Entitlement to Net Sims Funds and Net Ardent Funds: paras 2 and 3
17 The Liquidators consider that:
(a) the amount of each of the Sims Funds Entitlements in the Administration Account No 2 is held on express trust for each Sims Client respectively; and
(b) the amount of each of the Ardent Funds Entitlements in the Administration Account No 2 is held on express trust for each Ardent Client respectively.
18 The Liquidators submit, and I accept, that this result follows for the same reasons as in the decision in Spring, in the matter of Goal Group Australia Pty Ltd (Administrators Appointed) [2024] FCA 1043. In this regard:
(a) The client agreements contemplate the clients being "entitled" to the settlement monies and require those monies be paid to them directly. A typical clause is as follows:
all settlement monies to which the Client may be entitled will be paid and payable to the Client directly without any withholding from GGA (except for fees properly due to GGA) unless agreed by the parties in advance in writing.
That language suggests that any money received by the Company is regarded as the relevant client's money and not the Company's money (see Reasons at [18(a)]). One client agreement, for Auscoal Superannuation, does not contain this typical clause, but nonetheless appears to contemplate that net proceeds are "actually received" by the Client.
(b) The terms of the client agreements and powers of attorney contemplate that the Company acts on the clients' behalf. Here, a typical clause in the client agreements provides:
Where the Client participates in a Case as a Class Member, GGA will request the Client to sign or arrange the signature of the proof of claim forms under guidance from and as per timelines notified to the Client by GGA…GGA will then file all claim forms on the Client's behalf in a timely manner.
Further, many of the powers of attorney expressly refer to the Company receiving money on the client's behalf. Thus, three powers of attorney authorise the Company's "receipt of any amounts from any party related to the Services…in respect of payments made to the Client, or through the Attorney on behalf of the Client". Three others refer to the Company "reclaiming from any paying agent and/or administrator or any authority in any jurisdiction (as appropriate) amounts in respect of payments made to the [Client], or through GGA on behalf of the [Client]"; and the language of a fourth is similar. Another form of power of attorney refers to "…securing an entitlement from, an Action". (See Reasons at [18(b)]).
(c) In the case of one client, QSuper Limited (QSuper), the client agreement expressly provided that the Company must ensure that monies it receives on behalf of QSuper are kept in a separate account. That is a strong indication that a trust is intended. (See Reasons at [18(c)].
(d) There does not appear to be any basis on which the Company (which was not a participant in the Sims Class Action or the Ardent Class Action in its own right) was legally entitled to receive the fruits of any settlement. Those fruits could only have been payable to it as the agent of the respective clients. As has been seen, under the terms of the client agreements, the Company had no entitlement to those monies (beyond the right to deduct its fees). In those circumstances, the following statement from Registrar of Accident Compensation Tribunal v Federal Commissioner of Taxation [1993] HCA 3; (1993) 178 CLR 145 at 165-6 (quoted by Bell, Gageler and Keane JJ in Legal Services Board v Gillespie-Jones [2013] HCA 35; (2013) 249 CLR 493 at [113]) is in point:
[U]nless there is something in the circumstances of the case to indicate otherwise, a person who has 'the custody and administration of property on behalf of others' or who 'has received, as and for the beneficial property of another, something which he is to hold, apply or account for specifically for his benefit' is a trustee in the ordinary sense.
(See Reasons at [18(d)]).
19 Further, it appears that the Company directed payment of settlement monies from litigation claims into the Westpac Account 2, which was regarded as the Company's main Australian based Client Account (Spring 1 at 63) and had the account name "Goal Group Australia Pty Ltd AUD Client" (Exhibit AJS-20, p 222-223). The payment of funds into a separate account entitled "Trust Account" has been treated as a powerful indication that a trust is intended: Re French Caledonia Travel Service Pty Ltd (in liquidation) [2003] NSWSC 1008; (2003) 59 NSWLR 361 at [19] (Campbell J). The Liquidators submit, and I accept, that the same would follow where the relevant account is described as a "Client" account and a practice is followed of directing monies payable to clients into that account: see Reasons at [19]. The Ardent settlement funds were paid into the Westpac Account 2. The Sims settlement funds, whilst originally directed to be paid into the Westpac Account 2, were subsequently requested (as a post-appointment receipt) to be paid into the Administration Account, and then transferred by the Administrators to the Administration Account No 2 (being an account which the Administrators intended that funds to which clients may be beneficially entitled would be paid into to keep them separate from the Company's own funds, pending the ascertainment as to the entitlement of clients to those funds).
20 Finally, I note that correspondence received by the Administrators from two clients, New South Wales Treasury Corporation and Colonial First State Investments Limited, records their position that settlement monies received by the Company are held by the Company on trust for them and are not assets of the Company available to be distributed to its creditors: see Reasons at [20]; Exhibits AJS-38 to 41, pp 467-474.