MATTER : Section 89 and 92 of the Trustees Act 1962

MARK ANTHONY CONLAN AS LIQUIDATOR OF ROWENA NOMINEES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQ) (ACN 008 818 273)

ROWENA NOMINEES PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQ) AS TRUSTEE (ACN 008 818 273)

MARK ANTHONY CONLAN AS LIQUIDATOR OF OAKLEIGH ACQUISITIONS PTY (IN LIQ) (ACN 008 879 454)

OAKLEIGH ACQUISITIONS PTY (IN LIQ) AS TRUSTEE (ACN 008 879 454)

Directions concerning trust property - Trustees Act 1962 (WA) - Scope of power to give such directions - Shortfall in trust property - Application of principles from bankruptcy and insolvency law - Chapter 5 of the Corporations Act 2001 (Cth) - Use of pari passu and hotchpot principles - Equitable debts - Remuneration and costs of the trustee

Corporations Act 2001 (Cth), Pt 5.6

Finance Brokers Control Act 1975 (WA), s 48

Trustees Act 1962 (WA), s 89, s 92

Interested Parties : Dibbs Abbott Stillman & Lawrence Legal Solutions

Adsett v Berlouis [1992] FCA 368; (1992) 37 FCR 201

Australian Securities and Investments Commission v Rowena Nominees Pty Ltd [2003] WASC 112; (2003) 45 ACSR 424

Australian Securities and Investments Commission v Rowena Nominees Pty Ltd (in liq) (Receiver and Manager Appointed) (Supervisor Appointed) [2006] WASC 36

Barlow Clowes International Ltd (in liq) v Vaughan [1991] EWCA Civ 11; [1992] 4 All ER 22

Conlan v Registrar of Titles [2001] WASC 201; (2001) 24 WAR 299

Coventry v Charter Pacific Corporation Ltd [2005] HCA 67

Ex parte Adamson; In re Collie (1878) 8 Ch D 807

Foskett v McKeown [2000] UKHL 29; [2001] 1 AC 102

Re Global Finance Group Pty Ltd (in liq) [2002] WASC 63; (2002) 26 WAR 385

Re Hobourn Aero Components Limited's Air Raid Distress Fund; Ryan v Forrest [1946] Ch 86

Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq) [2003] NSWSC 1008; (2003) 59 NSWLR 361

Target Holdings Ltd v Redferns (A Firm) [1995] UKHL 10; [1996] 1 AC 421

Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96

Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15

Australian Securities and Investments Commission v Nelson [2003] NSWSC 129; (2003) 44 ACSR 719

Bishopsgate Investment Management Ltd (in liq) v Homan [1995] Ch 211

Cleaver v Delta American Reinsurance Co (in liq) [2001] UKPC 6; [2001] 2 AC 328

Coleman v Lake (1903) 3 SR (NSW) 603; 20 WN (NSW) 191

Hagan v Waterhouse (1994) 34 NSWLR 308

In Re Lead Company's Workmen's Fund Society [1904] 2 Ch 196

In Re Printers and Transferrers Amalgamated Trades Protection Society [1899] 2 Ch 184

Kardiasmenos v Pioneer Management Pty Ltd [2005] NSWSC 770

Keefe v Law Society of New South Wales (1998) 44 NSWLR 451

Murray v Scott (1884) 9 App Cas 519

Re Australian Home Finance Pty Ltd (in liq) [1956] VicLawRp 1; [1956] VLR 1

Re Berkeley Applegate (Investment Consultants) Ltd (in liq) [1989] Ch 32

Re Blume (dec'd); Fegan v Blume [1959] Qd R 95

Re British Red Cross Balkan Fund; British Red Cross Society v Johnson [1914] 2 Ch 419

Re Crest Realty Pty Ltd (No 2) (in liq) [1977] 1 NSWLR 664

Re Dawson (dec'd); Union Fidelity Co Ltd v Perpetual Trustee Co (1966) 84 WN (Pt 1) (NSW) 399

Re Guardian Permanent Benefit Building Society (1882) 23 Ch D 440

Re Oakleigh Acquisitions Pty Ltd (in liq); Ex parte Mark Anthony Conlan (as liquidator of Oakleigh Acquisitions Pty Ltd) [2003] WASC 75

Re Oatway; Hertslet v Oatway [1903] 2 Ch 356

Re Ontario Securities Commission and Greymac Credit Corp (1986) 55 OR (2d) 673

Re Registered Securities Ltd [1991] 1 NZLR 545

Re Shoreline Currencies (Australia) Pty Ltd, unreported; SCt of NSW (Kearney J); Library No BC8801417; 14 October 1988

Re Vassis; Ex Parte Leung [1986] FCA 21; (1986) 9 FCR 518

Scott v Scott [1963] HCA 65; (1963) 109 CLR 649

Shannon v JMA Accounting Pty Ltd [2005] QSC 240

Sinclair v Brougham [1914] AC 398

Westdeuche Landesbank Girozentrale v Islington London Borough Council [1996] UKHL 12; [1996] AC 669

Windsor Mortgage Nominees Pty Ltd v Cardwell [1979] CLC 40-540

1 This is an application for orders under ss 89 and 92 of the Trustees Act 1962 (WA). The orders sought are to do with the distribution of funds on hand from, or expected to arise out of, collections of trust property or property that should be dealt with as trust property, for the benefit of clients of a failed finance broking business. The application raises issues of some significant complexity.

2 This judgment begins by describing the background to this application. I then review a preliminary issue concerned with the scope of what ss 89 and 92 of the Trustees Act permit me to do. I then consider the other issues raised by the parties in relation to the orders sought by the applicants.

3 This action arises out of the collapse of the finance broking business of Mr Graeme Grubb. This business was called in these proceedings Graeme Grubb Finance Broker, or GGFB. I intend to follow this usage in these reasons, notwithstanding (as I will indicate) the range of entities that were involved in carrying on this business.

4 The chronicle of the collapse of GGFB appears in the Report of the Royal Commission into the Finance Broking Industry, I Tenby QC Commissioner, 2001. That collapse has given rise to much litigation apart from this proceeding, and some of that litigation is ongoing.

5 There is particular useful background to the present proceedings in the decisions of Owen J in Conlan v Registrar of Titles [2001] WASC 201; (2001) 24 WAR 299 and Pullin J in Australian Securities and Investments Commission v Rowena Nominees Pty Ltd [2003] WASC 112; (2003) 45 ACSR 424. Other relevant background to which I refer in these reasons comes principally from the affidavit of Mark Anthony Conlan sworn 17 September 2004 and filed in these proceedings. Drawing on all of this material the following account can be given.

6 GGFB was a business that for some years prior to 1996 appears to have been conducted by Mr Grubb personally. In 1996 Rowena Nominees Pty Ltd became a finance broker licensed under the Finance Brokers Control Act 1975 (WA), and at some point in that year began to carry on business under the name of GGFB. At or about that point Rowena became the trustee under at least one of the trust accounts in respect of GGFB required under the Control Act, s 48. I return to s 48 later in these reasons.

7 There were in fact two such trust accounts in the history of GGFB that are material for my purposes. One such account was with the Challenge Bank, (called here "the Challenge account") maintained until some point in 1996, and the other with the St George Bank, (called here "the St George account") maintained from some point in 1996 onwards, and for a time overlapping with the Challenge account, it would appear.

8 Oakleigh Acquisitions Pty Ltd was at all material times simply a nominee of Rowena, used as a nominal lender and mortgagee. It appears to have had no other activity. Oakleigh made registered and unregistered transfers of parts of mortgages to clients of GGFB. On occasion Oakleigh held mortgages in its own name, rather than the name of a client.

9 The underlying business of this corporate complex is described in Conlan (supra) per Owen J, at [3] as follows:

"GGFB was controlled by one Graeme Grubb (Grubb). GGFB engaged in what are known as pooled mortgages. A potential borrower would approach GGFB with a view to obtaining finance for a venture. GGFB would, in turn, approach a number of potential investors and invite them to advance moneys for the venture. Often, the amount required was beyond the resources of an individual investor and several entities or people contributed varying amounts so as to make up the whole. Promises were made to potential investors that they would be given a first mortgage security over identified property. In the main, Oakleigh did little more than act as trustee for investors who had supplied the funds to Rowena for the advances to borrowers. Often the mortgage was registered in the name of Oakleigh as mortgagee. Some of the mortgages remained in that state. In relation to others, there was a transfer of mortgage from Oakleigh to named investors. In other instances the mortgages were registered in the names of investors as mortgagees."

10 It will be noted that two sorts of client are referred to in that paragraph, borrower clients and investor clients. This is a usage that I will employ in the remainder of these reasons, when I do not refer to both sets of clients collectively.

11 The GGFB's record-keeping practices, and the operation of the St George account, are described as follows in Conlan per Owen J at [20] and [22]:

"One of the few things upon which everyone involved in this sorry saga agrees is that Rowena's records are notoriously unreliable. Nonetheless, they must still form the starting point for any consideration of the issue that I have to determine.

...

Rowena maintained, relevantly, a single trust account, styled Account No 551075797000, with St George Bank Ltd, Perth. I will call this account the 'trust bank account'. Section 48 of the FBCA requires a finance broker to maintain a trust account. It authorises the broker to pay all moneys into one such bank account, thus avoiding the problems that are associated with a trustee mixing trust funds. However, there is an obligation under s 48(5) to account separately for the moneys of individuals on whose behalf funds are held. It is clear to me that GGFB failed dismally in this respect. There are no, or no accurate, individual ledgers clearly accounting for the moneys of individual investors or borrowers within the trust account structure. It seems to me to be, at best, imprudent practice and, more likely, a breach of fundamental trust obligations to allow the trust bank account to be overdrawn on a regular basis. These things make it very difficult to trace interests in and through the trust account. They also make it difficult to reconstruct the individual ledger accounts in any meaningful way."

12 On the evidence before me, the position with respect to the earlier trust account, the Challenge account, was not materially better except there is no evidence it ever went into overdraft. The importance of the matter of the overdraft in the St George account on repeated occasions will become evident later in these reasons.

13 On 24 May 1999 Mark Anthony Conlan was appointed provisional liquidator of Rowena, a date of significance in the orders sought in the originating summons in these proceedings, as will become evident. On 21 July 1999 he was appointed the official liquidator of Rowena. On 16 July 1999 he was appointed provisional liquidator of Oakleigh. On 25 August 1999 he was appointed its official liquidator.

14 Conlan's inquiries after appointment confirmed a pattern of behaviour in the conduct of the GGFB pointing to activity by Rowena beyond the authority of clients and in breach of trust. This activity at its root involved Grubb, GGFB and Rowena carrying on business, in effect, not of a licensed finance broker, but as the managers of a pool of investment funds. There was no evidence, however, that clients were ever made aware of, let alone consented to, this set of arrangements. As will become evident later in these reasons, the understanding of clients as to the business in which they were involved is of considerable importance to me.

15 The results of the inquiries by Conlan that led him to form the conclusion referred to are set out in his affidavit sworn 17 September 2004, at [25] - [29]. I reproduce those paragraphs below, as they are important to understanding the complexity of the orders sought in this case. There is no contest as to the descriptions so referred to.

"GGFB used the funds in the St George Account as a pool of money for lending to borrower clients. It was GGFB's practice to make a loan from the St George Account to a borrower client from whatever money was then available (sometimes going into overdraft to do so) without at that time having identified all of the investor clients who were to be regarded as having contributed to the loan. In these cases security took the form of a contributory mortgage or other security in which some investor clients were shown as contributories, with Oakleigh being shown as contributory for the balance.

Where Oakleigh was shown as contributory in a mortgage or other security, GGFB on occasion later allocated parts of the security to one or more investor clients who had subsequently made money available to GGFB for investment. In some such cases GGFB arranged for a registered transfer of the appropriate part of a registered security from Oakleigh to the new investor client, but in others there was no transfer, or a transfer was incompletely executed, or prepared but not registered. To the extent that there was no registered transfer, the balance of the security remained registered in the name of Oakleigh.

I have found instances where an investor client has demanded and been repaid the investment, from funds in the St George Account, notwithstanding that the borrower had not repaid the loan. In some instances the investor client remained as registered mortgagee of the whole or part of the mortgage securing the loan.

Conversely, payments of interest and repayments of loans actually made by borrowers were not necessarily directed to the investor client nominally entitled thereto, but in effect returned to the pool of funds in the banking accounts of GGFB and Rowena (not exclusively the St George Account) for the financing of other transactions. Payments of interest were made from the available money in the pool.

In respect particularly of payment of interest to investor clients (in respect of which, in some instances, GGFB gave an undertaking through the cash flow guarantee), allocation of an investor client to a Folio was of prime importance to GGFB's method of operation. Once an investor client was linked to a Folio, Realtime [a computer programme] would report that the client was entitled to interest that was payable by the borrower linked to the Folio. The cash flow guarantee system, to which I make specific reference in other paragraphs of this affidavit, would then ensure that the investor client was regularly paid or credited with interest at the guaranteed rate directly or (through the Cashflow Guarantee Account) indirectly from the St George Account."

16 The result of the collapse of GGFB is that there are persons who provided funds to the business to be held on trust for certain purposes who had not been repaid their funds in full, including persons who it appears received some security, but not the security they expected, and persons who did receive security they expected. There are also other persons who paid funds to GGFB on trust for them to be used to discharge certain obligations when the funds were not so used. These persons could be called the trust creditors of Rowena and Oakleigh, to distinguish them from the other creditors of those companies.

17 There have already been proceedings in which the distinction between, trust creditors and other creditors of the companies has been recognised, and that distinction's implications for claims by trust creditors and general creditors to any trust assets and any general assets in the liquidation of Rowena and Oakleigh have been considered. I have been told that there are presently no indications of any non-trust assets of Rowena and Oakleigh, and by this I understood that Rowena and Oakleigh do not have any residual beneficial interest in any trust assets they hold.

18 Those other proceedings were ASIC v Rowena (supra) where Pullin J said this at [24], [26] and [27]:

"There will be a second category of creditors, namely persons who paid money to Rowena to be held on trust pending, or during, a loan transaction. If Owen J is correct and there are insuperable difficulties in tracing funds and therefore no proprietary claim can be pursued to any moneys, then the trust creditors will still be able to pursue a personal claim against Rowena in relation to breaches of trust by Rowena and thereby seek a dividend out of Rowena's property. These personal claims will be provable debts: see Re Vassis [1986] FCA 21; (1986) 9 FCR 518; 64 ALR 407; Re Crest Realty Pty Ltd (No 2) (in liq) [1977] 1 NSWLR 664 at 667; (1977) 2 ACLR 502 at 503-4. They will be creditors, but to distinguish them from the other general creditors I will call them trust creditors or investors. The trust creditors will also be able to claim a share of the pool of mixed trust moneys.

...

The second category of property is trust property. In the main, as I have said, it seems that the trust property is so mixed, and the records so poor, that it is untraceable. It is likely that all that it will be possible to say is that Rowena does not have any beneficial interest in it, and that trust creditors have a claim in relation to this property. The court will have to decide how the proceeds are to be divided up. Only the trust creditors will be able to claim against the property in this category. The general creditors will not be able to claim against the trust property because it is not 'property of the company'.

I make no findings of fact about what property of the company or what trust property there is at this stage. All that I have done is to identify problems which remain to be sorted out in this liquidation."

19 The applicants are Conlan in his capacity as liquidator of Rowena (first applicant), and as liquidator of Oakleigh (third applicant). Rowena and Oakleigh themselves as trustee are the second and fourth applicants respectively.

20 The applicants are seeking orders for distribution of moneys they presently hold in connection with the activities of GGFB representing the realisation or recovery of certain trust assets of Oakleigh or Rowena, as well as money still to be collected or obtained by the applicants in connection with the activities of GGFB and representing the realisation or recovery of certain trust assets of Oakleigh or Rowena. The assets in question, for both moneys presently held and money still to be collected or obtained, are, in the main, debts and associated securities that arose when GGFB funded loans to borrower clients from the statutory trust account in question. But the assets also include other property acquired by Rowena and Oakleigh in their own names and other recoveries from GGFB's activities. All of the assets in question of either sort are said to be impressed with trusts or equitable interests deriving from the history of payments to and investments and recoveries by Rowena or Oakleigh, or those assets are said to be held by them on fresh trusts.

21 I am told that moneys presently held are substantial, being in the amount of over $6,000,000.00. However, there are also known to be substantial claims by trust creditors, principally investor clients.

22 Over the course of his administration of the affairs of Rowena and Oakleigh, Conlan has become aware of clients of GGFB, principally investor clients, but including borrower clients. In January 2004 he invited all investors of GGFB known to him at that time to submit notices of their claims in the form of Australian Securities and Investments Commission Form 535 Proof of Debt claims against GGFB. He received claims from 435 claimants for a total value of approximately $29,700,000.00. As at 13 September 2004, he had made a preliminary assessment of 325 claims with a total value of $18,417,875.25. Before me, however, it was stressed that there had been no final determination of any claim against GGFB.

23 The orders sought in the substituted originating summons, which replaced an originating summons pursuant to leave I granted as I will indicate below, are of two sorts.

24 One sort of order applied for would declare the mortgages, charges and secured and unsecured debts, and the proceeds of the last two, held by the fourth applicant, assets held in trust for the second applicant, and would make certain moneys, held by the second, third and fourth applicants on trust pending further order under orders made in other proceedings in this Court, subject to the orders in these proceedings. In both cases the orders would authorise the payment of the proceeds to the second applicant. All moneys paid to or collected by, or to be paid to or collected by, the applicants, relating to or in respect of the activities of GGFB, are to be what the orders call the Fund, for the distribution of which the orders provide. (Orders pars 1, 2, 5 and 6 read with the Orders "Dictionary": "Fund".)

25 The other set of orders would have the first applicant determine the existence and amount of claims on, and make distributions of, the Fund. Subject to the terms of the orders the first applicant would do these following, as far as possible and with such modifications as may be required, the procedures set out in Pt 5.6 of the Corporations Act 2001 (Cth) and Corporations Regulations 2001 (Cth), reg 5.6.39 - 5.6.72, inclusive. This is to be as if a claim to participate in a distribution in all matters affecting or related to such a claim were a proof of debt in the liquidation of a company whose assets were the Fund and whose liquidator was the first applicant. (See Orders pars 3 and 4.)

26 The original originating summons provided for the same two sorts of order. The changes to the original originating summons made by the substituted originating summons are to the orders so as to provide for a more elaborate calculus of distribution entitlements, by way of offsets of four types. One type is for amounts received by claimants in respect of their claims before the appointment of the first applicant (called in the substituted originating summons "Pre-Appointment Receipts"). Another type is the "Applicable Face Value" of the benefits, in the form of security received, of the sort expected under the transactions founding the claimants' claims (such security being called "Expected Benefits"). Another type is the estimated value of other benefits received in respect of such transactions (the monetary proceeds from which are called "Receivable Money"). The final type of offset is a hold-back in respect of Receivable Money in connection with or concerning a claim by the second applicant against St George Bank Ltd, explained to me as arising out of the trust account with that bank having been permitted to go into overdraft.

27 On 11 October 2004, at the hearing of the original form of the originating summons and a chamber summons for directions, Acting Master Chapman made a number of orders. These included orders for service of notice of the original originating summons, by circular letter to each investor and borrower listed in the Schedule to the orders and to any other person who became known to the applicants as a potential claimant against the second applicant, and by advertisement in the West Australian and the Australian newspapers; and pursuant to O 18 r 13(1) and O 18 r 29(b) making all persons with a claim against trust funds held by the applicants bound by the orders and directions made in these proceedings. Further orders were made on 28 October and 2 December 2004, and on 15 March 2005, by Masters Sanderson and Newnes. Memoranda of appearance were filed on behalf of a list of persons identified as investors and represented by Solomon Bros (called in these reasons "persons represented by Solomon Bros"), for a person identified as an investor holding security, Mary Croci, and for an entity, Ord River Sandalwood Corporation Pty Ltd that I was told had deposited money with Grubb Finance, money that had ended up in one of the GGFB trust accounts.

28 At a further directions hearing before me on 20 July 2005 at which the applicants and all of the other parties referred to appeared, orders were made that included giving leave to amend the originating summons in the form that became the substituted originating summons, and for notice of what became the hearing before me to be given by newspaper advertisement. The orders also provided for notice of the substituted originating summons to be given by circular letter, enclosing among other things a marked up copy of the substituted originating summons, to investors and borrowers listed in the schedule referred to in the orders and to any other person who became known to the applicants as being a potential claimant against the second applicant. Notice was also to be by newspaper, and by posting to a nominated web address, where the terms of the orders were also to appear. The orders also provided for any party with the right and intention to be heard at the hearing, other than the applicants and those parties who had entered an appearance in the proceedings as at the date of the directions hearing before me, to enter an appearance on or before 19 August 2005.

29 In the event, at the hearing of the substituted originating summons before me on 25 November 2005, only the applicants and the same parties as had been represented at the directions hearing at 20 July 2005 appeared. As a result of submissions at the hearing on 25 November 2005 made, and amendments to the substituted originating summons proposed, by counsel for the interests represented by the Solomon Bros, the applicants at that hearing proposed amendments to the substituted originating summons in accordance with a schedule of amendments tendered at the hearing. These amendments were described as reflecting most but not all of the amendments proposed by counsel for the persons represented by Solomon Bros. To allow the parties a suitable opportunity to respond in full to the applicants' proposed amendments, and to allow the applicants to deal with a drafting issue as to the inclusion of an allowance for interest in distribution entitlements that had been considered at the hearing, I allowed for further written submissions by all parties after the hearing.

30 In the event, the applicants subsequently submitted a minute of proposed substituted originating summons incorporating some of the amendments proposed by the persons represented by Solomon Bros, the amendments in the schedule as addressed at the hearing, further amendments raised at that hearing, and still further amendments to include certain claims for interest and allow for the settlement of the action underlying the hold-back in respect of the St George account to which I have referred. The proposed substituted originating summons so filed was marked up to show the changes from the substituted originating summons. In these reasons I refer to this minute, dated 25 November 2005, as the "proposed substituted originating summons".

31 Further submissions, including submissions on this proposed substituted originating summons, were filed by all parties. I have taken the proposed substituted originating summons as having been put in with an application for leave to amend the substituted originating summons in the ways the proposed substituted originating summons indicates. For convenience, I have set out in an appendix to these reasons the proposed substituted originating summons.

32 From this point forward in my reasons, references to "Orders" are to paragraphs in the proposed substituted originating summons, unless otherwise indicated.

33 As there was no indication before me of any objection to my doing so, I have determined to grant leave to replace the substituted originating summons with the proposed substituted originating summons. However, for convenience, I will continue to so refer to the latter.

34 Subsequently to the filing of the proposed substituted originating summons and the further submissions, I called for a further hearing, to address the issue of my authority, if any, in orders made in proceedings of this sort to deal with the issues of the definition of the boundaries of the Fund, and my authority, if any, to make what would represent further orders in the other proceedings with respect to property ordered to be held in trust, proceeds of which would form part of the Fund. That further hearing was held on 10 February 2006. I reach the issues addressed in that further hearing next.

Preliminary issues: the definition of trust property, and orders in other proceedings

35 The issue of the authority I have in proceedings of this nature to deal with the boundaries of the Fund arises in this way, out of the provisions of the Trustees Act under which these proceedings are brought. Those provisions are, as I have indicated, ss 89 and 92.

36 Trustees Act, s 89(1) permits a trustee or person beneficially entitled under a trust to seek from the Court authorisation for certain dealings in trust property. The terms of the provision are as follows:

"(1) Where in the opinion of the Court any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, retention, expenditure or other transaction is expedient in the management or administration of any property vested in a trustee, or would be in the best interests of the persons, or the majority of the persons, beneficially interested under the trust, but it is inexpedient or difficult or impracticable to effect the disposition or transaction without the assistance of the Court, or it or they cannot be effected by reason of the absence of any power for that purpose vested in the trustee by the trust instrument (if any) or by law, the Court may by order confer upon the trustee, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions (if any) as the Court may think fit, and may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne, and as to the incidence thereof between capital and income."

37 Trustees Act, s 92(1) provides that a trustee may apply to the court for directions as the provision indicates. The terms of the subsection are as follows:

"(1) Any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee."

38 It is established that orders made under s 89(1) may go beyond simply protecting the trustee from actions of breach of trust to "determining the rights of the parties to trust property" (ASIC v Rowena (supra) per Pullin J at [5]).

39 These proceedings are indeed of the sort foreshadowed by Pullin J in ASIC v Rowena at [21], where he said this of funds then comprising trust property in the hands of the first applicant in this case:

"Whatever the outcome, the moneys referred to above in these two bank accounts are not moneys in which Rowena has any beneficial interest. These moneys are therefore held on trust to be distributed to the beneficiaries, being investors or others, once the facts become clearer, possibly in accordance with directions of the Court. See, for example, the type of order made by Austin J in ASIC v Nelson [2003] NSWSC 129; (2003) 44 ACSR 719. The moneys are probably to be shared between the beneficiaries of many trusts. For example, when Rowena received money from an investor under an obligation to hold the money and then pay it over to a borrower in return for a registered mortgage Rowena held the money on trust. Rowena was obliged under s 48 of the [Finance Broker Control] Act to pay the money into the trust account. Normally a trustee would have to hold the money in a separate account, but s 48 of the FBC Act permitted a finance broker to maintain one trust account and to pay all trust moneys received into that account. Another investor who paid a separate sum of money to be advanced to another borrower became the beneficiary of another trust. In some cases there may have been several beneficiaries of one trust. I am not making any findings at the moment. I only mention this aspect so that it can be shown that I recognise that the moneys in the bank accounts the subject of this application are moneys which the beneficiaries of many separate trust arrangements will be claiming. The mixing of the moneys and the likely inability of anyone to trace the moneys as a result of the very many overdrawings of the account, make it necessary for Conlan to complete his process of recovery and then to approach the Court for orders providing for the distribution of the mixed fund."

40 However, it was not in contest before me that neither s 89(1) nor s 92 permits the court to determine the boundary between what is trust property and property the trustee beneficially owns, except, it would seem, for the purposes of protecting the trustee from actions for breach of trust, as in distributing to a beneficiary what turns out not to be trust property. Counsel for the applicants indicated to me that this understanding of the legislative provisions was meant to be reflected in the orders in the proposed substituted originating summons.

41 The definition of "Fund" in the Dictionary at the end of the orders in the proposed substituted originating summons has the effect, when read with the definition of "Borrower", of requiring amounts it covers to be derived from moneys drawn from the Challenge account or the St George account; or to be in respect of money or other property at any time held by GGFB or in its possession as trustee for any "Claimant"; or to be moneys ordered in these or other proceedings to be available for distribution to Claimants. Excluded are moneys ordered in these or other proceedings to be held by the applicant on trust or otherwise for a person or persons identified in the proceedings. These qualify the generality of "Fund", opening words, which say that "Fund" means "all moneys paid to or to be collected by are to be paid to or collected by the Applicants relating to or in respect of the activities of GGFB". I deal separately, under other headings later in these reasons, with the language just quoted, and below (under the present heading) the specific inclusions following those words lettered "(a)" and "(b)".

42 Before me consideration was given to a case where an advance had been made to a borrower client of Rowena, with some of the funds coming from the Challenge or St George account, and some from Rowena itself. Just such a case was referred to in ASIC v Rowena Nominees (supra) Pullin J at [13].

43 In such a case, it is at least arguable that a portion of any repayments would not be trust property, even although the trustee had breached one or more of its trust obligations: see Re Global Finance Group Pty Ltd (in liq) [2002] WASC 63; (2002) 26 WAR 385, McLure J at [102] - [105]. However, there is also scope for an assertion of a lien or charge on the property, for the amount of the contributions of trust property in favour of the beneficiaries, so that any shortfall in the proceeds below the value of those contributions is borne by the defaulting trustee: see Foskett v McKeown [2000] UKHL 29; [2001] 1 AC 102 per Lord Millett, at 103 - 132. The argument cannot be resolved in proceedings such as these, it was accepted, although it is likely that there is just such a shortfall here.

44 A variation on the case just considered was also dealt with at the hearing before me on 10 February 2006. The variation assumed that the funds for the borrower client came from the Challenge or St George account when the account was in overdraft. There is considerable authority, including from this jurisdiction, as I will explain, that there is no trust property that can be asserted by reference to tracing claim for payments into or out of a bank account in overdraft: Global Finance Group (supra) per McLure J at [129] - [136]; Conlan v The Registrar (supra) per Owen J at [366] - [370]. Later in these reasons I consider the position where it is not possible (as here) to determine the relationship between the dates of the payments in and the overdraft dates, and also when (as here) the assets in question can be claimed as trust property, or property to be dealt with as trust property, otherwise than by tracing.

45 The variation has a particular relevance to the specific inclusion in "Fund" of the item in "(a)", for "moneys paid to or collected by or to be paid or collected by and held by the third and fourth applicants on trust until further order pursuant to orders made by Justice Owen of this Honourable Court on 16 August 2001 in proceedings designated CIV 2076 of 1999", including monies "so held" pursuant to par 4 of the order of Roberts-Smith J in chambers on 5 February 2003 in CIV 2779 of 2002, varied as described in "(a)". The orders, pars 8 and 10, of Owen J appear to be those of his meant (see proposed substituted originating summons, Orders par 5(a)), and they are below:

"8. In relation to Category 1, 2 and 3 mortgages and subject to paragraph 10, on discharge or dealing the share or interest of Oakleigh and of any co-mortgagee who is a person or company listed in the Second Schedule shall be held by Conlan on trust until further order but (and subject to paragraph 10) the share or interest of any other person shall be paid to that person.

...

10. If on a discharge of mortgage to which these orders relate any amount was, or is, received in a situation where the mortgagee has previously received that amount by way of interest from the cash flow guarantee account maintained by Rowena (called 'the Paid Component') and:

(a) if the mortgagee receives moneys at settlement of the discharge of mortgage from or on behalf of a borrower, the mortgagee shall forthwith pay from interest received an amount equal to the Paid Component (or if less, all of the interest) to Conlan to be held on trust pending further order; or

(b) if Conlan is required to pay moneys, which include interest received from a borrower, to any mortgagee pursuant to paragraphs 8 or 9, the amount of interest received from a borrower payable to the mortgagee shall be reduced by an amount equal to the Paid Component and held on trust by Conlan pending further order."

46 Owen J's view in Conlan v The Registrar of the claims of investor clients who had paid money into Rowena's trust account when it was overdrawn on the proceeds of a mortgage for which they had made their contributions, but in which they had not acquired a registered interest, was as follows (from [366]):

"However, I return to the central issue. Once the moneys were paid into the overdrawn trust account the right to trace was lost. As I have already said, the investors have an interest in the loan arrangements represented by the mortgage. However, in my view it is an interest which, in terms of characterisation, can only be described as a mere equity. It is not possible to ascribe to it any proprietary characteristics. There is a personal claim against the defaulting broker. But this is not sufficient to convert it to a claim of a proprietary nature that could attach to the mortgage itself. In the circumstances of this case the loss of the right to trace is critical. If that right were present the personal equity may be more than something that is merely ancillary to an interest in property. It would become a species of proprietary interest in its own right. However, if it cannot attach to the mortgage I have difficulty in seeing how it could form the basis of a claim against the proceeds from the discharge of the mortgage."

47 However, as Owen J had previously indicated in his judgment in Conlan v The Registrar, there was no suggestion in those proceedings that Oakleigh held its legal interest in the relevant mortgage beneficially, although the question of the identities of the beneficiaries was a "vexing" one ([333]). The proceedings before me are in effect to answer that question.

48 Thus, while these proceedings cannot resolve what property Rowena or Oakleigh beneficially owns, the Orders here are not intended to deal with such property. They are intended to deal with property which is trust property or which should be dealt with as trust property (because of the beneficiaries' lien or charge over it).

49 The form of the definition of "Fund" in the proposed substituted originating summons does not in my view clearly provide that it is only to the extent the assets it refers to are trust property, or property to be dealt with as if it were trust property, that the orders apply. At the hearing on 10 February 2006 to consider the matter, the applicants, who as I have said indicated this was their understanding of the Orders also, proposed a variety of forms to make the matter clearer and reflect their further consideration of the scope of "Fund" at present. These included relocating the express inclusions for orders in other proceedings to the end of the definition, as well as removing the reference in "Fund", item "(b)", to Pullin J's orders in COR 131 of 1999 (see also Order par 5(b)) thereby not expressly including the proceeds subject to that order (until further order) in the definition of "Fund".

50 At the hearing consideration was also giving to adding to "Fund" (original) item (j) the words "and to the extent of" before "money drawn from the Challenge Account or the St George Account". (There are definitions of "Challenge Account" and "St George Account" which refer to the accounts I have so identified earlier in these reasons.) With respect to the last change, however, as counsel for the persons represented by Solomon Bros put to me, care needed to be taken to ensure the clarification did not restrict the scope of "Fund" to something less than property capable of being made the subject of orders under ss 89 and 92 of the Trustees Act.

51 It seems to me that a qualifier additional to those in "Fund" as it stands now should be provided at the end of the definition, so as to make the matter of its coverage clearer. The qualifier might simply say that the moneys intended to be included by the definition are those which the applicants do not or will not hold in whole or in any part beneficially unencumbered by any interest in favour of the claimants. I will hear from the parties as to what language should be employed in the orders to this effect.

52 As I have indicated, at the same hearing on 10 February 2006 I asked the parties to address me on my authority to make what would represent further orders in the hearings in proposed substituted originating summons Orders pars 1 and 5(a). I have already indicated that one set of such proceedings, in Order par 5(b), being COR 131 of 1999, would be removed, as indicated above. The orders in those other proceedings deal with property which on the material before me is held on trust, either by the second applicant for GGFB clients or by the fourth applicant on trust for the second applicant. This is subject to the provisions of those orders, as in the terms of pars 8 and 10 of the orders of Owen J in CIV 2076 of 1999, as the quotation from those paragraphs above indicates.

53 The applicants point to the desirability in those circumstances of dealing with the trust property of the third and fourth applicants in single proceedings like these, and point also to service (as I have already indicated) of the materials in these proceedings, including the orders in the substituted originating summons, on all of those involved in those other proceedings.

54 In those circumstances, in the absence of any objection to the proposed orders in those proceedings, I have concluded I have and should exercise authority to make the orders having the effects referred to. However, I have also concluded that my orders are not formally orders in those proceedings, but rather orders under Trustees Act, ss 89 and 92 to do with the trusts in them. This will make it necessary to adjust the language of Orders par 1, to make it clear that the order is to dispense with the need to transfer the mortgages in the name of the fourth applicant to the second applicant, subject to the terms of Orders par 2. This will also make it necessary for the language at the end of Orders par 5 to be used in respect of the orders having the effect on the proceedings in Orders par 1.

55 This conclusion now takes me to the issues raised concerning the other terms of the orders sought at the hearing before me on 25 November 2005 and in the subsequent written submissions.

Other issues: general approach to distributions for claimants holding Expected Benefits

56 There was some argument before me directed to the undoubted complexity of the orders in the substituted originating summons. There was a contrast drawn with the orders in the original originating summons. The arguments, which were not at all to the same effect, went to the basic approach that should be adopted to distribution. There was no disagreement a pari passu approach was appropriate. I will return to the matter of the appropriateness of that principle later in my reasons. However, it was put by counsel for Mary Croci that the approach in bankruptcy law, said to be mirrored in the original originating summons, was the appropriate form of the pari passu principle to use.

57 Under that form, any investor client who received a security in the form of an Expected Benefit at least would be treated as a secured creditor. This meant, in the case of a shortfall on any realisation on the security, the investor client would have a claim: see Corporations Act, s 554E(4), in Pt 5.6 of the Corporations Act. The pari passu principle would cover that claim together with those of all other trust beneficiaries. Under the orders in the substituted originating summons, and in the proposed substituted originating summons, however, the beneficiaries' claims are reduced by the "Applicable Face Value" of an Expected Benefit, which a security in those circumstances would represent: see "Gross Distribution Claim", from which that value is deducted, together with the forms of security represented by "Expected Benefit", namely, "Specified Mortgage", "Unspecified Mortgage", and "Unspecified Security".

58 The approach contended for seems to me to ignore the essential difference between a secured creditor and an investor client who held an Expected Benefit. Provided the form of security representing the Expected Benefit had a face value at least equal to the minimum amount GGFB had undertaken to arrange, or the investor client had authorised to be arranged, the investor client had received what had been promised, subject in the case of an Unspecified Security to its registration or other perfection. The investor client would thus have received a transfer of the relevant security in return for their investment or the relevant part of it: see Global Finance Group (supra) per McLure J at [220] - [222]. In such a case, it seems to me that the investor client would not have a proprietary claim to the extent of the Applicable Face Value of the relevant Expected Benefit. There is no suggestion here that the GGFB had guaranteed the secured debt.

59 However, it was put to me that equitable debts should be seen to give rise to claims on trust property in cases like these. Equitable debts might be seen to arise in this case, if not from guarantees of the obligations of such as borrower clients, then (as here) from the failure to keep adequate records, or paying money into an account in overdraft. It was put to me that in cases of equitable debt, at least in circumstances like these, there is an obligation to make restitution to the beneficiary in the amount of the debt. The security would be a form of such restitution. To the extent of the shortfall there was a failure to make restitution, and thus a claim on the trust property.

60 It seems to me that argument would make what is seen in law as a personal claim into a proprietary one. A misappropriation of trust property resulting in traceable proceeds is of course also a breach of trust. A breach of trust may also enrich the defaulting trustee. In both cases proprietary claims may result, for the trust property misappropriated, or in respect of the enrichment, as in the case of a constructive trust arising out of a conflict between the duty of the trustee of loyalty to the beneficiary and the trustee's own interests. However, the security in the form of the Expected Benefit in the hands of a claimant cannot be described, in my view, as the result of a misappropriation of the Claimant's trust property. Nor can the Expected Benefit be described, in my view, as an enrichment of Rowena or of Oakleigh. Absent either basis for a proprietary claim, it seems to me that there is simply a personal claim against the defaulting trustee, which is not a proprietary one, and which must be proved in competition with Rowena's general creditors: see Foskett (supra) per Lord Millett at 130; ASIC v Rowena (supra), per Pullin J at [24].

61 Nor is the matter improved by a claim that, had the investor client been aware of the breaches, he, she or they would have withdrawn their funds. To hold otherwise would be difficult in my view to reconcile with Target Holdings Ltd v Redferns (A Firm) [1995] UKHL 10; [1996] 1 AC 421. There moneys were paid out of a solicitor's trust account for the purposes of borrowers acquiring property. However, the terms of the trust arrangements were not complied with, as payment was made before the security on the property required for the providers of the moneys was in place. Subsequently the security was provided, but there was a shortfall on realisation. The conclusion in the House of Lords was that there was no loss from the shortfall, which would have been suffered anyway, as the providers of the moneys got what they contracted for. Although the contrary was put to me, I do not see any question cast on the reasoning in this case in Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15, where the equivalent in that case of the Expected Benefit in this one was never provided: per curiam, [47] - [50]; see also [63].

62 Another way of putting the conclusion I have just arrived at is this. The shortfall on a realisation on an Expected Benefit cannot in my view be described as the wrongful dissipation of trust property. A wrongful dissipation of trust property would not, of course, reduce or be credited against the proportionate claim of an investor client. But to treat the shortfall as such a dissipation would be to disregard that feature of the trust which called for the provision of an Expected Benefit, and treat the realisation proceeds of the security representing it as simply a partial return of trust property to the investor client.

Other issues: general approach where statutory trust account went into overdraft

63 As I have said, the general pari passu approach was not challenged before me. That approach provides for a rateable sharing amongst innocent contributors. The rating is their proportionate contributions determined as the orders in the substituted originating summons and the proposed substituted originating summons provide.

64 There is strong support for the application of such a principle in a case such as this one, of a fund made up of receipts each of which is to be held in trust to produce an individual benefit or benefits, including for some combination of individuals a pooled benefit or benefits, where the receipts were mixed (properly so under the Control Act, s 48) in what is now a fund unable to meet all the claims on it. This is at least where there is no basis for distinguishing between claims or claimants: see Global Finance Group (supra), per McLure J at [237] - [243]; Re Sutherland; French Caledonia Travel Service Pty Ltd (in liq) [2003] NSWSC 1008; (2003) 59 NSWLR 361, Equity Div, Campbell J, at [176] - [193]. Issues then arise as to whether and how to distinguish claims in this case where an Expected Benefit was received. I have just dealt with those issues. There are also issues in this case of how to account for other benefits received in respect of contributions made, a matter which might be seen to go to distinguish such claimants from others. I return to that matter later in these reasons. However, it is sufficient for now to say that the pari passu approach entails treating all claimants (after accounting for any Expected Benefit) as on the same footing, subject to the matter of accounting for any proceeds actually received (the hotchpot principle, to which I return to below). This approach takes no account of the fact that the St George account went into overdraft on numerous occasions. Indeed it appears that the account was in overdraft when the first applicant was appointed as provisional liquidator of Rowena (that date in the Dictionary to the orders is the "Date of Appointment").

65 I have already referred to authority on the impact on proprietary claims on bank accounts, and assets bought using such bank accounts, of the account going into overdraft. The effect of that authority is that, when the trust account goes into overdraft, and so long as it remains in overdraft, tracing into and out of the account is no longer possible. In effect, moneys paid in should be seen to be dissipated, while moneys paid out are simply borrowings from the bank by the trustee. One of the authorities is in connection with the GGFB: see Conlan v The Registrar (supra) per Owen J at [366] - [370]; see also Global Finance Group (supra) per McLure J at [129] - [136]. I note in passing the possibility of a "backward" tracing claim, as where money paid into an account in overdraft was meant to reduce the overdraft and so to make finance available to acquire the property the subject of the claim: see Global Finance Group at [133]. Thus, subject to that possibility, there can be no claim based on tracing to the proceeds of payments out: Conlan v The Registrar at [366].

66 I note there is a connection between the principles I have described and the treatment of the case when the account is partially depleted, whether or not payments in are made (restoring the former credit balance, wholly or in part). The claimant is only entitled to the lowest balance in the account between the date of the payment in and the date the remedy is sought, absent the intention by the trustee to restore the balance: see French Caledonia Travel Service (supra) per Campbell J at [175]; Global Finance Group (supra) per McLure J at [136]. This is sometimes called the "lowest intermediate balance rule".

67 I also note that there has been strong criticism of the logic of the principles I have described for the overdraft and the lowest intermediate balance situations: see Barkehall-Thomas, S, "Tracing into an Overdrawn Mixed Bank Account" (2004), 12 Insolvency Law Journal 95 at 101. However, I do not consider that I am in a position to depart from those principles, in view of the strength of their support in this jurisdiction to which I have referred.

68 At the same time I also note the qualification on the assets making up the fund, that they are intended to be property held on trust or to be so treated for the benefit of the claimants, discussed in the section of this judgment devoted to preliminary issues. To the extent that character derives from any express trust, there is no need to resort to tracing principles: see Global Finance Group per McLure J at [220]. To the extent that character derives from any constructive trust - such as one where the use of the trust account's overdraft facility might be seen to be in breach of the fiduciary duty of the trustee not to profit from the use of the trustee's position, or in breach of the conflict rule to which I have previously referred - the same conclusion would seem to follow. To the extent that character can rely on tracing principles, there is no basis on which to distinguish between claimants based on the balance in the trust account out of which the tracing is done at any relevant time, given the practical difficulty in cost, and likely impossibility, of establishing the date and time the claimant's funds were paid in and the balance in the account at the relevant time. In the last case the court should recognise for present purposes the impossibility of making any such distinctions: see French Caledonia (supra) at [192] and [193].

69 Thus, the fact the trust account with St George Bank went into overdraft on numerous occasions does not affect the application of the pari passu principle in this case.

Other issues: the pari passu principle and hotchpot

70 The hotchpot qualification of the pari passu principle was contained, I was told, in those provisions in the orders in the substituted originating summons, replicated in the proposed substituted originating summons, allowing for distributions to a claimant on their "Commencement Claim" only after and to the extent the distribution otherwise to be made to that claimant exceeded the claimant's Receivable Money with respect to the Claimant's Gross Distribution Claim. The latter claim is defined in the "Dictionary" as the Claimant's Commencement Claim less the Applicable Face Value of any Expected Benefit. See Orders par 4(b)(ii).

71 This calculation involves bringing to account the amount for Receivable Money, by treating that amount as if it were a prior distribution from the Fund. This is so that a claimant does not receive an "unfair advantage" by "retaining" what the claimant "has already received" and also "sharing equally" with "unadvanced" Claimants in "what remains for division": Malbray J, Lewin on Trusts 17th ed London, Sweet & Maxwell 2000 at 721 (on the hotchpot principle).

72 The hotchpot principle also (Lewin on Trusts, at 721):

"Secures that such a beneficiary shall account, as from the date fixed for distribution, for a sum in respect of interest on the amount which he has already received."

73 However, there is no proposal in the orders in the substituted originating summons or the proposed substituted originating summons to apply any notional interest, due I was told to the practical constraints of time, complexity and cost, and there was no argument put to me that the orders should allow for such interest.

74 It should be noted that the hotchpot principle in this case does not take account of any "Pre-Appointment Receipt": see "Receivable Money "item (x). However, so far as concerns a Pre-Appointment Receipt prior to the "Date of Appointment" of any amount other than interest, it needs also to be noted that such a receipt goes to reduce a Commencement Claim, and thus the Gross Distribution Claim: see "Commencement Claim", opening words, and "Pre-Appointment Capital Receipt". So it would appear that the practical effect of the exclusion of a Pre-Appointment Receipt is confined to an "amount" for interest that was received before the Date of Appointment. Any "amount" of any other sort received prior to that date will go to reduce the Commencement Claim. Any amounts received on or after the Date of Appointment will count only as Receivable Money.

75 This appears to mean that money's worth which is not an "amount" received prior to the Date of Appointment is not excluded from "Receivable Money", and its value does not go to reduce the "Commencement Claim". The example discussed before me was a security for an advance to a borrower, a security which was earmarked for a claimant but which was not an "Expected Benefit". This construction is also supported by the separate treatment of the Applicable Face Value of an Expected Benefit, in the definition of Gross Distribution Claim. Thus, through Receivable Money, the anticipated realisation value of the security, subject to adjustment for what ultimately is actually received (see Orders par 4(b)(vii), in the proposed substituted originating summons, amending in this respect the substituted originating summons), is treated as if it had been received as a distribution from the Fund.

76 It is not clear to me why, if the hotchpot principle is appropriate (to which I return), there is this form of differential treatment of value received prior to the Date of Appointment. There appears to be no practical impediment to identifying "Pre-Appointment Receipt", nor to valuing money's worth not yet converted to money.

77 Yet the difference will be a participation (in the case of a Pre-Appointment Capital Receipt), compared with no or a reduced participation (in the case of Receivable Money), in a "current Proposed Distribution". See Orders par 4(b)(ii).

78 The exclusion of any accounting for pre-appointment interest payments, but accounting for a subsequent recovery for interest (see "Receivable Money" (i)), is also on the face of it not easy to explain, given that interest can form no part of a Commencement Claim, as I have already indicated (see "Commencement Claim" item (f)), with exceptions to be noted. However, the reason for the latter exclusion seems to me to be the practical difficulty in determining that entitlement, owing to the state of the books and records I earlier described, a matter confirmed by the submissions of the applicants. The reason for the former inclusion is not as clear, although no objection has been taken to it. It lies presumably in the greater ease with which an entitlement and ultimate payment representing Receivable Money may be dealt with if a separate accounting for interest is not required.

79 The differential treatment was not directly addressed by the applicants. Their arguments were addressed to the appropriateness of the hotchpot principle. The principle was said to be based on the fortuity of provision of benefits (other than Expected Benefits) to clients. Such benefits should be seen as a return on what in substance was what the applicants called "the great Grubb lottery". There was reference to authority on returns to contributors to a common pool in which it was determined those returns should be treated as distributions from the fund under the hotchpot principle: see Re Hobourn Aero Components Limited's Air Raid Distress Fund; Ryan v Forrest [1946] Ch 86 at 97 - 98, per Cohen J, referred to with apparent approval in French Caledonia Travel Service (supra) per Campbell J at [181] (noting the appeal in the case, [1946] Ch 194, did not deal with the point). I presume that money or other value received or to which the client is entitled from a source other than assets forming part of the Fund is included as Receivable Money on the basis that such source for that claimant performs the same function as the Fund. Thus, the other source - such as a guarantor - might have subrogation rights after the entitlement was met. I also presume the Expected Benefits are not treated in this way because of the allocation in accordance with the prior undertaking given to the client or authority previously received from them.

80 This argument seems to me to deal with the point concerning differential treatment of moneys paid and other value received prior to the Date of Appointment, as follows. Moneys received before the business terminated are less likely to be a fortuitous result of the activities of Grubb and GGFB than the receipt before that date of other value not representing any Expected Benefit. It is the fortuity, as I have said, that founds the fairness in treating the value received at any time in the same way as a distribution from the Fund after the Date of Appointment. Both sorts of distribution could be seen as the result of the process of apportionment of loss arising out of the common misfortune suffered by clients as a result of the failure of the trust arrangements of GGFB.

81 However, accepting this, the distinction made here, between the Applicable Face Value of Expected Benefits and Pre-Appointment Capital Receipts, on the one hand, and other value (leaving aside pre-appointment interest), on the other, seems to me to be one of degree. The evidence of the chaotic state of the internal system of GGFB to which I earlier referred would seem to me to indicate an element of fortuity in the receipt as a result of GGFB's operations of all three forms of value. If it is appropriate, that notwithstanding, to treat the Applicable Face Value of Expected Benefits and the Pre-Appointment Capital Receipts as not being distributions of the Fund, but rather as transactions to which effect should be given, including by not treating them in the same way as a distribution from the Fund, then I am not convinced such treatment is inappropriate for the other value.

82 Of course it would be possible to treat all three forms of value as distributions to which the hotchpot principle applied, although no one before me contended for this. This would not involve any disturbance of the title of the recipient to the value in question. Rather, it would involve bringing the value into hotchpot, as I have indicated. Just this was involved in Re Hobourn Aero Components Limited's Air Raid Distress Fund (supra). The approach has the virtue of analytical simplicity and a single response to the common misfortune for all of the clients who were drawn into the business of GGFB: see Barkehall-Thomas, "Overdrawn Mixed Bank Account" (supra) at 102.

83 However, so doing would, it seems to me, treat the GGFB business in the same way for this purpose as one of a common or collective investment pool (as Barkehall-Thomas, "Overdrawn Mixed Bank Account" at 102 recognises). While doing that would recognise the ultimate (chaotic) reality of the operation of the GGFB business, as I have indicated, it involves, in my view, not giving sufficient weight to the intentions of the clients involved in the GGFB business. Their intentions are at least relevant to the working out of appropriate principles of distribution inter se, on the authorities, see Barlow Clowes International Ltd (in liq) v Vaughan [1991] EWCA Civ 11; [1992] 4 All ER 22 (CA); ASC v Buckley (1996) 7 BPR 15,024 (NSWSC Santow J). It is not in contest that there was a basis for the GGFB business that was reasonably understood by the clients to be the provision to them of separate investments or credit for their funds representing the intended return or application of those funds, not of general funds. While pro rata treatment of all in relation to the trust property shortfall would be justified as I indicated above, receipts of all three forms of value other than as a result of the distribution of the Fund or these proceedings would be capable of being reasonably regarded by the recipient client as a receipt of or in respect of their contribution.

84 It seems to me all of the three forms of value here are capable of being reasonably regarded by a client as a receipt of or in respect of their contribution. I presume that any such form of value known at the point of receipt by the recipient to be the result of misappropriation of trust assets would be recoverable from the recipient for the benefit of the Fund, and so would not count as such a form of value for the recipient for present purposes. It is also the case that none of these three forms of value would be capable of application to what was an illusory receipt because in truth there was no real allocation of value to the client. Any purported allocation that did not produce the value for the client denoted by an Expected Benefit, a Pre-Appointment Capital Receipt or Receivable Money would simply not count for the purpose of the relevant term. See the authorities discussed in Barkehall-Thomas S, "Clayton's Case and the 'common pool' exception" (2004) 15 Journal of Banking and Finance Law and Practice 177, at 182 - 183. Nor of course would any distribution from the Fund under the orders in the proposed substituted originating summons count as a form of value of any of the three sorts, by virtue of the definitions of "Expected Benefit", "Pre-Appointment Capital Receipt" and "Receivable Money".

85 It would follow on my view that receipt of any of the last three forms of value should not represent a distribution to which the hotchpot principle would apply. There would still be a basis for distinguishing between the Anticipated Face Value of an Expected Benefit and the other two forms of value, however. This is based on the character of an Expected Benefit, as what was contracted for. However, it seems to me that, after allowing for that distinction, there is no further sufficient basis for distinguishing between the three forms of value for the purposes of the application of the pari passu principle. All three, as I have said, would be capable of being reasonably regarded as a receipt of or in respect of a Claimant's contribution. Of course, an Expected Benefit and a Pre-Appointment Capital Receipt can only be received, it seems to me, before the Date of Appointment, while Receivable Money can be received before, or on or after, that date. However, that does not seem to me to affect the present point.

86 The result it seems to me is that all three forms of value would go to reduce (allowing for the character of an Expected Benefit) a Claimant's Gross Distribution Claim for the purpose of that Claimant's entitlement to participate in a distribution from the Fund. Receivable Money would need to be distinguished from the other two forms of value only because it is the only one not necessarily arising prior to the Date of Appointment (see Orders par 4(b)(iv)), the only one subject to the uncertainties of valuation such that there should be a right to put the Receivable Money to the first applicant (see Orders par 4(b)(v)), and the only one subject to the possibility of change after initial determination (see Orders par 4(b)(vii)).

87 Thus there would be no need for any reference to Receivable Money in the provision for distribution in what is now Orders par 4(b)(ii). Receivable Money would have been taken account of at the stage of calculating (and re-calculating) the Claimant's Gross Distribution Claim. However, counsel for the persons represented by Solomon Bros prepared a revised version of Orders par 4(b)(ii) which he said gave effect to the pari passu principle so far as Receivable Money was concerned. He did this as part of the modifications of the orders in the substituted originating summons to give effect to the pari passu principle more generally. The revised version of Orders par 4(b)(ii) provided that a Current Proposed Distribution in respect of a Gross Distribution Claim plus what appeared to be the sum of past actual distributions from the Fund "does not exceed" the difference between the Gross Distribution Claim and any Receivable Money. This, however, seems to me to have a different effect from that of applying the pari passu principle in the same way for Receivable Money as for the other two forms of value. The former effect would be of ensuring that a Claimant who has Receivable Money cannot in a distribution receive, with the sum of past distributions, more than the difference between their Gross Distribution Claim and their Receivable Money. Receivable Money would not cause the proportionate abatement of the Claimant's entitlement, but rather at a certain point cut that entitlement off, in whole or in part, in the same way as the entitlement would be cut off, in whole or in part, by past distributions from the Fund. I would, however, be prepared to hear further argument on this modification.

88 There would be further effects on the orders sought by the applicants. Thus, the modifications of the orders in the substituted originating summons prepared by counsel for the Solomon Bros included also changes to deal with the amount representing the proceeds of the action by Rowena against St George Bank in respect of the claims that the bank permitted the St George account to fall into overdraft regularly. That action, which as I previously indicated I was told was settled, is referred to in the hold-back provisions to which I earlier made reference (Orders par 4(b)(vi) in the proposed substituted originating summons). It was agreed by the applicants that, if I concluded the hotchpot principle did not apply to Receivable Money, there was no need for such separate treatment for such moneys. The Court's determination of the relevant issues will either make the moneys part of the Fund, or Receivable Money to which the Orders par 4(b)(iv) disposition would have application.

89 I will hear further from the parties on the final form of the changes to be made to the orders to reflect the conclusion in this section of my reasons.

Other issues: interest received by GGFB and not paid out

90 The orders in the proposed substituted originating summons exclude from "Commencement Claim" by virtue of the definition of that term interest on any amounts received by or deposited with GGFB or arising or alleged to arise out of any finance broking transaction between a claimant and GGFB. This is with two exclusions, representing proposed amendments to the substituted originating summons.

91 One exclusion is for what was described in the hearing of 25 November 2005 as an authorised rollover ("Commencement Claim" item (e)(i)), on mortgages registered under the Transfer of Land Act 1893 (WA). The authorised rollover description was explained as necessary to identify the amount reliably and cost-effectively. I agree with the objection that that rationale is not limited to transactions involving the described forms of security but extends to any form of security. However, it is a closer question whether the further qualification, that the interest component had been retained by GGFB with the authority of the claimant "for the purpose of being lent or advanced on the claimant's behalf in the course of the finance broking business conducted by GGFB" (the "rollover" feature), can be regarded as unnecessary for the purpose indicated. It seems to me it is necessary, because of the likelihood of the identification of funds on the settlement of such a transaction. Accordingly, I would not make the further change to the description the objector sought.

92 The second exclusion is for interest paid on mortgages registered under the Transfer of Land Act or other security granted in favour of a claimant forming, or the proceeds of which form, an Expected Benefit or (in the case of proceeds) Receivable Money that can be identified as having been paid by a Borrower and dealt with as indicated in "Commencement Claim" item (e)(ii). The restriction to Expected Benefit or Receivable Money was on the basis that the first applicant would be able in most instances to identify interest paid by borrowers if that interest was confined to interest derived from such securities. It was objected that such a restriction was unnecessary. However, the concepts of Expected Benefit and Receivable Money carry within them that the relevant item is identifiable by the first applicant, and in fact will be identified. It therefore seems to me that the restriction the applicants' drafting would impose would serve the interests of practical administration as claimed. That having been said, it does not seem to me that the words "that can be identified as" add anything significant for this purpose.

93 I will hear from the parties on modifications to the drafting of the orders to reflect the conclusions in this section of my reasons.

Other issues: the exclusion of equitable debt

94 The orders in the proposed substituted originating summons, as well as the substituted originating summons, also exclude from a "Commencement Claim" amounts for unliquidated damages or equitable compensation as described in "Commencement Claim" item (f). It is objected that amounts claimed as equitable debts should not be excluded. A claim for equitable debt was identified for this purpose as the amount claimable on a breach of trust as necessary for the restoration of trust property on that breach. I was told this was a reference to what was described in Coventry v Charter Pacific Corporation Ltd [2005] HCA 67, per Gleeson CJ, Gummow, Hayne and Callinan JJ at [47] as follows:

"The reference to Ex parte Adamson; In re Collie [(1878) 8 Ch D 807 at 819] was to the well-known statement by James LJ to the effect that in a suit in equity for restoration of money or property of which the claimant has been cheated, earmarked money or an asset which could be found in specie or traced might be the subject of a proof in bankruptcy; this was on the footing that what was admitted on the proof was an equitable debt or a liability in the nature of an equitable debt."

95 I reproduce below the passage from Ex parte Adamson; In re Collie (1878) 8 Ch D 807 relevant for my purposes that is referred to in Coventry (supra) (per James LJ, at 819):

"The Court of Chancery never entertained a suit for damages occasioned by fraudulent conduct or for breach of trust. The suit was always for an equitable debt or liability in the nature of debt. It was a suit for the restitution of the actual money or thing, or value of the thing, of which the cheated party had been cheated. If a man had been defrauded of any money or property and the cheater afterwards became bankrupt, if the money could be earmarked, or if the thing could be found in specie, or traced, the assignees or trustees were made to give it back, or if it could not be earmarked or traced, then proof was allowed against the estate."

96 It seems to me from these quotations that the form of claim is for restoration to the claimant, not to the Fund to which the Commencement Claim applies. To the extent an equitable debt is associated with a proprietary claim, based on a tracing claim or a constructive trust, as the extract from Adamson (supra) appears to indicate, it would be a matter of a claim on property the proceeds of which claim might indeed, as a result of order of the Court, not form part of the Fund. For that purpose, I note the exclusion of moneys ordered to be held for an identified person or persons in these proceedings from the definition of "Fund", to be seen in its closing words. To the extent an equitable debt is not associated with a proprietary claim, as the quotation from Adamson indicates in its closing words, it is an in personam one that in my view could not itself be characterised as a payment to GGFB. It is on payments to GGFB that the concept of a "Commencement Claim" is based.

97 However, counsel for the persons represented by Solomon Bros put it to me the wording was needed to avoid having the effect of excluding an amount that had been included by the preceding words, but represented an amount subsequently misappropriated. However, I do not consider that concern is justified, by reason of the structure of the definition, and the words prefatory to "Commencement Claim" items (e) and (f), "for the avoidance of doubt". The words of inclusion in "Commencement Claim" deal with amounts fixed whether or not conduct with respect to them gives rise to other claims. Amounts in respect of those other claims are not included. However, the original amount will found a Commencement Claim.

98 That is, I do not consider the exclusion in "Commencement Claim" item (f) is meant or should be read to allow for the introduction of a disqualification of a "Commencement Claim" otherwise arising based on the fact that it also gives rise to a claim for an equitable debt in a particular amount.

Other issues: definitions of the securities encompassed by Expected Benefit

99 It will be noted that each of "Specified Mortgage", "Unspecified Mortgage", and "Unspecified Security" provides for a disjunctive set of conditions for the relevant security, that the security or its kind or class was identified to the claimant by GGFB in the course of a finance broking transaction it conducted as being security it either undertook to obtain for the claimant or had obtained for the claimant (within GGFB's authority from the claimant, with a qualification under the proposed substituted originating summons that no longer seems to apply, with an exception to be considered). It was put to me, however, that these conditions should be conjunctive, to ensure that an Expected Benefit was indeed what had been contracted for.

100 However, in my view the point of the objection is met by the following language in the definition, which in my view makes it clear (especially with the amendment with respect to the amount secured) that the security must have been obtained within authority conferred on GGFB. This could have been by a prior undertaking by GGFB, or by a subsequent ratification by the client, or by prior authority granted by the client to GGFB. At the same time, the language should be made clearer, in my view, by the dropping of the first condition, so as to ensure a prior declaration by GGFB that was inconsistent with the authority actually conferred is not covered. Including such a case within the Expected Benefit concept would be inconsistent with the basis for its treatment to which I earlier referred. I understood counsel for the applicants, at least at the hearing on 25 November 2005, not to be opposed to such a change.

101 Before leaving this aspect of Expected Benefit, I note that the amendments of "Unspecified Security" do not, unlike those to "Specified Mortgage" and "Unspecified Mortgage", include the change requiring the security to be at least for the amount GGFB was obliged or authorised to obtain. I do not see any justification for treating the first form of Expected Benefit referred to differently from the other two forms.

102 I will hear from the parties as to modifications of the drafting to deal with the matters in this section of my reasons.

103 The opening words of the definition confine it to moneys "relating to or in respect of the activities of GGFB". It was objected that these words should be deleted as there was no suggestion there were any non-trust assets of Rowena, and as those words would be inconsistent with the basis for the application of the pari passu principle in this case, by reintroducing the requirement for moneys to be traceable.

104 I do not consider the words have the latter effect, of reintroducing a traceability requirement. I consider that the words rather are directed to excluding proceeds of activities relevant to the liquidation of Rowena but entirely separate from the activities of GGFB. That it is not now possible to say there will be such proceeds is not a reason not to provide for them. However, if proceeds of activities relevant to the liquidation of Rowena which were not activities of GGFB are impressed with the trust for the claimants, or may be the subject of a lien or charge for them, then those proceeds are caught by the words, in my view. If they are not impressed with that trust nor subject to such a lien or charge, they are not trust property or property to be dealt with as trust property, and, as I have indicated earlier, these proceedings cannot reach them.

105 Thus, I do not conclude the words need to be deleted.

Other issues: notice to claimants of quantum of Receivable Money

106 There is a requirement for such notice, in Orders par 4(b)(iii) of the proposed substituted originating summons. This applies where the first applicant proposes to admit a Gross Distribution Claim for which to his knowledge there is Receivable Money. Before he admits the Claim he will give written notice to the claimant "as to the quantum of the Receivable Money that will or may effect any distribution to the Claimant from the Fund", because of Orders par 4(b)(ii). It was objected that the words "or may" might be read to indicate there was a broad discretionary element in the definition of Receivable Money itself.

107 I do not agree with the objection. In my view the definition of Receivable Money is not affected by the notice provision. Rather, it seems to me the "or may" language recognises the possibility that Receivable Money that would affect distribution under Orders par 4(b)(ii) might not do so in certain circumstances. The most obvious of these is in Orders par 4(b)(v), for assignments of Receivable Money to the first applicant.

Other issues: "Costs" for the purposes of "Receivable Money"

108 In the definition of Receivable Money, "Costs" are deductible from the amounts otherwise caught by the definition. There is a definition of "Costs" which restricts the term to reasonable legal costs and expenses and/or outgoings, but which does not include other losses.

109 It was initially objected that losses of all other sorts should be included. The example discussed at the hearing was a claimant's loss of time in making a claim. However, I understood the objection was not pressed. It seems to me this was an appropriate position. Costs beyond legal costs would not usually be allowed for in recovery actions. The difficulty in including them would be the cost and expense of quantifying them.

110 There was a further objection, to the qualification of Costs by reference to ones simply "reasonably" incurred. It was suggested costs should be reasonably "and necessarily" incurred. However, I understood this to be part of the terms put forward by the objector for the inclusion of losses beyond legal costs, expenses and outgoings. In any event it seems to me it adds an inappropriate restriction on those legal costs, expenses and outgoing, because of the costs and difficulty of the determinations it would require.

111 In making a distribution to claimants, the first and third applicants have the power to first deduct "Trustee Costs": Orders par 4(c) of the proposed substituted originating summons. The definition of "Trustee Costs" has them comprise "Trustee Recovery Costs" and "Administrative Costs".

112 The definition of "Trustee Recovery Costs" refers to costs, charges, expenses and disbursements, "actually and properly incurred", and not reimbursed, paid or recovered, "of or in any way associated with or related to the Fund or its administration or distribution and all matters associated with or related to the Fund or its administration or distribution", with specific inclusions.

113 The definition of "Administrative Costs" has them comprise "Remuneration", as well as all costs, charges, expenses and disbursements "actually, reasonably and properly incurred", and not reimbursed, paid or recovered, "of or in any way associated with or arising out of or related to the liquidations of the Second and Fourth Applicants" and "all matters associated with or arising out of or related to those liquidations, not being Trustee Recovery Costs". There were a number of objections to the terms of those definitions.

114 For all of them, there was an objection to their inclusion of remuneration or costs incurred prior to 1 September 2003. This date was explained to me by reference to an application for remuneration by the applicants under Corporations Act, s 473 for the period to and including 31 August 2003. The decision in that application was pending at 10 February 2006, and has since been delivered: Australian Securities and Investments Commission v Rowena Nominees Pty Ltd (in liq) (Receiver and Manager Appointed) (Supervisor Appointed) [2006] WASC 36, Sanderson M. The concern, it appeared, was that without those words the applicants might be able to recover from the Fund amounts beyond those allowed under those proceedings or those which the creditors had been led to believe had been paid.

115 I do not consider the absence of the words contended for allows for recovery of remuneration for the period prior to 1 September 2003 with which the proceedings before Master Sanderson were concerned, other than the remuneration as finally determined in those proceedings. I understood the applicants to be of this view also. I note the words in "Remuneration", "as determined pursuant to s 473 of the Corporations Act", and I also note Orders par 4(d) with respect to Remuneration, which are "to the extent that Trustee Costs comprise Remuneration, they must be determined in accordance with s 473 of the Corporations Act 2001". That section of the Corporations Act is, of course, the provision with respect to the regulation of claims for remuneration by liquidators and was the provision which founded the jurisdiction of the Court exercised by Master Sanderson.

116 As to other amounts than those in respect of Remuneration, I return to the provisions of the orders in the proposed substituted originating summons in that regard below.

117 As to amounts which the creditors might have been led to believe had been paid, there was no evidence before me that the applicants had been paid or had acknowledged they had been paid any such amounts. If there were such evidence, that would be a matter for proceedings in relation to the applicants' claim to deduct the amounts in question. I do not consider the burden is on the applicants to show in these proceedings there is no such evidence. The burden would of course be on them to show what amounts had not been paid, reimbursed, or received by them in any such other proceedings.

118 There was also an objection to the inclusion in "Remuneration" of the words "ancillary to or arising out of or associated with" in addition to "in or in relation to" the liquidations including the Fund. It was put that these words were too wide. The response was that these words were quite customarily used to qualify allowable remuneration in liquidations.

119 Whether or not that response is correct - and there was no evidence on the point, nor any authority referred to, under Corporations Act, s 473 or otherwise - I note again that the operation of the definition is qualified by reference to the amounts for "Remuneration" being "as determined pursuant to s 473 of the Corporations Act 2001", and by the terms of Orders par 4(d) quoted above. I do not understand the courts would be bound by language of the sort objected to in this clause if it went beyond allowable remuneration under that section. This language must then in my view be read subject to the process so provided for in the Corporations Act. I do not understand any other basis for a right to remuneration has been put forward here. See also Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96, at 101 - 102, per Kennedy and Ipp JJ, quoting from Adsett v Berlouis [1992] FCA 368; (1992) 37 FCR 201 at 209 - 210 (dealing with the basis for a claim for remuneration by a liquidator).

120 There was a further objection, to the definition of "Administrative Costs" not confining the costs, charges and expenses in item (b) of that definition to ones "necessarily" incurred. There was also an objection to the use of the words "in any way" in the language of connection to the liquidations, although I note there was no similar objection to the words' appearance in the corresponding language in "Trustee Recovery Costs" of connection to the affairs of the Fund.

121 I understand the right to the costs, charges and expenses on which the right in "Administrative Costs", item (b), as well as the right to" Trustee Recovery Costs", is based to be that under general law, whether the amounts are to be regarded as the costs of liquidations of the second and fourth applicants, or the administration of the trusts in this case: see Adsett v Berlouis (supra) at 209 - 210, and ASIC v Rowena Nominees (supra), Pullin J at [94]. I note that the general law right to an indemnity, whether it is equitable or statutory (see Trustees Act, s 71), is to no less than reasonably and honestly incurred costs, charges and expenses (Ford H A J and Lee W A, Principles of the Law of Trusts, loose leaf section [14040]). I do not consider any narrower definition by reference to "necessarily" to be appropriate in this case.

122 It seems to me that the words "reasonably and properly incurred" in the definition of "Administrative Costs" provide for the same control over inappropriate costs as the equitable and statutory entitlement.

123 I turn then to the use of the words "in any way", and note again their use in the definition of "Trustee Recovery Costs" for the "Fund" not objected to, to which I previously made reference. In view of the determination in ASIC v Rowena (supra) Pullin J at [94] that the whole of the costs in the liquidation of Rowena should be charged on the trust assets, and the basis for that view, I do not see a reason to distinguish between the two rights of indemnity in that respect. Nor, in view of the relationship between Oakleigh and Rowena, do I see a reason to distinguish between the costs of liquidation of the second and of the fourth applicants in this respect.

124 However, I note the language used by Pullin J in ASIC v Rowena (supra) at [100], to give effect to his conclusion, as follows:

"I also direct that the liquidator's 'costs charges and expenses' (as distinct from 'remuneration') may be deducted from the same accounts if they were incurred in relation to his duties as liquidator, and if the assets of Rowena are insufficient for that purpose."

125 The last condition likely obtains, as I have indicated. The language ("in relation to") of that direction in my view should be used here, in place of that in the definition "Administrative Costs" (b) and "Trustee Recovery Costs".

126 I will hear from the parties as to modification of the drafting to deal with these matters.

Other issues: review of the decisions in the first applicant in relation to Commencement Claims

127 The question was raised at the hearing by counsel for Ord River Sandalwood whether or not the right of review for the decisions referred to was, or should be, as for a determination as to a proof of debt under Pt 5.6 Corporations Act 2001 (Cth) and reg 5.6.39 - 5.6.72 of the Corporations Regulations. The answer to the first part of the question is that there is such equivalence: see Orders par 3 of the proposed substituted originating summons. My attention was, however, drawn to the opening words of Orders par 3, "subject to paragraph 4 and generally to these orders", and to the language later in that order of "follow as far as possible with such modifications as may be required". However, I do not read either set of words, or their combination, to affect the present point, and the applicants confirmed that this was their understanding also. I return to the opening words of Orders par 3 below. As to the second quoted language, it does not in my view confer any element of discretion on the applicants, but simply reflects the lack of a perfect or one to one correspondence between something that is simply a liquidation of a company under ch 5 of the Corporations Act, and claims against trust property in the form of the Fund in this case.

128 As to the second part of the question, whether there should be a right to review as for a determination under the law for the winding up of companies, particular concern was expressed about the possibility of time periods for review provided for in the corporations law provisions having run. However, I did not understand any determinations had been made for the purpose, nor do I easily see how they could be made until the relevant orders in these proceedings come into effect. The applicants also confirmed it was their understanding no determinations had yet been made.

129 I do not see any other reason why the right of review in the winding up of companies should not apply here.

Other issues: making the determination under Orders par 3 subject to par 4 and these orders

130 This is the matter of the necessity for the opening words of Orders par 3 which I have quoted in the previous section. It was put to me those words were unnecessary in view of the language from Order 3, to do with required modifications, also just quoted. I disagree. The two sets of words perform different functions.

131 The opening words draw attention to what would be the result of construction in context in any event, that is, that there are provisions elsewhere in the orders, and in particular in Orders par 4, inconsistent with the corporations law regime. One such inconsistency is the treatment of Expected Benefits, which ensures there is no question of treating them like secured debt under s 554E(4) in Pt 5.6 of the Corporations Act. I have already dealt with that matter. That effect can only be fully appreciated once Orders par 4 is read with the "Dictionary".

132 The modifications language, by contrast, is concerned with the translation of claims against a trust fund into the language of proofs of debt in a winding up, as I have indicated.

133 It was further put, by counsel for the persons represented by Solomon Bros, that the opening words in Orders par 3 let in the possibility of modification of the corporations law regime by substituting for objective circumstances determinations resting on the honest exercise of discretion. What would then be reviewable would not be, whether or not there had been an error in determining whether or not those circumstances existed, or whether or not any discretion had been exercised reasonably, but would rather be, whether or not the exercise of the relevant discretion had been honest. However, as I understood it from the applicants, this point was put to me before further changes had been made to the orders sought, reflected now in the proposed substituted originating summons, to remove the elements of discretion of concern to the objector. No further submissions were made by the objector in respect of that redraft in those respects. Nor did I find any of the elements of discretionary decision-making to which the objector had apparently objected that had not been so responded to (see for example Receivable Money estimations that had been falsified by subsequent actual receipts: proposed substituted originating summons, Orders par 4(b)(vii)).

134 At the hearing the applicants supported an order as to the costs of this action of the persons represented by the Solomon Bros, that they be recoverable from the Fund. There was no similar position that I understood them to have taken with respect to the costs of those other participants in the hearings before me. Indeed, with respect to the costs of Mary Croci, whose counsel put the argument for treating Estimated Benefit as secured debt in an insolvency, I understood the position of the applicants to be that the failure of that argument should be a matter that should inform my deliberations as to the recoverability of their costs against the Fund.

135 In my view, however, the appropriate order as to costs in this case is that the costs of all participants be paid from the Fund, to be taxed if not agreed. All participants put arguments that were of assistance to me in deliberating on the complex issues posed by the orders sought in this case. I do not consider any of the arguments so put to be ones so devoid of merit as to warrant denial to those putting them of what is in effect in my view part of the costs of administration of the trust arrangements.

136 A separate issue arises in respect to the costs of the amendments by leave of the originating summons. As I have indicated, there have been two sets of such amendments, one set the subject of the leave I granted on 20 July 2005, the other set of amendments the subject of the leave I have indicated in these reasons I would allow to replace the substituted originating summons. Costs of the first set of amendments were reserved by my orders of 20 July 2005.

137 In my view, the costs of the amendments in both cases should not be dealt with differently from the other costs of these proceedings. In my view they are a part of the process for administration of what are (necessarily) complex trust arrangements. The first set of amendments were to respond to a set of issues, principally as to appropriate off-sets from distribution claims, that would in my view likely have had to have been confronted and dealt with in any event. The second set of amendments were the result of the process of testing of the first set of amendments, a process which in my view has resulted in useful clarifications of the amendments and the identification of the need for some changes to them.

138 I have not addressed in these reasons matters raised with me, at the hearing of 25 November 2005 or in the subsequent written submissions, which in my view the proposed substituted originating summons fully and properly conceded. In my view this makes it unnecessary to deal with those other matters.

139 On a number of matters in these reasons I have indicated the need for further address by the parties as to modifications of the orders in the proposed substituted originating summons to give effect to these reasons.

140 I will hear from the parties as to those modifications, and to the final orders in this case.

Minute of proposed substituted originating summons dated 25 November 2005, "Orders and Directions" sought by the applicants:

"Orders and directions

1. Paragraph 4 of the orders made by the Honourable Justice Murray on 30 September 1999 in proceedings designated as CIV 2076 of 1999 be set aside, but only so far as it is ordered that all mortgages in the name of the fourth applicant be transferred to the second applicant.

2. It be declared that all charges and all secured and unsecured debts in the name of the Fourth Applicant, and the proceeds thereof, as well as the mortgages the subject of order 1 of these orders, are held on trust by the Fourth Applicant for the Second Applicant, and it is ordered that the proceeds thereof be authorised to be paid to the Second Applicant and form part of the Fund and be subject to the orders made in these proceedings.

3. Subject to paragraph 4 and generally to these orders, the First Applicant, in determining the existence and amount of any Commencement Claim or any Gross Distribution Claim and in making any distribution of the Fund pursuant to the orders and directions made in these proceedings, follow as far as possible but with such modifications as may be required the procedures set out in Pt 5.6 of the Corporations Act 2001 and reg 5.6.39 - 5.6.72 inclusive of the Corporations Regulations 2001, as if a claim to participate in the distribution of the Fund and all matters affecting or related to such a claim (including, without limitation, the existence or quantum of any Pre-appointment Receipt, Expected benefit or Receivable Money) were a proof of debt and matters affecting or related to a proof of debt in the liquidation of a company, the Fund were property of the company available for distribution to creditors of the company, and the First Applicant were the liquidator of that company.

4. In assessing and admitting Commencement Claims and Gross Distribution Claims and in distributing the Fund in accordance with these orders:

(a) The First Applicant will reduce or extinguish, as the case may be, the amount of each Commencement Claim, by deduction from it of the amount of the Applicable Face Value of any Expected Benefit relating to the Commencement Claim; and

(b) The First Applicant will distribute the Fund among all Claimants in accordance with the following provisions:

(i) At any time before the final distribution of the Fund, the First Applicant may make one or more interim distributions of the Fund;

(ii) A Claimant is entitled to participate in a distribution ('current Proposed Distribution' or 'CPD') from the Fund (whether an interim or final distribution) in respect of a Gross Distribution Claim ('GDC') of the Claimant admitted by the First Applicant before the CPD is made, but only in the amount, if any, by which:

CPD + PPD is greater than RM + DR

Where for each Claimant:

CPD is the current Proposed Distribution in respect of the GDC;

PPD is the sum of past Proposed Distributions in respect of the GDC;

DR is the total mount of distributions actually made from the Fund in respect of the GDC.

(iii) If the First Applicant proposes to admit a Gross Distribution Claim in respect of which, to his knowledge, there is Receivable Money, he will, before admitting the Gross Distribution Claim, give written notice to the Claimant as to the quantum of the receivable Money that will or may affect any distribution to the Claimant from the Fund in respect of the Gross Distribution Claim because of the operation of paragraph 4(b)(ii) hereof.

(iv) If the First Applicant has admitted a Gross Distribution Claim, and thereafter become aware that there is Receivable Money in respect thereof he will, as soon as reasonably practicable after becoming so aware:

A. using the quantum of the Receivable Money as assessed by him, recalculate any previous distributions from the Fund to the Claimant;

B. give written notice to the Claimant as to the quantum of the Receivable Money that will or may affect any distribution (including any previous distribution) to the Claimant from the fund in respect of the Gross Distribution Claim because of the operation of paragraph 4(b)(ii) hereof, and as to the result of any recalculation made in accordance with paragraph 4(b)(iv)A hereof;

C. unless the Claimant has in the meantime cause the amount of the Receivable Money to be reduced to zero in accordance with paragraph 4(b)(v) hereof, after expiry of the period referred to in that paragraph and following regulation 5.6.55 of the Corporation Regulations 2001, recover from the Claimant, and the Claimant must repay to the First Applicant, such amount that the Claimant received by way of distribution in any previous distribution from the Fund as exceeds the amount that the Claimant would have received, if the first applicant had used the quantum of Receivable Money in calculating the amount to be distributed to the Claimant;

D. pay the amount so recovered to the Fund or, in any case to which paragraph 4(b)(vi) applies, to the reserve fund referred to in paragraph 4(b)(vi)A; and

E. subject to any reassessment provided for by paragraph 4(b)(vi)B and to the provisions of that paragraph generally, use the quantum of the Receivable Money in calculating any future distributions to be made to the Claimant from the Fund.

(v) Within a period of 21 days after the issue of written notification by the First Applicant to the Claimant pursuant to paragraph 4(b)(iii) or 4(b)(iv)B hereof, or such further period or periods as may be permitted by the First Applicant, the Claimant may cause the amount of the Receivable Money for the purposes of the formula in paragraph 4(b)(ii) to be reduced to zero by the Claimant (at its own cost) making, executing and delivering to the First Applicant a legally binding agreement, on such terms as may be reasonably required and approved by the First Applicant's solicitors, whereby the Claimant:

A. assigns to the First Applicant all right, title and interest it has in the Receivable Money (other than the amount of Costs) and the rights of the Claimant to recover the Receivable Money (other than the amount of Costs) (including all securities and relevant choses in action relating thereto) and acknowledges that the Claimant has no further claim, right, title or interest in or to the Receivable Money otherwise than as trustee for the First Applicant where applicable and otherwise than as to the amount of Costs; and

B. covenants to pay over to the first applicant such amounts of the Receivable Money as the Claimant has already been paid or received or recovered (after deduction of Costs) or which may be paid or received or recovered by the Claimant in the future.

(vi) Where the Second Applicant has admitted a Gross Distribution Claim in respect of which, to his knowledge, there is Receivable Money, and the Receivable Money (or part thereof) arises in connection with or concerns any action or claim by the second applicant against St George Bank Limited ('St George Bank Receivable Money' or 'SGRM'), the following provisions apply:

A. The First Applicant must hold back from any distribution to the Claimant, and keep in a reserve fund, an amount of money (Hold Back Amount) equal to the amount of money that the First Applicant would have distributed to the Claimant if the SGRM as originally assessed by him ('Original SGRM') had been determined by him not to be Receivable Money.

B. The First Applicant must, after the resolution of any action or claim against St George Bank Ltd as is referred to in paragraph 4(b)(iv)A above and the resolution by the Court of the persons entitled to any moneys so recovered by the second applicant from St George Bank Ltd (St George Recoveries), or otherwise as permitted or required by the Court:

b) using the reassessed SGRM ('Reassessed SGRM'), recalculate any previous distribution from the Fund to the Claimant calculated using the Original SGRM;

c) pay to the Claimant from the Hold Back amount such amount (if any) without interest as the Claimant would have received by way of distribution in any previous distribution from the Fund, if the first applicant had used the Reassessed SGRM rather than the Original SGRM in calculating the amount to be distributed to the Claimant, and return any balance of the Hold Back Amount to the Fund;

d) following regulation 5.6.55 of the Corporations Regulations 2001, recover from the Claimant, and the Claimant must repay to the first applicant, such amount (if any) that the Claimant received by way of distribution in any previous distribution from the Fund as exceeds the amount that the Claimant would have received, if the First Applicant had used the Reassessed SGRM rather than the Original SGRM in calculating the amount to be distributed to the Claimant; and

e) use the Reassessed SGRM in calculating any future distribution to be made to the Claimant from the Fund.

(vii) Except as provided in paragraph 4(b)(vi), and subject to the outcome of any appeal against a decision of the First Applicant, where the First Applicant has admitted a Gross Distribution Claim in respect of which, to his knowledge, there is Receivable Money, the quantum of the Receivable Money as assessed by him shall, subject to any appeal as to quantum, apply and continue to be applied in connection with the distribution of the Fund (including all interim and final distributions) until the amount the Claimant is entitled to be paid or to receive or recover is finally paid, received or recovered at which time the first applicant will use the amount referred to in paragraph (a) of the definition of 'Receivable Money' as the amount of the 'Receivable Money' for the purposes of distribution of the Fund.

(c) Subject to paragraph 4(d), the First and Third Applicants have and may exercise the power to deduct and make provision for or pay such of the Trustee Costs as are payable to the First and Third Applicants to the first and third applicants to their own use absolutely and such of the Trustee Costs as are payable to other parties to the parties entitled thereto from the Fund of which the Applicants are trustee and, after such deduction, provision for or payment of the Trustee Costs, and subject to paragraph 4(e), to distribute the Fund among all Claimants in proportion to their Gross Distribution Claims, in accordance with paragraphs 3 and 4 of these orders.

(d) To the extent that Trustee Costs comprise Remuneration, they must be determined in accordance with s 473 of the Corporations Act 2001.

(e) The First Applicant or the Third Applicant may, acting reasonably, apply any part of the Fund for the purpose of getting in or attempting to get in assets or possible assets of the Fund and in connection therewith they or either of them may, acting reasonably, apply any part of the Fund towards the costs and disbursements of and relating to instituting, joining in or defending proceedings at law, in equity or by way of mediation or arbitration and proceeding to the final end and determination or compromise and settlement of any such dispute or proceedings.

(a) monies held or to be held by the Third and Fourth Applicants on trust pending further order in accordance with paragraphs 8 and 10 of orders made by the Honourable Justice Owen on 16 August 2001 in proceedings designated as CIV 2076 of 1999, including monies so held pursuant to par 4 of the order made in chambers by the Honourable Justice Roberts-Smith on 5 February 2003 in proceedings designated as CIV 2779 of 2002 as varied by par 1 of the order made by the Honourable Justice Roberts-Smith on 30 November 2004 in those proceedings; and

(b) monies held or to be held by the Second Applicant on trust pending further order in accordance with paragraph 3 of orders and directions made by the Honourable justice Pullin on 6 June 2003 in proceedings designated as COR 131 of 1999;

be subject to the orders made in these proceedings, so that the orders made in these proceedings be deemed to also be further orders in those proceedings. A copy of this order must be filed by the First Applicant in each of those proceedings.

6. Pending distribution in accordance with paragraphs 3 and 4 of these orders, the Third and Fourth Applicants be authorised to pay the monies referred to in paragraph 5(a) of these orders to the second applicant by its liquidator the First Applicant.

7. There be liberty to apply.

Dictionary

The following words and phrases shall have the meanings attached to them as follows:

'Administrative Costs' means

(a) the Remuneration; and

(b) all costs, charges, expenses and disbursements actually, reasonably and properly incurred by the applicants that have not been reimbursed, paid or recovered, of or in any way associated with, or arising out of or related to the liquidations of the Second and Fourth Applicants and all matters associated with or arising out of or related to those liquidations, not being Trustee Recovery Costs,

together with such other costs, charges, expenses and disbursements as are ordered in these proceedings or other proceedings to be included in this definition.

'Applicable Face Value' means, in respect of an Expected Benefit:

(a) subject to paragraph (b), the principal amount of money or indebtedness secured or acknowledged to a Claimant by any Expected Benefit that relates to the Claimant's Commencement Claim; or

(b) where the Expected Benefit is part of a pooled or contributory mortgage or other security, the proportionate part of the principal amount of money or indebtedness attributed by the mortgage or security to the Claimant.

(a) Grubb in his own name or trading as Graeme Grubb finance Broker or an agent or employee of Grubb; or

(b) the Second Applicant or an agent or employee of the Second Applicant,

negotiated or arranged a loan or other advance in the course of conducting Grubb's or the Second Applicant's business as finance broker, and to whom a loan or other advance was made with monies drawn from the Challenge Account or the St George Account.

'Challenge Account' means the banking account opened and operated by Grubb with Challenge Bank Ltd, 95 William Street, Perth identified as account number 453 005756.

'Claimant' means any person having or purporting or claiming to have a Commencement Claim, including, where the context permits, an assignee or transferee of or successor to the whole or part of a Commencement Claim or any rights thereto.

'Commencement Claim' means, in respect of each separate finance broking transaction between a Claimant and GGFB, the amount (being in each case an amount net of any Pre-appointment Capital Receipt):

(a) determined by the first applicant as being the amount deposited or received (in a manner referred to in pars (i), (ii), or (iii) of par (c) below) as at the Date of Appointment, and which amount (after deduction of any Expected Benefit) is listed against a person in the Schedule to be filed in these proceedings from time to time showing Gross Distribution Claims admitted by the First Applicant; or

(b) determined by the First Applicant in accordance with the orders and directions made in these proceedings to be admitted as a Commencement Claim for the purposes of those orders and directions, including the amount so determined as being an amount that should have been, but was not in fact, lent or advanced to a Borrower or a person who would have been a Borrower if an amount that should have been lent or advanced to the person had in fact been lent or advanced; or

(c) identified in these proceedings, or in proceedings ordered in these proceedings to be tried as separate proceedings, to be admitted as a Commencement Claim as being the amount of money of a person identified in these proceedings or those separate proceedings:

(i) that was deposited into the Challenge Account or the St George Account; or

(ii) that was received by Grubb in his own name or trading as Graeme Grubb Finance Broker or by any agent or employee of Grubb for the purpose of being lent or advanced on his her or its behalf by Grubb in the course of a finance broking business, whether or not that money was deposited into the Challenge Account or the St George Account; or

(iii) that was received by the Second Applicant or by any agent or employee of the Second Applicant for the purpose of being lent or advanced on his her or its behalf by the second applicant in the course of a finance broking business, whether or not that money was deposited into the Challenge Account or the St George Account; or

(d) any other amount that this honourable Court determines to be a Commencement Claim,

but (for the avoidance of doubt) does not mean or include:

(e) any interest on any amount received by or deposited with GGFB or arising or alleged to arise in any way out of any finance broking transaction between a Claimant and GGFB other than:

(i) the interest component of an amount paid by a Borrower to discharge a mortgage registered under the Transfer of Land Act 1893 (WA) in favour of a Claimant, being an amount paid to or received by Grubb or GGFB or the second applicant or any agent or employee of Grubb or GGFB or the second applicant with the authority of the Claimant, and retained by GGFB with the authority of the Claimant for the purpose of being lent or advanced on the Claimant's behalf in the course of a finance broking business conducted by GGFB; and

(ii) interest on a mortgage registered under the Transfer of Land Act 1893 (WA) or other security granted in favour of a Claimant and forming (or the proceeds of which form) an Expected Benefit or Receivable Money in the hands of that Claimant, that can be identified as having been paid by a Borrower to or received by Grubb or GGFB or the Second Applicant or any agent or employee of Grubb or GGFB or the Second Applicant with the authority of the Claimant, but not accounted for by GGFB to the Claimant; or

(f) any amount claimed for unliquidated damages or equitable compensation from GGFB by reason of any wrongful conduct of GGFB, whether by way of misrepresentation, misleading or deceptive conduct or conduct likely to mislead or deceive, breach of trust or otherwise.

'Costs' means, in relation to Receivable Money, all reasonable legal costs and expenses and/or outgoings actually and properly incurred by the Claimant but not reimbursed or recovered, of or associated with asserting an entitlement to the Receivable Money or to any property or claim the proceeds of which are or form part of the Receivable Money or in being paid, receiving or recovering the Receivable Money or enforcing any security for the Receivable Money, other than Entitlement Costs.

'Date of Appointment' means the date of appointment of the First Applicant as provisional liquidator of the Second Applicant on 24 May 1999.

'Distribution Rate' means a rate (as declared by the First Applicant from time to time), being the percentage figure that expresses the proportion that the amount of the Fund that the First Applicant proposes to distribute bears to the total of all claims to participate in the distribution of the Fund at the time when the rate is declared, irrespective of whether the claims have been admitted by the first applicant as Gross Distribution Claims.

'Entitlement Costs' means costs and expenses actually and properly incurred by the Claimant but not ordered by a Court to be recovered, being costs and expenses of or associated with asserting, against the First, Second, Third or Fourth Applicants only, entitlement to receive the Receivable Money or to any property or claim the proceeds of which are or form part of the Receivable Money.

'Expected Benefit' means any one or more of:

(a) a Specified Mortgage;

(b) an Unspecified Mortgage; and

(c) an Unspecified Security.

'Fund' means all monies paid to or collected by or to be paid to or collected by the Applicants relating to or in respect of the activities of GGFB including, without limitation:

(a) monies paid to or collected by or to be paid to or collected by and held by the Third and Fourth Applicants on trust until further order pursuant to orders made by Justice Owen of this Honourable Court on 16 August 2001 in proceedings designated CIV 2076 of 1999, including monies so held pursuant to paragraph 4 of the order made in chambers by the Honourable Justice Roberts-Smith on 5 February 2003 in proceedings designated as CIV 2779 of 2002 as varied by paragraph 1 of the order made by the Honourable Justice Roberts-Smith on 30 November 2004 in those proceedings; and

(b) monies paid to or collected by or to be paid to or collected by and held by the Second Applicant on trust until further order pursuant to orders and directions made by Justice Pullin of this Honourable Court on 6 June 2003 in proceedings designated COR 131 of 1999,

(c) principal; or

(d) interest; or

(e) other amounts;

and being

(f) payments or repayments by Borrowers;

(g) proceeds of realisation of securities given to secure their loans or other advances by Borrowers;

(h) proceeds of enforcement of judgments obtained against Borrowers;

(i) monies which in any way represents a return for, of or from loans or other advances to Borrowers;

(j) monies which in any way are or represent the payment or repayment of any claim or property, or the proceeds of realisation of security or enforcement of judgment in respect of any claim or property, or which in any way represents a return for, of or from any claim or property, where the claim or property was acquired with money drawn from the Challenge Account or the St George Account;

(k) monies which in any way are or represent the repayment or return or restoration of money or other property, or which are or represent compensation or damages, whether at law or in equity, for the loss of money or other property, where the money or other property was at any time held by or in the possession of GGFB as trustee for any Claimant; and

(l) monies ordered in these or other proceedings to be available for distribution to Claimants;

(m) any amounts of interest - net of tax - earned on the monies referred to above,

and not being monies ordered in these or other proceedings to be held by the Applicants on trust or otherwise for a person or persons identified in the proceedings.

'GGFB' means Grubb in his own name or trading as Graeme Grubb Finance Broker when acting in the course of a finance broking business conducted by Grubb, or the Second Applicant when acting in the course of a finance broking business conducted by the Second Applicant, or any agent or employee of Grubb or the second applicant acting in the course of a finance broking business conducted by Grubb or the Second Applicant.

'Gross Distribution Claim' or 'GDC' means:

(a) where there is no Expected Benefit relating to a Commencement Claim, that Commencement Claim; and

(b) where there is an Expected Benefit relating to a Commencement Claim, the Commencement Claim less the Applicable Face Value of the Expected Benefit.

'Grubb' means Graeme Clifford Grubb.

'Pre-appointment Receipt' means any amount received by the Claimant prior to the Date of Appointment in respect of a finance broking transaction between the Claimant and GGFB on which a Commencement Claim or any part thereof is based.

'Pre-appointment Capital Receipt' means any Pre-Appointment Receipt other than interest.

'Proposed Distribution' means, in respect of a GDC, the amount the First Applicant proposes to pay in respect of the GDC as a distribution from the Fund, calculated by multiplying the Distribution Rate by the GDC.

'Receivable Money' means money or the value of any consideration:

(a) paid to or received or recovered by a Claimant (after deduction of Costs) otherwise than through these proceedings; or

(b) that a Claimant is entitled (or in the case of St George Recoveries, may be entitled, subject to the Court's determination thereof) to be paid or to receive or recover after deduction of Costs (including anticipated Costs as assessed by the First Applicant),

as a return or reimbursement of or recompense or compensation for the loss on which a Commencement Claim is based or otherwise received or receivable in connection with that Commencement Claim, being money that was paid to or received or recovered by the Claimant or that the Claimant is entitled (as ascertained in the manner set forth in paragraph (b) above) to be paid or to receive or recover by way of:

(i) interest; or

(ii) return of capital; or

(iii) compensation for loss; or

(iv) otherwise,

and whether it was paid to or received or recovered by a Claimant or a Claimant is entitled to be paid or to receive or recover it;

(v) by way of payment or repayment by a debtor or guarantor; or

(vi) through realisation of any security or enforcement of any judgment; or

(vii) as damages or compensation (including equitable damages or equitable compensation) paid to or received or recovered by the Claimant directly or indirectly as a result of any proceedings, whether or not the Claimant was party to those proceedings; or

(viii) as money or consideration paid to or received or recovered by the Claimant directly or indirectly in settlement or as a result of settlement of any claim for or proceedings to recover damages or compensation (including equitable damages or equitable compensation), whether or not the Claimant was party to the claim or proceedings so settled;

[there is no "(ix)"]

but not being:

(x) a Pre-appointment Receipt;

(xi) money paid to or received or recovered by a Claimant or money which a Claimant is or may become entitled to be paid or to receive or recover, by way of a distribution from the Fund under paragraphs 3 and 4 hereof;

(xii) money paid to or received or recovered by a Claimant, or money which a Claimant is or may become entitled to be paid or to receive or recover, payable, receivable or recoverable as the proceeds of realisation of any Expected Benefit; or

(xiii) an entitlement to be paid or to receive or recover moneys from the Second Applicant in connection with an in personam right, claim or cause of action against the Second Applicant.

'Remuneration' means the reasonable remuneration of the First and Third Applicants for work done in or in relation or ancillary to or arising out of or associated with the liquidations of the Second and Fourth Applicant and all matters in any way relating or ancillary to or arising out of or associated with those liquidations including, without limitation, the Fund or its administration and all matters in any way relating or ancillary to or arising out of or associated with the Fund or its administration, as determined pursuant to s 473 of the Corporations Act 2001 taking "creditors" for purposes of consideration of that section to mean all persons who:

(a) are or claim to be creditors of the Second and Fourth Applicants; or

(b) have or claim to have a Commencement Claim,

and taking the committee of inspection of the Second Applicant to be also the committee of inspection of the Fourth Applicant, until such time (if ever) as a committee of inspection of the Fourth Applicant is appointed.

'Specified Mortgage' means, in relation to a Commencement Claim, the registered mortgage under the Transfer of Land Act 1893 (WA) over particular land, together with associated rights of the Claimant as mortgagee against the mortgagor, that was identified to the Claimant by GGFB in the course of a finance broking business conducted by GGFB as being the security that GGFB:

(i) undertook to obtain for the Claimant; or

(ii) had obtained (within its authority from the Claimant, subject to the qualification further below) for the Claimant,

in return or exchange for or as security for repayment of or otherwise in respect of the moneys being the subject of the Commencement Claim provided the amount secured by the registered mortgage was not less than the amount which GGFB was obliged or authorised to procure or obtain for the Claimant.

'St George Account' means the banking account opened and operated by the Second Applicant with St George Bank Ltd identified as account number 551075797.

'Trustee Costs' in relation to the Fund means the Trustee Recovery Costs and the Administrative Costs.

'Trustee Recovery Costs' means the costs, charges, expenses and disbursements actually and properly incurred by the applicants that have not be [sic] reimbursed, paid or recovered, of or in any way associated with or related to the Fund or its administration or distribution and all matters associated with or related in any way to the Fund or its administration or distribution, including without limitation the costs, charges, expenses and disbursements of:

(a) recovering or getting in or attempting to recover or get in the Fund or any assets or possible assets of the Fund, or recovering or getting or attempting to recover or get into the Fund other assets or possible assets;

(b) asserting entitlement to receive the Fund or any assets or possible assets of the Fund against any other person;

(c) identification of Claimants and determination of the amounts of their Gross Distribution Claims and all matters relating thereto and the quantification thereof;

(d) distribution of the Fund and determination of the amounts to be distributed to Claimants or held in reserve;

(e) the application for and implementation of the orders and directions made in these proceedings; and

(f) any proceedings at law, in equity or by way of mediation or arbitration relating to, arising out of or associated with anything referred to above;

and all matters related to arising out of or associated with any of the above.

'Unspecified Mortgage' means, in relation to a Commencement Claim, a registered mortgage under the Transfer of Land Act 1893 (WA) over land, together with associated rights of the Claimant against the mortgagor, of the kind or class of security that was identified to the Claimant by GGFB in the course of a finance broking business conducted by GGFB as being the kind or class of mortgage that GGFB:

(i) undertook to obtain for the Claimant; or

(ii) had obtained (within its authority from the Claimant, subject to the qualification further below) for the Claimant,

in return or exchange for or as security for repayment of or otherwise in respect of the moneys being the subject of the Commencement Claim, provided the amount secured by the registered mortgage was not less than the amount which GGFB was obliged or authorised to procure or obtain for the Claimant, but not being a specified Mortgage.

'Unspecified Security' means, in relation to a Commencement Claim, a mortgage or other security over property, or debt or obligation to repay, together with associated rights of the Claimant against the mortgagor or grantor of security or debtor or obligor, of the kind or class (or that would, after registration or other perfection, be of the kind or class) (provided it is capable of registration or other perfection) of mortgage or other security or debt or obligation (as the case may be) that was identified to the Claimant by GGFB in the course of a finance broking business conducted by GGFB as being the kind or class of security or debt or obligation (as the case may be) that GGFB:

(i) undertook to obtain for the Claimant; or

(ii) had obtained (within its authority from the Claimant, subject to the qualification further below) for the Claimant,

in return or exchange for or as security for repayment of or otherwise in respect of the moneys being the subject of the Commencement Claim, irrespective of whether the amount secured by the mortgage or other security or the amount of the debt or obligation to repay was the amount which GGFB was obliged or authorised to procure or obtain for the Claimant, but not being either a Specified Mortgage or an Unspecified Mortgage."