Warner v Mayfair Limited, in the matter of the Personal Insolvency Agreement of Gore

Federal Court of Australia|2015-05-11|Before: Farrell J

Dal Pont GE, Law of Costs (3rd edition, LexisNexis Butterworths, 2013)

Date of hearing: 11 September 2013

Category: Catchwords

Number of paragraphs: 129

Counsel for the Applicant: Mr SA Wells

Solicitor for the Applicant: Breene & Breene, Solicitors

Counsel for the First, Second, Third and Fourth Respondents: Mr B O'Donnell QC

Solicitor for the First, Second, Third and Fourth Respondents: Clayton Utz

Counsel for the Fifth Respondent: Mr N Kirby

Solicitor for the Fifth Respondent: Clamenz Evans Ellis Lawyers

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 525 of 2013

IN THE MATTER OF THE PERSONAL INSOLVENCY AGREEMENT OF CRAIG KIRRIN GORE BETWEEN: ANTHONY JOHN WARNER IN HIS CAPACITY AS TRUSTEE OF THE PERSONAL INSOLVENCY AGREEMENT OF CRAIG KIRRIN GORE

JUDGE: FARRELL J DATE OF ORDER: 11 May 2015 WHERE MADE: SYDNEY

By 20 May 2015, each of the respondents must advise the applicant and the Associate to Justice Farrell by email of the amount which it claims as its reasonable costs of and incidental to this application broken down as to the costs of solicitors, counsel and any other disbursements.
If any party takes issue with the amount claimed by any respondent, that party may file and serve brief submissions (no more than 2 pages) by 5 pm on 22 May 2015.
By 28 May 2015, the applicant must file and serve draft short minutes of order reflecting the reasons delivered on 11 May 2015. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 525 of 2013

IN THE MATTER OF THE PERSONAL INSOLVENCY AGREEMENT OF CRAIG KIRRIN GORE BETWEEN: ANTHONY JOHN WARNER IN HIS CAPACITY AS TRUSTEE OF THE PERSONAL INSOLVENCY AGREEMENT OF CRAIG KIRRIN GORE

JUDGE: FARRELL J DATE: 11 May 2015 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 Unless otherwise indicated references to legislative provisions are to the Bankruptcy Act 1966 (Cth) ("Bankruptcy Act") or regulations made under it.

Background 2 This is an application for directions and advice to Mr Warner in relation to money which came to be held by him as trustee of the Personal Insolvency Agreement of Mr Craig Kirrin Gore ("PIA"). Mr Warner was appointed trustee on 23 December 2011 when, pursuant to a resolution of creditors, he replaced the original trustee, Mr Maxwell Prentice ("Mr Prentice").

Formation of PIA and funds available to Trustee 3 The PIA was formed under a deed made on 23 November 2010 between Mr Gore (as Debtor), Mr Prentice (as Controlling Trustee and Trustee), ACN 146 231 487 Pty Ltd (referred to as the "Company") and GFC09 Pty Ltd ("GFC09"). Mr Prentice had previously been named as Mr Gore's controlling trustee under an authority pursuant to s 188 signed by Mr Gore. 4 The PIA provided that the funds available to the Trustee would be as follows: Debtor's Property and Income 3.1 The property of the Debtor available to satisfy Creditor's [sic] claims and the manner in which it is to be made available is set out in clause 3.2 herein. 3.2 The Debtor covenants to:- 3.2.1 convey to the Trustee all his divisible property as defined in Section 116 of the Bankruptcy Act, excluding after-acquired property, to be dealt with in accordance with this Personal Insolvency Agreement; 3.2.2 pay, or cause to be paid within 14 days of this Deed, the sum of $300,000, net of payments to the Controlling Trustee, to be held, subject to the Act and the provisions of this Deed, for his remuneration and costs as referred to in clause 13.1 - UPON TRUST and dealt with in accordance with this Personal Insolvency Agreement. 3.3 there will be no contributions from the income of the Debtor available under this Personal Insolvency Agreement and no income of the Debtor shall be made available to satisfy the claims of the Creditors. For the avoidance of doubt, for the purposes of this Deed income earned by Ocerog and The Ocerog Discretionary Trust and GFC09 is not and ought not be deemed to be, income or property of the Debtor, nor income of property of the Company nor the Gore 2010 Unit Trust and any income, including consultancy fees, earned by Ocerog and The Ocerog Discretionary Trust and GFC09 will not be available to the Creditors under this Deed. 3.4 the Debtor further covenants that … the Debtor will, for the benefit of the Creditors:- 3.4.1 arrange for and ensure that either GFC09 or the Company pays to the Creditors the sum of ONE MILLION DOLLARS ($1,000,000) each year, for a period of three (3) years payable by monthly instalments of $83,333.33 with the first instalment being paid within 14 days of the passing of a special resolution of Creditors of the Debtor as contemplated above, and each calendar month thereafter until a total sum of THREE MILLION DOLLARS ($3,000,000) is paid to the Creditors; … 5 GFC09 undertook to enter into a consultancy agreement with International Marina Development & Management Pty Ltd ("IMDM") for $2 million (plus GST) per annum in consultancy fees in place of an existing consultancy agreement with Ocerog Pty Ltd, which was the trustee of the Ocerog Discretionary Trust: clauses 1.1(g) and 3.8. It was intended as well that the Gore 2010 Unit Trust would be created, of which the Company would be the trustee; 30% of the units would be issued to the Trustee of the PIA and 70% to Goreco Pty Ltd as trustee of the Gore Family Trust No 2. Mr Gore covenanted to undertake all new commercial, property and business activity through the Company, as trustee of the Gore 2010 Unit Trust, for three years but Mr Gore would be free to invest funds he personally derived from the Company and the Gore 2010 Unit Trust as he chose: clauses 1.1(e) and 3.4.3. 6 Clauses 3.4.2 to 3.9 set out the machinery to effect these arrangements. Relevantly, under clause 3.5, Mr Gore provided covenants that: 3.5.4 he will request and arrange for GFC09 to guarantee and indemnify the Creditors in respect of the payments referred to in clause 3.4.1 above; … and the Deed went on to provide: 3.6 the Debtor and GFC09 each unconditionally and irrevocably agrees with the Creditors and Trustee that the Debtor and GFC09 will at all times each guarantee and indemnify the Creditors for the amount of the instalment payments to be made by the Company to the Creditors [being the payment set out in clause 3.4.1]. 3.7 The Debtor and GFC09 each expressly acknowledges:- 3.7.1 that the guarantee shall be a continuing security until all the obligations of the Debtor or the Company are performed in full and the whole of the $3,000,000 has been paid to the Creditors; … 7 It appears that Mr Gore and Mayfair Group fell out in early 2011. In his circular to creditors dated 21 November 2011, Mr Prentice explained to creditors his understanding that although the agreements required by the machinery provisions were put in place and payments of $83,333.33 per month were being made, the payments were not being made by GFC09 as a result of the falling out between Mr Gore and Mayfair Group. I make no finding in relation to the accuracy of Mr Prentice's assessment of the source of funds paid to him but GFC09 does not claim that it made the payments. Mr Prentice explained the matter in his circular in this way: 4.2 Possible Default of the Personal Insolvency Agreement contd. It is my understanding that the operations and actions of IMDM are controlled by and continues to be controlled by the Mayfair Group. It was also the intention of GFC09 to establish the company as the entity to derive an income stream pursuant to the subject consultancy agreement. However, the debtor has advised that there was a falling out between himself and the Mayfair Group which resulted in the termination of his consultancy arrangement with the Mayfair Group. This has been confirmed by Mr Banks-Cooper. Accordingly, the Company was not required to be established to derive an income stream given that GFC09 did not have a consultancy arrangement with IMDM. As such, there is no commercial value in the proposed 30% unit holdings of the Gore 2010 Unit Trust. Notwithstanding the above-mentioned default, which was beyond the control of the debtor, the debtor has managed to maintain his monthly PIA contributions via an alternative entity, being MOGS Pty Limited, in which the debtor's wife holds a beneficial interest. Therefore, I am satisfied that the said defaults are not considered to be a material default in the scheme of the PIA as the debtor has managed to maintain his monthly PIA contributions via alternative means. To date, the debtor is currently up to date with his PIA contributions of $83,333.33 per month since the resolution by creditors to accept the PIA. The debtor's monthly PIA contributions is due and payable on the 7th day of each calendar month pursuant to Clause 3.4.1 of the PIA which provides for the first monthly instalment to be paid within 14 days of the passing of the Special Resolution and each calendar month thereafter until a total sum of Three Million Dollars ($3,000,000.00) is paid to creditors. However given that both the Company and GFC09 are no longer applicable and the debtor has utilised an alternative entity to comply with his obligations of the PIA, the debtor may wish to consider to make a written request for a variation of the terms of the PIA to rectify a technicality in the interest of complying with his obligations under the PIA, subject to creditors' resolution.

Mr Prentice's advice to creditors concerning dividends 8 On 10 December 2010, Mr Prentice advised creditors in writing that the PIA had been executed by Mr Gore and it went on to say: I intend to declare a first interim dividend to creditors in May 2011. Creditors who have not already lodge [sic] a Proof of Debt with my office are required to do so no later than 31 March 2011. You will not be able to participate in the dividend if you have failed to lodge a Proof of Debt by the due date. Attached is a Proof of Debt form for your convenience. 9 By letter dated 20 May 2011, Mr Prentice advised Mr Simon Banks-Cooper on behalf of the first to third respondents ("Mayfair Group") and 21st Century Investments LLC ("21st Century") that he had admitted proofs of debt from them in an aggregate amount of $174,858,062.83. 10 In his circular to creditors dated 21 November 2011, Mr Prentice noted that he issued a Notice of Intention to Declare Dividend on 6 May 2011. He confirmed that he had commenced and was still in the process of adjudicating on all creditors' claims received for admittance to rank for a dividend. 11 Mr Gore commenced proceedings on 24 November 2011 seeking (among other things) to challenge Mr Prentice's admission of Mayfair Group's proofs of debt under s 104.

Dividend declared 12 On 20 December 2011, Mr Prentice declared a dividend of 0.115 cents in the dollar and paid $237,976.17 to 16 creditors only. He did not pay the dividend to Mayfair Group and 21st Century among approximately 50 creditors whose proof of debt were, according to Mr Prentice's working papers, "under consideration" at the time. The Trustee's Account of Receipts and Payments for the PIA for Mr Gore dated 20 December 2011 indicate that the remaining dividend of $259,203.37 in respect of the outstanding proofs was "retained pending further documentations".

Moneys held before termination of PIA 13 In January 2012, Mr Warner received $485,000 from Mr Prentice under cover of a letter in which Mr Prentice referred to this amount as "Funds to be transferred to the PIA Trustee (incl $259,203.37 reserved for interim dividend distribution to creditors)". Mr Prentice also received a monthly payment of $83,333.33 in accordance with clause 3.4.1 of the PIA. No monthly payment was made by the due date in February 2012 or subsequently.

Termination of PIA and approval of remuneration 14 Mr Warner's circular to creditors dated 9 February 2012 proposed that termination of the PIA be considered at a meeting of creditors to be held on 24 February 2012. Mr Warner stated his intention was to complete the adjudication of proofs of debt "regardless of what creditors decide at the meeting of creditors on 24 February" and to pay an interim dividend to those who did not receive payment from Mr Prentice. 15 The PIA was terminated under s 222B on 24 February 2012. Before terminating the PIA, creditors passed resolutions approving payment of Mr Warner's remuneration from 23 December 2011 to 9 February 2012 of $89,563.10 (plus GST) and a further $61,000 (plus GST) in "future remuneration" for the period to the "conclusion of the administration of the PIA" of which $31,000 (plus GST) had accrued as at that date. Mayfair Group and 21st Century voted in favour of the resolutions. Mr Warner's intention to complete the adjudication of proofs of debt and to pay an interim dividend of the PIA was reiterated in his 5 March 2012 advice to creditors that these resolutions had been passed.

Mr Gore made bankrupt 16 Within two months of the termination of the PIA, on 18 April 2012, Mr Gore became bankrupt upon presentation of a debtor's petition and the Official Trustee was appointed as his trustee in bankruptcy. On 9 May 2012, Mr Gore's application for review of Mayfair Group's proofs of debt was dismissed following a decision of the Official Trustee to elect to discontinue the proceedings under s 60(2): Gore v Prentice (Trustee), in the matter of the Personal Insolvency Agreement of Gore [2012] FCA 660.

Claims made between June and August 2012 and supporting arguments 17 Between May and August 2012, Mr Warner received correspondence asserting claims to the assets held by him having regard to the termination of the PIA.

Mayfair Group 18 Mayfair Group demanded payment of the unpaid dividend and costs incurred in the proceedings commenced by Mr Gore which had now been dismissed. Mayfair Group argued that: Mr Prentice's admission of the proofs of debt was now "undisputed" as Mr Gore's action challenging the proofs of debt had been dismissed; Having regard to s 231(3), Mr Warner was "obliged" to pay creditors who had proved their debts but had not received the declared dividend under s 140(8). That "statutory entitlement" was recognised under s 147 which conferred power on the Court to order a trustee who neglects or refuses to pay a declared dividend to pay interest on it. Although the PIA was terminated on 24 February 2012, s 224 preserves that statutory entitlement; The reasoning of Barrett J in Lombe v Wagga Leagues Club Limited [2006] NSWSC 3 ("Lombe") did not establish that Mr Warner had no authority to pay the dividend. Having regard to Mr Warner's obligations under s 140(8), Mr Warner had the right to claim indemnity for such a debt or liability which arose from the administration of the PIA. Further there are factual distinctions from cases dealing with deeds of company arrangement such as Lombe; and A trust or agency was created by reason of (but not pursuant to) clause 3.4.1 of the PIA under which the trustee of the PIA came to hold the monthly instalments of $83,333.33 for the benefit of creditors. Those funds did not form part of the property of the bankrupt within s 58. 19 None of companies in Mayfair Group or 21st Century has commenced proceedings to require Mr Warner to pay a dividend in respect of its proofs of debt.

GFC09 20 GFC09 claimed all of the remaining assets on the basis of a resulting trust because it had caused payments to be made to secure Mr Gore's release from the claims of participating creditors and that could not be achieved because creditors had terminated the PIA. GFC09 said that where liabilities are incurred by the trustee of a PIA in good faith and are unpaid when a PIA terminates and the debtor becomes bankrupt within two months thereafter, those liabilities should be dealt with in accordance with the priority established by ss 109 and 114. By undertaking administration of proofs of debt, Mr Warner would be acting as trustee of the PIA in contravention of s 276.

Mr Stonehouse and others 21 Lawyers acting for GFC09 also acted for other creditors of Mr Gore, including Mr Graeme Stonehouse, the director of GFC09. In that capacity they relevantly contended that although Mr Prentice's letter of 20 May 2011 provided "limited evidence" that Mayfair Group's proofs had been admitted, as at 20 December 2011, Mr Prentice had either decided that the claims were not admitted or had revoked his prior admission. They contended that s 140(8) does not create a debt and Mayfair's reliance on s 147 was misguided. They relied on Lane v McDonald [2003] FMCA 391 at [12] and [20] for the propositions that the annulment of the PIA extinguishes, at that time, any contractual or equitable interest of the trustee in the funds held under the deed and the property vests in the debtor or (as here) the debtor's trustee in bankruptcy.

Official Trustee 22 The Official Trustee claimed that following the termination of the PIA, the remaining funds were held on resulting trust for Mr Gore and as he was bankrupt, his entitlement vested in his bankruptcy trustee under s 58. Having regard to the decision of Barrett J in Lombe, Mr Warner had no power, capacity or duty to apply the unexpended residue of the deed fund in accordance with the PIA.

ASIC 23 The Australian Securities & Investments Commission advised that it was investigating whether certain of the funds paid into the PIA fund were wrongfully transferred from moneys raised by ActiveSuper Pty Ltd and ACN 143 832 053 Pty Ltd. 24 ASIC and the Official Trustee have since indicated that they would not pursue their claims, although as "a matter of courtesy", the lawyers for the Official Trustee indicated that as the PIA had been terminated, Mr Warner had no power to adjudicate proofs of debt.

Application 25 Mr Warner seeks directions under ss 134(4), 190(4A) or 30(1) or advice, directions and orders under s 4(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) and ss 63, 59 and 93 of the Trustee Act 1925 (NSW) ("Trustee Act") as to: (1) whether he is justified in ruling on the outstanding proofs of debt and declaring and paying a dividend in respect of them; (2) whether, before any further dividend is paid and in any event, he is entitled to an indemnity out of the assets which he holds for his remuneration, costs, charges and expenses incidental to preservation and administration of those assets; and (3) his entitlement to be paid the costs of this application out of those assets on an indemnity basis. 26 There was no submission made that the Court did not have jurisdiction to entertain this application. I find that s 190(4A), which empowers the Court to give directions to a controlling trustee, has no application. Mr Warner was never the controlling trustee of Mr Gore's property. Section 134(4) as applied by s 231(3) permits the trustee of a personal insolvency agreement to apply to the Court for directions "in respect of a matter arising in connexion with the administration of the estate". The directions and orders sought by Mr Warner arise by reason of the termination of the PIA under s 222B and I accept that the jurisdiction of the Court to give directions does extend to providing advice to Mr Warner in relation to his powers and duties in completing his role. In the alternative, I accept that I have jurisdiction under the Trustee Act in relation to the exact nature of the trusts on which Mr Warner holds property having regard to the terms of the PIA and the consequences which flow from that. 27 Before the hearing, Mr Greg Maloney, in his capacity as trustee of Mr Gore's bankrupt estate indicated that he would not participate in the proceedings because he could not afford to as there were no available assets in the bankrupt estate. 28 At the time of the hearing Mr Warner held the sum on $295,058.18. An amount of approximately $140,000 would be available for distribution to creditors if all of Mr Warner's claims to indemnity for additional remuneration and legal costs are paid in priority. 29 Mr Warner relies on clause 28.1 of the PIA as the basis of his power and duty to adjudicate on proofs of debt and distribute funds to Creditors after the termination of the PIA. He also submitted that Mr Prentice's action of admitting Mayfair Group and 21st Century proofs of debt as advised in his letter of 20 May 2011 was effective under s 224(2); as a result s 140(8) (applied by s 231(3)) requires the payment of that dividend to them, and clause 28.1 of the PIA empowers the Trustee to make those payments having regard to clause 7 of the PIA which sets out the powers of the Trustee. 30 At the hearing, the parties accepted that all moneys contributed by Mr Gore to the PIA had already been expended in Trustee's remuneration, expenses and disbursements (as provided by clause 13.1 of the PIA) and that the remaining assets held by Mr Warner, which are the subject of this application, were contributed by other entities. No evidence was tendered of the intention of any person who paid instalments to the Trustee in the amounts required under clause 3.4.1 of the PIA. 31 The dividend not paid on 20 December 2011 to Mayfair Group was an aggregate of $175,086.16 and for 21st Century the amount was $26,000.60. They claim to be entitled to be paid those amounts in priority to other claims including Mr Warner's remuneration and expenses in view of Mr Prentice's letter of 20 May 2011. Mr Banks-Cooper says that those entities have not received notice of any change to that advice at the time of the hearing. 32 In the outline of submission filed before the hearing, GFC09 indicated that it abandoned its claim to a resulting trust in its favour over the funds in Mr Warner's hands but pressed the contention that the assets held by Mr Warner should be paid to Mr Gore's trustee in bankruptcy and any acts of Mr Warner pursuant to clause 28 to adjudicate on proofs of debt would breach s 276. 33 Mayfair Group and 21st Century claimed that GFC09 should cease to be a party because it had no relevant interest in the proceedings. Counsel for GFC09 was permitted to remain but on the basis that his role resemble that of an amicus curiae and his submissions be confined to questions of law. As no creditors other than Mayfair Group and 21st Century were represented at the hearing, GFC09 would play the role of contradictor.

The PIA 34 Before considering the issues raised by the application, it is useful to set out relevant provisions of the PIA. The PIA is not a model of the draftsman's art. While the document clearly seeks to address the requirements for the content of a personal insolvency agreement set out in s 188A(1) and (2), the transaction-specific provisions are ambiguous, dealing inconsistently with the fact that moneys derive both from contributions made by Mr Gore and contributions made by third parties (that is, persons who are neither Mr Gore nor the Trustee), and the document contains a number of clearly inappropriate cross-references. 35 The PIA is expressed to be made on 23 November 2010 "pursuant to the provisions of Part X of the Bankruptcy Act, 1966 as amended (hereinafter called "the Act")". 36 Clause 1 of the PIA relevantly provides: 1. Definitions and Interpretation 1.1 (a) In the construction of this Deed and except to the extent that such construction shall be excluded by or shall be repugnant to the context: (b) The definitions contained in sections 5 and 187 of the Act apply to the terms used in this Deed. … (d) "Creditor" means a person who has a provable debt. … (h) "Trustee" means MAXWELL PRENTICE or such other person or persons who may at any time be appointed in their place. … 1.3 The provisions of this Personal Insolvency Agreement shall in all respects be subject to and regulated by the provisions of the Act and the Regulations. To the extent that there may be any inconsistency between the provisions of this Personal Insolvency Agreement and the Act or the Regulations, the provisions of the Act and/or Regulations shall prevail. 37 Clause 4 requires the Trustee to establish the Personal Insolvency Agreement Fund (which I will also refer to as the "PIA Fund") which "will comprise the total cash payments referred to or received as a consequence of clauses 3.2 and 3.4". 38 Clause 5 indicates that the antecedent transaction provisions of the Bankruptcy Act will not apply to the PIA. 39 Clause 6 acknowledges that Mr Prentice had been Mr Gore's controlling trustee under a written authority pursuant to s 188 signed on 10 September 2010 and he became Trustee of the PIA upon execution of the PIA in accordance with a resolution of creditors. The resolution was passed on 18 November 2010. 40 Clause 7.1 set out the powers of the Trustee under the PIA: 7. Powers of the Trustee 7.1 The Trustee has the powers and duties as prescribed by the Act and/or the Regulations including but not limited to: (a) section 189AC - Right of indemnity for controlling trustee; (b) section 190 - Duties and powers of controlling trustee; and (c) section 190A - Additional duties of controlling trustee. 41 The specification of rights to indemnity under s 189AC and the powers and duties under ss 190 and 190A is curious, given that Mr Prentice ceased to be controlling trustee upon execution of the PIA in accordance with a resolution of the creditors. 42 Clause 8 provides for advertising and notices of claims. Clauses 8.3 and 8.5 provide: 8.3 Each Creditor who notifies an asserted claim to the Trustee must: (a) provide the Trustee with such further proof, evidence or information in support of its asserted claim as the Trustee may reasonably require; and (b) if so required by the Trustee, prove its asserted claim by delivering to the Trustee a statutory declaration verifying the asserted claim which statutory declaration will be in such form as may be required by the Trustee; … 8.5 If the Trustee is satisfied that the asserted claim or any part of the asserted claim is not a claim against the Debtor, then the Trustee must notify the Creditor in writing, including an explanation of the Trustee's decision as reflected in the notice. 43 There is no requirement expressed in clause 8 of the PIA for the Trustee to notify creditors when a proof of debt is admitted. 44 Clause 9 provides for the functions of the Debtor. Clause 10 provides that the Creditors would be bound by the deed in accordance with s 229. Clause 11.1 provides that "[s]ubject to the satisfaction of clause 19" the Debtor is released from provable debts; clause 19 is set out at [51] below. Clause 12 provides for the Trustee, subject to satisfaction of clause 19, to certify in accordance with s 232 that the Debtor has complied with the PIA. 45 Clause 13 deals with payments to Creditors. It provides as follows: 13. Payment of Creditors 13.1 The amount referred to in clause 3.2 shall be distributed as follows: (a) First, in payment of the reasonable costs, charges, remuneration, and expenses of the Trustee, plus disbursements (for the avoidance of doubt, this is in addition to payment of the remuneration of the Controlling Trustee in the sum of $100,000 inclusive of GST and disbursements); then (b) Secondly, in payment of the claim by any Creditor who would be entitled to priority in a bankruptcy pursuant to section 109 of the Act; then (c) The balance remaining to be distributed pro-rata, in accordance with section 108 of the Act as if the Debtor had been made bankrupt, to all unsecured creditors admitted under the Personal Insolvency Agreement and who have proved their debts in accordance with the Act; and who satisfy the Trustee of their respective debts by lodging proofs of debt with the Trustee in accordance with that Part; (d) except for the following Creditors who have advised the Trustee in writing of their provable claims and of their intention to participate in this Personal Insolvency Agreement but who accept and agree that they will not be participating in the distribution of the property identified in clause 3 and shall not be entitled to a distribution under this Personal Insolvency Agreement: (i) nil. 46 The form of clause 13.1 would be unremarkable if it were not for the fact that there are two sources of funds to be dealt with under the PIA: property of the debtor, which is clearly and expressly dealt with in clause 3.2, and funds contributed by third parties for the benefit of Creditors which is separately dealt with under clause 3.4. As clause 4 provides that those two sources will be contributed to the PIA Fund the reference to clause 3.2 in clause 13.1 suggests that it is intended only to deal with a priority for payment in relation to funds sourced from the assets of Mr Gore either from his divisible property or as he causes to be contributed under clause 3.2.2. There is no clause which deals specifically with the order of distribution of funds sourced under clause 3.4. 47 Clause 21.1 (below) appears to establish the rate at which remuneration is to be calculated, that it must be approved by Creditors or otherwise as specified in the Bankruptcy Act and that remuneration is to be paid "out of the Personal Insolvency Agreement". If clause 13.1 specified that it applied to funds contributed under clause 3, then clause 13.1 and 21.1 would sit comfortably together; there is a question as to whether the word "Fund" is missing from this clause but that would be insignificant. As currently drafted, it is open to the interpretation that Trustee's remuneration was to be paid from funds contributed by Mr Gore under clause 3.2 and the balance of moneys was to be available for Creditors, although clause 21.1 is more widely cast and only clause 13.1 deals expressly with distribution to Creditors so that that the Trustee's power to take all steps necessary to do so relies on the power conferred in general terms in clause 7. 48 No submissions were addressed to the apparent limitations of clause 13.1 and it appears to have been the common and reasonable assumption that funds contributed under clause 3.4 would be available for payment of the Trustee's remuneration and costs before distribution to Creditors in accordance the priority set out in clause 13.1 which accords with Part VI and for payment of remuneration as specified in Part VIII as applied by s 231. 49 Clause 14.1 provides: 14. Release of Creditors Debts 14.1 All of the Creditors of the Debtor, including without limitation those creditors listed in clause 13.1(e) [sic] who have agreed that they will not be participating in the distribution of the Debtor's property identified in clause 3, are released from their respective Debts upon the Debtor entering into this Personal Insolvency Agreement and the Creditors' rights are converted into an entitlement to lodge a Proof of Debt with the Trustee for determination in accordance with the Act, and for Creditors, to be paid, in accordance with the terms of this Personal Insolvency Agreement, a dividend from the fund of money paid under the terms of this Personal Insolvency Agreement. 50 Clauses 16 and 17 provide as follows: 16. Discharge of Debts and Release of Debtor 16.1 The Creditors, including without limitation those Creditors noted in clause 13.1(e) [sic], will accept the Creditor entitlement in full and final satisfaction and complete discharge of all Debts following which they and each of them will, if called upon to do so, execute and deliver to the Debtor such release of any debt as the Trustee requires. Any release by Creditors is subject to there being no default hereunder and all the terms of the Personal Insolvency Agreement have been fulfilled to the satisfaction of the Trustee. 16.2 Upon payment by the Trustee to the Creditors of the creditor entitlements all the Creditors' debts, including without limitation those Creditors noted in clause 13.1(e) [sic], are extinguished. 16.3 Upon fulfilment of the provisions of this deed, the Debtor will be released from all the provable debts, including without limitation the provable debts of those Creditors noted in clause 13.1(e) [sic] that he would have been released from had the Debtor been bankrupt, upon discharge from bankruptcy. 17. Set Off 17.1 Nothing in this Personal Insolvency Agreement shall affect the right of any Creditor to set-off any debt against any claim by the Debtor against that Creditor available as at the Commencement Date. 51 Clause 19 deals with default and termination of the PIA and clause 20 with completion of the PIA where it has achieved its purpose. They provide as follows: 19. Default and Termination of Personal Insolvency Agreement 19.1 In the event that the Debtor fails to make any payment or breaches any covenant herein, the Trustee shall be entitled to give notice to the Debtor thereof and the Debtor shall rectify the said default within 7 days of the receipt of the notice of default from the Trustee. This Personal Insolvency Agreement shall terminate by notice in writing by the Trustee to the Debtor if the default has not been rectified. 19.2 This Personal Insolvency Agreement may be terminated in accordance with the following provisions outlined in the Act:- (a) section 222A - Termination of Personal Insolvency Agreement by Trustee; (b) section 222B - Termination of Personal Insolvency Agreement by Creditors; (c) section 222C - Court may terminate Personal Insolvency Agreement; and (d) section 222D - Termination of Personal Insolvency Agreement when the amount referred to in clause 3.1.a [sic] has been distributed in accordance with the terms of this Personal Insolvency Agreement. 20. Completion of Personal Insolvency Agreement Where it Achieves Its Purpose 20.1 Except for and subject to clauses 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 5.1, 10.1, 11.1, 12.1, 14.1, 14.2, 16.1, 16.2, 16.3, 28.1 this Deed will terminate pursuant to section 222D of the Act when the Personal Insolvency Agreement Fund has been distributed in accordance with the terms of this Personal Insolvency Agreement. 52 There is provision for the calculation of the Trustee's remuneration and for the Trustee's indemnity and lien in clauses 21 and 22 as follows: 21. Remuneration of Trustee 21.1 The Trustee shall be remunerated out of the Personal Insolvency Agreement for themselves and their employees at the hourly rates charged by BPS Recovery for work of this nature as approved by creditors plus GST from time to time or otherwise in the manner set forth in the Act as if the Debtor was a bankrupt. 22. Indemnity & Lien 22.1 The Trustee shall be entitled to be indemnified out of the Personal Insolvency Agreement Fund and property and assets of the Debtor against any debt incurred or liability arising from the administration of this Personal Insolvency Agreement, except where such indebtedness or liability was incurred as a result of negligence, default, breach of duty or breach of trust on their part or on the part of their staff. 53 Clauses 15 (Moratorium), 18 (Variation of PIA), 23 (Power of Attorney), 25 (Creditors Meeting), 27 (Service of Notices on Debtor) and 29 (General) are not relevant. 54 Clause 26 provides: 26. Severability 26.1 Any provision of this Personal Insolvency Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Personal Insolvency Agreement or affecting the validity or enforceability of such provisions in any other jurisdiction. 55 Clause 28.1 purports to extend the powers of the Trustee so as to continue after termination of the deed under which the PIA was made: 28. Powers of Trustees to Continue after Termination 28.1 Notwithstanding the termination of this Deed pursuant to clauses 16 and 17 hereof the powers of the Trustee herein to get in, realise and/or distribute the Personal Insolvency Agreement Fund of the Debtor shall not terminate until a final distribution has been made to Creditors.

Consideration 56 I am satisfied that Mr Warner brought this application appropriately. There are competing claims to the moneys which he holds and interpretation of the PIA is not straightforward. Further, it was common ground that, in circumstances where creditors of the debtor have not been fully paid, the issue of entitlement to moneys held by the trustee of a personal insolvency agreement upon its termination is not clearly addressed in the Bankruptcy Act.

Statutory context 57 Section 5 contains some relevant definitions: end means: … (ba) in relation to a personal insolvency agreement - the time when all the obligations that the agreement created have been discharged; … personal insolvency agreement means a personal insolvency agreement executed under Part X. Note: Section 188A sets out requirements for personal insolvency agreements. … provable debt means a debt or liability that is, under this Act, provable in bankruptcy. 58 Section 188A sets out the requirements for the content of a personal insolvency agreement as follows: 188A Personal insolvency agreement Requirements for a personal insolvency agreement (1) A personal insolvency agreement is a deed that: (a) is expressed to be entered into under this Part; and (b) complies with subsection (2). (2) A personal insolvency agreement must: (a) identify the debtor's property (whether or not already owned by the debtor when he or she executes the agreement) that is to be available to pay creditors' claims; and (b) specify how the property is to be dealt with; and (c) identify the debtor's income (whether or not already derived by the debtor when he or she executes the agreement) that is to be available to pay creditors' claims; and (d) specify how the income is to be dealt with; and (e) specify the extent (if any) to which the debtor is to be released from his or her provable debts; and (f) specify the conditions (if any) for the agreement to come into operation; and (g) specify the circumstances in which, or the events on which, the agreement terminates; and (h) specify the order in which proceeds of realising the property referred to in paragraph (a) are to be distributed among creditors; and (i) specify the order in which income referred to in paragraph (c) is to be distributed among creditors; and (j) specify whether or not the antecedent transactions provisions of this Act apply to the debtor; and (k) make provision for a person or persons to be trustee or trustees of the agreement; and (l) provide that the debtor will execute such instruments and generally do all such acts and things in relation to his or her property and income as is required by the agreement. (3) Subsection (2) does not limit the provisions that may be included in a personal insolvency agreement. Antecedent transactions provisions … Definition (6) In this section: income has the meaning given by section 139L. 59 Section 231(3) relevantly applies the following provisions of Part VI of the Bankruptcy Act to a personal insolvency agreement: ss 82-118 which deal with proofs of debt, priority for payment and the property divisible among creditors; and ss 140-147 which deal with declaration and distribution of dividends and the actions a creditor may take in relation to the failure of a trustee to pay a declared dividend, and, under s 231(4), in applying those provisions a reference: to property of the bankrupt is to be read as a reference to the divisible property of the debtor; to a provable debt is to be read as a reference to a provable debt within the meaning of Part X; and to the end of the bankruptcy is to be read as a reference to the end of the personal insolvency agreement. 60 Section 231(5) applies Part VIII to the trustee of a personal insolvency agreement as if: the debtor were a bankrupt; and the trustee were the trustee in the debtor's bankruptcy. 61 Section 231A is the only provision which expressly deals with entitlement to remaining property at the time the personal insolvency agreement is terminated. It provides that the debtor is entitled to "any property remaining" after the costs, charges and expenses of the administration of the agreement, all provable debts and all interest on interest-bearing provable debts have been paid in full. The terminology is ambiguous as to whether "property remaining" refers to "property of the debtor" or any property held by the trustee for the purposes of the personal insolvency agreement. Having regard to s 188A(3), it would seem possible to make some other provision for disposition of property which does not belong to the debtor before the terminating event occurs. It is unnecessary to determine that issue as s 231A does not apply to the circumstance of this application. 62 Where a personal insolvency agreement is terminated by the Court, s 222C(3) empowers the Court to make ancillary orders and (if sought by the trustee or creditor) s 222C(5) empowers the Court to make a sequestration order in relation to the debtor. However, none of s 222A (termination by the trustee), s 222B (termination by creditors) or s 222D (termination by occurrence of terminating event) contains a similar power nor any express provision concerning how a trustee must deal with moneys in his or her hands at the time the personal insolvency agreement terminates. 63 Although there is a definition of "end" of a personal insolvency agreement in s 5 ("the time when all the obligations that the agreement created have been discharged"), there is no provision which specifies what "termination" of a personal insolvency agreement entails. Under s 230(1), if a personal insolvency agreement provides for a debtor to be released from a provable debt, the agreement operates to release the debtor from that provable debt "unless the agreement is set aside or terminated under this Part". This, however, does not necessarily result in the "discharge" of all obligations under the agreement. Commercial agreements commonly contain provisions which deal with mechanical detail for winding up of an arrangement which are expressed to survive termination of the agreement. Having regard to s 188A(3), there appears to be no express prohibition on a personal insolvency agreement creating obligations which endure despite the termination of the agreement. This view is consistent with the views expressed in relation to a deed of arrangement in force under Part X as it existed before 1 December 2004 in One.Tel Limited (in liq) v Watson [2009] NSWCA 282 per Sackville AJA (Hodgson and Campbell JJA agreeing) ("One.Tel"). 64 However, s 276 makes a person who knows that a personal insolvency agreement has been set aside or terminated liable, on conviction, to a penalty not exceeding $20 for each day on which he or she continues to act as trustee under the personal insolvency agreement except for acts "confined to taking such steps as were necessary for the protection of the property of the debtor". This provision has not received extensive judicial consideration. 65 Where the funds held by the trustee are sourced from the debtor, the policy reasons for enacting s 276 are clear: depending on the circumstances of the termination, debts owed to the creditors have not been released and the funds are held by the trustee for the debtor or the debtor's bankrupt estate. Actions by the trustee of the personal insolvency agreement after termination of the agreement, other than protecting the property of the debtor and administrative functions such as accounting for and paying the funds to the debtor or the trustee in bankruptcy, may prejudice the interests of the debtor as owner of the property or the bankrupt estate by dissipating those funds. 66 It is less clear why this should be so in relation to funds provided by third parties. If third parties entered into a collateral agreement with the person named as the trustee of the personal insolvency agreement under which the third parties' moneys must be retained by the trustee as trustee or agent for the third parties to be released only when the time came to pay a dividend to the debtor's creditors in accordance with a personal insolvency agreement, it is difficult to see how s 276 would have application to the performance of duties by the trustee under the collateral agreement. There is no obvious public policy reason why it should not be possible to achieve the same thing in a personal insolvency agreement despite the terms of s 276. If it is sufficiently clear that the person named as trustee of the personal insolvency agreement would be acting as trustee or agent for the third parties, then s 276 should have no operation in relation to those activities. There is no public policy reason why third parties could not insist on such provisions if it encourages them to assist debtors and creditors by providing funds to allow personal insolvency agreements to operate. There is no intrinsic reason why funds contributed by third parties which have not been expended or distributed at the time the personal insolvency agreement is terminated should go to the benefit of the debtor. 67 In Lombe Barrett J said: [82] If, as the observations of Austin J in the Arcfab case may thus tend to suggest, termination of a deed of company arrangement puts an end to the obligation of a deed administrator to assemble and distribute a deed fund in accordance with the deed, as well as putting an end to the particular person's tenure as deed administrator, one might think that that person no longer had the power, capacity or duty to apply any unexpended residue of the deed fund. It seems clear enough that that the person could not, after termination, look to the deed as a source of power and protection. 68 This logic is compelling insofar as a deed constitutes a personal insolvency agreement relating to property of the debtor. The usual consequence of termination of a contract is that unperformed obligations under the arrangement are discharged, and there is no reason to apply different principles in relation to termination of a personal insolvency agreement, subject to specific provisions of the Bankruptcy Act. Although the Bankruptcy Act does not provide detail of what "termination" means, s 230 frees creditors from their obligation to release debts owed to them by the debtor and the trustee's powers, rights and duties to get in and deal with the debtor's property for their benefit under Part X ceases since they derive from the terminated agreement. Section 224(2) preserves the validity of payments made, acts and things done and transactions entered into in good faith under, or for the purposes of, the personal insolvency agreement by the trustee or debtor before they have notice of termination of the agreement so that those payments, acts, things done or transactions are not liable to be set aside by the trustee of a later personal insolvency agreement or in a subsequent bankruptcy. 69 However, that does not necessarily mean that the personal insolvency agreement "ends" at the point of termination. While s 276 prohibits the trustee from undertaking actions as such unless they are to protect the property of the debtor, that provision recognises that such acts may be required. The trustee would also be obliged to transfer residual property of the debtor to the debtor, the debtor's trustee in bankruptcy or as otherwise appropriate; that is the consequence of ceasing to be trustee. There is no reason why a personal insolvency agreement could not contain provisions expressed to survive termination which deal with such issues. Such actions might also be justified as the satisfaction of obligations standing outside the personal insolvency agreement as obligations of a bare trustee for the debtor or some other person: see CGU Insurance Ltd v One.Tel Limited (in liq) (2010) 242 CLR 174 ("CGU") referred to below. The obligations which clause 28.1 (set out at [55] above) purports to place on the Trustee after termination of the PIA do not fall into this category. 70 I do not consider that it would be consistent with Part X of the Bankruptcy Act if provisions of a personal insolvency agreement provided for the trustee, after termination of the agreement, to continue to get in property of the debtor with a view to its disbursal to creditors, adjudicate proofs of debt or declare and pay dividends to creditors out of the debtor's property: those are primary functions subject to the statutory regime and such powers and duties must cease upon termination, otherwise ss 222A to 222D have no meaning. As personal insolvency agreements are made with insolvent persons, it would be inconsistent with the Bankruptcy Act for a debtor to be bound by such a provision. Actions taken by a trustee to give effect to such a provision would breach s 276 and would be inconsistent with Part IV Div 4 upon a sequestration order being made in relation to the debtor's bankrupt estate. In that regard, I can see no material difference between deeds of company arrangement and the regime established by Part X. 71 Having said that, I see no reason, consistent with the purposes which the Bankruptcy Act is designed to serve, why a personal insolvency agreement could not contain contractual terms which are expressed to survive termination insofar as those terms relate to the disposition of residual property of third parties and the terms impose duties and obligations on the trustee as trustee or agent of those third parties. 72 In support of the submission that moneys contributed by third parties become the property of the debtor, GFC09 relied on Federal Commissioner of Taxation v All Suburbs Car Repairs Pty Ltd (1994) 14 ACSR 753; [1994] FCA 1393. That case related to a deed of company arrangement in accordance with s 444A(4) of the Corporations Act 1989 (Cth); s 444A(4)(b) is in the same form as s 444A(4)(b) of the Corporations Act 2001 (Cth) ("Corporations Act") and relevantly in the same form as s 188A(2)(a). Davies J found at 758-759 that s 444A(4)(b) contemplates "that sums may be paid by third parties for distribution to creditors and that those sums will be property of the company available to pay creditors' claims" and this accords with the "ordinary" operation of deeds of company arrangement. GFC09 noted that these words were quoted with approval by Barrett J in Lombe at [66]. However, Barrett J went on to say in Lombe at [68] that this analysis seems to him to hold good in every case where a deed of company arrangement incorporates cl 1 of sch 8A to the Corporations Regulations 2001 (Cth). Clause 1 of sch 8A provides that: In exercising the powers conferred by this deed and carrying out the duties arising under this deed, the administrator is taken to act as agent for and behalf of the company. 73 That factor was critical to the reasoning of both judges (cl 1 of sch 8A existed in the same form under the Corporations Regulations 1990 (Cth)) and there is no equivalent provision in Part X or the PIA. The conclusion to be drawn from Barrett J's reasoning is that the terms of the deed of company arrangement will be determinative of whether funds contributed by third parties become property of the company when the deed of arrangement terminates early. In the context of Part X, I do not accept that the argument put by GFC09 (that is, that s 189(1) provides that it is the "property of the debtor" which becomes subject to control when an authority signed under s 188 becomes effective) has any impact in determining on whose behalf the trustee under a particular personal insolvency agreement holds funds contributed by third parties. It is certainly the purpose of Part X to control how "property of the debtor" is dealt with but the simple fact that the agreement provides for the contribution of third party funds does not mean that they must become the property of the debtor. Section 188A(3) expressly provides that s 188A(2) does not limit the contents of the deed under which the personal insolvency agreement is constituted; the intention of the parties in relation to how funds supplied by third parties should be dealt with, including on whose behalf they are held if the personal insolvency agreement terminates before they have all been expended under the agreement, can and should be set out in the personal insolvency agreement. Although s 444A(4)(b) of the Corporations Act is in substantially identical terms to s 188A(2)(a), s 444A(4) has no provision similar to s 188A(3). 74 CGU was an appeal to the High Court from the decision of the Court of Appeal of New South Wales in One.Tel. In CGU the debtor's rights under a directors and officers liability policy issued by CGU were assigned to the trustee under a deed of arrangement under Part X (as it was then enacted) and the deed provided for the proceeds of the policy to be paid to One.Tel and ASIC. The deed of arrangement terminated by effluxion of time before litigation arising from CGU's denial of liability under the policy was complete. CGU argued that upon termination of the deed the trustee had no power either under the deed or the Bankruptcy Act to pursue proceedings to enforce the policy. The High Court noted that "very great stress" was placed by CGU on s 276 in argument before that Court but such an argument had not been raised before the Court of Appeal of New South Wales. The High Court found it unnecessary to deal with the argument and undesirable, because Part X had changed since the agreement the subject of the controversy in that case had been entered into: see CGU at [29]-[31]. 75 The Court went on to consider the issue of the capacity in which the trustee acted: [34] This is a concession by CGU that the termination of the Deed did not cause the Trustee to cease holding the equitable interest in the chose in action on trust. The concession was correct. Even if CGU's submission that the Trustee was prevented from acting as trustee of the Deed after it was terminated is assumed to be correct, nothing in the Deed or the Act either caused the Deed to unwind on termination, or returned the parties to the status quo just before the execution of the Deed. The title on which the Trustee had held the benefit of the equitable interest in the chose in action did not vanish into thin air or return to [the debtor] or go anywhere else: it remained with the Trustee. Nor was it open to the Trustee to enjoy the property beneficially: the Trustee continued to hold it on trust. Thus the Trustee continued to have the duties of a trustee, but, on CGU's assumptions, on trusts other than those created by the Deed, because on those assumptions the beneficial interests under those trusts and the powers to continue the Trustee proceedings had come to an end. [35] Even if the termination of the Deed is assumed to have deprived the Trustee of any power in the Deed or the Act to continue the Trustee proceedings, it does not follow that there was not some other power to do so. [36] The primary judge described the trust on which the Trustee held the rights under the Policy which [the debtor] assigned to it as a "bare trust" after the termination of the Deed. Let that be assumed. The trustee of a bare trust has no interests in the trust assets other than those which exist by reason of the office of trustee and the holding of legal title. Further, the trustee of a bare trust has no active duties to perform other than those which exist by virtue of the office of the trustee, with the result that the property awaits transfer to the beneficiaries or awaits some other disposition at their direction. One obligation of a trustee which exists by virtue of the very office is the obligation to get the trust property in, protect it, and vindicate the rights attaching to it. That obligation exists even if no provision of any statute or trust instrument creates it. It exists unless it is negated by a provision of any statute or trust instrument. Here no provision of the Act or the Deed negates it. [The debtor's] equitable assignment of his right to sue CGU under the Policy gave the Trustee the duty to vindicate that right. After the Deed terminated, the Trustee continued to comply with the duty to vindicate that right by prosecuting the trustee proceedings against CGU in order to crystallise its advantages by reducing them to a judgment in damages. Even assuming in favour of CGU that, after termination of the Deed, the Trustee no longer held the chose in action on the trusts of the Deed, the Trustee did remain a trustee, and did have an obligation to continue the process of complying with the duty to vindicate the rights associated with the trust property. [37] It does not follow from CGU's contention that the Trustee had no entitlement to continue the proceedings which could be derived from the deed once it had terminated that the Trustee did not have an entitlement to continue the proceedings after the Deed terminated which derives from a source other than the Deed. The latter entitlement derives from the duty and power of trusteeship. The Deed created a trusteeship with express duties. The termination of the Deed caused the Trustee to have duties and powers outside the Deed. Here the duty of the Trustee to vindicate the rights connected with the trust property related to a chose in action being enforced in the trustee proceedings. The hoped-for fruits of those proceedings lay in an order for damages. Discontinuance by the Trustee with a view to letting some other person enforce the chose in action by starting a new action may have run the risk that the new action might be statute-barred, and would certainly have involved a waste of costs. In these circumstances the only way of protecting the chose in action, vindicating the rights attached to it and getting in its fruits was for the Trustee to continue the proceedings. 76 In CGU, it was unnecessary for the High Court to determine on whose behalf the trustee held the chose in action since the controversy to be quelled was whether or not the trustee was entitled to continue the litigation and the issue of beneficial ownership of the chose in action was found not determinative of that controversy: see CGU at [38]-[39]. I accept the submission made by Counsel for GFC09 that CGU is not authority for the proposition that provisions of a personal insolvency agreement may have operation despite the termination of the agreement; it is silent on the point. I also accept Counsel's proposition that if s 276 did apply in the context of CGU the trustee's action might well not have resulted in breach even if the fruits of the chose in action were found to be the property of the debtor because it was an action designed to preserve that property. However, I do not understand this to assist the argument put by GFC09 because in my view CGU is authority for the proposition that a person who held the position of trustee of a person insolvency agreement may hold property, even property which formerly belonged to the debtor, in another capacity due to an assignment or other dealing with property of the debtor which occurred before termination. 77 Accordingly, the question of beneficial entitlement to residual funds at the time a personal insolvency agreement is terminated is to be determined having regard to the source of the funds and, where the funds have been contributed by third parties, the terms of the agreement including the extent to which they incorporate relevant provisions of the Bankruptcy Act.

Clause 28 78 Clause 28.1 of the PIA (set out at [55] above) purports to extend "the powers of the Trustee" to "get in, realise and/or distribute the Personal Insolvency Agreement Fund of the Debtor" until "a final distribution has been made to Creditors" "notwithstanding the termination of the this Deed pursuant to clauses 16 and 17". I take the reference to clauses 16 and 17 to be a mistaken cross-reference to clauses 19 and 20 which deal with termination and I do not think anything turns on this apparent error for the purposes of the following analysis. 79 Clause 4 of the PIA provides that contributions made by the Debtor under clause 3.2 and contributions made under clause 3.4 will comprise the fund. On that basis, at the time the PIA was executed clause 28.1 purported to empower the Trustee to deal with the property of the Debtor by getting it in and distributing it to Creditors after the termination of the PIA. For the reasons set out at [70] above, I do not think that this provision is consistent with Div 4 of Part IV, Part VI or s 276 of the Bankruptcy Act upon Mr Gore's bankruptcy. Having regard to clause 1.3 (set out at [36] above), the clause should be read down to the extent of the inconsistency. For reasons set out at [71] above, if the clause is read down to deal only with property contributed by third parties which remains their property until expended in accordance with the PIA, then the clause might have valid operation, however, I do not think that is possible in this case. 80 In the absence of evidence from any of the persons who contributed funds under clause 3.4 and having regard to the terms of the PIA I have formed the view that I must direct Mr Warner that he is justified in treating the residual funds held by him as property of the Debtor which, having regard to s 58 vested in Mr Gore's trustee in bankruptcy on 18 April 2012. Mr Gore was discharged from bankruptcy on 19 April 2015 "by operation of law" without his creditors having been satisfied in full so that these funds remain part of his bankrupt estate. 81 It is true that clauses 3.2 and 13.1 deal expressly with property of the Debtor and clause 3.4 separately provides for contributions by third parties. However, the form and much of the wording of the PIA suggests that residual funds are to be treated as property of the Debtor: clause 1.3 provides for the PIA to be "subject to and regulated by" the Bankruptcy Act and Regulations and for their primacy; clause 2.1 provides that it is entered into "pursuant to Part X"; although contributions under clause 3.4.1 are "for the benefit of the Creditors", that benefit can be achieved by distribution under the PIA or by distribution by Mr Gore's trustee in bankruptcy; clause 4 provides for the mixing of contributions by the Debtor and under clause 3.4.1 in the PIA Fund. To the extent that the PIA Fund includes moneys contributed by Mr Gore, clause 28.1 could not operate; and most importantly, although clause 28.1 might be said to evince a desire to benefit Creditors directly because it suggests that the regime continues until all moneys in the PIA Fund have been paid to Creditors, it refers to that fund as the "Personal Insolvency Agreement Fund of the Debtor" (emphasis added). 82 While I have expressed the opinion that it is possible for a personal insolvency agreement or a collateral arrangement to make it clear that moneys contributed by third parties are not and do not become property of the debtor, giving effect to that intention requires clear language. The PIA did not contain clear language to that effect.

Do Mayfair Group and 21st Century have an entitlement to the dividend declared on 20 December 2011? 83 I am not satisfied that Mayfair Group and 21st Century are entitled to be paid the dividend declared by Mr Prentice on 20 December 2011 from the moneys held by Mr Warner and accordingly I do not propose to direct that he would be justified in paying the dividend to them. 84 I accept that Mr Prentice advised Mr Banks-Cooper by letter dated 20 May 2011 that he had admitted the proofs of debt of Mayfair Group and 21st Century. I accept Mr Banks-Cooper's evidence that they have not received notice that the decision to admit the proofs has been revoked, as would be required by s 102(5)(a) as applied by s 231(3) if the Trustee did revoke the decision. 85 The working papers in relation to the declaration of the dividend which Mr Prentice gave to Mr Warner set out a list of creditors indicating whether their proofs of debt have been "Admitted", "Rejected" and those "Under Consid". The Mayfair Group and 21st Century debts are listed as "Under Consid". There is no dispute that "Under Consid" means "under consideration". The Trustee's Account of Receipts and Payments for the PIA for Mr Gore dated 20 December 2011 indicates that as at that date, Mr Prentice treated the unpaid dividend as "retained pending further documentations". 86 In the absence of any evidence from Mr Prentice personally, I am compelled to the view that he revoked his decision to admit the proofs of debt of Mayfair Group and 21st Century because of the manner in which he documented the status of the proofs of debt as at 20 December 2011 and the fact that he did not pay a dividend to Mayfair Group and 21st Century. While it would have been conclusive of the issue if Mr Prentice had given notice of revocation of his decision under s 102(5)(a), nothing turns on his failure to do so. Section 102(5)(a) is simply a notice provision and does not go to the validity of a trustee's power to revoke the decision to admit a proof of debt under s 102(3). 87 If I am wrong and the status of the proofs of debt is that they were admitted, the decision to admit them was not revoked, and the Trustee has simply not yet paid Mayfair Group and 21st Century the dividend declared on 20 December 2011, I am not satisfied that they have a vested right to payment of the dividend which confers on them any interest in the moneys now held by Mr Warner. 88 Section 224 applies where a personal insolvency agreement has been set aside or terminated and s 224(2) provides: Validity of acts (2) All payments made, acts and things done and transactions entered into in good faith under, or for the purposes of, the agreement by: (a) the trustee; or (b) any other person; before he or she had notice of the order of the Court or of the termination of the agreement, as the case may be, are valid and effectual and are not liable to be set aside by the trustee of a later personal insolvency agreement or in a subsequent bankruptcy. 89 Section 231(3) relevantly applies ss 140 to 147 to a personal insolvency agreement. Section 140 relevantly provides: 140 Declaration and distribution of dividends (1) The trustee of the estate of a bankrupt shall, subject to this section, with all convenient speed, declare and distribute dividends amongst the creditors who have proved their debts. (2) Subject to the retention of such sums as are necessary to meet the costs of administration or to give effect to the provisions of this Act, the trustee shall distribute as dividend all moneys in hand. … (8) Subject to subsections (9) and (10) [which are not presently relevant], where the trustee declares a dividend, he or she shall pay each creditor who has proved his or her debt the amount due to the creditor and send the creditor a statement in accordance with the approved form in relation to the realization and distribution of the estate. 90 Section 147 provides: 147 No action for dividend (1) An action for a dividend does not lie against the trustee of the estate of a bankrupt but, if the trustee neglects or refuses to pay a dividend to a creditor, the Court, on the application of the creditor, may, if it thinks fit, order the trustee to pay the dividend and may also order that the trustee pay interest on the dividend for the time that it is withheld and the costs of the application. (2) Where the Court orders the trustee of the estate of a bankrupt to pay interest on a dividend or to pay the costs of an application under subsection (1), the trustee is personally liable for, and is not entitled to be reimbursed by the estate in respect of, the payment of that interest or those costs. 91 The submissions made by Mayfair Group and 21st Century that these provisions give rise to some form of statutory entitlement or equitable interest enforceable in a court of equity are misplaced. Properly characterised, s 147 confers standing on a creditor to approach the Court to require payment of an unpaid dividend and the trustee is responsible to the Court, not the debtor or the creditors. While the creditor's standing to approach the Court under s 147 is akin to the right of a beneficiary to approach the Court to secure the due administration of a trust, it gives rise to no debt due by the trustee or equitable interest in the fund. Indeed, s 147 provides that the Court "may, if it thinks fit" order the trustee to pay the dividend and any interests or costs. While the trustee will be personally liable for the interest and costs, he or she will not be personally liable for the payment of the dividend. 92 Mayfair Group and 21st Century asserted that their entitlement to receive payment of the dividend was not affected by the termination of the PIA. They rely on s 224(2) to preserve the "acts" of Mr Prentice in admitting their proofs of debt and declaring the dividend as causing the "right" to accrue before the PIA was terminated along with the "right" to approach the Court under s 147. I do not accept those submissions. Even if it is true that Mr Prentice's acts are preserved by s 224(2), the standing of Mayfair Group and 21st Century to approach the Court pursuant to s 147(1) and the obligation of Mr Warner under s 140(8) do not persist after termination of the personal insolvency agreement because they derive from s 231(3). Once the personal insolvency agreement is set aside or terminated without release of debts, the creditor's recourse for payment of the debt is to the debtor or the debtor's trustee in bankruptcy (as appropriate). 93 Mayfair Group and 21st Century conceded that the unpaid dividend does not constitute an "unpaid liability" or "unpaid commitment" for the purposes of s 114 which provides as follows: 114 Payment of liabilities etc. incurred under terminated deed etc. (1) Where a debtor becomes a bankrupt after a personal insolvency agreement executed by him or her, or a composition or scheme of arrangement accepted by his or her creditors, has, whether before or after the commencement of this Act, been set aside or terminated: (a) any unpaid liabilities incurred in good faith, and any unpaid commitments entered into in good faith, under the terminated agreement, composition or scheme of arrangement by the trustee or the debtor; (b) any expenses reasonably incurred in good faith under the terminated agreement, composition or scheme of arrangement by the trustee, being expenses for which he or she has not been reimbursed; and (c) such proportionate part of the unpaid remuneration of the trustee as the creditors in relation to the terminated agreement, composition or scheme of arrangement determine by resolution; are debts provable in the bankruptcy. (2) In this section: the terminated agreement, composition or scheme of arrangement means the agreement, composition or scheme of arrangement that has been set aside or terminated. 94 This concession is based on the decision in Re Williams; ex parte Wilson and Randall (1933) 6 ABC 40 at 43 which is authority for the proposition that under the then existing legislation, which gave priority to "a lawfully authorised and bona fide commitment", "commitments" are acts or engagements in the course of the administration or realisation of the assets of the debtor under the terminated deed. The term "commitment" does not include the admission of a proof of debt or, as found in Re Levine (1942) 13 ABC 37 at 42-43, payments made under the deed, including dividends. Under the legislation as then enacted payments made under the deed within the relation back period were recoverable by the trustee in bankruptcy. 95 It is clear that s 224(2) would not now permit a trustee in bankruptcy to seek to recover a dividend which had been paid by a trustee of a personal insolvency agreement in good faith and without notice of termination of the personal insolvency agreement. 96 It is also clear that an unpaid dividend is not a "liability" since an unpaid dividend does not constitute a debt incurred by the trustee. However, it is less clear that under the current regime of Part X and s 114 that a declared but unpaid dividend could not constitute a "commitment" flowing from the act of the trustee of declaring a dividend. It would arguably be consistent with equal treatment of creditors under the personal insolvency agreement that a creditor who did not receive a dividend declared and paid to some but not all creditors whose proofs of debt had been admitted had the priority afforded unpaid commitments under s 109(1)(c). This is so even though creditors must prove their debts in the bankruptcy and this priority might result in unequal treatment as between creditors whose debts were proved in relation to the personal insolvency agreement and creditors whose debts are proved only in the bankruptcy. 97 It is not necessary for me to decide this question. Whether Mr Prentice revoked his decision to admit the proofs of debt of Mayfair Group and 21st Century or simply did not pay the dividend to them, any rights they may have under s 114 are not the subject of this application. In my view they do not now have any standing under s 147 as applied by s 231(3) to approach the Court to require the Trustee of the terminated PIA to pay the dividend nor is this an application by Mayfair Group and 21st Century to vindicate any such claim. Mr Warner does not now have any power under the PIA or Part X to make such a payment as the PIA has terminated to his knowledge.

Mr Warner's claims to remuneration, costs, expenses and disbursements 98 Moneys paid by Mr Warner from the PIA Fund in the period from 23 February 2012 to 1 August 2012 are as follows: Description $ Amount Balance in the PIA Fund following the payment Opening balance 534,382.22 23.02.2012 - legal fees 38,099.45 496,282.77 27.02.2012 - Trustee remuneration for the period 23.12.2011 to 9.2.2012 98,519.31 397,763.46 01.03.2012 - legal fees 31,941.25 365,863.13 02.03.2012 - realisations charge 3,666.67 362,196.46 18.04.2012 - Trustee remuneration for the period from 10.2.2012 67,100.00 295,127.23 01.08.2012 - electronic debit ITSA 161.52 295,045.66 20.03.2013 - closing balance $295,131.36

99 The figures for remuneration in the table are the amounts (inclusive of GST) approved by creditors at the meeting on 24 February 2012, being $98,519.31 (inclusive of GST) for the period to 9 February 2012 and $67,100 (inclusive of GST) for the Trustee's future remuneration from 10 February 2012 to complete the adjudication of proofs of debt and pay an interim dividend. 100 Mr Warner deposed that the remuneration of $67,100 can be broken down as follows: $39,923.47 (GST inclusive) for the period 10-24 February 2012; $9,092.27 (without GST charge, $10,001.50 with GST) for work relating to finalising the PIA between 25 February and 5 April 2012; and $15,613.67 (without GST charge, $17,175.04 with GST) for work relating to proofs of debt between 25 February and 5 April 2012. In submissions provided after the hearing Mr Breene advised no claim is made by Mr Warner in relation to proofs of debt for the period after 18 April 2012. 101 Mr Warner proposes to deduct from the Personal Insolvency Agreement Fund the following amounts in relation to which he seeks advice and direction from the Court: Description $ Amount Balance in the PIA Fund following the payment Opening balance 295,180.68 Interest realisation charge - ITSA 147.56 295,033.12 Trustee's disbursements 1,067.00 293,966.12 Trustee's remuneration to 18.4.2012 7,740.05 286,226.07 Legal costs and disbursements to 18.04.2012 invoiced 15.5.2012 25,559.72 260,666.35 Trustee's remuneration 19.04.2012 to 22.03.2013 34,718.26 225,948.09 Legal costs and disbursements 19.04.2012 to 22.03.2013 invoiced on 1.5.2013 39,670.00 186,278.09 Trustee's remuneration 23.03.2013 onwards 15,606.00 170,672.09 Legal costs and disbursements 23.03.2013 onwards (anticipated) 29,655.00 141,017.09 Closing balance $141,017.09

102 The closing balance will have increased slightly due to interest payments. 103 Mr John Breene, solicitor to Mr Warner, deposed that his invoice dated 15 May 2012 included: work in progress of his firm of $17,658 (without GST charge) of which $5,202.50 related to advice to Mr Warner concerning his obligations following termination of the PIA; and $12,455.50 was for work related to proofs of debt. disbursements including the costs of attendance by counsel and his firm's agent at the Federal Court in Queensland in relation to the litigation commenced by Mr Gore in November 2011.

Remuneration 104 None of the parties complained that Mr Warner has paid himself all of the remuneration authorised by creditors on 24 February 2012, even though the payments were made after termination of the PIA and $27,176.54 (GST inclusive) related to the period after 24 February 2012. Although it was done honestly and in the belief that it was authorised by the PIA, Mr Warner was not justified in paying himself $17,175.04 (GST inclusive) on the basis of work done after 24 February 2012 in relation to proofs of debt for the reasons I have already given. 105 I accept Mr Warner's evidence that he has done substantial work since 24 February 2012 in finalising the administration of the PIA having regard to the competing claims and that the amount he claims for that work far exceeds $17,175.04. At the meeting of creditors on 24 February 2012, Mr Warner advised creditors that the future fee approval would be incurred in "adjudicating on creditor claims, paying the dividend and finalising the administration of the PIA" and the resolution was passed authorising future remuneration of $61,000 (plus GST) for the period "from 10 February 2012 to the conclusion of the administration". Despite the expectation that remuneration would be for the work in adjudicating proofs of debt (for which it was in fact claimed) but which Mr Warner would not have appropriately undertaken for reasons previously given, the payment of the fee can be justified on the basis that remuneration for work done in finalising the administration of the PIA was also approved. 106 Insofar as Mr Warner now claims additional amounts of remuneration as set out at [102] above, there is no right at general law for a trustee to claim remuneration: Adsett v Berlouis (1992) 37 FCR 201 ("Adsett v Berlouis") at 210. Section 162 of the Bankruptcy Act gives effect to a statutory assumption that a trustee does not intend to act gratuitously in the absence a prior agreement to do so, but there is no evidence that Mr Warner has sought either approval of creditors or for the Inspector-General to fix remuneration under s 162(4). In any event securing either of these authorisations would be problematic after termination of the PIA as s 231 (and therefore Part VIII) would no longer be available to support the claim. Mr Warner suggested that his right to claim remuneration additional to that approved by creditors on 24 February 2012 survived termination of the PIA, but he did not suggest on what basis since neither of clauses 13.1 nor 21.1 purport to survive termination. 107 I will decline to give Mr Warner advice that he is justified in deducting any further remuneration from the moneys now in his hands under the PIA.

Legal expenses 108 The Bankruptcy Act confers on the trustee in bankruptcy no right of reimbursement for expenses, charges and costs incurred in administration of a bankrupt estate, but the general law confers on the trustee a right of indemnity for such imposts which are prudently and reasonably incurred in the discharge of the trustee's duties: see Adsett v Berlouis at 212. That indemnity is supported by a lien over assets in the trustee's hands. 109 This application raises the question of whether the trustee of a personal insolvency agreement is entitled to the same indemnity and lien over funds in the trustee's hands as a trustee in bankruptcy having regard to the priority set out in s 109(1), which relevantly provides: 109 Priority payments (1) Subject to this Act, the trustee must, before applying the proceeds of the property of the bankrupt in making any other payments, apply those proceeds in the following order: (a) first, in the order prescribed by the regulations, in payment of the taxed costs of the petitioning creditor and the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee and the costs of any audit carried out under section 175; (b) second, if the bankrupt had signed an authority under section 188 before the date of the bankruptcy, in payment of: (i) the remuneration of the controlling trustee (as defined in section 187); and (ii) the costs, charges and expenses properly and reasonably incurred by the controlling trustee while the authority was in force (including any debts incurred by the controlling trustee that are provable in the bankruptcy); (c) third, in the case of a bankruptcy that occurs within 2 months after a personal insolvency agreement executed by the bankrupt, or a composition or scheme of arrangement accepted by the bankrupt's creditors, has (including at a time before the commencement of this paragraph) been set aside or terminated, in payment of liabilities, commitments, expenses or remuneration referred to in section 114 … 110 Section 114 is set out at [93] above. 111 I have concluded that a trustee of a personal insolvency agreement is entitled to the same right of indemnity out of assets in their hands as trustees in bankruptcy under the general law. Mr Warner is not an unsecured creditor to the extent of the indemnity because he is entitled to enjoy the lien accorded to trustees at general law in support of that indemnity: see the definition of "secured creditor" in s 5. In Lane v McDonald [2003] FMCA 391, the Federal Magistrate found that any contractual or equitable interest of the trustee of a scheme of arrangement under Part X of the Bankruptcy Act as enacted in 2002 was destroyed when the scheme was annulled so that property held by the trustee was subject to s 58. For the reasons which follow, I do not consider that authority persuasive in relation to the legislative context relevant to this application. 112 Part X, through the medium of s 231 and in particular s 231(5), seeks to put trustees of personal insolvency agreements in as similar a position as trustees in bankruptcy as possible. Section 231(5) applies Part VIII to trustees of personal insolvency agreements and Part VIII deals with appointment of trustees in bankruptcy and vacancies in office, remuneration, accounts and supervision of trustees. There is no provision similar to s 189AC applicable to either trustees in bankruptcy or trustees of personal insolvency agreements. 113 Although s 210, which applies to controlling trustees, is to the same effect as s 231(5), s 189AC provides as follows: 189AC Right of indemnity for controlling trustee (1) The controlling trustee is entitled to be indemnified out of the debtor's property for: (a) his or her remuneration; and (b) any costs, charges or expenses properly and reasonably incurred by the controlling trustee while the debtor's property was subject to control under this Division. (2) To secure a right of indemnity under subsection (1), the controlling trustee has a lien on the debtor's property. (3) A lien under subsection (2) ceases to have effect if the debtor becomes a bankrupt. 114 Upon making of a sequestration order, the controlling trustee must pay or transfer any property of the debtor in his or her hands to the trustee in bankruptcy since the indemnity and lien usually conferred by general law on trustees has been displaced by s 189AC and the property of the debtor in the hands of the controlling trustee vests in the trustee in bankruptcy under s 58. The priority accorded by s 109(1)(b) is necessary to enable the controlling trustee to be paid when the debtor becomes bankrupt. 115 Section 114(b) applies to reasonable expenses of the trustee which have not been "reimbursed". In my view, having regard to the treatment of trustees in bankruptcy, trustees of personal insolvency agreements and controlling trustees under the Bankruptcy Act, the priority accorded by s 109(1)(c) to payment out of the bankrupt estate of "liabilities, commitments, expenses or remuneration referred to in section 114" when a bankruptcy occurs within two months after a personal insolvency agreement is set aside or terminated makes those payments available to the trustee of the personal insolvency agreement where the lien has not been exercised or where the trustee is unable to exercise a lien due to a paucity of funds. 116 There were a number of occasions where submissions made to Mr Warner in correspondence and submissions made in argument at the hearing sought to rely on powers and duties of controlling trustees in aid of a position taken in relation to the powers, duties and entitlements of Mr Warner as trustee of the personal insolvency agreement. I consider those arguments to have been wholly misplaced. For instance, in argument, Counsel for Mr Warner argued that Mr Warner was entitled to indemnity for legal costs and disbursements by reason of clause 7 and s 189AC. If this argument were right, then any lien that Mr Warner might have under general law would not apply because of s 189AC(3). There are a number of provisions of the PIA (for instance, clause 3.4) which contemplate a period after the PIA is executed and before creditors ratify it at which time the Trustee would be acting as a controlling trustee. I consider that it is only to this period that the express references to the powers and duties of the controlling trustee in clause 7 relate, even though in this case Mr Gore executed the PIA after the creditors' meeting directing Mr Gore to execute it. While there is no need to include a reference to the powers and duties of the controlling trustee in the PIA because they apply by force of the Bankruptcy Act, in my view this is another example of the poor quality of the drafting of the PIA rather than revealing of any intention to exclude the right of the trustee of the personal insolvency agreement as such to claim indemnity and lien. 117 No complaint was made by the respondents in relation to legal fees which have been paid by Mr Warner including the invoice dated 1 March 2012, which post-dates termination of the PIA but which relates to work done by Mr Warner's lawyers before termination. 118 Mr Breene's account dated 15 May 2012 was for an aggregate amount of $25,559.72, of which $12,455.50 (plus GST) (being $13,701.05) related to time costs of advice provided to Mr Warner in relation to proofs of debt in the period 25 February 2012 to 18 April 2012. Although Mr Warner incurred this expense in the period 25 February 2012 to 18 April 2012 honestly, I do not consider that he is entitled to indemnity for those costs or related disbursements since this is not a power he was entitled to exercise following the termination of the PIA despite the terms of clause 28.1. In my view, Mr Warner would be justified in paying $11,858.44 of the original account or reimbursing himself for payment of it from residual funds on the basis that these were costs were incurred in relation to activities properly undertaken incidental to his role as trustee of the personal insolvency agreement. 119 GFC09 has suggested that Mr Warner should not be entitled to indemnity in relation to all of the amounts which he claims subsequent to 15 May 2012 on the basis that they were not reasonably and properly incurred. It was suggested that much of this cost might have been avoided had Mr Warner brought the application earlier than 13 months after the PIA was terminated. There is some force to this argument. On 10 May 2012, the day after Logan J dismissed Mr Gore's challenge to the admission of Mayfair Group's proofs of debt by Mr Prentice, Mayfair Group and 21st Century wrote to Mr Warner claiming payment of the dividend; the validity of the claim to that dividend was unclear having regard to the termination of the PIA. This was followed by correspondence in late May 2012 on behalf of the Official Trustee in relation to its claim on the funds as trustee of Mr Gore's bankrupt estate and, in August, claims from GFC09, other parties and ASIC. 120 The issues raised in correspondence with Mr Warner after the termination of the PIA and in this application have considerable complexity and, even though ASIC and the Official Trustee indicated that they would not pursue their claims, there were a number of parties contending for different outcomes. I am satisfied that legal costs in the order of $29,655 (GST included) were likely to be incurred whenever the application was made. There is no reason to think that Mayfair Group and 21st Century and GFC09 would have pursued claims with less vigour than they did whenever the application was brought and some cost will have been incurred in dealing with the resulting trust claim which GFC09 only abandoned close to the hearing. 121 Having said that, Mr Warner describes legal fees invoiced to him on 1 May 2013 of $39,669.68 (inclusive of GST) (referred to in the table as $39,670) for the period from 19 April 2012 to 22 March 2013 as being with respect to preparation of this application. I take it that this invoice includes fees for considering issues raised by the contending parties and correspondence with them which is in evidence. Even so, this appears to be a substantial account and some of this correspondence might well have been avoided had Mr Warner sought advice earlier as foreshadowed in the correspondence. 122 Although the habit of the courts has been to discourage trustees from seeking judicial advice in relation to matters properly within the trustee's discretion, this application raises complex matters of law and trustees should be encouraged to raise those issues quickly. No doubt, the fact that Mr Warner is not in a position to recover his remuneration beyond that approved by the creditors on 24 February 2012 would encourage earlier application. I am inclined to the view that Mr Warner should not be entitled to all of the fees claimed because of his delay in bringing this application which is likely to have involved unnecessary legal costs in addressing competing claims. 123 On that basis I will advise Mr Warner that he would be justified in paying or reimbursing himself to an aggregate maximum amount of $76,000 (GST inclusive) from moneys in his hands for legal costs in relation to the account of 15 May 2012 account of Mr Breene in an amount of $11,858.44, the 1 May 2013 account for $39,669.68 and for costs reasonably incurred of and incidental to this application.

Minor disbursements 124 To the extent that Mr Warner has indicated that there are minor disbursements, such as ITSA fees or realisation charges, I do not understand that there is any contention that he would not be justified in paying them or being reimbursed from funds in his hands as appropriate and, if necessary, that should be the subject of short minutes of order.

Costs of Mayfair Group and 21st Century and GFC09 125 Mayfair Group and 21st Century submitted that they should be entitled to their costs of and incidental to the application out of the moneys in Mr Warner's hands on the analogy of the position of beneficiaries of a trust in relation to an application for directions by a trustee. They relied on Dal Pont GE, Law of Costs (3rd edition, LexisNexis Butterworths, 2013) at [10.15]: Where beneficiaries are represented on an application brought by a trustee for directions of the court as to the construction of the trust deed or some question arising in the course of administration, and it is in the circumstances reasonable for the beneficiaries to be represented, the costs of all parties are ordinarily viewed as necessarily incurred for the benefit of the trust, and so ordered to be paid out of the fund. 126 The essential question is whether the litigation is adversarial or directed at the due administration of the trust. Although Mayfair Group and 21st Century pursued their own interest in the application often in an adversarial manner, the issues raised by them and by GFC09 at the hearing were relevant to the due administration of moneys in the hands of Mr Warner which he obtained in his role as trustee of the PIA. On that basis I am satisfied that I should advise Mr Warner that he should pay the reasonable costs of the respondents of and incidental to this application from the residual moneys in his hands. I have some concern that in so ordering, the costs of the respondents should be proportional to costs claimed by Mr Warner having regard to the limited amount of the funds in Mr Warner's hands and I will seek advice from those parties as to the amount they claim and that advice will influence the form of the final order.

Conclusion 127 I will advise and direct Mr Warner that he is justified in paying any residual funds in his hands in relation to the PIA to Mr Gore's trustee in bankruptcy after paying his legal costs in accordance with these reasons and the reasonable costs of the respondents on the basis set out in these reasons. 128 I will direct that by 20 May 2015, the respondents advise Mr Warner and my Associate in writing of the amount which each of them claims as their reasonable costs of and incidental to this application having regard to the costs and disbursements of their solicitors and counsel. If any party takes issue with the amount claimed, they may file and serve brief submissions (no more than 2 pages) by 5 pm on 22 May 2015. I reserve my decision in relation to any amount so claimed. 129 I will direct that by 28 May 2015, Mr Warner file and serve draft short minutes of order reflecting these reasons. I certify that the preceding one hundred and twenty-nine (129) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.

Bankruptcy Act 1966(Cth)ss 5, 30(1), 58, 60(2), 102, 104, 109, 114, 134(4), 140, 147, 162, 188, 188A, 189(1), 189AC, 190, 190A, 210, 222A, 222B, 222C, 222D, 224, 229, 230, 231, 231A, 232, 276

Corporations Act 1989(Cth)s 444A(4)(b)

Corporations Act 2001(Cth)s 444A(4)(b)

Trustee Act 1925(NSW)ss 59, 63, 93

At a glance

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Judgment (47 paragraphs)

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Legislation Cited (7)

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