Primary Securities Ltd v Willmott Forests Limited [2016] VSCA 309

1 I have had the advantage of reading in draft the joint reasons for judgment of Whelan and Santamaria JJA. I too would grant leave to appeal but dismiss the appeal. Subject to what follows, I would do so for the reasons which their Honours give.

2 As appears from the joint reasons, the sole issue on this application was the scope of the principle stated in Re Universal Distributing Co Ltd (in liq).[1] The contention for the applicant ('Primary') was that the principle did not apply in the circumstances of the present case, as the costs and expenses claimed by the respondent liquidators had not resulted in the realisation of assets or the creation of a fund.

3 That contention must be rejected. Properly understood, the notion of justice which underpins the equitable principle stated in Universal Distributing does not depend upon a fund having come into existence. So much is clear from the elucidation of the principle in Stewart v Atco Controls Pty Ltd (in liq).[2]

4 In a unanimous judgment, the High Court in Stewart v Atco restated the principle in these terms:

The principle in Universal Distributing is stated at some length, no doubt because Dixon J was concerned to identify its sources. It may be more shortly stated as: a secured creditor may not have the benefit of a fund created by a liquidator's efforts in the winding up without the liquidator's costs and expenses, including remuneration, of creating that fund being first met. To that end, equity will create a charge over the fund in priority to that of the secured creditor.

The circumstances in which the principle will apply are where: there is an insolvent company in liquidation; the liquidator has incurred expenses and rendered services in the realisation of an asset; the resulting fund is insufficient to meet both the liquidator's costs and expenses of realisation and the debt due to a secured creditor; and the creditor claims the fund. In these circumstances, it is just that the liquidator be recompensed. To use the language of Deane J in Hewett v Court, it might be said that a secured creditor would be acting unconscientiously in taking the benefit of the liquidator's work without the liquidator's expenses being met. However, such a conclusion is avoided by the application of the principle stated in Universal Distributing.[3]

5 Unsurprisingly, Primary submitted that the High Court had here defined 'clearly and unequivocally' the circumstances which must exist before the principle will apply. It follows, so it was said, that the existence of a 'resulting fund' was a necessary condition of the application of the principle. In my view, however, Primary's submission fails to heed the High Court's clear warning - given in Stewart v Atco itself - that

the words of a principle stated in a judge's reasons for decision require consideration of what those reasons convey about the principle and are not to be applied literally.[4]

6 Stewart v Atco was a case - like Universal Distributing itself - where a fund had been created. Accordingly, as counsel for the liquidators correctly pointed out on this application, the Court had no occasion to consider the applicability of the principle to a case where no fund had come into existence. Read as a whole, however, the reasons of the Court in Stewart v Atco elucidate the principle in terms which show that the existence of a fund is not a necessary condition of its application.

7 I begin with the High Court's statement that, in the circumstances identified, 'it is just that the liquidator be recompensed'.[5] Equity intervenes because justice requires it. This statement must, of course, be read with the statement later in the judgment that the flexibility of the rules of equity

does not mean that courts should proceed on general notions of justice without regard to settled principles. A principle should be applied when the circumstances of a case fall within it.[6]

8 The principle in Universal Distributing can be seen to rest on a quite specific notion of justice. It is that the creditors of the company in liquidation (including the secured creditor), who stand to benefit from the action taken by the liquidator with respect to the relevant asset(s), should not have the benefit without the costs of the liquidator's work being met.

9 This understanding of the principle appears most clearly from what the High Court said in Stewart v Atco about the analogy between the Universal Distributing lien and the solicitor's 'particular lien', as follows:

More closely analogous to the present case is the solicitor's particular lien (which may be distinguished from the general or retaining lien that entitles retention of documents until fees are paid), which arises over any property recovered or judgment obtained by a solicitor's work. In Guy v Churchill, Lindley LJ said that '[i]t is right that they who get the benefit of the recovery of money should bear the expense of recovering it.' A similar notion underlies the principle expressed in Universal Distributing. A secured creditor cannot lay claim to the benefit of realised assets without the costs of their realisation being met. [7]

10 The 'notion' of justice here identified is clear. It is that the person who gets - or 'lays claim to' - the benefit of the recovery of money or the realisation of an asset should not have that benefit without the cost of that recovery or realisation being met. Once the underlying notion of justice is thus exposed, it becomes clear that there is no reason in principle to distinguish between:

(a) a case where money is actually recovered (or an asset actually realised); and

(b) a case, like the present, where expense is incurred by the liquidator for the purpose of the recovery of money or the realisation of an asset[8] but where the efforts of the liquidator cease (or are interrupted) before the money is recovered or the asset realised.

In each case, the liquidator's efforts enure for the benefit of the creditors.

11 The authorities relied on by Dixon J in Universal Distributing were all concerned with the costs of realisation of assets.[9] But his Honour's formulation of the principle encompassed, in addition, the costs of the care and preservation of assets.[10] This was doubtless because the incurring of those costs was seen to have - or be capable of having - the same nexus with the benefit accruing to creditors.

12 If that nexus exists - because of the purpose for which the costs are incurred - it does not cease to exist merely because the appointment of the liquidator comes to an end before a fund has been created. The equivalent proposition is clearly established in relation to the analogous solicitor's lien.[11]

13 In response to questions from the Court, counsel for Primary were unable to identify any principled basis for the distinction which they sought to draw. Counsel conceded that the liquidators were 'justly entitled' to the costs and expenses claimed, but maintained that they were not recoverable on a 'Universal Distributing basis'. Two propositions were advanced to explain why the principle could not apply. First, it was said, the circumstances in which the principle applied had been precisely defined in Stewart v Atco and the existence of a fund was 'fundamental' to its application. Secondly, and in any event, the existence of an identified fund was necessary in order to ascertain which costs were properly recoverable.

14 With respect, these contentions do not explain why the existence of a fund should be viewed, as counsel submitted it should be, as the 'touchstone' for the application of this principle. As I have said, the notion of justice on which the principle rests applies with equal force when no fund is created. And the task of identifying the recoverable costs is made no more difficult by the absence of a fund. In every case, the question to be determined is one of fact, namely, whether the costs were incurred exclusively for the purpose of care, preservation and/or realisation of the assets.[12]

15 For these reasons, the principle in Universal Distributing does not depend for

its application on the existence of a fund as the product of the liquidator's efforts. As the joint reasons make clear, this conclusion accords with that reached by Finn J in Pattison v Lockwood,[13] and there is no authority to the contrary.

16 In a case where no fund has been created, what needs to be shown in order to establish the liquidator's lien is that:

(a) the costs and expenses incurred by the liquidator were incurred exclusively in caring for, preserving and/or realising property;

(b) the activity of care, preservation and/or realisation enured for the benefit of the creditors of the company (including the secured creditor); and

(c) there is property which can properly be subjected to the liquidator's charge for remuneration, costs and expenses.

17 In Universal Distributing[14] it was held that a secured creditor may not have the benefit of a fund created by a liquidator's efforts in the winding up of an insolvent company without the liquidator's costs and expenses, including remuneration, of creating that fund being first met.[15]

18 On 26 October 2010, the second and third respondents ('the liquidators') were appointed joint and several administrators of the first respondent, Willmott Forests Limited ('WFL'), and on 22 March 2011 they became liquidators of WFL. WFL was an insolvent company which was the responsible entity of a managed investment

19 On 22 December 2011, the applicant replaced the company as the responsible entity of the scheme and, thus, removed the assets of the scheme from the care and custody of the liquidators.

20 Following judgments delivered on 17 April 2015[16] and 5 October 2015,[17] Efthim AsJ made orders on 5 October 2015 to the effect that the liquidators were entitled to be indemnified out of the assets of the scheme for the expenses incurred in administering the scheme and/or caring for, protecting, preserving and/or realising the assets and/or property, including the trees, of the scheme during the period from 26 October 2010 to 22 December 2011 'on a Re Universal Distributing basis' notwithstanding that their efforts had not resulted in the creation of a fund.

21 The applicant has applied for leave to appeal against the decision of the associate judge. For the reasons given below, the application should be granted, but the appeal should be dismissed.

22 WFL was the responsible entity of numerous registered and unregistered forestry investment schemes associated with a group of companies which can be referred to as 'the Willmott Group'. One of those schemes was the 1995-1999 Willmott Forests Project (ARSN 089 598 612) ('the 95-99 Scheme'), a registered managed investment scheme, which WFL managed from the 9599 Scheme's inception until it was replaced by the applicant on 22 December 2011.[18]

23 On 6 September 2010, WFL was placed into administration. The liquidators were appointed as joint and several administrators on 26 October 2010. On 22 March 2011, they were appointed liquidators of WFL.[19]

24 By application filed in the Federal Court of Australia on 11 May 2011, the liquidators sought directions from the Court that, inter alia, they would be justified in procuring WFL to amend the constitutions of the registered managed investment schemes operated by it (including the 95-99 Scheme) to provide for an express power to terminate or surrender the scheme members' ('the growers') leases and other project documents, which would allow the liquidators to sell the assets used in the schemes on an unencumbered basis. Those directions were made on 29 June 2011 ('the sale orders').[20]

25 On 20 May 2011, the Willmott Growers Group Inc ('WGG') convened a meeting of growers in the 95-99 Scheme for 23 June 2011, for the purpose of considering and voting on, amongst other things, resolutions to replace WFL as responsible entity of the 95-99 Scheme with the applicant. WFL held interests in the 95-99 Scheme which were under the control of receivers of WFL ('the receivers'). Those receivers applied to the Supreme Court of Victoria in the name of WFL to enjoin the meeting. An interim injunction was granted on 22 June 2011[21] and extended on 1 July 2011.[22] The liquidators applied for and were granted leave to appear in that proceeding in support of the receivers' application.

26 By deed dated 12 July 2011, the liquidators caused WFL to amend the constitution of the 95-99 Scheme to insert the power to terminate, relinquish or surrender the leases, subleases, forestry management agreement and other project documents between WFL and the growers (together the 'project documents').[23] The liquidators then proceeded to seek expressions of interest from persons interested in purchasing the land subject to the Willmott schemes, or in purchasing the land and the trees of the Willmott Group on an unencumbered basis. The liquidators only received offers for the purchase of the land and the trees of the Willmott Group on an unencumbered basis.[24] On 6 December 2011, contracts of sale, which included the land on which the 95-99 Scheme operates and its trees, were entered into ('the contracts of sale').

27 On 16 December 2011, the injunction proceeding was discontinued and the injunction dissolved by agreement between the receivers and WGG and other defendants, with orders by consent that each party bear its own costs.[25] Efthim AsJ found that, on the evidence, the liquidators had acted appropriately in opposing the injunction, that the liquidators had been acting on behalf of growers, and that the original proposal which had meant a dilution of the interests of some growers had been abandoned.[26]

28 On 21 December 2011, a meeting of growers in the 95-99 Scheme took place. The growers resolved to remove WFL as responsible entity of the 95-99 Scheme and appoint the applicant in its place.

29 Following the replacement, the 95-99 Scheme land and trees were removed from the contracts of sales, and the 95-99 Scheme shared no part of the proceeds from the contracts of sale.

30 The costs and expenses incurred by the liquidators in the management of the 9599 Scheme until WFL was replaced as responsible entity constitute expenses properly incurred in the winding up of WFL. Those costs and expenses (including the $322,418.80 ordered by Efthim AsJ to be paid from the assets of the 95-99 Scheme discussed below) have been paid in full out of the assets held by WFL in its own capacity, pursuant to section 556(1)(a) of the Corporations Act 2001 (Cth) ('the Act').[27]

31 If the amount ordered by Efthim AsJ is recovered by the liquidators, it will be reimbursed back to WFL and, subject to first meeting any outstanding costs of the liquidation, would be distributed to unsecured creditors.[28]

32 By Originating Process dated 29 April 2013 the respondents sought, inter alia

(a) A declaration that the land used in the 95-99 Scheme is not 'scheme property' within the meaning of section 9 of the Act ('the land issue').

(b) A direction pursuant to s 511 of the Act that the liquidators are justified in claiming the expenses (including their reasonable remuneration) incurred in caring for, protecting, preserving and/or realising the assets and/or property, including the trees of the 95-99 Scheme (the 'Assets') during the period:

(i) they were appointed administrators and/or liquidators of WFL; and

(ii) WFL was the responsible entity of the 95-99 Scheme;

and that the Liquidators were entitled to indemnify themselves for that expenditure and reasonable remuneration out of:

(c) the proceeds of any insurance claims in respect of the 95-99 Scheme

33 The land issue was heard and determined by Ferguson J and is not relevant to this application.[29]

34 By order made on 4 September 2013, Ferguson J ordered that the relief sought in the Originating Process regarding the liquidators' costs and expenses be referred to an Associate Judge for hearing pursuant to rule 77.05 of the Supreme Court (General Civil Procedure) Rules 2005 and, if required, pursuant to rule 16.1(3) of the Supreme Court (Corporations) Rules 2013.

35 The liquidators later sought leave to amend the Originating Process and by order made 28 February 2014, Ferguson J also referred that application to an Associate Judge.

36 The matter came before Efthim AsJ. On 19 November 2013 he made an order by consent that the application 'proceed by determination of the list of questions in Annexure A to these Orders'. The annexure comprised the following six questions:

1. What categories of costs are being claimed by the Plaintiffs?
2. What categories of costs are recoverable on a Re Universal Distributing basis?
3. What categories of costs are recoverable on a Re Berkeley Applegate basis?
4. For those categories of costs recoverable on a Re Universal Distributing basis, what amounts are recoverable?
5. For those categories of costs recoverable on a Re Berkeley Applegate basis, what amounts are recoverable?
6. For the amounts recoverable, to what assets does the Plaintiffs' lien attach?

37 The categories of costs claimed by the liquidators comprised:

(a) 'Scheme Specific Costs', being costs specific to the 95-99 Scheme, which included:

(i) reviewing the scheme documentation;

(ii) drafting the amendment deed to the constitution of the 95-99 Scheme following the sale orders;

(iii) reviewing and considering the Notice of Meeting and Explanatory Memorandum issued by the applicant in relation to its proposal to replace WFL as the responsible entity;

(iv) meetings and discussions with the applicant and its solicitors in respect of the replacement of WFL as responsible entity;

(v) participating in injunction proceedings issued by the receivers against the applicant;

(vi) drafting reviewing and considering carve outs in the contracts of sale in respect of the 95-99 Scheme trust assets;

(vii) meetings and discussions with the applicant in respect of a new proposal to replace WFL as responsible entity; and

(viii) reviewing scheme accounts, including insurance and thinning proceeds, in preparation for the applicant replacing WFL as responsible entity.

(b) 'General Costs', being costs which related to work performed for more than one Willmott scheme that were apportioned across the relevant Willmott schemes, which included:

• (i) analysing the general viability of the Willmott schemes;
• (ii) considering plantation obligations and dealing with statutory notices;
• (iii) considering an expression of interest campaign for a new responsible entity for the Willmott schemes;
• (iv) analysing the estimated scheme outcome from the offers received during the sale campaign, including undertaking financial modelling, consulting with legal advisers and attending internal and external meetings;
• (v) compiling remuneration reports;
• (vi) Poyry's viability assessment, being an analysis of the value of the trees and viability of the schemes;
• (vii) dealing with grower enquiries;
• (viii) dealing with insurance issues; and
• (ix) calculating estimated grower returns from offers received during the sale campaign.

(c) 'Mixed Costs', being costs referrable to both the Willmott schemes and the liquidation of the Willmott Group, which included:

• (i) staff costs;
• (ii) overhead costs;
• (iii) bank interest; and
• (iv) sale costs.

38 At the hearing of the matter, counsel for the liquidators confirmed that the liquidators no longer sought an answer to the questions concerning Re Berkeley Applegate (questions 3 and 5).

39 The matter was heard by Efthim AsJ on 3, 7 and 13 March 2014. On 13 March 2014, he adjourned the proceeding and reserved his decision. On the last day of hearing, it was noted that the High Court had concluded hearing an appeal from this Court's decision in Atco Controls Pty Ltd (in liq) v Stewart,[30] and that the judgment of the High Court on that appeal was likely to be relevant to the issues before Efthim AsJ.

40 On 7 May 2014 (while the decision of Efthim AsJ was still reserved), the judgment of the High Court in Stewart v Atco was delivered.[31] At his invitation, the parties appeared again before Efthim AsJ on 13 June 2014 and made submissions concerning the effect of Stewart v Atco. He again reserved his decision.

41 On 17 April 2015, Efthim AsJ delivered his judgment. He:

(a) rejected the applicant's submission that, following the High Court's decision in Stewart v Atco, the principle in Universal Distributing did not apply to the facts before him;[32]

(b) held that the test which he identified, and considered himself bound to follow, was to ascertain whether the costs and expenses claimed by the liquidator had been incurred in the care, preservation or realisation of an asset, and held that whether the costs and expenses claimed should be allowed was to be determined from the liquidators' verified accounts and whether they had acted appropriately;[33] and

(c) found that the liquidators have an equitable lien over trust assets held by the applicant for $322,418.80 in costs and expenses on the basis of the principle stated in Universal Distributing.

42 In his reasons, Efthim AsJ said that the 'liquidators seek an indemnity for their costs over the assets of the scheme in accordance with the salvage principles in Universal Distributing where Dixon J held that a liquidator can recover from the assets of a company in liquidation his remuneration and expenses properly incurred in the care, preservation and realisation of the assets in priority to a debenture debt'.[34]

43 The applicant appears to have relied on two arguments in opposition to the claim of the liquidators before Efthim AsJ. First, it submitted 'that in order to establish a lien the liquidators must identify that the work performed had created an incontrovertible benefit and it would be unconscientious for the owners of the property over which they were assessing the lien not to compensate the liquidators for those costs and expenses'.[35] In resolving that argument, Efthim AsJ discussed the decision of the High Court in Stewart v Atco. He said:

In Stewart v Atco, the High Court held that a liquidator's duty is owed to the body of creditors as a whole when realising the assets. It also held that there was no suggestion that the liquidator was reckless in bringing actions against Atco or that the actions had no prospect of success. Most important was the finding that the liquidator acted with propriety in bringing the actions. The High Court did not determine that in order to establish a lien, the liquidator needed to identify the work performed had created an incontrovertible benefit and it would be unconscientious for the owners of the property over which the lien was asserted to deny them payment. It found that there was a relevant benefit which was brought by the realisation of assets, 'namely the augmentation of assets available for distribution.'[36]

44 Second, the applicant said that 'Stewart v Atco should be distinguished because here there is no fund over which a liquidator is entitled to claim an equitable lien'.[37] Efthim AsJ did not accept that submission. He said:

In Pattison v Lockwood, Finn J rejected a submission that there must be a creation of a fund for Re Universal Distributing to apply. His Honour said:

While in the present case there was no fund produced from which payment was to be made - the consent given was to have the business continue to trade for the purpose of paying its debts - I do not regard this as an operative difference. I would add in passing that I reject the respondents' submission that the existence of a fund is a prerequisite for the principle of In re Universal Distributing Co coming into play. What is necessary is that there is property that properly can be subjected to the charge for remuneration, costs and expenses.

Robson J, in Re S & D International Pty Ltd (In Liq) Managers & Receivers Appointed, also held that a lien may arise whether or not a sale is [effected] by the liquidator and the liquidator is entitled to be paid in priority out of the fund whether or not he is in possession of a fund.[38]

45 It is only the second holding concerning the need for a fund that is now contested by the applicant.

46 On 31 August 2015, Efthim AsJ heard submissions on the question of the assets to which the lien attached.

47 On 5 October 2015, Efthim AsJ provided the following answers to the six agreed questions:

1. The answers to the parties' agreed list of questions are as follows:

a) What categories of costs are being claimed by the plaintiffs?

The specific, general and mixed costs identified in Appendices 3, 6, 7 and 9 to exhibit CDC-33.

1. What categories of costs are recoverable on a Re Universal Distributing basis?

Part of the costs identified in Appendices 3, 6, 7 and 9 to exhibit CDC- 33.

1. What categories of costs are recoverable on a Re Berkeley Applegate basis?

1. For those categories of costs recoverable on a Re Universal Distributing basis, what amounts are recoverable?

1. For those categories of costs recoverable on a Re Berkeley Applegate basis, what amounts are recoverable?

1. For the amounts recoverable, to what assets does the plaintiffs' lien attach?

(A) The right title and interest in the Trees, comprising:

i) the Trees;

ii) the proceeds of sale of any Trees;

iii) the proceeds of thinning of any of the Trees;

iv) the proceeds of harvest of any of the Trees; and

1. the proceeds of any insurance claims paid in respect of the Trees.

For the purpose of this answer:

'Tree' or 'Trees' means: the trees planted as at 21 December 2011 on the land used by the Willmott Forests 1995-1999 Project (ARSN 089 598 612).

48 On 18 May 2015, Efthim AsJ heard submissions on costs. On 19 August 2015, he delivered judgment on that matter to the effect that 65% of the costs of the liquidators should be paid out of the Lienable Property.

49 The applicant proposes one ground of appeal, namely:

In circumstances where none of the liquidators' costs and expenses were incurred in the realisation of an asset, or otherwise in connection with a resulting fund, the Associate Justice erred in finding that those costs and expenses were recoverable from the 95-99 Scheme assets on a Re Universal Distributing basis.

50 There is no dispute that, between 26 October 2010 and 22 December 2011 ('the relevant period'), the liquidators took steps to preserve and maintain assets of the 95-99 Scheme and that costs and expenses were incurred in that endeavour. Similarly, there is no dispute that the Assets were not 'realised' by the liquidators and that no fund was created by the liquidators during the relevant period. The issue now in contention is whether the fact that they never 'realised' those assets or created a fund precludes recovery on a Universal Distributing basis.

51 Before dealing with that issue, it is necessary to address two issues about the way in which the present proceeding has been brought before the Court. The first concerns the nature of the claim, and the second concerns the questions formulated to resolve that claim.

52 During the relevant period, WFL was the responsible entity of the 95-99 Scheme. The liquidators were the insolvency administrators of WFL, first as administrators, then as liquidators.

53 As the responsible entity of a managed investment WFL held the scheme property on trust for the scheme members: s 601FC(2) of the Act. The assets that it took steps to preserve and maintain were scheme property; it did not itself have a beneficial interest in those assets. As a trustee, WFL had a right of indemnity over trust property.[39] The right is supported by an equitable lien or charge.[40] A trustee's right of indemnity survives its removal as trustee.[41] If the property the subject of the lien is transferred to a new trustee, the new trustee takes subject to the lien.[42] Section 601FH of the Act deals expressly with a responsible entity's right of indemnity.[43] While it does not itself create a right of indemnity, it assumes that the right exists. The section deals with the situation where the responsible entity is being wound up. First, it makes void against the liquidator any provision of a scheme's constitution or another instrument that purports to deny the company a right to be indemnified out of scheme property that the company would have had if it were not being wound up.[44] Second, it provides that that right of the company to be indemnified out of scheme property may only be exercised by the liquidator.

54 A creditor of a scheme[45] will generally be subrogated to the responsible entity's right to be indemnified out of scheme property.[46]

55 In the present case, no claim seems to have been advanced that WFL was entitled to any indemnity out of the scheme property.

56 The Court asked the parties why the matter had been pursued as a claim by the liquidators rather than by WFL as the former trustee. The suggestion put in response was that the trustee's indemnity may have been compromised by an inability to demonstrate 'clear accounts'. This explanation was put forward with little apparent confidence in its reliability.

57 That is the issue concerning the nature of the claim.

58 As to the questions formulated to resolve the claim, it might have been thought desirable to ask the Court a question such as: what, if any, amount are the liquidators entitled to be paid from the funds in the hands of the applicant? Such a question would have permitted the Court, in resolution of the whole of the controversy between the parties, to explore every available basis upon which such an entitlement might arise and thereby quieten the dispute. However, the principal question asked of the Court was a narrow one: what categories of costs are recoverable on a Universal Distributing basis? There are two immediate difficulties with this question. First, the reach of the expression 'the Re Universal Distributing basis' is far from clear. Whatever else, it refers to a principle of equity. Unlike principles of law, principles of equity are open textured and reflect equity's protean ability to prevent action considered unconscientious. Associating the formulation of such principles too closely with one particular case has the tendency to narrow the inquiry and to stultify the analysis of the dispute between the parties. The applicant placed great reliance on the narrowness of the question, accepting that the liquidators may have been entitled to recover at least some of the claimed costs and expenses on some basis, but not, so it said, on the Universal Distributing basis.

59 The applicant's reliance on the narrowness of the question answered by Efthim AsJ is in turn reflected by the respondents' reliance on the narrowness of the proposed ground of appeal. The respondents contend that whatever view might be taken by this Court of the costs and expenses ordered to be paid the only issue for us to determine is whether the mere absence of a realised fund precludes recovery.

60 The applicant referred to the majority judgment in Stewart v Atco and, in particular, to its description of the Universal Distributing principle. The applicant said that a secured creditor may not have the benefit of a fund created by a liquidator's efforts in the winding up without the liquidator's costs and expenses of creating that fund first being met. It is for that purpose that equity will create a charge over the fund in priority to a secured creditor. But, it was submitted, the principle has no application where the costs and expenses sought by the liquidators did not result in the realisation of assets and a resulting fund against which the applicant makes or maintains the claim (as trustee or otherwise).

61 The applicant also contended that it was not a secured creditor, or even a creditor in the winding up, and was not seeking the benefit of a fund created by the liquidators' efforts in the winding up.

62 The applicant accepted that it may have been open to the Associate Judge to find that part of the costs and expenses were recoverable on some other basis, specifically what was said to be a broader principle described by Deane J in Hewett v Court[47]. But, it was submitted, the question framed by the liquidators for the Associate Judge to answer was expressly directed at the narrower principle. The applicant contended that the distinction between the principles which would apply to a claim based upon Hewett v Court and one based upon Universal Distribution was critical. If Hewett v Court had been relied upon, the liquidators would have had to demonstrate incontrovertible benefit, which, it was said, would have been very difficult to do in relation to many of the claimed costs and expenses. Stewart v Atco confirms that this is not a requirement when the claim is made under Universal Distributing. But, it was submitted, when the claim is made on the basis of Universal Distributing it must conform to the requirements set out in both Stewart v Atco and Universal Distributing, one of which is that the claimant must have realised a fund. In that context it was submitted to be significant that Dixon J had referred to expenses incurred in the care, preservation and realisation of the property, not or as some later authorities have misquoted.

63 The respondents submitted that, in Stewart v Atco, the Court was not required to consider whether the existence of a fund was an essential pre-requisite to the operation of the Universal Distributing principle. The critical issue in Stewart v Atco was whether the nature and purpose of the action against Atco operated to distinguish that case from a case in which the Universal Distributing principle would apply.[48]

64 The respondents submitted that the principle applies whether or not a fund is created. The respondents said, given that '[i]t is the duty of liquidators to realise assets'[49], if a liquidator has maintained, preserved and attempted to realise an asset (as occurred here) there is no principled basis for refusing to recognise their equitable interest simply because a sale ultimately was not effected.

65 In oral submissions senior counsel for the respondents emphasised that the equitable lien or charge attaches to the asset which is cared for, preserved or realised, not just to a fund which results from realisation of that asset. It was submitted that what Dixon J had said about care, preservation and realisation was to be read disjunctively.

66 Finally, the respondents submitted that several authorities have explicitly or implicitly rejected the proposition that Universal Distributing can only apply where a fund is created, and, with one exception, none has suggested that the creation of a fund is a necessary pre-condition.[50]

67 The liquidators filed a notice of contention upon which they said that the orders made 5 October 2015 (save for orders 1(f)(A)(i)-(iii)) could be affirmed on the basis that there was a fund created in respect of the proceeds of the harvesting of the trees and the proceeds of insurance claims paid in respect of the trees. Thus, if it was necessary to do so, the decision below ought to be upheld on the basis that the liquidators' lien attached to the proceeds of harvest of the trees (as defined) and the proceeds of insurance claims paid in respect of those trees.

68 The liquidators said that it was erroneous to find that no fund was in fact created in connection with their work. They said that the evidence disclosed that a fund was in fact created in connection with their efforts. The Associate Judge had held that:

In my view, unless the trees had actually been preserved and maintained, there would not have been any harvesting or thinning. In relation to insurance, the lien would attach to the insurance proceeds in respect of trees on 22 December 2011, because that is when the trees were preserved and maintained to enable the insurance claims to be subsequently made.[51]

The respondents said that the evidence was that well over $1 million in harvest proceeds were subsequently received by the applicant. Furthermore, the evidence revealed that 95% of the insurance proceeds to which the lien attached were received and paid out to investors in the 95-99 Scheme and that the remaining 5% was retained by the applicant and subsequently used by it to defray its costs of defending the liquidators' claim for a lien. It was submitted that, if realisation of a fund is a pre-condition, a Universal Distributing lien can arise whether or not the realisation was effected by the liquidators themselves and whether or not they were themselves in possession of the fund.

69 The applicant said that the respondents' contention ought not be entertained for several reasons. First, the argument was not put at trial. Secondly, it was inconsistent with the liquidators' position at trial and was directly contrary to a concession made on behalf of the liquidators at trial that no fund had been created. Thirdly, had the contention been raised at trial, the applicant could have adduced evidence (including by way of cross-examination) which was relevant to the issue and would likely have prevented the argument from succeeding. Finally, the applicant repeated its principal contention that the Universal Distributing principle applied to protect the position of a person who had realised a fund and the liquidators simply had not realised any fund. They did no harvesting of trees; they did not pay any premiums for insurance; they did not pursue any insurance claims. The applicant said that the only insurance claims that have resulted in payments were hail claims under policies paid for by certain individual growers.

70 In Universal Distributing Co Ltd the assets of the company were insufficient to meet the amount owing to a secured creditor. The liquidator had sought to have his accounts passed and his remuneration fixed. The secured creditor had objected on the basis that the liquidator's remuneration and certain disbursements should not come out of the company's assets in priority to his security.

71 The relevant companies ordinance in the ACT had adopted s 118 of the Companies Act 1899 (NSW) which provided:

The Court may, in the event of the assets being insufficient to satisfy the liabilities, make an order as to the payment out of the estate of the company being wound-up of the costs, charges, and expenses incurred in winding-up in such order or priority as the Court thinks just.

Dixon J explained the relevant principle as follows:

If a creditor whose debt is secured over the assets of the company come in and have his rights decided in the winding up, he is entitled to be paid principal and interest out of the fund produced by the assets encumbered by his debt after the deduction of the costs, charges and expenses incidental to the realization of such assets (In re Marine Mansions Co). The security is paramount to the general costs and expenses of the liquidation, but the expenses attendant upon the realization of the fund affected by the security must be borne by it (In re Oriental Hotels Co; Perry v Oriental Hotels Co). The debenture-holders are creditors who have a specific right to the property for the purpose of paying their debts. But if it is realized in the winding up, a proceeding to which they are thus parties, the proceeds must bear the cost of the realization just as if they had begun a suit for its realization or had themselves realized it without suit (cf In re Regent's Canal Ironworks Co; Ex parte Grissell; and see Batten v Wedgwood Coal & Iron Co).

In applying this principle, only those expenses appear to have been thrown against the fund belonging to the debenture-holders which have been reasonably incurred in the care, preservation and realization of the property. In the present case the liquidator has employed a material part of his time and energies in recovering moneys, both uncalled capital and debts, which enure for the debenture-holder, and in so far as these services increase the remuneration which he receives, I see no reason why the burden should not be thrown upon the proceeds. The question is not whether moneys available for unsecured creditors should be relieved at the expense of the security. In such a case it may be said that the service of collecting enough to discharge the debenture must in any event be performed in order that a surplus may then arise in which the unsecured creditors may participate. The question in the present case is whether the liquidator can charge against the fund passing through his hands as between himself and the person to whom it is payable, so much of the remuneration fixed for work done in the winding up as is referable to the calling in and conversion of the assets producing the fund. I see no reason why remuneration for work done for the exclusive purpose of raising the fund should not be charged upon it.[52]

72 There have been several relevant judgments of intermediate appellate courts which have considered this principle,[53] but in the present context it is necessary to turn first to the more recent decision of the High Court in Stewart v Atco.[54]

73 In Stewart v Atco a company in liquidation brought proceedings against a secured creditor and against receivers appointed under the security. The liquidator contended that the secured creditor was not entitled to any payment and that its security should be set aside. He also contended that the appointment of the receivers was void and claimed damages for trespass and conversion arising from the sale by them of the company's assets. At trial, the challenge to the security, on which the claim against the receivers was based, succeeded. The secured creditor and the receivers appealed. On the day that the appeals were to be heard, the receivers settled the claim against them and paid the liquidator $1.25 million. On the secured creditor's appeal, the attack on the security failed and the company was ordered to pay the secured creditor's costs. When the settlement sum was paid to the liquidator, the secured creditor claimed it as falling under its security. The liquidator declined to pay over the settlement sum on the basis that he was entitled to an equitable lien over it securing the costs and expenses of the litigation. He relied upon Universal Distributing.

74 The High Court upheld the claim. Having referred to what Dixon J had said in that case, the Court said:

The principle in Universal Distributing is stated at some length, no doubt because Dixon J was concerned to identify its sources. It may be more shortly stated as: a secured creditor may not have the benefit of a fund created by a liquidator's efforts in the winding up without the liquidator's costs and expenses, including remuneration, of creating that fund being first met. To that end, equity will create a charge over the fund in priority to that of the secured creditor.

The circumstances in which the principle will apply are where: there is an insolvent company in liquidation; the liquidator has incurred expenses and rendered services in the realisation of an asset; the resulting fund is insufficient to meet both the liquidator's costs and expenses of realisation and the debt due to a secured creditor; and the creditor claims the fund. In these circumstances, it is just that the liquidator be recompensed. To use the language of Deane J in Hewett v Court, it might be said that a secured creditor would be acting unconscientiously in taking the benefit of the liquidator's work without the liquidator's expenses being met. However, such a conclusion is avoided by the application of the principle stated in Universal Distributing. [55]

75 The Court analysed each of the authorities referred to by Dixon J in the passage we quoted earlier. It also referred to equitable liens analogous to that described in Universal Distributing and said: 'More closely analogous to the present case is the solicitor's particular lien (which may be distinguished from the general or retaining lien that entitles retention of documents until fees are paid), which arises over any property recovered or judgment obtained by a solicitor's work.'[56]

76 The Court's reference to the 'language of Deane J in Hewett v Court' requires amplification.

77 Hewett v Court[57] was not a case about insolvency practitioners or about the care, preservation and realisation of assets. The issue in Hewett v Court was whether a purchaser who had paid money to a builder for a prefabricated house had an equitable lien over the uncompleted house when the builder went into liquidation. The majority held that the purchaser did. In that context Deane J said:

it is difficult, if not impossible, to formulate any satisfactory statement of the necessary or sufficient circumstances for the implication of an equitable lien which is applicable to any relationship at all (eg the trustee's lien over trust assets; the solicitor's lien over the proceeds of an action). I do not propose to essay that task here. It is adequate for present purposes that I identify what I consider to be the circumstances which are sufficient for the implication, independently of agreement, of an equitable lien between parties in a contractual relationship. Those circumstances have, to some extent, been indicated in what has been said above. They are: (i) that there be an actual or potential indebtedness on the part of the party who is the owner of the property to the other party arising from a payment or promise of payment either of consideration in relation to the acquisition of the property or of an expense incurred in relation to it; (ii) that that property (or arguably property including that property) be specifically identified and appropriated to the performance of the contract; and (iii) that the relationship between the actual or potential indebtedness and the identified and appropriated property be such that the owner would be acting unconscientiously or unfairly if he were to dispose of the property (or, if it be appropriate, more than a particular portion thereof) to a stranger without the consent of the other party or without the actual or potential liability having been discharged. It may be that the above circumstances or tests, particularly (i), would be unduly restrictive if propounded as a statement of exclusion. As has been said, however, they are formulated as a statement of what is sufficient rather than of what is essential.[58]

78 We turn then to the authorities concerning claims by insolvency practitioners to an equitable charge or lien over assets over which, absent the claimed charge or lien, there are priority proprietary interests. The parties particularly addressed Pattison v Lockwood,[59] Dean-Willcocks,[60] Coad,[61] Re S & D International Pty Ltd (in liq) (recs & mgrs apptd) ('Re S & D'),[62] and Thackray.[63] The applicant also relied upon Blairgowrie.[64] We begin, however, with a decision referred to in some of those cases, the judgment of Finkelstein J in 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) ('13 Coromandel Place').[65]

79 13 Coromandel Place concerned the affairs of a corporate trustee. A solicitor, who had since been killed, had used the corporate trustee as trustee of a number of joint ventures which, as matters transpired, were shams. One of the issues before Finkelstein J was a claim by a receiver who had been appointed by the Federal Court as a receiver of the assets of the corporate trustee and who had subsequently been appointed as the corporate trustee's liquidator. That receiver/liquidator sought to have his costs, charges and expenses paid out of the trust assets. Finkelstein J began his consideration of the claim by quoting the passage from Universal Distributing which we have quoted earlier. He then referred to the conflicting decisions in Re Suco Gold Pty Ltd (in liq)[66] and Re Enhill Pty Ltd[67] which, while conflicting on other issues, confirmed that a corporate trustee in liquidation continued to be under a duty to pay debts incurred for the purpose of the trust business and that costs and expenses incurred in performing that obligation by a liquidator were incurred by the trustee company in discharging the duties imposed upon it as a trustee. Finkelstein J observed that there was 'no difficulty' with this analysis and continued:

All of the steps taken by the liquidator were to procure the performance by the trustee of its duties and it is no novel proposition that, in those circumstances, a trustee has a charge on trust property for the costs and expenses properly incurred in dealing with trust assets.[68]

80 Finkelstein J referred to the fact that courts had at times applied the principle overlooking the distinction to be drawn between the trustee and its liquidator, a distinction reflecting the issue to which we referred earlier concerning how this claim was formulated and the absence of any claim by WFL to indemnity as the former trustee. Finkelstein J then referred to a number of other cases, in particular, Re Berkeley Applegate,[69] before concluding:

These cases establish, clearly enough in my opinion, that provided a liquidator is acting reasonably he is entitled to be indemnified out of trust assets for his costs and expenses in carrying out the following activities: identifying or attempting to identify trust assets; recovering or attempting to recover trust assets; realising or attempting to realise trust assets; protecting or attempting to protect trust assets; distributing trust assets to the persons beneficially entitled to them.[70]

81 Finkelstein J went on to observe that the position was more complicated in relation to what he described as 'general liquidation matters'. He suggested that it would be unlikely that such expenses would be recoverable unless the corporate trustee acted solely as a trustee. He observed that the liquidator would be required to estimate those of his costs which were 'attributable to the administration of trust property and only those costs will be charged against the trust assets'.[71]

82 Finkelstein J concluded that there was insufficient evidence before him in order to determine the issue. He made an order that the receiver/liquidator was entitled to deduct from the trust assets 'just and reasonable costs, charges and expenses' but directed the preparation of accounts.

83 Pattison v Lockwood[72] was a case where the Universal Distributing principle worked to benefit a receiver notwithstanding that no fund had been created during the term of the receivership. The case concerned the rights of a receiver who had been appointed by a second ranking creditor and who was replaced by another receiver appointed under a higher ranking security.

84 In November 1989, Quicknit Pty Ltd ('Quicknit') executed a first ranking debenture and gave a charge over its assets and undertaking in favour of a bank. In 1993, Quicknit executed a further debenture and gave a second ranking charge in favour of one of its trade creditors. In 1996, the bank assigned its debenture and the debt it secured to a company named Standby Force Pty Ltd ('Standby Force'). On 7 March 1997, the trade creditor appointed Paul A Pattison as receiver and manager of the whole of the assets and undertaking of Quicknit. Upon his appointment, the floating charge held by Standby Force crystallized and became fixed. During the period of his appointment, Pattison operated the business and used part of its cash resources to pay down some of the indebtedness to Standby Force. On 11 August 1997, Standby Force appointed its own receiver and manager of Quicknit's assets and undertaking. At the time of the appointment of the second receiver, that receiver and Standby Force gave undertakings to the Court the effect of which were that such lien or charge as Pattison had over Quicknit's assets was not terminated by his giving up possession of them to the second receiver.

85 Eventually, Pattison claimed a right to be paid for costs, expenses and remuneration and claimed that that right was secured by a lien. The claim had several bases including that, on the basis of the Universal Distributing principle, Pattison was entitled to be indemnified and remunerated from Quicknit's property in priority to the first chargee of that property as he had incurred expenses and fees in the care and preservation of the property. The respondents conceded that Pattison had a right to be paid by Quicknit for costs, expenses and remuneration and that that right was secured by a lien. However, they said that the lien could only be over assets in respect of which the trade creditor could have an interest and its interest was subject to Standby Force's prior ranking charge.

86 Having reviewed the communications between the parties, Finn J found that, from 13 March 1997 until it made its own appointment of the second receiver, Standby Force had consented to Pattison's conduct of Quicknit's business for the purposes of achieving repayment first of Standby Force's debt and then, at least partially, that of the trade creditor.[73] The Court held that it had done so because it was prepared to see whether, subject to the conditions it had imposed, this conduct would result in its being paid.

87 Finn J held that the situation should be regarded as analogous to that considered by Dixon J in Universal Distributing: Standby Force's right to be paid out of the assets the subject of its debenture was to be deferred to Pattison's right to remuneration to the extent that Pattison had expended time and service in getting the secured property. Standby Force had chosen not to act independently and realize its security, but had left it to Pattison to do so.

88 Pattison had traded the business of Quicknit but he had not himself created any fund from which payment of his costs and expenses could be made. The respondents contended that, as no fund had been created, the Universal Distributing principle had no application. Finn J rejected that contention. He said:

While in the present case there was no fund produced from which payment was to be made - the consent given was to have the business continue to trade for the purpose of paying its debts - I do not regard this as an operative difference. I would add in passing that I reject the respondents' submission that the existence of a fund is a prerequisite for the principle of In re Universal Distributing Co coming into play. What is necessary is that there is property that properly can be subjected to the charge for remuneration, costs and expenses. The actions taken by Mr Pattison were in the first instance for Standby Force's benefit and only then for [the trade creditor's]. Whether or not those actions proved fruitful is another matter altogether. What is important is that when they were taken Mr Pattison was, in light of the consent given, acting as a stand-in for the receiver and manager Standby Force chose not to appoint. In these circumstances his costs, expenses and remuneration for so acting should be paid out of Quicknit's assets in priority to the right to be paid out of those same assets enjoyed by Standby Force.[74]

89 In Dean-Willcocks,[75] receivers appointed by a second ranking mortgagee failed in a claim for costs and expenses under the Universal Distributing principle. Both the primary judge and the New South Wales Court of Appeal discussed Pattison v Lockwood.

90 In July 2004, a second ranking mortgagee which had a mortgage debenture over the assets and undertakings of Nothintoohard Pty Ltd appointed receivers over those assets and undertakings. That mortgagee also held a second ranking mortgage over land at Mascot. Sovereign Capital Limited was the first registered mortgagee of the Mascot land. The receivers had been taking steps to sell the land by tender up until about 20 October 2004 when Sovereign Capital exercised its power to sell under the first ranking mortgage. The primary judge found that Sovereign Capital did not consent to the appointment of the receivers or to their attempts at realising the Mascot land. The receivers claimed that they were entitled to a lien on the basis of the Universal Distributing principle over the Mascot land, and the proceeds of sale of that land, for their costs incurred in the course of the receivership in taking steps to arrange for the land to be sold. They claimed that that lien ranked in priority to Sovereign Capital's first registered mortgage.

91 The New South Wales Court of Appeal dismissed an appeal from a judgment of Barrett J[76] who had rejected the claim distinguishing Pattison v Lockwood.

92 At first instance, Barrett J accepted that, on the basis of the Universal Distributing principle, if remuneration, costs and expenses were reasonably incurred by a receiver or a liquidator in realising a fund to which a secured creditor is entitled, the remuneration, costs and expenses were to be charged upon the fund before it was to be applied towards satisfaction of the secured creditor's debt.[77] The charge was an equitable lien. Sovereign Capital's interest was that of a registered mortgagee and the receivers' interest was that under the equitable lien. Barrett J held it was, thus, a contest between a prior legal interest and a subsequent equitable interest which, on ordinary principles, had to be resolved in favour of the legal interest.[78] Barrett J then considered the circumstances in which a legal interest may come to be postponed to a subsequently arising equitable interest, including where the holder of the legal interest has himself created the subsequent equity 'by some assurance, declaration of trust or agreement'.[79] It was in this context that he distinguished Pattison v Lockwood. He found that in Pattison v Lockwood (a) there had been no legal mortgage; the contest had been between two equitable interests; (b) the receiver under the subsequently created charge (Pattison) had maintained a business in the mutual interest of both chargees; and, (c) he had done so with the consent of Standby Force, the prior chargee.[80]

93 Barrett J also considered an alternative basis upon which the receivers had based their claim. It was described as the 'salvage basis'. It had been propounded under what might be described as two aspects. The first was based on the maxim: 'he who seeks equity must do equity'. Barrett J considered that irrelevant as Sovereign Capital was relying upon its legal interest. Barrett J then turned to the second aspect and said:

But there may be a wider basis for the plaintiffs' 'salvage' claim, namely, that it is necessary to impose an equitable lien, as in Hewett v Court, above, to ensure that the second defendant, in relying upon its rights at law to sell the property as a means of obtaining satisfaction of moneys owing to it in priority to moneys owing to others, does not unconscientiously reap the reward of outlays by the plaintiffs productive of 'incontrovertible benefit' to the property and therefore to the second defendant as the holder of a legal interest in it. Such an approach - characterised as an aspect of the law of restitution - has been recognised in somewhat analogous circumstances: see, for example, Monks v Poynice Pty Ltd; Young v ACN 081 162 512 Pty Ltd. Such a 'salvage' claim, if properly available as a matter of principle, would be an example of the intervention of equity to prevent unconscientious reliance on common law rights and would operate as a qualification upon such rights.

It is unnecessary, however, to come to any firm conclusion whether such a claim is properly available as a matter of principle. This is because I am satisfied that none of the outlays to which the plaintiffs point can be said to have protected or preserved the property or enhanced its value in a way that produced 'incontrovertible benefit' that ultimately enured to the advantage of the second defendant and the sale it effected.[81]

94 Barrett J did not have to decide whether the receivers could recover their costs and expenses under the alternative 'salvage basis' as he made a finding that the expenses that the receivers claimed had been directed at putting themselves into a position where they could sell the Mascot property which, as it happened, they did not do.[82]

95 The Court of Appeal disapproved of Barrett J's analysis of the competing priorities on two bases: (1) the mortgage debenture pursuant to which the receivers had been appointed had been registered and so it was no less a legal interest than the interest held by Sovereign Capital; (2) even if the interest of the receivers had been equitable, it could have prevailed over that of Sovereign Capital. The Court of Appeal nevertheless unanimously dismissed the receivers' appeal. In their separate judgments, each member of the Court made observations relevant to the present appeal.

96 Beazley JA wrote the principal judgment. She rejected a claim by the receivers that Sovereign Capital had consented to the appointment of the receivers for the purpose of the selling of the Mascot land.

97 Beazley JA accepted that 'in circumstances where Sovereign allowed the receivership to proceed when it was itself in a position to exercise its power of sale, an equitable lien arose in favour of the receivers for the costs of realisation of the Mascot land'.[83] However, that holding did not resolve the question 'whether the lien thereby gave the receivers the right to the costs expended in relation to the sale of the property before the payment out of Sovereign's first registered mortgage'.[84]

98 Beazley JA considered that Pattison v Lockwood was an application of the Universal Distributing principle, either by analogy or extension of the principle. The difference or extension which she identified was that in Pattison v Lockwood, no fund had been realised, but there had been assets to which the charge or lien could attach.[85] She observed that 'Finn J held that was sufficient'.[86]

99 Beazley JA found that none of the steps taken by the appellants was of any benefit in achieving the eventual sale of the Mascot property. Accordingly, the appellants had not established that they had any costs and expenses properly referrable to realising the sale of the Mascot land, which was the only basis upon which they had made a claim.[87]

100 In his reasons, Spigelman CJ adopted Beazley JA's analysis of the facts and said there was 'no element of unconscientiousness' in Sovereign Capital insisting on its legal right.[88] He referred to the Universal Distributing principle and to the narrow basis upon which the case before the Court had proceeded. He said:

The basic authority considered in the judgment of Beazley JA is Re Universal Distributing Company Ltd (In liq). In that case Dixon J referred to a claim made for expenditure with respect to 'the care, preservation and realisation of the property'.

In the present case there was expenditure capable of answering the description of 'care and preservation' of the property, from which the Respondent received some benefit. I refer to the evidence that, during the period in which he was in control of the property, the receiver expended funds on changing the locks and providing security guards. However, this case proceeded upon the basis that what the Appellant was seeking was the costs of 'realisation', in which all other costs had been subsumed. There was no separate claim for any amount by way of 'care and preservation'.[89]

101 McColl JA agreed with Beazley JA. She said that there had been no conduct by the appellants which created the fund from which they sought to be reimbursed, and that none of the money they had spent could be said to have protected or preserved the property or enhanced its value in a way that produced incontrovertible benefit that ultimately enured to the advantage of Sovereign Capital and the sale that Sovereign Capital itself had effected.[90]

102 In Coad,[91] the appellant was appointed the administrator of a company that had given three charges over its assets and undertaking. The appellant proceeded to sell some of the assets of the business without any objection from the chargees. The proceeds of the sale were placed in a trust account pending court order as to their proper distribution. The appellant sought approval of his remuneration and that it be paid out of the trust fund. A Master of the Court approved the remuneration but refused to order that it be paid out of the trust fund which, he said, was secured under one of the charges and that the administrator had no priority over that chargee. On appeal, Buss JA (with whom Wheeler and Pullin JJA agreed) reviewed the authorities in respect of the Universal Distributing principle[92] and said:

an administrator's equitable lien for his or her proper remuneration, and properly incurred costs and expenses, attributable to work done exclusively in caring for, preserving and realising the company's assets will have priority over, relevantly, a prior charge that was fixed from its creation if, in the particular circumstances of the case, the holder of the fixed charge would be acting unconscientiously if it were to assert priority over the assets realised by the administrator, without the relevant remuneration, costs and expenses having been discharged. This is not intended to be an exhaustive statement as to when equity will depart from the statutory scheme of priority.[93]

103 In Re S & D,[94] one of the issues before Robson J was whether a liquidator of a corporate trustee was entitled to indemnity out of the trust assets for costs he had incurred in taking steps, including court proceedings, to compel a first mortgagee who had realised charged assets to pay the net proceeds into court. His activities were characterised as having 'preserved' those net proceeds from 'misuse' by the first mortgagee.

104 A good deal of the judgment concerns the activities of the first mortgagee and whether they were justified or not. Having found that they were not, Robson J then turned to the liquidator's claim to be indemnified out of the fund which was eventually paid into court 'in respect of his costs, expenses and remuneration for and incidental to procuring payment into court'. The costs included investigations and inquiries, demands and dealings with the first mortgagee, and the costs, charges and expenses of eventually issuing the proceeding.

105 Robson J referred to Universal Distributing and to a number of other cases which he considered to be within a line of authority which includes Hewett v Court. He concluded his review of the authorities with the decision in Dean-Willcocks and then said:

From these authorities the following principles referrable to a liquidator may be stated:

(a) At equity, an equitable lien arises in favour of a liquidator over the funds realised from the sale of company property for the costs he incurs for the care, preservation and realisation of the property in priority to those otherwise interested in the fund. ...

(b) The costs include those that the liquidator fairly incurs in the discharge of his duty to care, preserve and realise the property. ...

(c) The lien may arise whether or not the ultimate sale is affected by the liquidator and entitles the liquidator to be paid in priority out of the fund whether or not he is in possession of the fund. ...

(d) The costs and expenses secured by the lien must be incurred exclusively for the care, preservation or realisation of the property and not otherwise expended in the general administration of the mortgagor. ...

(e) The costs and expenses include the liquidator's reasonable remuneration.[95]

106 In relation to the particular facts before him, Robson J then applied those principles as follows:

In this case the liquidator did not realize the fund. It was realized by [the first mortgagee]. On the other hand, I find that but for the fund being paid into court; it would probably have been dissipated and lost by the unauthorised actions of [the first mortgagee] in accessing and applying the moneys to the claimed mortgage debt and expenses. This assumes that the fund in court represents a surplus over and above the moneys otherwise due to [the first mortgagee]. Naturally, if [the first mortgagee] had taken moneys of S&D that they were not entitled to, the trustee may have had a claim in damages against [the first mortgagee] for the moneys so taken. However the fund in specie would have been lost.

Accordingly, I hold that the costs and expenses of the liquidator directed exclusively towards recovering the funds out of the hands of [the first mortgagee] and delivering them into the safety of the court do constitute a lien over the fund, in priority to all other claimants to the fund (save for [the first mortgagee]). In this case, those costs will be limited to the costs of and incidental to the application taken in this court up until the court order made in September 2008 was complied with, including the liquidator's reasonable remuneration incurred exclusively for that purpose.

I do not consider that the prior actions of the liquidator in investigating and making inquiries into the quantum of the fund and general correspondence with [the first mortgagee] and their solicitors, to be included within the lien. This expenditure did not 'preserve' the fund. This conduct merely sought to identify the fund and was part of the liquidator's general administration duties.[96]

107 Davies J's decision in Thackray[97] concerned receivers and managers of a corporate trustee which was the responsible entity of some 45 managed investment schemes. The receivers claimed an entitlement to be indemnified out of the scheme property for remuneration and expenses incurred in taking steps for the care, protection, preservation and realisation of the assets and property of those schemes. The claim was made under what was described as the 'salvage' principle in Universal Distributing which Davies J described as a principle 'entitling a person who has incurred expenses in caring for, preserving or realising assets to an indemnity for those expenses out of, and secured by an equitable lien over, the resulting asset pool'.[98]

108 Davies J embarked upon an initial assessment of the receiver's claim in order to determine whether it was supported to a 'prima facie' level, including determination of any relevant legal questions. The procedure undertaken was one under which, if the receiver's claim was established at a 'prima facie' level, a process would be embarked upon to enable 'interested stakeholders' to object to the receiver's claims. The replacement responsible entity for the schemes and a representative beneficiary supported this approach.

109 Davies J quoted extensively from the decision in Universal Distributing and then observed as follows:

The principle enunciated by Dixon J was that a person who works and incurs expenses to care for, preserve or realise property to create a fund is entitled to a charge against the fund or the property (if no fund is created) in priority to any other claimant.[99]

110 The authority Davies J cited in relation to the bracketed 'if no fund is created' observation was Pattison v Lockwood. She then quoted Robson J's summary of the relevant principles, quoted earlier by us, with approval. She went on:

It is clear on the authorities that the equitable lien will extend only to the receiver's costs, expenses and remuneration incurred 'exclusively' in the care, preservation and realisation of the property and assets ... Furthermore, that those costs, expenses and that remuneration must be referrable to the particular scheme against which the claim is made. The lien will not extend to the general receivership costs or costs, expenses and remuneration referrable to the care, preservation and realization of the property and assets of any other scheme or schemes.[100]

111 Davies J referred to the issue of 'general' remuneration, costs and expenses (not 'exclusively' referrable to care, preservation and realisation of the trust assets) and cited in that respect Finkelstein J's decision in 13 Coromandel Place.[101] She referred to the position of activities being undertaken for a 'mixed purpose' and indicated that as a matter of principle there was no reason why recoverable remuneration and expenses might not relate to more than one scheme. In such a circumstance an apportionment must be made.[102] She then continued:

The cases that have applied the Re Universal Distributing principles also demonstrate that there is no limit on the type of expense or work done for which remuneration is claimed that may be the subject of an equitable lien, other than that the expenditure and remuneration must be referrable to the care and protection of, or calling in and conversion of the assets producing the fund.[103]

She again cited Finkelstein J in 13 Coromandel Place where he had listed the activities for which a liquidator might be indemnified (quoted earlier) and then observed:

Another way of putting it is to ask the question whether the work done and expense incurred was necessary to the salvage objective. An actual benefit from the receiver's work and expenditure does not have to be demonstrated. The nexus with the salvage objectives is sufficient.[104]

112 Finally, the applicant relied upon Blairgowrie.[105] This is not a case that concerns recovery of remuneration or costs and expenses by insolvency practitioners. In Blairgowrie, Wigney J in the Federal Court was asked, in effect, to prospectively endorse arrangements whereby a litigation funder would have priority for amounts due to it for legal costs and a commission in relation to funding a class action. Amongst other things, this application was made in reliance upon the principle in Universal Distributing. The judge rejected the application for a variety of reasons, many of which have no present relevance. In the course of dealing with the reliance placed on Universal Distributing, Wigney J emphasised that the principle had no application to the matter before him because there was no fund which had been recovered. In that context, Wigney J made a number of references to the fact that no issue under Universal Distributing could arise until there was a fund which had been recovered. Amongst a number of such references, he observed:

A liquidator's right to recover his or her reasonable costs and expenses incurred in realising a fund for the benefit of others does not rely or depend on a liquidator obtaining a prior order from the court. There is no need for a liquidator to approach the court for a declaration that they are entitled to recover their costs and expenses from any property or fund that they may recover. Nor is the principle in Universal Distributing directly concerned with the liquidator's right to recover reasonable expenses. Rather, it is concerned with the question of priorities when it comes to distributing a fund created upon the realisation of property of a company that is subject to security. The principle is also concerned with costs and expenses actually incurred, not costs and expenses that might be incurred in the future ... The equitable charge or lien that arises under the Universal Distributing principle also only arises when the fund or other property has been realised.[106]

113 In Stewart v Atco, the Court referred to a close analogy between a solicitor's lien and the Universal Distributing lien. It said:

Gibbs CJ observed in Hewett v Court that it is not possible to state 'a general principle which would cover the diversity of cases in which an equitable lien has been held to be created.' However, equity has been able to develop and state a principle to be applied in or with respect to particular circumstances or relationships.

With respect to a vendor's lien for unpaid purchase money, Gibbs CJ said that such a lien is founded on the principle that 'a person, having got the estate of another, shall not, as between them, keep it, and not pay the consideration'. The lien of a purchaser is based on a converse principle. In both cases, the lien is for money 'justly due'. More closely analogous to the present case is the solicitor's particular lien (which may be distinguished from the general or retaining lien that entitles retention of documents until fees are paid), which arises over any property recovered or judgment obtained by a solicitor's work. In Guy v Churchill, Lindley LJ said that '[i]t is right that they who get the benefit of the recovery of money should bear the expense of recovering it'. A similar notion underlies the principle expressed in Universal Distributing. A secured creditor cannot lay claim to the benefit of realised assets without the costs of their realisation being met.

Generally speaking, in a system based on case law, the type of general principle to which Gibbs CJ referred in Hewett v Court is derived from judicial decisions on particular instances. The principle stated by Dixon J in Universal Distributing was derived from the earlier decisions of the equity courts to which his Honour referred.[107]

114 Where a solicitor has worked to establish a fund (by, for example, conducting litigation), a client cannot deprive the solicitor of an equitable lien by terminating the services of the solicitor before judgment or before receipt of the proceeds of a judgment. The court will intervene to ensure that the solicitor is not deprived of the fruits of the lien.[108] There does not need to be any fund, whether realised by the solicitor or not.

115 In the present case, the applicant has not suggested that there was not 'property that properly can be subjected to the charge for remuneration, costs and expenses' as specified by Finn J in Pattison v Lockwood; nor has the applicant challenged the finding of Efthim AsJ that the remuneration, costs and expenses were incurred in caring for and preserving property which is now held on trust by the applicant.

116 The applicant does not contend that the claim ought to have been made by WFL as the former trustee; and it does not contend that any component of the claim as allowed (which did include an apportionment of general administration expenses) ought not to have been allowed because it had not been shown to have been 'exclusively' for the purpose of care and preservation of the trust assets.[109]

117 Just as the proceeding before Efthim AsJ was confined to what was described as a 'Universal Distributing basis', so the appeal before us is confined to the contention that none of the costs and expenses allowed were recoverable because there was no realisation by the claimant of a fund.

118 In the circumstances we express no view as to whether the claim ought properly to have been made on behalf of the former trustee; nor as to whether all of the expenses and remuneration claimed were 'exclusively' for the purpose of care and preservation of the trust assets.

119 The only issue for us to determine is whether the existence of a fund which has been realised by the claimant is a pre-requisite to the application of the principle which was the subject of Dixon J's decision in Universal Distributing.

121 The issue under consideration concerns the formulation and application of equitable principles. The concept that there are clear lines of demarcation in relation to such principles, and that those clear demarcations can be discerned from High Court dicta on the topic, conflicts with what the High Court has itself said about the nature of such equitable principles,[110] and with what the High Court has said about the principle in Universal Distributing itself. In Stewart v Atco the High Court said, citing Comcare v PVYW[111]:

Some distinguishing features were said by Atco to arise from the language employed by Dixon J in Universal Distributing. It is, of course, necessary to bear in mind, in connection with these submissions, that the words of a principle stated in a judge's reasons for decision require consideration of what those reasons convey about the principle and are not to be applied literally.[112]

122 It is important to be mindful of the fact that what is under consideration is a position where a claimant seeks to recover out of property, in relation to which the claimant has no proprietary interest and no statutory entitlement, in priority to those who do hold the proprietary interests. The claimant, in effect, seeks priority over the owner of the property in circumstances where the owner has not agreed to employ the claimant or to pay the claimant for the work done, and where no statute provides for that priority. Accordingly, the circumstances where a claimant might obtain such priority must be strictly confined.

123 Where the claimant's work has created a fund, the position may be relatively straightforward. The holder of the proprietary interest wishes to take possession of property (the fund) which would not exist at all but for the work of the claimant.

124 In our view the authorities also make it clear that the principle may apply where the claimant has cared for or preserved an asset, and not simply where the claimant has realised it and created a fund. One circumstance where the principle may apply is where the claimant has acted as a kind of 'stand in', undertaking activities which the holder of the proprietary interest would have had to undertake itself had the claimant not done so. In essence, that is what happened in Pattison v Lockwood. On the other hand, if the claimant's activities are properly characterised as unrelated to the interests or objectives of the holder of the proprietary interest then the claimant may have no entitlement to priority over that proprietary interest holder. It seems to us that that was the position in Dean-Willcocks.

125 In our view, when Dixon J referred to 'care, preservation and realisation' of an asset, the activities to which he referred are to be read disjunctively. Spigelman CJ in Dean-Willcocks was clearly of that view and, it seems to us, Beazley JA implicitly accepted it also. It was expressly accepted by the trial judges in both Thackray and Re S & D and implicitly accepted in 13 Coromandel Place. This conclusion is itself inconsistent with the applicant's contention that the principle can only apply where the claimant has realised a fund. It can also apply where the claimant has cared for or preserved an asset without realising it.

126 In our view Finn J was correct in Pattison v Lockwood when he rejected the submission that the existence of a fund was a pre-requisite for the principle in Universal Distributing to apply.

127 The conclusion that the realisation of a fund is not a pre-requisite to the application of the relevant principle is consistent with the position in relation to solicitors' liens which the High Court said in Stewart v Atco are closely analogous to the lien which is the subject of Universal Distributing.

128 In our view the respondents were correct when they submitted that there is no authority which, properly understood, supports the proposition that the principle in Universal Distributing is confined to circumstances where a fund has been realised by the claimant. In context, Blairgowrie is not properly understood as suggesting such a pre-requisite exists. Blairgowrie was relevantly concerned with the issue of timing, not the issue of characterisation of the property to which the lien or charge might attach. The point being made in Blairgowrie was that the application in that case was premature. There was no property at that time to which any lien or charge could attach. The only such property which there would ever be was a fund. What was said must be understood in that context.

129 It is unnecessary to deal with the notice of contention. If it had been necessary to deal with it, we would not have permitted reliance upon the matters raised in the notice of contention because they were not relied upon at trial and they could have been met by evidence, and because they are contrary to a concession made on behalf of the liquidators at the trial.

130 In our view, the proposed ground of appeal upon which the applicant relies was arguable and leave to appeal should be granted. For the reasons we have given the appeal should be dismissed.

[1] [1933] HCA 2; (1933) 48 CLR 171 ('Universal Distributing').

[2] [2014] HCA 15; (2014) 252 CLR 307 ('Stewart v Atco').

[3] Ibid 320 [22]-[23] (emphasis added) (citations omitted).

[4] Ibid 322 [32] (citations omitted). See also Comcare v PVYW [2013] HCA 41; (2013) 250 CLR 246, 256 [15]-[16], citing Brennan v Comcare [1994] FCA 1147; (1994) 50 FCR 555, 572; Benning v Wong (1969) 122 CLR 249, 299-300.

[5] Stewart v Atco [2014] HCA 15; (2014) 252 CLR 307, 320 [23] (emphasis added).

[7] Ibid 318 [16] (emphasis added) (citations omitted).

[8] Stewart v Atco [2014] HCA 15; (2014) 252 CLR 307, 330 [64].

[9] Universal Distributing [1933] HCA 2; (1933) 48 CLR 171, 173-4.

[11] Trkulja v Efron and Associates [2014] VSCA 76, citing Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451, 463-4.

[12] Stewart v Atco [2014] HCA 15; (2014) 252 CLR 307, 324-5 [40]-[41].

[13] [1998] FCA 472.

[14] [1933] HCA 2; (1933) 48 CLR 171.

[15] See Stewart v Atco [2014] HCA 15; (2014) 252 CLR 307, 320 [22]-[23] (Crennan, Keifel, Bell, Gageler and Keane JJ).

[16] Re Willmott Forests Ltd (recs & mgrs apptd) (in liq) [2015] VSC 138 ('Efthim AsJ Reasons 1').

[17] Willmott Forests Ltd (recs & mgrs. apptd) (in liq) v Primary Securities Ltd [2015] VSC 529 ('Efthim AsJ Reasons 2').

[20] Re Willmott Forests Ltd (recs & mgrs. apptd) (in liq) [2011] FCA 1517.

[21] In the matter of Willmott Forests 1995-1999 Project ARSN 089 598 612 (Supreme Court of Victoria, S CI 2011 3155, Beach J, 22 June 2011) cited in 'Agreed Summary for Court of Appeal', 8 March 2016, [4] n 4.

[22] In the matter of Willmott Forests 1995-1999 Project ARSN 089 598 612 (Supreme Court of Victoria, S CI 2011 3155, Ferguson J, 29 June 2011) cited in 'Agreed Summary for Court of Appeal', 8 March 2016, [4] n 5.

[23] Re Willmott Forests Ltd (No 2) [2012] VSC 125 [19], [22].

[25] In the matter of Willmott Forests 1995-1999 Project ARSN 089 598 612 (Supreme Court of Victoria, S CI 2011 3155, Ferguson J, 16 December 2011) cited in 'Agreed Summary for Court of Appeal', 8 March 2016, [6] n 9.

[27] 'Agreed Summary for Court of Appeal', 8 March 2016, [9].

[29] Willmott Forests Ltd (rec & mgrs apptd) (in liq) v Primary Securities Ltd [2013] VSC 574.

[30] [2013] VSCA 132.

[31] [2014] HCA 15; (2014) 252 CLR 307.

[32] Efthim AsJ Reasons 1 [22]-[23].

[38] Ibid [23]-[24] (emphasis in original) (citations omitted).

[39] Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360, 367-8. See generally Heydon and Leeming, Jacob's Law of Trusts in Australia (7th ed) c 21 'Rights of Trustees'.

[40] Chief Commissioner of Stamp Duties (NSW) v Buckle [1998] HCA 4; (1998) 192 CLR 226, 246; Kemtron Industries Pty Ltd v Commissioner of Stamp Duties [1984] 1 Qd R 576, 585 ('Kemtron').

[41] See, eg, the discussion of relevant principles in Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344; (2008) 74 NSWLR 550, 553-4 [12]-[22] (Brereton J).

[42] Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (in prov liq) (1990) 3 ACSR 183, 186.

Liquidator etc. of responsible entity entitled to exercise indemnity rights.

If the company that is a registered scheme's responsible entity is being wound up, is under administration or has executed a deed of company arrangement that has not terminated:

(a) a provision of the scheme's constitution, or of another instrument, is void against the liquidator, or the administrator of the company or the deed, if it purports to deny the company a right to be indemnified out of the scheme property that the company would have had if it were not being wound up, were not under administration, or had not executed a deed of company arrangement; and

(b) a right of the company to be indemnified out of the scheme property may only be exercised by the liquidator or the administrator of the company or the deed.

[44] The question whether a trustee can waive its right of indemnity is unsettled. See Kemtron [1984] 1 Qd R 576, 585 (McPherson J, with whose reasons Andrews SPJ agreed); RWG Management Ltd v Commissioner for Corporate Affairs [1985] VicRp 42; [1985] VR 385, 395 (Brooking J).

[45] That is, a creditor of the responsible entity whose debt was incurred by the responsible entity in the interests of the scheme as opposed to a debt that was incurred by the responsible entity in its own corporate interests.

[46] See Nolan v Collie [2003] VSCA 39; (2003) 7 VR 287; Condon (Trustee) Re Rayhill (Bankrupt) v Truthful Endeavour Pty Ltd (2015) 323 ALR 83 (Jagot J).

[47] [1983] HCA 7; (1983) 149 CLR 639, 668-9 ('Hewett v Court'). See also the discussion in Dean-Willcocks v Nothintoohard Pty Ltd (in liq) [2006] NSWCA 311; (2007) 25 ACLC 109 ('Dean-Willcocks'); Coad v Wellness Pursuit Pty Ltd (in liq) [2009] WASCA 68; (2009) 40 WAR 53 ('Coad').

[48] Stewart v Atco [2014] HCA 15; (2014) 252 CLR 307, 321-2 [29], 329 [57].

[50] The liquidators referred to Pattison v Lockwood [1998] FCA 472; Thackray v Gunns Plantations Ltd [2011] VSC 380; (2011) 85 ACSR 144, 154 [40] (Davies J) ('Thackray'). Cf Blairgowrie Trading Ltd v Allco Finance Group [2015] FCA 811; (2015) 325 ALR 539, 563 [124] (Wigney J) ('Blairgowrie').

[52] Re Universal Distributing Co Ltd [1933] HCA 2; (1993) 48 CLR 171, 173-5 (citations omitted).

[53] Shirlaw v Taylor [1991] FCA 415; (1991) 31 FCR 222 (Sheppard, Burchett and Gummow JJ); Lockwood v White [2005] VSCA 30; (2005) 11 VR 402 (Winneke P, Buchanan JA and Gillard AJA); Dean-Willcocks [2006] NSWCA 311; (2007) 25 ACLC 109 (Spigelman CJ, Beazley, and McColl JJA); Coad [2009] WASCA 68; (2009) 40 WAR 53 (Wheeler, Pullin and Buss JJA).

[54] [2014] HCA 15; (2014) 252 CLR 307.

[55] Ibid 320 [22]-[23] (citation removed).

[56] Ibid CLR 318 [16]. See Batrouney v Forster [2016] VSCA 80 (Santamaria Beach and McLeish JJA)

[57] [1983] HCA 7; (1983) 149 CLR 639.

[59] [1998] FCA 472.

[60] [2006] NSWCA 311; (2007) 25 ACLC 109 (Spigelman CJ, Beazley and McColl JJA).

[61] [2009] WASCA 68; (2009) 40 WAR 53 (Wheeler, Pullin and Buss JJA).

[62] [2009] VSC 225.

[63] [2011] VSC 380; (2011) 85 ACSR 144.

[64] [2015] FCA 811; (2015) 325 ALR 539.

[65] [1999] FCA 144; (1999) 30 ACSR 377.

[66] (1983) 33 SASR 99.

[67] [1983] VicRp 52; [1983] 1 VR 561.

[68] 13 Coromandel Place [1999] FCA 144; (1999) 30 ACSR 377, 384.

[69] [1989] Ch 32.

[70] 13 Coromandel Place [1999] FCA 144; (1999) 30 ACSR 377, 385.

[72] [1998] FCA 472.

[73] Finn J said at 16: 'that from 13 March 1997 until it made its own appointment of [the second receiver], Standby Force consented to Mr Pattison's conduct of Quicknet's business and conduct for the purposes of achieving repayment first of Standby Force's debt and then, at least partially, of [the trade creditor].'

[75] [2006] NSWCA 311; (2007) 25 ACLC 109 (Spigelman CJ, Beazley and McColl JJA).

[76] Dean-Willcocks [2005] NSWSC 357; (2005) 53 ACSR 587.

[77] Ibid 589 [6]-[7]. Barrett J referred to Moodemere Pty Ltd (in liq) v Waters [1988] VicRp 31; [1988] VR 215, 221 (Murphy J), 229 (Tadgell J).

[79] Ibid 591 [15]. He referred to Meagher, Heydon and Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (Butterworths, 4th ed, 2002) [8-220].

[80] Ibid 591-2 [16]-[17]. Barrett J quoted (without comment) that part of Finn J's reason in which he accepted that the Universal Distributing principle could be applied notwithstanding that the receiver claiming the lien had not itself created the fund.

[81] Ibid 593 [22]-[23] (citations omitted).

[83] Dean-Willcocks [2006] NSWCA 311; (2007) 25 ACLC 109, 119 [65].

[89] Ibid 111 [9]-[10] (citations omitted).

[91] [2009] WASCA 68; (2009) 40 WAR 53 (Wheeler, Pullin and Buss JJA).

[92] Buss JA noted, without comment, the decision of Finn J in Pattison v Lockwood that an equitable lien may exist even though the administrator did not create a fund: Ibid 80 [90].

[94] [2009] VSC 225.

[97] [2011] VSC 380; (2011) 85 ACSR 144.

[99] Ibid 154 [40] (citations omitted).

[104] Ibid 158 [48] (citation omitted).

[105] [2015] FCA 811; (2015) 325 ALR 539.

[106] Ibid 563 [124] (citation omitted).

[107] [2014] HCA 15; (2014) 252 CLR 307, 318 [15]-[17] (citations omitted).

[108] Trkulja v Efron [2014] VSCA 76 (Warren CJ and Santamaria JA).

[109] The requirement that the claimed costs and expenses be exclusively referrable to the designated purpose is repeatedly referred to in the authorities: see Universal Distributing [1933] HCA 2; (1933) 48 CLR 171, 175; Coad [2009] WASCA 68; (2009) 40 WAR 53, 81 [96]; Re S & D [2009] VSC 225 [273]; Thackray [2011] VSC 380; (2011) 85 ACSR 144, 155 [42]. One consequence of this requirement is that it seems general administration expenses may not be recoverable, although Finkelstein J in 13 Coromandel Place suggested they were recoverable if the corporate entity acted solely as a trustee and if the expenses were apportioned: (1999) 85 ACSR 377, 385.

[110] See Hewett v Court [1983] HCA 7; (1983) 149 CLR 639, 645-6, 649 (Gipps CJ), 668 (Deane J).

[111] [2013] HCA 41; (2013) 250 CLR 246, 256 [15]-[16].

[112] Stewart v Atco [2014] HCA 15; (2014) 252 CLR 307, 322 [32].