In the matter of Montpac Pty Ltd (in liquidation) and Global Network Link Pty Ltd (in liquidation) [2020] NSWSC 1237

Nature of the application, affidavit evidence and chronology

1. By Originating Process filed on 2 July 2020, Messrs van der Velde and Porter ("Liquidators") as the joint and several liquidators of each of Montpac Pty Ltd (in liq) ("Montpac") and Global Network Link Pty Ltd (in liq) ("Global") seek several orders and directions in respect of the past and future conduct of the liquidations of Montpac and Global. The Liquidators read affidavits of Mr van der Velde affirmed 15 June 2020 and Mr McKenzie sworn 26 August 2020 in support of the application.
2. I first set out a brief chronology of events, which I have drawn from the helpful submissions prepared by Mr Robertson on behalf of the Liquidators and the supporting affidavit evidence. Global was incorporated on 24 June 1994 and Mr George Ioannidis was a director and shareholder of Global at all relevant times. On about 30 June 1995, Global was appointed as trustee of the Global Network Link Superannuation Fund ("Global Superannuation Fund"), pursuant to a written Trust Deed. On about 11 May 1998, Global was appointed as trustee of the Diamond Unit Trust, pursuant to a written Trust Deed, which provides that the trustee shall be disqualified from holding office if it goes into liquidation (cl 54(2)(b)), and that the unitholders shall be entitled to appoint a trustee in place of any trustee who is disqualified from office (cl 54(4)).
3. Montpac was incorporated on 7 April 2000 and Mr George Ioannidis was also a director and shareholder of Montpac at all relevant times. On about 19 April 2000, Montpac was appointed as the trustee of the 2000A Parkwood Estate Unit Trust ("Parkwood Unit Trust"), also pursuant to a written Trust Deed. The Trust Deed for that trust also provides that a trustee shall be disqualified from holding office if it goes into liquidation (cl 54(2)(b)), and that the unitholders shall be entitled to appoint a trustee in place of any trustee who is disqualified from office (cl 54(4)). On the same day, Global was appointed as trustee of the Global Network Link Unit Trust ("GNL Unit Trust"), which contains a corresponding provision as to the disqualification of a trustee.
4. On about 14 March 2013, Global was replaced as trustee of the Global Superannuation Fund by GLL Retirement Pty Ltd ("GLL"). On 15 March 2013, Messrs van der Velde and Hathaway were appointed as the joint and several voluntary administrators of both Montpac and Global. At that time, Montpac was the registered proprietor of nine parcels of Torrens title land situated in Mogo Road, Oallen, NSW ("Mogo Road Properties"), and these are the only assets owned by Montpac that the Liquidators have located. As at that date, Global was the registered proprietor of two parcels of land situated at Cowra, NSW ("Cowra Properties"); two parcels of land situated at Grenfell, NSW; a parcel of land situated at Parkwood Lane, Oallen, NSW; and also held a mortgage over another parcel of land situated at Cowra. In 2016, the land that was subject to that mortgage was sold by the local council, and the net proceeds of sale (being the sum of $44,118.97) were paid to Global as mortgagee.
5. Subsequently, on 30 September 2013, Messrs van der Velde and Hathaway were appointed as the joint and several liquidators of Montpac and Global ("Previous Liquidators"), and Montpac was "disqualified" as trustee of the Parkwood Unit Trust pursuant to cl 54 of the Trust Deeds to which I referred above. On that date, Global was also "disqualified" as trustee of the two unit trusts of which it was then trustee pursuant to cl 54 of the Trust Deed to which I referred above. The Liquidators have also not found any evidence that the unitholders of the Parkwood Unit Trust, the Diamond Unit Trust or the GNL Unit Trust exercised their respective powers under cl 54(4) of the respective Trust Deeds to appoint a new trustee in place of Montpac or Global to the trusts after they were disqualified as trustees on their liquidation.
6. In 2014, the Previous Liquidators sold one of the Mogo Road Properties owned by Montpac, being Lot 146, for a sale price of $140,000, and also sold the Cowra Properties owned by Global for the sale price of $150,000.
7. On 1 October 2015, Mr Hathaway resigned as liquidator of Montpac and Global and, on 6 August 2018, Mr Porter was appointed by the Court as a joint and several liquidator of each of Montpac and Global together with Mr van der Velde.

The Court's directions power

1. The Liquidators here seek several directions under s 90-15(1) of the Insolvency Practice Schedule (Corporations) ("IPSC"). The Court's power to give a direction under s 90-15 of the ISPC at least allows the Court to give a liquidator advice as to the proper course of action for him or her to take in a liquidation, and may give directions that provide guidance on matters of law and the reasonableness of a contemplated exercise of discretion, although it typically will not do so where a matter relates to the making and implementation of a business or commercial decision, where no particular legal issue is raised and there is no attack on the propriety or reasonableness of the decision. The power to give directions under this section is wider than its power to give such directions under former s 479(3) of the Act: Walley; Re Poles & Underground Pty Ltd (admins apptd) [2017] FCA 486 at [41]; Warner (liquidator), Re Sakr Bros Pty Ltd (in liq) [2019] FCA 547 at [18]; Re Go Energy Group Ltd [2019] NSWSC 558 at [16]; Re Plutus Payroll Australia Pty Ltd (in liq) [2019] NSWSC 1171 at [4]; Re RCR Tomlinson Ltd (admins apptd) [2020] NSWSC 735 at [6].
2. Section 63 of the Trustee Act, on which Mr Robertson relies, authorises the Court to give an "opinion advice or direction on any question respecting the management or administration of the trust property" and permits relief aimed at resolving legitimate doubts held by a trustee as to the proper course of action and protecting the trust and those entitled to it. In Re Australian Pipeline Ltd (2006) 60 ACSR 625; [2006] NSWSC 1316 at [17], Barrett J noted the role of such advice in providing guidance for the future and referred to Marley v Mutual Security Merchant Bank and Trust Co Ltd [1991] 3 All ER 198 at 201 where Lord Oliver of Aylmerton observed that: "A trustee who is in genuine doubt about the propriety of any contemplated course of action in the exercise of his fiduciary duties and discretions is always entitled to seek proper professional advice and, if so advised, to protect his position by seeking the guidance of the court."
3. In Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [56]-[59], the majority of the High Court observed that there were no implied limitations on the power to give advice or on the discretionary factors relevant to the giving of advice, and the power is confined only by the subject matter, scope and purpose of the legislation, and may be exercised whenever a question arises as to "the management or administration of the trust property" or "the interpretation of the trust instrument". The majority also noted (at [64]) that the procedure operates as "an exception to the Court's ordinary function of deciding disputes between competing litigants" and affords a facility for providing "private advice" to trustees although the Court is not bound to give such advice. The function of the Court in a judicial advice application is to determine what should be done in the best interests of the trust: Macedonian Orthodox Community Church St Petka Inc above; Re Estate Late Chow Cho-Poon; Application for judicial advice [2013] NSWSC 844 at [45].
4. In Equititrust Ltd (in liq) (rec apptd) (recs and mgrs apptd) v Equititrust Ltd (in liq) (rec apptd) (recs and mgrs apptd) (No 4) [2017] FCA 1133 at [7], Jagot J summarised the applicable principles as including, inter alia, that (1) the jurisdiction or power to give judicial advice is not constrained by any implications or limitations not found in the express words of the section; (2) the Court's discretion is confined only by the subject matter, scope and purpose of the legislation, and there are no implied limitations on the discretionary factors that may arise or rules governing the relative importance of such factors; (3) the judicial advice procedure is intended to be summary in character; (4) a judicial advice application is in the nature of 'private advice' and a departure from usual Court proceedings in which there are multiple, adversarial parties and a person served with documents in respect of a judicial advice application is not thereby a 'party' to the application; (5) the right to obtain judicial advice protects the trustee, but it thereby also protects the interests of the trust, by enabling the trustee to act in the interests of the trust without fear of being personally liable for costs; (6) the function of the Court in a judicial advice application is to determine what should be done in the best interests of the trust; and (7) the usual form of order is that the trustee "would be justified" in taking the relevant course of action. I have drawn on my judgment in Re Go Energy Group Ltd [2019] NSWSC 558 at [18]ff for this summary of these principles.

Direction as to whether assets and liabilities are trust assets and liabilities

1. The Liquidators seek an order or direction under s 90-15(1) of the IPSC, and/or s 63 of the Trustee Act 1925 (NSW) that they are justified in treating all assets and liabilities of Montpac as assets and liabilities of the Parkwood Unit Trust. In respect of Global, they seek a broadly similar order or direction that they would be justified in treating all liabilities of Global as liabilities of the Diamond Unit Trust.
2. These directions depend partly on questions of law and partly on questions of fact. In Mutton (liquidator), Re Balsub Pty Ltd (in liq) [2020] FCA 741 ("Balsub"), to which Mr Robertson drew attention, Anastassiou J referred to several factors which were relevant to whether a company traded in its own right, or as trustee, including the existence of constituent trust documents which establish a trust; whether separate accounts were maintained for the trust; whether the company's name in its capacity as trustee is noted on key documents; whether invoices were issued by a company in its capacity as trustee of the trust; whether expenses were accounted for as receipts of the company as trustee; and whether records contained in the company's general ledger recorded activity consistent with the operation of a trust. Regrettably, little documentation of that character has been available here. Mr Robertson submits, and I accept that, when a corporate trustee incurs a liability on behalf of the trust, it has a right of indemnity out of the trust assets and retains an equitable lien or equitable charge over the trust assets to secure that right of indemnity; a right of exoneration out of the trust assets in respect of future liabilities; and a right to deal with the trust assets, in accordance with the terms of the trust, to satisfy any liabilities in respect of which the right of indemnity or right of exoneration attaches, including the power to sell trust assets: Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 ("Caterpillar") at [14]; Re Suncoast Restoration Pty Ltd (in liq) (2013) 211 FCR 203; [2013] FCA 355 ("Suncoast") at [27]. Creditors of a 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, and their claims will be met out of the trust assets through the trustee's right of indemnity: Parker, Re Dengi Pty Ltd (in liq) [2018] FCA 444 ("Dengi") at [30].
3. Mr van der Velde's evidence (van der Velde [43]) is that, based on their investigations, the Liquidators have formed the view that Montpac acted and conducted business only in its capacity as trustee of the Parkwood Unit Trust, and did not act or conduct business in any other capacity; the Mogo Road Properties, being its only assets, are owned in its capacity as trustee of the Parkwood Unit Trust; and the debts incurred by Montpac were incurred in its capacity as trustee of the Parkwood Unit Trust and its only creditors are creditors of the Parkwood Unit Trust. There is no reason to doubt Mr van der Velde's assessment of that matter. Mr Robertson submits that, having regard to the evidence to which I have referred above, the Court should find that Montpac was and remains the trustee of the Parkwood Unit Trust; the unitholders of the Parkwood Unit Trust have not exercised their power under the Trust Deed to appoint a new trustee to replace Montpac as trustee of the Parkwood Unit Trust, and there is no evidence that they intend to do so; Montpac owned and held all its assets in its capacity as trustee of the Parkwood Unit Trust; and Montpac incurred all its debts in its capacity as trustee of the Parkwood Unit Trust. I accept that the balance of the evidence supports that position.
4. I find, although with hesitation, that the Liquidators may reasonably proceed on the basis that Montpac only carried on activities in as trustee of the Parkwood Unit Trust, so that its liabilities are trust liabilities and within the right of exoneration, and there is sufficient doubt as to that question to warrant the direction sought by the Liquidators being made.
5. Mr van der Velde's evidence (van der Velde [94]) is that, based on their investigations, the Liquidators have formed the view that the only "active" trust of which Global was a trustee was the Diamond Unit Trust; Global owned all its assets (other than its interest in Lot 21 which I address below) in its capacity as trustee of the Diamond Unit Trust; and Global incurred all its debts in its capacity as trustee of the Diamond Unit Trust. There is no reason to doubt Mr van der Velde's assessment of that matter. Mr Robertson also submits that, having regard to the evidence, the Court should find that (or, I again interpolate, at least proceed on the basis that) Global was and remains the trustee of the Diamond Unit Trust; the unitholders of the Diamond Unit Trust have not exercised their power under the Trust Deed to appoint a new trustee to replace Global as trustee of the Diamond Unit Trust, and there is no evidence that they intend to do so. I am satisfied that I should make a direction that the Liquidators would be justified in treating all assets of Global (other than Lot 21) and all liabilities of Global as assets and liabilities of the Diamond Unit Trust, where that question must be determined on the basis of the information available to the Liquidators, and that is the probability where most of Global's assets were held in that trust.
6. The Liquidators also seek directions as to specific assets of Global. First, they seek an order or direction pursuant to s 90-15(1) of the IPSC and/or s 63 of the Trustee Act that they would be justified in treating Global's interest in Lot 21 (as 2/8th tenant in common) as held on bare trust for the Global Superannuation Fund, and an associated order or direction pursuant to s 90-15(1) of the IPSC and/or s 63 of the Trustee Act that they would be justified in causing Global to transfer its interest in the parcel of land comprising Lot 21 (as 2/8th tenant in common) to GLL as trustee of the Global Superannuation Fund.
7. Mr van der Velde observes in his affidavit that Mr Ioannidis has consistently claimed that Global owned its 2/8th interest as tenant-in-common in Lot 21 in its capacity as trustee of the Global Superannuation Fund. He also points out that Mr Ioannidis has never provided the Liquidators with any documents to substantiate that claim, such as a copy of the contracts for the sale of the land, despite requests to do so, but that the Liquidators' investigations have not revealed any information which caused them to disbelieve Mr Ioannidis' statements. While that is not a particularly satisfactory basis to assess the ownership of the land, it seems to me that the Liquidators must do the best they can with the information that is available to them, and the conclusion that they have reached as to that lot is justifiable in the circumstances. I find, also with hesitation, that the Liquidators may justifiably proceed on that basis.
8. The Liquidators also seek an order or direction pursuant to s 90-15(1) of the IPSC and/or s 63 of the Trustee Act that they would be justified in treating the interest of Global in Lot 2 and Lot 155 (as 50% tenant in common) as held on trust for the Diamond Unit Trust. They also seek an order or direction pursuant to s 90-15(1) of the IPSC and/or s 63 of the Trustee Act that the Liquidators would be justified in treating the net proceeds paid to Global in respect of the mortgage held by Global over the parcel of land comprising Lot 104, totalling $44,118.97, as held on trust for the Diamond Unit Trust.
9. Mr van der Velde observes, in his affidavit, that Mr Ioannidis has made conflicting statements to the liquidators as to the capacity in which Global owned other parcels of land, and had not provided the liquidators with documents to substantiate his claims as to the ownership of those parcels of land, despite request for the documents to be provided. As I noted above, the liquidators have formed the view that the land (other than the interest in Lot 21) were owned by Global in its capacity as the Diamond Unit Trust, and debts were incurred by Global in its capacity as trustee of the Diamond Unit Trust. Again, this is not a particularly satisfactory basis for reaching a determination as to the issue, but it seems to me that the Liquidators have reasonably formed the view they have taken, based on the limited information available to them. I also find, again with hesitation, that the Liquidators may justifiably proceed on that basis.

Previous sales of trust land

1. The Liquidators seek an order or direction under s 90-15(1) of the IPSC and/or s 63 of the Trustee Act that the sale of the land comprising Lot 146 be deemed to be a sale within the power of Montpac as trustee of the Parkwood Unit Trust. They also seek a similar order or direction pursuant to s 90-15(1) of the IPSC and/or s 63 of the Trustee Act that the sale of the land comprising Lots 102 and 103 be deemed to be a sale within the power of Global as trustee of the Diamond Unit Trust. The form of this order reflects the form of an order made by Gordon J in Caterpillar above.
2. The Liquidators also seek associated orders or directions under s 90-15(1) of the IPSC, s 1318(2) of the Corporations Act and/or s 85 of the Trustee Act that the Previous Liquidators in their capacity as joint and several liquidators of Montpac and Global respectively, acted honestly and ought fairly be excused for any breaches, failures or omissions arising from the sales of Lot 146, being an asset of the Parkwood Unit Trust, and Lots 102 and 103, being assets of the Diamond Unit Trust. Section 1318 of the Corporations Act permits the Court to make an order relieving specified persons from an apprehended claim in respect of any negligence, default, breach of trust or breach of duty in an appropriate case. Section 85 of the Trustee Act relevantly provides that: "(1) Where a trustee is or may be personally liable for any breach of trust, the Court may relieve the trustee either wholly or partly from personal liability for the breach. (2) The relief may not be given unless it appears to the Court that the trustee has acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the direction of the Court in the matter in which the trustee committed the breach."
3. Similar relief was granted to a liquidator, in respect of previous dealings with trust property, under s 1318 of the Corporations Act and the Trustee Act in Caterpillar above at [42] and Sun Coast above at [29]ff. In Amirbeaggi, Re Simpkiss Pty Ltd (in liq) [2018] FCA 2121 at [46]-[48], Markovic J held that such relief could be granted where there was a prospect of a claim being brought against the liquidator, although that prospect was unlikely. The possible need for such relief arises from the Previous Liquidators' failure to seek an order from the Court to permit the sale of the asset, or to appoint them as receiver to sell the relevant assets: Balsub above at [29].
4. Mr Robertson submits that any breach of trust committed by the Previous Liquidators, by selling assets on behalf of each trustee company in circumstances where the trustee company held the assets as bare trustee and therefore did not have the power to sell the assets, was done honestly and reasonably and the Previous Liquidators should be excused for any such breach of trust. In respect of the sale of Lot 146, the Previous Liquidators entered into the contract to sell the property in 2014, and it appears they did not then realise that they or Montpac did not have the power to sell the property, and first became aware of that matter in 2018 when they took legal advice about the future conduct of Montpac's liquidation. The sale was on appropriate commercial terms, where the Previous Liquidators obtained an independent valuation for the property, which valued the land at $140,000, and sold the property to an unrelated third party in an arm's length transaction at that price, and also obtained confirmation from Mr Ioannidis, as a secured creditor of Montpac, that that price was acceptable to him.
5. In respect of the sale of Lot 102 and Lot 103, the Previous Liquidators entered into the contracts to sell the properties in 2016, and it appears they again did not recognise that neither they nor Global had the power to sell the properties. The Previous Liquidators entered into the contract to sell Lot 103 for the sale price of $75,000 to an unrelated third party, following a lengthy marketing campaign carried out by a local real estate agent, and after the real estate agent "strongly" recommended that they accept the offer. That sale price was marginally less than an independent valuation for the property. They entered into the contract to sell Lot 102 for a sale price of $75,000. The Liquidators cannot now locate the documents relating to that sale, but Mr van der Velde's evidence is, and I accept that, he has no reason to doubt that the same sale process was undertaken in respect of Lot 102 as was undertaken for Lot 103.
6. Mr Robertson submits, and I accept, that the Previous Liquidators acted honestly and reasonably (although in error) in their decision to sell the properties owned and held by Montpac and Global, and they should be excused for any breach of trust they committed in doing so.

Power to sell remaining trust assets

1. The Liquidators seek orders or directions pursuant to s 90-15(1) of the IPSC and/or s 81 of the Trustee Act that they on behalf of Montpac be permitted to sell the assets of the Parkwood Unit Trust in the course of the winding up of Montpac, and that the proceeds of sale of any assets of the Parkwood Unit Trust be dealt with by the Liquidators as assets in the winding up of Montpac and accounted for accordingly. They also seek corresponding orders or directions, as liquidators of Global, that they be permitted to sell the assets of the Diamond Unit Trust in the course of the winding up of Global and that the proceeds of sale of any assets of the Diamond Unit Trust be dealt with by the Liquidators as assets in the winding up of Global and accounted for accordingly. The form of these orders reflects the form of orders 2 and 4 made by Gordon J in Caterpillar above.
2. As Mr Robertson points out, where a corporate trustee has been disqualified and no new trustee has been appointed or will be appointed, the corporate trustee holds the assets as bare trustee for the beneficiaries of the trust: Caterpillar above at [24], [26], [36]; Suncoast above at [14], [27]. A bare trustee does not have the power to retain or sell those assets as against any new trustee, and a bare trustee's duties, powers and rights are ordinarily limited to protecting the trust assets: Caterpillar above at [14], [26]; Woodgate, Re Bell Hire Services Pty Ltd (in liq) [2016] FCA 1583 ("Woodgate") at [21]; Suncoast above at [27]; Dengi above at [30]). A liquidator may be granted a power to deal with trust property, and relieved from liability when doing so, where the company has become a bare trustee of the assets of the trust upon the liquidator's appointment; the company had acted only as trustee of the trust and not in any other capacity; all of its assets were held as trustee of the trust and all liabilities incurred by it were incurred as trustee of the trust; and no new trustee had been appointed: Caterpillar above at [35]-[36]; Balsub above at [25]. Mr Robertson also submits, and I accept, that the Court has the power under the Trustee Act 1925 (NSW) to authorise the liquidator of a company that holds trust assets as a bare trustee to deal with those assets and apply them to meet claims in the winding up of the company, and it may be appropriate to exercise this power where there is no present likelihood of a new trustee being appointed: Caterpillar above at [26], [30]; Suncoast above at [29]-[39]. I am satisfied that such an order should here be made in respect of both of the companies.

Costs and liquidators' remuneration in dealing with trust assets

1. The Liquidators seek an order or direction pursuant to s 90-15(1) of the IPSC and/or s 63 of the Trustee Act that the costs and expenses incurred by them in realising and/or otherwise dealing with any assets of the Parkwood Unit Trust be costs in the winding up of Montpac. They seek a corresponding order or direction that the costs and expenses incurred by them in realising and/or otherwise dealing with any assets of the Diamond Unit Trust be costs in the winding up of Global. The Liquidators also seek order or directions pursuant to s 90-15(1) of the IPSC and/or s 63 of the Trustee Act that they, as Liquidators of Montpac, be allowed their reasonable remuneration from the assets of the Parkwood Unit Trust and that they, as liquidators of Global, be allowed their reasonable remuneration from the assets of the Diamond Unit Trust. Mr Robertson confirmed that these orders are intended to confirm the Liquidators' entitlement to remuneration from trust assets, as a matter of principle, recognising that any claim for payment or remuneration of a particular amount would likely require a further application for Court approval.
2. As Mr Robertson points out, the Liquidator's remuneration and expenses in respect of work relating to trust assets which is properly done for the purpose of winding up the company's affairs should ordinarily be paid out of non-trust property of a trustee company to the extent that such property is available. However, if non-trust property is not available and a liquidator would not otherwise be required to undertake that work, it would generally be appropriate for the cost of the work to be paid out of the trust assets, and the liquidator will be entitled to be paid "reasonable remuneration" out of the trust assets: Woodgate above at [22]-[23]; Dengi above at [36]-[37]. In Dengi above, Markovic noted (at [41]) that the liquidator was there seeking a direction that he be allowed his reasonable remuneration and not a quantification of costs, and indicated her satisfaction that an order could be made in those terms; and orders allowing a liquidator to be paid remuneration and expenses referable to a trust from trust property were made in Balsub above at [33]-[34]. I am satisfied the orders sought should also be made in respect of Montpac and Global.

Costs of the proceedings

1. The Liquidators seek orders or directions pursuant to s 90-15(1) of the IPSC and/or s 63 of the Trustee Act that the costs of this proceeding be costs in the winding up of Montpac and Global. Mr Robertson submits, and I accept, that where a trustee acts reasonably and in good faith, the general rule is that the trust assets bear the costs of a trustee's application for advice and directions either directly or under the trustee's indemnity: Woodgate above at [24]. In Dengi above, Markovic J referred to the general rule that the trust assets bear the costs of a trustee's application for advice and directions, either directly, or under the trustee's indemnity, where a trustee acts reasonably and in good faith. The orders sought should be made, but may require an allocation of those costs, possibly on an equal basis, between those trusts.

Priority in distribution of trust assets

1. The Liquidators seek an order or direction pursuant to s 90-15(1) of the IPSC and/or s 63 of the Trustee Act that they would be justified in distributing the assets of the Parkwood Unit Trust, first, in respect of the expenses of the liquidation of Montpac; second, in payment of the costs of this proceeding; third, in payment of their reasonable remuneration; fourth, pari passu amongst the admitted creditors of Montpac; and fifth, if applicable, pari passu amongst the unit holders of the Parkwood Unit Trust. They similarly seek an order or direction that they would be justified in distributing the assets of the Diamond Unit Trust first, in respect of the expenses of the liquidation of Global; second, in payment of the costs of this proceeding; third, in payment of their reasonable remuneration; fourth, pari passu amongst the admitted creditors of Global; and fifth, if applicable, pari passu amongst the unit holders of the Diamond Unit Trust.
2. The order sought as to the order of distribution of trust assets reflects order 3 made by Markovic J in Dengi above, with the addition of a paragraph recognising the possibility that there will be a surplus to be distributed among unitholders of the trusts, after payment of creditors of the companies as trustees. In that case, Markovic J noted that the directions sought raised the question whether s 556 of the Act applied, and referred to the decision of the Court of Appeal of the Supreme Court of Victoria in Commonwealth v Byrnes and Hewitt [2018] VSCA 41. Her Honour also referred to the decision of the Full Court of the Federal Court in Jones (liquidator) v Matrix Partners Pty Ltd, Re Killarnee Civil and Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40, and noted that two members of the Full Court there agreed, albeit for different reasons, that the proceeds of realisation of trust assets should be applied in accordance with the priority regime established by ss 555-560 and 560-561 of the Act, where a plaintiff carried on business as trustee of a trust and all of his assets were held on the terms of the trust.
3. Since the decisions to which her Honour referred, the High Court's decision in Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (2019) 368 ALR 390; [2019] HCA 20 supports the view that the statutory priority provisions will apply where a company is in liquidation. In McLean v Hill, TMC Plumbing & Drainage Pty Ltd (in liq) [2019] FCA 1439 at [25], Moshinsky J referred to the High Court's decision in Carter Holt Harvey as authority, inter alia, that the proceeds from the exercise of the right of exoneration are to be distributed to the trust creditors in accordance with the order of priorities prescribed by the Corporations Act. I am satisfied that the orders sought accurately reflect the present state of the law and that the direction sought can be made, given the complexities of the relevant issue.

Orders

1. For these reasons, I make orders in the form sought by the Liquidators as follows: In respect of the third plaintiff, Montpac Pty Ltd (in liq):
2. The first and second plaintiffs are justified in treating all assets and liabilities of the third plaintiff, Montpac Pty Ltd (In liquidation), as assets and liabilities of The 2000A Parkwood Estate Unit Trust ("Parkwood Unit Trust").
3. The sale of the land comprising Lot 146 DP 1097269 be deemed to be a sale within the power of the third plaintiff as trustee of the Parkwood Unit Trust.
4. The first and second plaintiffs on behalf of the third plaintiff be permitted to sell the assets of the Parkwood Unit Trust in the course of the winding up of the third plaintiff.
5. The proceeds of sale of any assets of the Parkwood Unit Trust be dealt with by the first and second plaintiffs as assets in the winding up of the third plaintiff and accounted for accordingly.
6. The costs and expenses incurred by the first and second plaintiffs in realising and/or otherwise dealing with any assets of the Parkwood Unit Trust be costs in the winding up of the third plaintiff.
7. The costs of this proceeding be costs in the winding up of the third plaintiff.
8. The first and second plaintiffs be allowed their reasonable remuneration from the assets of the Parkwood Unit Trust.
9. The first and second plaintiffs would be justified in distributing the assets of the Parkwood Unit Trust as follows: (a) first, in respect of the expenses of the liquidation of the third plaintiff; (b) second, in payment of the costs of this proceeding; (c) third, in payment of their reasonable remuneration; (d) fourth, pari passu amongst the admitted creditors of the third plaintiff; and (e) fifth, if applicable, pari passu amongst the unit holders of the Parkwood Unit Trust.
10. The first plaintiff and Mr Stephen Hathway in their capacity as joint and several liquidators of the third plaintiff acted honestly and ought fairly be excused for any breaches, failures or omissions arising from the sale of the parcel of land comprising Lot 146 DP 1097269, being an asset of the Parkwood Unit Trust. In respect of the fourth plaintiff, Global Network Link Pty Ltd (in liq):
11. The first and second plaintiffs would be justified in treating the interest of the fourth plaintiff, Global Network Link Pty Ltd, in the parcel of land comprising Lot 21 DP 752945 (as 2/8th tenant in common) as held on bare trust for the Global Network Link Superannuation Fund ("GNL Super Fund").
12. The first and second plaintiffs would be justified in causing the fourth plaintiff to transfer its interest in the parcel of land comprising Lot 21 DP 752945 (as 2/8th tenant in common) to GLL Retirement Pty Ltd as trustee of the GNL Super Fund.
13. The sale of the land comprising Lot 102 DP 1045466 and Lot 103 DP 1045466 be deemed to be a sale within the power of the fourth plaintiff as trustee of the Diamond Unit Trust.
14. The first and second plaintiffs would be justified in treating the interest of the fourth plaintiff in the parcels of land comprising Lot 2 DP 1053881 and Lot 155 DP 1031813 (as 50% tenant in common) as held on trust for the Diamond Unit Trust.
15. The first and second plaintiffs would be justified in treating the net proceeds paid to the fourth plaintiff in respect of the mortgage held by the fourth plaintiff over the parcel of land comprising Lot 104 DP 1045466, totalling $44,118.97, as held on trust for the Diamond Unit Trust.
16. The first and second plaintiffs would be justified in treating all liabilities of the fourth plaintiff as liabilities of the Diamond Unit Trust.
17. The first and second plaintiffs on behalf of the fourth plaintiff be permitted to sell the assets of the Diamond Unit Trust in the course of the winding up of the fourth plaintiff.
18. The proceeds of sale of any assets of the Diamond Unit Trust be dealt with by the first and second plaintiffs as assets in the winding up of the fourth plaintiff and accounted for accordingly.
19. The costs and expenses incurred by the first and second plaintiffs in realising and/or otherwise dealing with any assets of the Diamond Unit Trust be costs in the winding up of the fourth plaintiff.
20. The first and second plaintiffs be allowed their reasonable remuneration from the assets of the Diamond Unit Trust.
21. The costs of this proceeding be costs in the winding up of the fourth plaintiff.
22. The first and second plaintiffs would be justified in distributing the assets of the Diamond Unit Trust as follows: (a) first, in respect of the expenses of the liquidation of the fourth plaintiff; (b) second, in payment of the costs of this proceeding; (c) third, in payment of their reasonable remuneration; (d) fourth, pari passu amongst the admitted creditors of the fourth plaintiff; and (e) fifth, if applicable, pari passu amongst the unit holders of the Diamond Unit Trust and/or the GNL Unit Trust.
23. The first plaintiff and Mr Stephen Hathway in their capacity as joint and several liquidators of the fourth plaintiff acted honestly and ought fairly be excused for any breaches, failures or omissions arising from the sale of the parcels of land comprising Lot 102 DP 1045466 and Lot 103 DP 1045466, being assets of the Diamond Unit Trust.

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