security is that of a floating charge, he is equally to be postponed in respect of any claim of his against the assets of the company until those preferential debts have been paid, but the free general assets must be exhausted before recourse is had to the assets charged. (emphasis added) 28 Similarly in Australia in Stein v Saywell (1969) 121 CLR 529 the High Court considered the operation and effect of, inter alia, s 292(4) of the Companies Act 1961 (NSW) and reached a similar conclusion to the view expressed by Younger J in Westminster Corporation. 29 In Australia, pursuant to similar legislation, Irvine CJ in Re Esplanade Theatre Ltd (in liq) [1929] VLR 237 (at 242-243) described s 208 of the Companies Act 1915 (Vic) as having the following effect: … the effect of the Victorian Act is to give to persons who are clerks or servants coming within that definition an absolute right to be paid in full the wages earned by them at any time during the four months preceding liquidation. They have a first charge upon the property of the Company, whether subject to mortgage or not. It is the duty of the liquidator to pay those claims first out of any assets available for payment of creditors generally, if there are any such assets. But before paying those claims he is entitled, out of the assets available for such payment, to deduct the sum necessary for paying the expenses of the winding-up, including his remuneration; and, after satisfying those expenses and the claims, to apply any general assets remaining in payment of creditors generally. In so far as there are no general assets available for payment of those clerks or servants preferentially, he is entitled to have recourse to any property which is subject to any lien or mortgage. The first in order of liability or availability for this purpose are the assets of the Company, which are subject to the claims of debenture-holders. He is entitled to make up the amount necessary for payment of the preferential creditors in priority to the claims of the debenture-holders, and to pay the amount necessary for the payment of those preferential creditors in full. … (emphasis added) (See also Finkelstein J in McEvoy v Incat Tasmania Pty Ltd (2003) 130 FCR 503.) 30 In summary, it is argued for the plaintiffs that: (a) in the winding up of a company, the order of priority of payments of debts of and claims against the company is that specified in s 556 CA; (b) section 561 CA: imposes a duty on a controller of floating charge assets to pay priority debts out of floating charge assets if the relevant conditions are satisfied. It … follows that the controller is required to withhold funds from the secured creditor sufficient to pay priority creditors if it appears that the company's property is likely to be insufficient. In these respects, s 561 mandates an incursion into the proprietary rights of the secured creditor …: Finkelstein J in Cook (at [78]); (c) and accordingly: the costs and expenses of the winding up of the company are payable out of the assets of the company not comprised in the debenture security before any payment is made by the liquidator in respect of what may be called preferential debts. But if the general assets after discharge of the costs and expenses of the winding up are insufficient for the payment of those preferential debts, then to the extent to which they are insufficient the amount must be made up by the debenture-holder whose security creates a floating charge upon the property of the company out of the property comprised in or subject to that charge, or in other words, whether a creditor be an unsecured creditor or a debenture-holder whose only security is that of a floating charge, he is equally to be postponed in respect of any claim of his against the assets of the company until those preferential debts have been paid, but the free general assets must be exhausted before recourse is had to the assets charged: Westminster Corporation per Younger J (at 168). (emphasis added) 31 The 23 February Orders specified that as long as the receivers remain in office they will be 'entitled to hold on trust, for the purposes of section 561 of the Act, sufficient floating charge property …' (emphasis added). Clearly what the learned Master had in mind in the Receivers' Proceeding was the 'trust' obligation in s 561 CA as 'developed' by Finkelstein J in Cook. The Master noted (at [27]) that: The 'trust' obligation in s 561 is developed by Finkelstein J in Cook v Italiano, ought not prevent the plaintiff receivers' retiring if the receivers have otherwise affected their purpose and fulfilled their duties. That would needlessly protract the receivership to the detriment of the unsecured creditors. The receivers should be entitled to retire by bringing about appropriate arrangements for the liquidators to become substitute trustees of the remaining s 561 floating charge assets. 32 It cannot be thought that in the Receivers' Proceedings, the Master was purporting to declare the existence of a trust. The practical effect of the orders being made was that whatever obligations then applied to the receivers, equitable and/or statutory, those obligations would continue to apply to the liquidators. But the orders did not, in my view, purport to establish either the receivers or the Liquidator as trustees.

Is there a trust? 33 For reasons discussed below, the plaintiffs argue, and I accept, that neither the receivers nor subsequently the plaintiffs by virtue of the statute were 'trustees' of the relevant funds. The plaintiffs point to the fact that no authority is cited at [79] of Cook in support of the trustee/beneficiary theory. Rather, each of them was bound by statute, namely, s 561 CA to apply the funds for the benefit of particular persons. This was the alternative formulation by Finkelstein J. It is difficult to see why it would be necessary to recognise some trust over and above comprehensive statutory terms. The statute does not purport to have that effect and it is not immediately apparent what additional benefit would be given by the creation of a trust. I prefer the second of the alternative approaches alluded to by Finkelstein J in the last sentence of [79] in Cook (see above at [24]). 34 Significantly, in Visbord v Commissioner of Taxation (Cth) (1943) 68 CLR 354 Latham CJ, noted that (at 369): …The fact that a person who has control of moneys is bound by statute to apply those moneys for the benefit of particular persons does not result in making him a trustee for those other persons as his cestuis que trust. … (emphasis added) 35 In Visbord, objections by Ms Visbord to two income tax assessments, having been disallowed by the Commissioner, were treated as appeals to the High Court by case stated. The relevant facts were that the receiver appointed by a second mortgagee paid moneys which he collected into a trust account opened by the second mortgagee. When Ms Visbord became a transferee of the first mortgage she informed the receiver that she did not require any payments for the time being out of the moneys which the receiver held. Amongst other things, Ms Visbord argued that she was not a beneficiary presently entitled to a share of the income of a trust estate in respect of the funds held by the receiver. 36 The Chief Justice stated a case for the Full Court on which he also sat. As noted, his Honour's opinion was that there was no trust. Consistently with the Chief Justice, Rich J made the point that it was not necessary to determine exactly what character should be attributed to moneys which had been collected by the receiver whilst they were still in his hands or remained under his control unaffected by anything except the statutory provisions or their equivalent contained in the mortgage instrument (at 373). 37 Starke J, although reaching the same conclusion, also expressly decided the funds held by the receiver were not on trust observing (at 376) (footnotes omitted): ... This obligation is not, I should think, a trust or a charge or an assignment, but a mandate based upon valuable consideration enforceable by the mortgagee in appropriate proceedings. … (emphasis added) 38 Williams J moved closer to the trust concept noting (at 387) that: Subject to the right of the receiver to pay the outgoings and his commission thereout, the money in the fund is owned by the mortgagee and mortgagor in the proportions fixed by the statute, and the receiver holds the fund in a fiduciary capacity on behalf of the mortgagee and the mortgagor to dispose of the moneys in this way. (emphasis added) 39 Of course, while trustees will generally be recognised as having fiduciary duties, not every person with fiduciary duties (e.g., a company director), will also be a trustee. 40 Several cases have followed Visbord but I have found none directly commenting on the trust observation of the Chief Justice and Rich and Starke JJ. 41 I am bound to follow the High Court and to say that the statutory duty in itself does not necessarily create a trustee/beneficiary relationship. 42 As noted, Finkelstein J left open the alternative option that these were simply reciprocal statutory rights and obligations and it seems to me that this accords with the High Court's approach in Visbord.

What is the impact of there being no trust? 43 If there is no statutory created trust, the question is what effect does this have on the current situation? 44 I do not consider there was a trust. I consider that the plaintiffs should carry out their duties in the normal manner, which requires an affirmative answer to the second question. 45 However, and I think most importantly, part of those duties is to ensure that GSL's assets (including those of its subsidiaries) will be and have been disbursed in accordance with the statutory criteria, particularly those set out in s 561. It may be, for example, that the payment out by the receivers was premature and should have been postponed pending determination of the question raised in s 561 as to the sufficiency of the company's property to meet the primary debts referred to in s 556(1), (e), (g) or (h), particularly the approximately $1.2 million due to former employees. I stress that it is by no means clear on the evidence before me with only one side of the story (despite, I am told, notice of the plaintiffs' application being served on the receivers), whether the obligations under s 561 were or were not complied with by the receivers. It is regrettable, as so often happens in these types of applications, one being in the Supreme Court and one being in this Court, that in each instance the Court has the benefit of only one argument. However, the nature of advice given on this application is no more than advice, and advice to ensure that compliance with a specific part of legislation has occurred or will occur. Further delay or cost by pressing the receivers once again for involvement in this application, at least on this occasion, is probably not warranted. 46 The liquidators should, as part of their duties, examine this issue and take appropriate steps if it is apparent there may have been non-compliance with s 561.

Two final matters 47 The plaintiffs argue, alternatively, that if there were a trust, it was a 'Quistclose' trust. In light of my conclusion on the trust question, it is unnecessary to consider this alternative contention. Secondly, consistently with practice on other occasions, I have made confidentiality orders to protect the identity and details of affected former employees.

CONCLUSION 48 The affirmative answers to the questions posed by the plaintiffs necessarily requires this issue to be pursued by them. 49 The following orders are made: 1. Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), and on the ground that the order is necessary to prevent prejudice to the proper administration of justice, Annexure AJS-16 to the affidavit of Andrew John Saker sworn 4 March 2014 (Saker Affidavit) and Annexure DX-2 to the affidavit of Darren Da Yi Xu sworn 24 March 2014, are to remain confidential on the court file and are not to be disclosed to any party or person until further order. 2. Any trust obligation that existed in relation to the funds referred to in paragraphs 27 and 28 of the Saker Affidavit is at an end. 3. Subject to satisfying themselves that s 561 of the Corporations Act 2001 (Cth) has been complied with, the plaintiffs would be acting properly and otherwise justified in treating the funds referred to in paragraphs 27 and 28 of the Saker Affidavit as funds to be applied in meeting the unsecured debts of GSL and claims made against GSL in the order of priorities established by section 556 of the Corporations Act 2001 (Cth). 4. The plaintiffs' costs and expenses of this application be costs and expenses in the winding up of GSL. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.