First Plaintiff v Second Plaintiff

1 The first plaintiff, Matthew Jess and Paul Burness (Liquidators), are joint and several liquidators of the second plaintiff (Company) having been appointed on 6 June 2017 in a creditors' voluntary winding up.

2 The Company was incorporated on 3 November 2014 for the purpose of acting as trustee of the Maddicks Discretionary Trust (Trust) established pursuant to a trust deed dated 3 November 2014 (Trust Deed). Francis Leo Maddicks was the Company's sole director and shareholder and he and his wife, Denise Maddicks, are the only two named primary beneficiaries under the Trust.[1] The primary asset of the Trust was a supermarket business that did not trade well and was sold to an unrelated third party (Business Purchaser) pursuant to a contract of sale dated 24 February 2017 (Contract).

3 The Trust Deed relevantly provided that the Company ceased to be the trustee pursuant to the Trust Deed upon the Liquidators being appointed. Consequently, the Company became bare trustee of the property of the Trust on 6 June 2017.[2]

4 It appears that the only material remaining asset of the Trust comprises a relatively modest sum of money.[3]

5 The Liquidators applied by originating process for orders directed at facilitating the completion of the winding up of the Company and the Trust. The relief sought included:

(a) Directions pursuant to s 90-15 of Schedule 2 - Insolvency Practice Schedule (Corporations) (Schedule 2) to the Corporations Act 2001 (Cth) (Act) that they are justified in proceeding on the basis that the Company carried on business in its capacity as trustee, that the assets of the Company[4] are properly characterised as property held in its capacity as trustee of the Trust (Trust property), and that the possession, realisation and any distribution of the Trust property is governed by Parts 5.5 and 5.6 of the Act.

(b) Orders under s 63 of the Trustee Act 1958 (Vic) (Trustee Act) empowering the Liquidators to deal with the property of the Trust and compromise any claims made against the Trust assets, including a subrogation claim made by Ms Maddicks in respect of $105,000 said to have been advanced in order to pay out a secured loan made to the Company by ANZ Bank.

(c) Orders pursuant to s 1318 of the Act, alternatively s 67 of the Trustee Act, relieving the Liquidators from any liability for dealing with Trust property between the date of their appointment and the date any orders are made in this proceeding.

6 Orders were also sought in relation to the payment of the Liquidators' remuneration and expenses.

7 The application was supported by the affidavit of Mr Jess sworn on 28 November 2019 and the three affidavits of his solicitor, Mr Punivalu, sworn on 13 May, 16 July and 22 July 2020. The plaintiffs relied upon written submissions which were supplemented orally.

8 For the reasons that follow I propose to make directions and orders to the substantive effect sought under s 90-15 of Schedule 2 of the Act and s 63 of the Trustee Act. No orders will be made under s 1318 of the Act or s 67 of the Trustee Act.

9 The background was helpfully set out at some length in the affidavit of Mr Jess and its exhibits, including the exhibited Liquidators' reports, and was further addressed in the written submissions, the chronology, and Mr Punivalu's affidavits. Although it is unnecessary to recite all of the detail, it is convenient to mention the following.

10 On 3 November 2014 the Company was incorporated and the Trust was established pursuant to the Trust Deed. The named primary beneficiaries are Francis and Denise Maddicks.

11 The Company was the sole trustee of the Trust and operated the supermarket business in that capacity. So far as the Liquidators are aware and have been able to establish, the Company did not trade, hold assets, incur liabilities or otherwise carry on activities other than in its capacity as trustee of the Trust.

12 The supermarket business traded poorly and at a loss for the 2015 and 2016 financial years. It was sold to the Business Purchaser for $880,000 pursuant to the Contract on 24 February 2017. On the information available to the Liquidators, they considered that this price reflected market value. The completion date was recorded in the Contract as being 1 May 2017, although it appears that this in fact occurred on 16 May 2017.

13 The Company had a business loan with ANZ Bank. On 16 May 2017, the Company made a payment of $904,443 to ANZ Bank in full repayment of the loan. In their report the Liquidators stated that they understood that all but a very small amount of this payout was comprised of two sources of funds, being $798,310.68 from the proceeds of the sale of the supermarket business and $105,000 from Denise Maddicks.

14 Denise Maddicks was a guarantor of the Company's business loan and her guarantee was secured against a property in which she had a material interest. The $105,000 was said to have come from a loan obtained from ANZ Bank by Denise Maddicks in order to pay out that part of the balance of the Company's business loan that the Company could not pay from its own funds. There was evidence that this amount was paid to the Company by bank cheque on 16 May 2017, being the day that the Company's business loan was repaid in full to ANZ Bank.

15 There was evidence that the Company's business loan from ANZ Bank was secured by a security interest against all present and after-acquired property that was registered on the personal property securities register (PPSR) on 13 November 2015. The other security interests in respect of all present and after-acquired property recorded on the PPSR were said to be in favour of Metcash Trading Ltd (Metcash), with a registration date of 14 January 2015, and Geelong West Supermarket Pty Ltd (Geelong West), with a registration date of 28 February 2017. There was evidence that the amount owed to Metcash and ANZ was nil, and that the amount owed to Geelong West was $234,192.

16 Clause 8.7(c) of the Trust Deed relevantly provided that the office of trustee held by the Company would be determined and vacated if the Company entered into liquidation.

18 So far as the Liquidators were aware, no replacement trustee had been appointed to the Trust and they were not aware of any proposal to appoint a new trustee. At the date of the hearing this remained the position and there was no evidence to suggest otherwise.

19 The Liquidators reported to creditors on 5 September 2017, 10 July 2018 and 1 October 2019. One matter reported was that, following the sale of the supermarket business, the Company had no material assets or sources of income from which it could meet its unpaid liabilities.

20 Throughout the liquidation the Liquidators undertook numerous steps and activities of the character customarily undertaken by liquidators, including those referred to in the affidavit of Mr Jess, the detail of which need not be repeated.

21 By letter dated 28 March 2019 from her solicitors, Denise Maddicks made a subrogation claim in respect of the $105,000 advanced to repay the Company's ANZ Bank business loan. In that letter it was stated that Ms Maddicks had no alternative but to borrow funds in order to pay down the overdraft of the Company because a house was used as security in the initial loan for the business. It was said that had she not advanced $105,000 to repay the business loan '... There was an imminent risk that the bank would have taken possession of both the house and the business ...' and there was also a risk that the landlord would have exercised rights to take possession of the business premises due to unpaid rent.

22 The Liquidators stated in their October 2019 report that they had sought and obtained advice confirming that Ms Maddicks had claimed a right of subrogation and would likely be entitled to the net proceeds recovered from the sale of the business in priority to other creditors. The Liquidators also stated in the report that there would be insufficient funds to enable payment of any of the debt owed to Geelong West.

23 Following a directions hearing on 17 July 2020 at which various matters were raised by the court, the plaintiff filed a further affidavit of Mr Punivalu sworn on 22 July 2020. Among other things, that affidavit exhibited additional evidence relating to Ms Maddicks' subrogation claim and exhibited legal advice obtained on the issue from solicitors and counsel. The Liquidators did not seek to maintain privilege over this advice.

24 The advice included a letter settled by junior counsel and a separate memorandum of advice from different junior counsel. In substance, the evidence confirmed that counsel and solicitors had advised the Liquidators that Ms Maddicks had a valid subrogation claim in respect of the $105,000 used to repay the Company's business loan from ANZ Bank.

25 Mr Jess stated that the Liquidators had considered the subrogation claim and determined that Ms Maddicks should succeed. However, during the course of the hearing, the court was informed that one further aspect remained to be considered by counsel and solicitors for the Liquidators, which was whether the subrogation claim related to Francis and Denise Maddicks jointly given the manner in which aspects of the documents suggested the loan funds were advanced by ANZ Bank. In this context counsel for the Liquidators properly confirmed that the Liquidators were seeking directions only and that the court was not being asked to substantively consider or determine the subrogation issue.

26 The Company has cash at the bank of about $100,000 and no further recoveries are expected. The liabilities of the Company were set out in the list of creditors in the September 2017 report and Mr Jess stated that they could be summarised as follows:

(a) $178,513 in respect of estimated employee entitlements including termination liabilities;

(b) $256,622 in respect of secured creditors relating to the finance of assets previously held by the Company but excluding the $105,000 subrogation claim of Ms Maddicks; and

(c) $174,761 in respect of known unsecured creditors.

27 Mr Jess also said that after remuneration, costs and expenses, the remaining funds held will only be sufficient to enable a partial return to Ms Maddicks as the subrogated secured creditor and that no return to any other form of creditor was expected.

28 The creditors were informed in the October 2019 report that this application would be made '... To obtain approval to pay the balance of funds held (after costs) to Ms Maddicks as secured creditor ...'. Specific notice of the application and related documents were provided to ASIC and to Denise and Francis Maddicks.

29 In June 2020, the court raised with the plaintiffs the need to clarify the position of ASIC and provide additional notice to others. By orders made 25 June 2020 the court directed that written notice of the trial and certain documents be provided to all secured and unsecured creditors. These steps were undertaken and the detail was referred to in the affidavit of Mr Punivalu of 16 July 2020, which was addressed at the directions hearing on 17 July 2020 and during the course of the final hearing. No one informed the Liquidators, their solicitors, or the court that they wished to be heard or appear, and no other interested person appeared at the hearing.

30 ASIC responded in an orthodox manner, informing the plaintiffs' solicitors that they did not propose to take any steps in relation to the matter or appear.

31 For ease of reference some relevant parts of the terms of the key statutory provisions relied upon by the Liquidators are set out below.

Section 90-15 of Schedule 2

32 Section 90-15 of Schedule 2 to the Act is in the following terms:

90-15 Court may make orders in relation to external administration

Court may make orders

(1) The Court may make such orders as it thinks fit in relation to the external administration of a company.

Orders on own initiative or on application

(2) The Court may exercise the power under subsection (1):

(a) on its own initiative, during proceedings before the Court; or

(b) on application under section 90-20.

Examples of orders that may be made

(3) Without limiting subsection (1), those orders may include any one or more of the following:

(a) an order determining any question arising in the external administration of the company;

(b) an order that a person cease to be the external administrator of the company;

(c) an order that another registered liquidator be appointed as the external administrator of the company;

(d) an order in relation to the costs of an action (including court action) taken by the external administrator of the company or another person in relation to the external administration of the company;

(e) an order in relation to any loss that the company has sustained because of a breach of duty by the external administrator;

(f) an order in relation to remuneration, including an order requiring a person to repay to a company, or the creditors of a company, remuneration paid to the person as external administrator of the company.

Matters that may be taken into account

(4) Without limiting the matters which the Court may take into account when making orders, the Court may take into account:

(a) whether the liquidator has faithfully performed, or is faithfully performing, the liquidator's duties; and

(b) whether an action or failure to act by the liquidator is in compliance with this Act and the Insolvency Practice Rules; and

(c) whether an action or failure to act by the liquidator is in compliance with an order of the Court; and

(d) whether the company or any other person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the liquidator; and

(e) the seriousness of the consequences of any action or failure to act by the liquidator, including the effect of that action or failure to act on public confidence in registered liquidators as a group.

Costs orders

(5) Without limiting subsection (1), an order mentioned in paragraph 3(d) in relation to the costs of an action may include an order that:

(a) the external administrator or another person is personally liable for some or all of those costs; and

(b) the external administrator or another person is not entitled to be reimbursed by the company or its creditors in relation to some or all of those costs.

Orders to make good loss sustained because of a breach of duty

(6) Without limiting subsection (1), an order mentioned in paragraph (3)(e) in relation to a loss may include an order that:

(a) the external administrator is personally liable to make good some or all of the loss; and

(b) the external administrator is not entitled to be reimbursed by the company or creditors in relation to the amount made good.

Section does not limit Court's powers

(7) This section does not limit the Court's powers under any other provision of this Act, or under any other law.

1318 Power to grant relief

(1) If, in any civil proceeding against a person to whom this section applies for negligence, default, breach of trust or breach of duty in a capacity as such a person, it appears to the court before which the proceedings are taken that the person is or may be liable in respect of the negligence, default or breach but that the person has acted honestly and that, having regard to all the circumstances of the case, including those connected with the person's appointment, the person ought fairly to be excused for the negligence, default or breach, the court may relieve the person either wholly or partly from liability on such terms as the court thinks fit.

(2) Where a person to whom this section applies has reason to apprehend that any claim will or might be made against the person in respect of any negligence, default, breach of trust or breach of duty in a capacity as such a person, the person may apply to the Court for relief, and the Court has the same power to relieve the person as it would have had under subsection (1) if it had been a court before which proceedings against the person for negligence, default, breach of trust or breach of duty had been brought.

...

(4) This section applies to a person who is:

(a) an officer or employee of a corporation; or

...

(d) a receiver, receiver and manager, liquidator or other person appointed or directed by the Court to carry out any duty under this Act in relation to a corporation. ...

Sections 63 and 67 of the Trustee Act

34 Sections 63 and 67 of the Trustee Act provide as follows:

63 Power of Court to authorize dealings with trust property

(1) Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other 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 trust instrument (if any) or by law, the Court 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 (if any) as the Court thinks fit and may direct in what manner any money authorized to be expended, and the costs of any transaction are to be paid or borne as 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.

(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.

67 Power to relieve trustee from personal liability

If it appears to the Court that a trustee, whether appointed by the Court or otherwise, is or may be personally liable for any breach of trust, whether the transaction alleged to be a breach of trust occurred before or after the commencement of this Act, but has acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the Court in the matter in which he committed such breach, then the Court may relieve him either wholly or partly from personal liability for the same.

35 The directions and orders sought are considered in turn below.

Section 90-15 direction that the Liquidators are justified in proceeding on the basis that the Company acted in capacity as trustee only and that all property was Trust property

36 The Liquidators submitted that the power in s 90-15 was engaged because, relevantly, the Company is taken to be under external administration by reason of their appointment as Liquidators. They submitted that the s 90-15 power is to be construed broadly and is informed by the principles that apply to the exercise of the directions power previously contained in ss 479(3) and 511 of the Act.

37 The Liquidators further submitted that the evidence of Mr Jess regarding the establishment and operation of the Company and the Trust, and the sale of the supermarket business, provided a sound basis for concluding that the Liquidators were justified in proceeding on the basis that the Company only carried on business in its capacity as trustee of the Trust and that the assets of the Company were properly characterised as property held by the Company in its capacity as trustee of the Trust.[5] Reference was also made in this context to the approach adopted by Kennedy J in Re St George's Development Company Pty Ltd (in liq) (St George's Development)[6] and by Riordan J in Re Matthew Forbes Pty Ltd (in liq) (Re Matthew Forbes),[7] and these matters were elaborated on during oral submissions.

38 The Company is in external administration and no question of standing arises. I refer to ss 90-20 and 5-15 of Schedule 2.

39 It is uncontroversial that the power conferred by s 90-15 is a broad one, a point recently emphasised again in this court by Sloss J in Re Mandeville Group Pty Ltd (In Liq) (Mandeville Group).[8] I also refer to Sloss J's helpful observations regarding the nature and scope of an application for directions by liquidators and trustees, which are not necessary to set out here.[9]

40 Having regard to the evidence, it is appropriate to make an order to the substantive effect sought. The Liquidators have been involved with the affairs of the Company for an extended period, have carried out investigations and have concluded that the Company did not trade, hold assets or incur liabilities or otherwise carry on activity other than in its capacity as trustee of the Trust. There was no evidence to suggest that the Company operated other than it its capacity as trustee of the Trust.

41 This conclusion is at least inferentially supported by the Trust being created and the Company being incorporated on the same day, 3 November 2014. Further, neither the primary beneficiaries nor any other parties have sought to suggest otherwise and there is no documentary evidence that sits in tension with the Liquidators' conclusion.

42 In the circumstances, the Liquidators are justified in proceeding on the basis that the Company acted in its capacity as trustee of the Trust only, and that the property of the Company is Trust property.

_Section 63 of the Trustee Act order empowering the Company to deal with the Trust property and compromise any claim_s

43 It was submitted that by reason of the operation of clause 8.7(c) of the Trust Deed the Company ceased to be trustee of the Trust pursuant to the terms of the Trust and when the Liquidators were appointed became a bare trustee only. It was submitted that, consequently, additional powers were required in respect of the Trust property so as to facilitate the Liquidators in concluding the winding up of the Company and the Trust.

44 The circumstances supporting the making of such orders were submitted to include:

(a) the evidence that the Company carried on business only in its capacity as trustee;

(b) the cost and other efficiencies involved in circumstances where no material conflict had been identified and the only material Trust asset was likely to remain a relatively small sum of money;

(c) the acquired knowledge of the Company's affairs possessed by the Liquidators by reason of the steps taken to date, and the related efficiencies and understanding of the financial position and affairs of the Company and the Trust - including the subrogation claim made by Ms Maddicks;

(d) the evidence of Mr Jess that although no further recoveries are likely, it is efficient, cost effective, and just and convenient to provide additional powers to ensure that the Liquidators can dispose of or otherwise deal with any additional Trust assets without having to incur the substantial further costs and expenses involved in seeking additional directions; and

(e) the work undertaken and advice obtained in relation to Ms Maddicks' subrogation claim.

45 It is appropriate to make an order under s 63 of the Trustee Act to the substantive effect sought by the Liquidators.

46 By reason of the operation of clause 8.7(c) of the Trust Deed the Company ceased to be trustee pursuant to the terms of the Trust Deed and became a bare trustee only. This commonly occurs in external administrations involving insolvent corporate trustees as many authorities demonstrate. See, for example: Re Cremin (in his capacity as liquidator of Brimson Pty Ltd (ACN 621 156 643) (in liq), Kane Retail Group Pty Ltd (ACN 147 179 922) (in liq) and Teal Retail Group Pty Ltd (ACN 165 892 544) (in liq)) (Brimson);[10] Re Matthew Forbes;[11] Re Killarnee;[12] Mandeville Group;[13] St George's Development;[14] Caterpillar Financial Australia Limited v Ovens Nominees[15] and Mutton (Liquidator), re Balsub Pty Ltd (In Liquidation).[16]

47 The evidence revealed that no new trustee has been or is to be appointed and that there remains a number of matters to attend to in the administration of the Trust and Trust property, including addressing the subrogation claim made by Ms Maddicks. These matters were referred to by Mr Jess. It is also the case that any existing but not yet identified property of the Trust will need to be managed or administered if and when it is identified. Further, the value of the Trust property identified to date is modest, and I accept the submission that avoiding the cost and expense of a further application of the kind currently before court appears desirable, provided of course that it is proper to do so.

48 Having regard to these matters and that the Company has only traded as trustee of the Trust; that there are cost and other efficiencies associated with the Liquidators' knowledge, experience and activities carried out to date; and the apparent absence of any conflict, it is in my view expedient to make orders pursuant to s 63 of the Trustee Act empowering the Company as trustee to sell, dispose and otherwise deal with the property of the Trust, including by compromising any claims made in respect of the Trust property.

Section 90-15 direction that the Liquidators are justified in proceeding on the basis that the possession, realisation and distribution of Trust property is governed by Parts 5.5 and 5.6 of the Act

49 The Liquidators again referred to the breadth of the s 90-15 power and submitted that a direction to the above effect was consistent with the decisions of the Court of Appeal in Commonwealth v Byrnes (in their capacity as joint and several receivers and managers of Amerind Pty Ltd (receivers and managers appointed) (in liq) (Re Amerind)[17] and the Full Court of the Federal Court in Re Killarnee to the effect that a corporate trustee's right of indemnity out of trust assets is property of the company, and that the priority regime in the Act applies to the distribution of trust property in the winding up of a corporate trustee. Again, reliance was placed on the decisions in St George's Development and in Re Matthew Forbes.

50 Keeping in mind the matters earlier referred to and the conclusions reached thus far, it is also appropriate to make an order to the substantive effect sought by the Liquidators in relation to Parts 5.5 and 5.6 of the Act. As was submitted (and observed by Kennedy J in St George's Development and Riordan J in Re Matthew Forbes), the Full Federal Court in Re Killarnee concluded that a corporate trustee's right of indemnity out of the trust assets is property of the company and the priority regime in the Act applied to the distribution of trust property in the winding up of a corporate trustee.

51 As was the case in St George's Development, there is no suggestion here that the Trust property might be available to creditors who are not Trust creditors. I add for completeness that since Kennedy J's decision in St George's Development the High Court decided in Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth of Australia & Ors (Carter Holt Harvey)[18] that the proceeds from an exercise of a corporate trustee's right of indemnity or exoneration in respect of trust liabilities may only be applied in satisfaction of trust liabilities to which that right relates.[19]

52 The order sought by the Liquidators is appropriate and will enable the Trust property to be dealt with on the basis that it is governed by Parts 5.5 and 5.6 of the Act.

Orders pursuant to s 1318 of the Act or s 67 of the Trustee Act that the Liquidators be relieved from any liability for dealing with the Trust property

53 The Liquidators initially submitted that ss 1318(1) and 1318(2) of the Act were engaged and that they have standing by reason of the operation of s 1318(4). They submitted that the order under s 1318 was sought '... Given the uncertainty as to Liquidators' powers in the context of a corporate trustee' and in this context they relied upon the decision in Re Western Port Holdings Pty Ltd.[20]

54 Following constructive exchanges with counsel for the Liquidators during the hearing regarding the statutory preconditions to the enlivening of the discretionary power in ss 1318(1) and (2), the terms and operation of s 67 of the Trustee Act, and the current limited state of the evidence on the topic, the court was informed that the plaintiffs would no longer pursue their applications for orders pursuant to s 1318 of the Act or s 67 of the Trustee Act. In the circumstances this was a proper and responsible course for counsel to adopt.

55 The position taken by the Liquidators was stated to be on the basis that it was without prejudice to the Liquidators' right to make a similar application in future should circumstances arise where that was considered to be necessary or desirable. For completeness I add that there was no suggestion in the evidence that the Liquidators had acted other than honestly and in good faith.

56 No order will be made under s 1318 of the Act or s 67 of the Trustee Act.

Section 90-15 direction that the Liquidators are justified proceeding on the basis that remuneration and expenses properly incurred may be paid from the Trust property and include remuneration costs and expenses relating to this proceeding, to be paid in accordance with s 556(1) of the Act

57 It was submitted that the Liquidators' remuneration and expenses were debts incurred in performing the Trust as the Company only operated as trustee and therefore the Company may be indemnified out of the Trust funds in the priority provided for under s 556(1) of the Act, with reference again being made to the observations of Allsop CJ and Farrell J in Re Killarnee.[21] The Liquidators also relied upon the observations of Kennedy J and Riordan J in St George's Development and Re Matthew Forbes respectively.

58 It is appropriate to make an order to the substantive effect sought regarding the Liquidators' remuneration and expenses properly incurred being paid from Trust property in accordance with s 556(1) of the Act. Noting the matters earlier referred to, that the Company has only ever operated as trustee of the Trust, and that all of the creditors are Trust creditors, it is sufficient in this context to refer generally and without elaboration to the helpful observations of Brereton J in Re Stansfield DIY Wealth Pty Limited (in liquidation);[22] Riordan J in Re Matthew Forbes;[23] Kennedy J in St George's Developments and in Re Mackie Group Pty Ltd;[24] Sloss J in Mandeville Group[25] who, in turn, placed emphasis upon the observations of Gordon J in Carter Holt Harvey;[26] and Allsop CJ in Re Killarnee.[27]

59 Subject to addressing the precise form of orders with counsel, I propose to make orders to the following effect.

(1) Pursuant to s 90-15 of Schedule 2 of the Act the Liquidators are justified in acting on the basis that the Company carried on business in its capacity as trustee of the Trust and that the assets of the Company are properly characterised as property held by the Company in its capacity as trustee of the Trust.

(2) Pursuant to s 63 of the Trustee Act, the Company, in its capacity as trustee of the Trust, shall have the power to:

(a) sell or otherwise dispose of in any lawful manner all or any part of the Trust property; and

(b) compromise any claim relating to the Trust or Trust property, including the subrogation claim made by Denise Maddicks against the second plaintiff in its capacity as trustee of the Trust.

(3) Pursuant to s 90-15 of Schedule 2 of the Act, the Liquidators are justified in proceeding on the basis that their possession, realisation and distribution of the Trust property is governed by Parts 5.5 and 5.6 of the Corporations Act.

(4) Pursuant to s 90-15 of Schedule 2 of the Act, the Liquidators are justified in proceeding on the basis that:

(a) the Liquidators are entitled to be paid their remuneration, costs and expenses properly incurred in preserving, realising or getting in the Trust property, or in carrying on the business of the Trust, or in conducting the winding up of the Company (Remuneration and Expenses), from the Trust property; and

(b) the Remuneration and Expenses include the remuneration, costs and expenses properly incurred of and incidental to this application; and

(c) the Remuneration and Expenses are to be paid in accordance with the priority specified in s 556(1) of the Act.

(5) There is liberty to apply for the plaintiffs and any person who can demonstrate a sufficient interest to modify these directions and orders on not less than three days' notice.

[1] The relevant definition in the schedule also refers to the spouses of the persons named as being primary beneficiaries, but the court was informed that Francis and Denise Maddicks are and were at all relevant times the spouse of each other.

[2] See, for example, Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd [2018] FCAFC 40; (2018) 260 FCR 310 (Re Killarnee) at [85] (Allsop CJ), [142] (Siopis J), [198] (Farrell J).

[3] At the trial on 4 August 2020, counsel for the plaintiffs informed the court that it is about $100,000.00.

[4] Putting to one side the Company's rights of indemnity, reimbursement and exoneration.

[5] With the unstated but implicit exception of any rights of indemnity or exoneration possessed by the Company in respect of such property.

[6] [2018] VSC 595.

[7] [2018] VSC 331.

[8] [2020] VSC 293, [139]-[141].

[10] (2019) 136 ACSR 649; [2019] FCA 1023 (Moshinsky J).

[11] [2018] VSC 331.

[12] (2018) 354 ALR 436; [2018] FCAFC 40 (Allsop CJ, Siopis and Farrell JJ).

[13] [2020] VSC 293.

[14] [2020] VSC 595.

[15] [2011] FCA 677 (Gordon J).

[16] [2020] FCA 741 (Anastassiou J).

[17] (2018) 54 VR 230; (2018) 354 ALR 789; (2018) 330 FLR 149; (2018) 124 ACSR 246; [2018] VSCA 41 (Ferguson CJ, Whelan, Kyrou, McLeish and Dodds-Streeton JJA).

[18] (2019) 368 ALR 390; [2019] HCA 20 (Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ).

[19] Ibid, [92] (Bell, Gageler and Nettle JJ). See also Gordon J at [167]-[172] and Re Killarnee at [99]-[109] (Allsop CJ).

[20] [2017] VSC 280, [15]-[16].

[21] [2018] FCAFC 40; (2018) 260 FCR 310 [105]-[106] and [201].

[22] [2014] 291 FLR 17, [2014] NSWSC 1484, [7].

[24] [2017] VSC 477; [2017] 122 ACSR 537, [50]-[64].