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Robsyn Pty Ltd v O'Brien[2012] QSC 285

Robsyn Pty Ltd v O'Brien[2012] QSC 285

 

 

SUPREME COURT OF QUEENSLAND

PARTIES:

FILE NO/S:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

DELIVERED ON:

21 September 2012

DELIVERED AT:

Brisbane 

HEARING DATE:

7 February and 9 February 2012

Written submissions

JUDGE:

Daubney J

ORDERS:

1.(a)The respondent indemnify the applicant from the $60,000 fund paid into Court on 22 November 2011 (“the Monies”) in the sum of $1,999.68 for the debt payable in that sum to the Deputy Commissioner of Taxation;

(b)The balance of the Monies (and any accretions) be paid out of Court to the respondent.

2.I will hear the parties as to costs

CATCHWORDS:

EQUITY – TRUSTS AND TRSUSTEES – POWERS DUTIES RIGHTS AND LIABILITIES OF TRUSTEES – INDEMNITY LIEN AND REIMBURSEMENT – RELEVANT PRICNIPLES – where the applicant seeks reimbursement for all liabilities incurred by the applicant in its capacity as trustee of the superannuation fund – whether the respondent ought indemnify the applicant for any or all of these costs

CORPORATIONS – WINDING UP – LIQUIDATORS – RENUMERATION – IN WINDING UP BY COURT – GENERALLY – where the applicant seeks reimbursement for all liabilities incurred by the applicant in its capacity as trustee of a superannuation fund – where liabilities incurred pre and post winding up –  where costs and expenses include legal costs and remuneration of the liquidator – where legal action commenced by the liquidator unsuccessful –whether the respondent ought indemnify the application for any or all of these costs

Trusts Act 1973 (Qld), s 72

Dayroll Pty Ltd (in liq) v Dayroll NSW Pty Ltd [2009] NSWSC 895

O'Brien v Robsyn Pty Ltd [2011] QSC 399  

COUNSEL:

A G Martin for the applicant

M Martin for the respondent

SOLICITORS:

Taylor David Lawyers for the applicant

MacDonnells Law for the respondent

[1] By the present application, as filed, the applicant sought the following relief:

“1.An order pursuant to section 72 of the Trusts Act (Qld) 1973, or alternatively pursuant to a covenant contained in a Deed dated 28 April 2008, that the Respondent indemnify the Applicant from the $60,000 fund paid into this honourable Court on 22 November 2011 (“the Monies”) for all liabilities incurred by the Applicant in its capacity as trustee of the JT & PM O'Brien Superannuation Fund (“the Fund”).

2.An order pursuant to s 101 of the Trusts Act (Qld.) 1973 that the Applicant be entitled to charge, and recover from, the Monies, an amount equal to the Applicant’s reasonable remuneration for having acted as trustee of the Fund for the period 23 November 1996 to 28 April 2008.

3.An order that the Applicant be indemnified from the Monies for its costs in these proceedings.

4.An order that the Respondent indemnify the Applicant in respect of the Applicant’s legal costs of these proceedings to the extent that the Applicant is not otherwise indemnified for those costs from the Monies.

5.Such further or other as this Honourable Court sees fit.”

[2] On the hearing of the application, however, the applicant limited itself to the relief sought in paragraph 1 of the application.  Moreover, as the hearing of the application progressed, the amount sought to be recovered by that relief decreased considerably.  Before stating the background at more length, it is sufficient by way of introduction to note that the monies which are sought to be recovered consist of:

(a)reimbursement of a creditor’s claim by the Australian Tax Office in the sum of $1,999.68.  In the hearing before me, it was ultimately not in issue that the applicant should receive this sum;

(b)remuneration for the liquidator and legal costs incurred by the liquidator in respect of certain proceedings for which the liquidator claims an entitlement to be indemnified.

[3] The fund from which the applicant seeks payments came into existence as a consequence of certain orders made by Henry J on 7 October 2011.  I will refer shortly to his Honour’s reasons for judgment.  First, however, I will set out some necessary background.

[4] Robsyn Pty Ltd (“the Company”) was the trustee of a self-managed superannuation fund known as the JT & PT O'Brien Superannuation Fund (“the Super Fund”).  Under the relevant trust deed dated 23 November 1998, pursuant to which the Super Fund was established and the Company was appointed as trustee, provision was made for the retirement of existing trustees and the appointment of new trustees. 

[5] By a Deed of Variation, Retirement and Appointment dated 28 April 2008, it was provided, amongst other things that:

(a)the Company resigned as trustee of the Super Fund from the date of the deed, and

(b)John Thomas O'Brien, Patricia May O'Brien and Juanita Michelle O'Brien were appointed as new trustees of the Super Fund.

[6] By a further deed entered into on about 29 July 2011, John Thomas O'Brien and Juanita Michelle O'Brien retired as trustees, and Patricia May O'Brien was confirmed as the sole trustee of the Super Fund. 

[7] In 2002, the Company, as trustee of the Super Fund, entered into an “off the plan” contract to acquire a unit in a complex in Felix Street, Brisbane (“the Unit”).  This contract settled in May 2004.  The Company was registered as proprietor of the Unit in June 2004. 

[8] On 20 July 2011, Mr Peter Dinoris was appointed liquidator of the Company.  This, of course, was well after the 2008 Deed by which the Company had ceased being the trustee of the Super Fund.  Notwithstanding that 2008 Deed, it appears that the Unit remained registered in the name of the Company.  It further appears that:

(a)as at the date of his appointment as liquidator, the only asset in the name of the Company was the Unit;

(b)as registered proprietor of the Unit, the Company had been issued with strata levy invoices by the relevant body corporate for the Unit;

(c)on 30 May 2011, the body corporate commenced winding up proceedings against the Company as a result of unpaid strata levies;

(d)on 20 July 2011, the Company was ordered to be wound up and Mr Dinoris was appointed liquidator.

[9] On 2 September 2011, Patricia May O'Brien, as trustee of the Super Fund, filed an application in the Cairns Registry of this Court seeking a declaration that she was the legal owner of the Unit, as trustee for the Super Fund, and an order requiring the Company (in liquidation) to do all things necessary for the transfer of the title to her.  This application was heard and determined by Henry J – his Honour’s reasons for judgment are found in O'Brien v Robsyn Pty Ltd.[1]

[10] In the course of his reasons for judgment, Henry J held:

“The unit is held in trust for the fund.  The unit’s title registration was not changed when there was a change in the identity of the trustee of the fund, however the evidence filed in support of the application demonstrated without contradiction that regardless of whether the title registration correctly identified the current trustee the unit was held in trust for the fund.”

[11] That finding was sufficient to dispose of the application.  His Honour’s reasons, however, usefully record the history of the hearing of the application before him.  The application first came on for hearing on 16 September 2011.  As is recorded in the reasons for judgment, counsel for the Company (in liquidation) argued that the proceeding ought be adjourned and that there be an order that the proceeding continue as if commenced by claim.  His Honour noted:

“In the course of argument, when the respondent’s counsel was attempting to mount an argument that some doubt lingered on the factual issue of whether or not the unit was held in trust for the fund, it was explained that subpoenas it had caused to issue to third parties involved in the original conveyance of the unit had not been responded to.”

[12] After referring to arguments before him about the utility of seeing that subpoenaed material, Henry J then said:

“The application was one which the respondent had effectively forced the applicant in to bringing on quickly.  Notwithstanding my inclination, against that background to then and there give the orders sought by the applicant for the reasons I’ve already given, I was troubled by the prospect that some of the evidence sought by the subpoenas might become available later in the day and that, while it was admittedly a remote prospect, they might bear materially upon the merits of the application.

I was concerned, in short, not to deprive the respondent of the chance to use the evidence it had sought to gather to present at the application, notwithstanding its failure to do so in time.

Against that background, I reserved my decision and gave leave to the respondent to file and serve affidavit material exhibiting any further evidence on or before Friday, 23 September 2011;  leave to the respondent to file and serve a supplementary outline on or before Monday, 26 September 2011, and leave to the applicant to file and serve an outline in reply on or before Wednesday, 28 September 2011.  I gave the parties liberty to apply to be further heard, such hearing to be on or before 30 September 2011.

The cross-application:  It was apparent at the time of the reserving of the decision that the leave given to the respondent was an indulgence, giving it the chance to file affidavit material, file an outline, and apply to be further heard in respect of the evidence it had apparently sought to obtain by the hearing day.

The respondent did none of those things.  Instead, on 28 September 2011 it filed an application applying to the Court for the following orders:

(1)  A declaration that the respondent, by its liquidators, is entitled, pursuant to section 72 of the Trusts Act, to realise the unit;

(2)  A declaration that the respondent, by its liquidator, is entitled to do all things necessarily consequent upon declaration 1 being made, including but not limited to the appointment of a real estate agent and the determination of the sale/reserve price and any other term of the realisation;

(3)  A declaration that the respondent, by its liquidator, is entitled to recoup its costs of realising the asset from the gross sale proceeds;

(4)  A declaration that the respondent, by its liquidator, is entitled to pay itself from the gross sale proceeds an amount equal to the unpaid liabilities of the respondent in its capacity as trustee of the trust known as the JT&PT O'Brien Super Fund (“the fund”);

(5)  further or in the alternative to prayers 1 to 4, a declaration that the respondent, by its liquidator, is entitled, pursuant to section 72 of the Trusts Act, to realise such other assets as may comprise the fund to the extent that the asset is either unavailable for sale or is insufficient to meet the indemnity (“the other assets”);

(6)  An order that the first respondent, by its liquidator, pay the net sale proceeds from the realisation of the asset or the other assets into Court;

(7)  Further or in the alternative to prayers 1 to 6, an order that the applicant in her capacity as joined and several trustee of the fund (along with John Thomas O'Brien and Juanita O'Brien) between 28 April 208 and 30 June 2011 indemnify the first respondent in respect of any liability that the respondent has incurred in its capacity as trustee of the fund, including but not limited to the judgment debt owing to the body corporate and any liability to the Australian Tax Office;

(8)  Further or in the alternative to prayer 7, an order that the applicant in her capacity as joint and several trustee of the fund between 28 April 2008 and 30 June 2011 specifically perform the covenant contained in clause 6.1 of a deed of variation in retirement and appointment of trustees of the fund dated 28 April 2008;

(9)  An order that any transfer of the asset by the first respondent to the applicant be stayed until further order;

(10)  An order that the applicant indemnify the respondent in respect of the respondent’s legal costs in these proceedings.

This second application was filed in the same matter number, 353/11, in which I had reserved my decision.  The applicant in its capacity as respondent to the second application contends that a reservation of liberty to apply does not permit a Court to re-open or re-determine in a substantive way a matter already concluded or disposed of.  It cites a useful analysis by Wilcox J in Comcare Australia v. Grimes and Anor [1994] 121 ALR 485 at 487 of the effect of reservation of liberty to apply orders.  However, that analysis is more concerned with the giving of liberty to apply at a time after orders have been made.

The position here is somewhat different in that the timing of the liberty to apply and the bringing of any such application was to precede my decision.  Nonetheless, it was quite plain from the orders I gave that the liberty to apply contemplated was restricted to an application arising out of the consequences of discovery of evidence of the kind that the respondent had unsuccessfully sought to subpoena for production before the conclusion of the first hearing.

The filing of the second application in the same matter, 353/11, in which I had reserved my decision, could only have been within the orders I gave if it related to the narrow point mentioned above.  It does not.

I acknowledge there may exist circumstances in which, because of some intervening event arising while a decision is reserved, it is proper to seek leave to re-open argument in the proceeding and to do so by the filing of a further application in the same matter.  However, there appears to have been no intervening event here which might explain why the second application was brought while my decision was reserved.

Further, there is no explanation why the issues sought to be agitated in the second application were not properly agitated in the course of the first application or, alternatively, agitated by way of a cross-application brought at the hearing of the first application.

A significant issue underlying the second application is the very issue on which I reserved judgment;  namely, whether the unit is, in truth, an asset of the fund.  For that issue to be agitated through the second application, at least indirectly, is an approach tending to undermine the strong emphasis in the authorities on the importance of the finality of proceeding.

The respondent could have, but did not, file a cross-application of the present kind in order that it be heard in conjunction with the applicant’s application in the same matter number.  Indeed, some of the issues it seeks to raise were touched on in its submissions at the first hearing.  For all of these reasons, I was disposed to dismiss the second application.  However, lest I was overlooking an issue properly raised relevant to my reserved decision, I, in fairness, permitted its counsel to make submissions on the merits.”

[13] His Honour then dealt briefly with the merits of the cross-application, and concluded:

“In respect of the second application, I conclude that in all the circumstances of the case, it ought not have been brought in respect of the matter which was by then reserved for my decision.  Even if I am wrong about that, I conclude the nature of the relief sought was inappropriate for pursuit by way of application.”

[14] Henry J then said that, in dismissing that cross-application, he would make an order reflecting the agreement reached between the parties as to “the orderly means of progression of their future dealings relating to the unit, its sale, and the proceeds of sale”.

[15] In relation to costs of the applications before him, Henry J dealt with arguments advanced before him concerning whether costs ought be paid personally by the liquidator and whether costs ought be ordered on an indemnity basis.  He determined that the appropriate order in respect of the first application before him would be for the costs to be met by both the respondent and the liquidator on the standard basis.  His Honour then said:

“In respect of the second application my conclusion, ultimately, is that there should be no order as to costs.  That might disappoint both ends of the Bar table.  My initial inclination in respect of the second application was that costs ought follow the event.  That is to say, that there should again be a costs order as against the respondent.

However, there were a number of factors which in combination caused me to conclude that the more appropriate course is to make no order as to costs.  One of those considerations is the circular nature of what was argued before me on the first application and then on the second to the extent that it touched on the indemnity issue. 

At the first application it was the respondent’s counsel who was arguing that that matter ought be dealt with by way of a proceeding rather than an application and that, in effect, it required proper pleadings.  Come the second application and it was the applicant’s counsel who was urging a similar view.

Another aspect to which I give weight is that while the respondent’s application has failed in the sense that the application for the orders sought is dismissed, it has, at another level, enjoyed success.

The success to which I refer is the preservation of its interests through the orders which the parties are in agreement should be made in respect of the payment into Court of a component of the sale proceeds of the property.

It appears to me that the making of that order is not merely in the interests of the respondent, but plainly also in the interests of the applicant who, doubtless, comprehended in the background to deciding to reach common ground that it was in the interests of the applicant also that such dispute as may remain between the parties is progressed in an orderly fashion.

It is against that background that I have concluded in all of the circumstances it is appropriate to make no order as to costs in respect of the second application.”

[16] The orders made by Henry J on 7 October 2011 were as follows:

“My orders then are as follows:

In respect of the application filed 2 September 2011 I:

(1)  declare that the applicant is the legal owner of the property located at lot 147 on SP140116 County of Stanley Parish of North Brisbane, title reference 50494813 (“the property”) as trustee for the JT & PM O'Brien Superannuation Fund;

(2)  order the respondent to sign all such documents and to do all such things as may be necessary or convenient to transfer the title of the property from the respondent to the applicant;

(3)  order that the respondent and Peter Dinoris pay the applicant’s costs of and incidental to the application to be assessed on the standard basis.

In respect of the 11 paragraph application (referred to in my reasons as the second application) filed 28 September 2011, I order:

(1)  that the application be dismissed;

(2)  that, by consent:

(a)  at any settlement of a contract for the sale of the property located at lot 147 on SP140116 County of Stanley Parish of North Brisbane title reference 50494813 (“the property”) entered into by the applicant, the applicant will cause a cheque to be paid into this honourable Court in the sum of $60,000 (“the fund”);

(b)  in the event that no proceedings are commenced by the respondent within two months of the date of the above payment into Court and served on the solicitors for the applicant, the fund is to be released by this honourable Court to the applicant and an affidavit by the solicitors for the applicant deposing to the fact that no proceedings have been served on them will be sufficient for the purposes of such release;

(c)  otherwise, the fund is only to be released by this honourable Court:

(i)  to the party/parties nominated in a consent signed by both parties and filed in this proceeding;  or

(ii)  in accordance with an order of this honourable Court;

(d)  either party has liberty to apply on the giving of two business days notice to the other party on any matters necessary to carry into effect the orders and/or directions of the Court dated 7 October 2011;

(3)  that there be no order as to costs in respect of this application.”

[17] The genesis of the proceeding before Henry J was a letter dated 26 July 2011 from the present respondent’s solicitor to the liquidator of the Company concerning the Unit.  The letter cited the history of the retirement of the Company as trustee of the Super Fund and the appointment of new trustees, said that the new trustees inadvertently did not transfer the Unit to themselves when they were appointed, enclosed copies of the relevant deeds, and called on the liquidator to confirm that he would not be taking any further action regarding the Unit.  The liquidator’s response was, in effect, to demand that the present respondent institute, within a specified short timeframe, proceedings to vindicate her claim in respect of the Unit.  That proceeding was then commenced and heard by Henry J. 

[18] I have already noted that the only relief now pursued on the present application is for indemnity “for all liabilities incurred by the Applicant in its capacity as trustee of” the Super Fund.  That indemnity is claimed “pursuant to s 72 of the Trusts Act (Qld) 1973, or alternatively pursuant to a covenant contained in a deed dated 28 April 2008”. 

[19] Section 72 of the Trusts Act provides:

72Reimbursement of trustee out of trust property

A trustee may reimburse himself or herself for or pay or discharge out of the trust property all expenses reasonably incurred in or about the execution of the trusts or powers.”

[20] In argument, the particular covenant in the April 2008 Deed on which reliance was placed was identified as cl 9, which provided:

“Subject to the Trust Deed, the New Trustees agree to discharge any liability incurred by the Retiring Trustee in its capacity as the Trustee from the assets of the Fund.”

For the purposes of that clause, “the Retiring Trustee” was the Company, and “the New Trustees” were John Thomas O'Brien, Patricia May O'Brien and Juanita Michelle O'Brien.

[21] In the case as ultimately pursued by counsel for the present applicant, the amounts for which indemnity was sought were:

(a)$1,999.68 owing to the Deputy Commissioner of Taxation for a running account deficit in respect of BAS amounts.  I note that the ATO had submitted a formal proof of debt dated 24 August 2011 to the liquidator claiming a total of $34,327.30 from the Company, and that this proof of debt expressly itemised the component of $1,999.68 as being the debt owing by the Company in its capacity as trustee of the Super Fund.  It is clear that the Company (in liquidation) should be indemnified for that sum, and there was no contest on this point before me;

(b)remuneration for the liquidator, in the sum of $4,643.10;

(c)legal expenses incurred by the liquidator, comprising (in the amounts ultimately advanced):

- solicitor’s fees of $22,648.29,  and

- counsel’s fees of $7,700.

[22] In respect of the liquidator’s work for which remuneration is claimed, the only detail in the material before me is contained in a spreadsheet exhibited to an affidavit by the liquidator, which he says gives details of his professional attendances “referrable to the administration of the trust”.  (Although the liquidator claimed remuneration in his affidavit of $5,284.40, in argument it was conceded that $641.30 of that work did not relate to administration of the Super Fund, yielding the claim for indemnity of $4,643.10.) 

[23] The spreadsheet identified individual attendances by the liquidator and his staff under a number of headings:

- “Nature of work : identifying trust property”;

- “Nature of work : attempting to recover trust property”;

- “Nature of work : attempting to realise trust assets”;

- “Nature of work : attempting to protect trust assets”.

[24] The attendances are itemised by date, and span a period from late July to mid-November 2011.  Beyond asserting that this spreadsheet gives a breakdown of “the total remuneration referrable to the administration of the trust”, the liquidator did not give any description in his affidavit of the work comprised in those attendances or the purpose for the attendances in connection with the administration of the Super Fund.  To the extent that the spreadsheet contains details of the work performed on each listed attendance, many of the entries are delphic, if not incomprehensible without further explanation.  Some of the entries appear to relate to something to do with the Super Fund; some of them appear to have nothing to do with the Super Fund (e.g. an entry on 20 October 2011 reading “Call to Scott Taylor to request confirmation no original report as to affairs was received”); a considerable number of the entries appear to be attendances in connection with the proceeding which was heard and determined by Henry J.

[25] In relation to the solicitor’s fees, an itemised tax invoice was produced, listing attendances between 7 September 2011 and 7 October 2011.  Even a cursory review of those itemised attendances reveals that this is the solicitor’s bill for acting in the proceeding before Henry J.

[26] The tax invoice for counsel’s fees, for which indemnity is claimed, reveals that these are the fees charged by counsel for the appearances before Henry J in October 2011 (i.e., the appearance on the argument concerning the “second application” referred to in his Honour’s judgment and an appearance on the delivery of his Honour’s judgment). 

[27] The present applicant’s claim for indemnity in respect of the liquidator’s remuneration and the legal fees rests on the assertion that these expenditures were incurred by the Company in discharge of the duties as trustee of the Super Fund. 

[28] In Dayroll Pty Ltd (in liq) v Dayroll NSW Pty Ltd,[2] Brereton J said:

“5  It is uncontroversial that a trustee has a right of indemnity out of the trust assets for expenses or liabilities properly and reasonably incurred in the administration of the trust [Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360, 367;  Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226, 245], that upon bankruptcy or liquidation of a trustee, its right of indemnity vests in its trustee in bankruptcy or liquidator [Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99, 109;  (1983) 7 ACLR 873, 882], and that this indemnity extends to the proper costs and expenses of the liquidator of a corporate trustee, incurred in the administration of the trust [Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99, 100;  Re Sutherland, French Caledonian Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361, [213];  Glazier Holdings Pty Ltd (in liq) v Australian Men’s Health Pty Ltd (in liq) [2006] NSWSC 1240, [42]].  However, this does not capture all the costs and expenses incurred by the liquidator of a corporate trustee, some of which will be attributable to liquidator’s role as liquidator of the trustee company, and not to administration of the trust;  it includes those costs and expenses reasonably incurred in identifying, recovering, realising, and protecting trust assets (or attempting to do so), and distributing tem to those beneficially entitled [13 Coromandel Place Pty Ltd v C L Custodians Pty Ltd (in liq) (1999) 30 ACSR 377, 385;  Re Sutherland, 426 [210]].”

[29] That case also concerned a claim by the liquidator of a corporate trustee to be indemnified out of trust assets for expenses, remuneration and legal fees.  However, unlike the present case (in which the Company had ceased to be trustee years previously), in the case before Brereton J the Company in liquidation was still the extant trustee when the relevant proceedings were commenced.  Brereton J said:

“11  Initially, Dayroll was justified in defending the claim for a declaration that Dayroll NSW had been appointed trustee in its place, as necessary steps to procure the appointment of a replacement trustee had not been completed.  However, the liquidator’s primary position was to put in issue the contention that all or any of the property held by Dayroll was held by it as trustee, with its alternative position being that, if it were established that Dayroll was a trustee, then it had a right of indemnity and was entitled to retain the trust assets for the purpose of satisfying liabilities of the trust.

12  If the proceedings had been defended only on the basis that Dayroll NSW had not made out its case that it had been appointed replacement trustee, Dayroll would undoubtedly be entitled to be indemnified for its costs.  And although it was unsuccessful in the contention [resolved in the related litigation in Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344] that it was entitled to retain possession of the trust property against the new trustee as security for its right of indemnity, such an argument on the state of the authorities was not an unreasonable one, and Dayroll would not have been deprived of its indemnity on account of mounting that unsuccessful defence.  However, the liquidator’s primary position – to put in issue that all or any of the property held by Dayroll was held by it as trustee – involved a denial of the trust, and a trustee is not be entitled to indemnity out of the trust assets for the costs of defending proceedings in which it denies that it hold assets on trust;  it would not have been acting as trustee, or in the interests of the trust, in so doing.

13  Moreover, although the indemnity to which the former trustee was entitled extended, in theory, to all liabilities incurred in the administration of the trust, as it transpired the only liability propounded was the liquidator’s costs and expenses.  As a matter of practicality, the proceedings were defended, not in the interests of the trust, but in the interests of the liquidator, in an endeavour to secure his remuneration.  In my view, the liquidator and company in liquidation have, in the defence of these proceedings, been acting in substance for their own benefit, not for the benefit of the trust, and should not be entitled to their costs of their unsuccessful defence out of the trust fund.”

[30] The final observations by Brereton J have, in my opinion, particular resonance in the present case.  The significant bulk of the present application is concerned with the liquidator seeking indemnity for the legal costs he incurred in connection with the proceeding before Henry J.  It is noteworthy that the liquidator’s “second application” before Henry J sought, amongst other things, declarations and orders to indemnify the Company (in liquidation) in respect of unpaid liabilities in its capacity as trustee of the Super Fund and for indemnity in respect of the legal costs in the proceedings before Henry J.  That second application was dismissed in the context of Henry J making orders which, as his Honour said, were “designed to allow the orderly preservation of the proceeds of sale of the unit pending the resolution of such proceeding as the [Company] may institute in respect of the indemnity issue”.

[31] Notwithstanding the fact that the Company had not, in fact, been trustee of the Super Fund for some years prior to the appointment of the liquidator, even if it could be said that the liquidator was nevertheless defending the proceeding before Henry J in pursuit of the administration of the trust, the right to indemnity only exists in respect of expenditure reasonably incurred in identifying, recovering, realising and protecting trust assets (or attempting to do so).  In my view it simply cannot be said that the present applicant’s expenditure of legal costs in defending the application before Henry J was reasonable.  On the contrary, it is quite clear that the proceeding before Henry J comprised a fight which the liquidator never should have had.  So much is apparent from his Honour’s reasons for ordering costs against the Company and the liquidator:

“Had [the liquidator] not taken the aggressive position of forcing the applicant to make an application and to do so promptly, it is highly likely that it eventually would have been able to satisfy itself in the proper conduct of its duties and obligations as a liquidator as to the veracity of the claims being communicated to it by the applicant’s solicitors.”

[32] A forteori in relation to the expenditure incurred in the abortive “second application” before Henry J – an application which, for the reasons given by his Honour, was completely misconceived.

[33] Accordingly, I do not consider that the Company (in liquidation) should be entitled to be indemnified out of the Super Fund for the legal costs incurred in connection with the proceeding before Henry J. 

[34] That leaves, then, the claim for indemnity in respect of the liquidator’s remuneration.  Leaving again to one side the detail that it is undisputed that, at the time this remuneration expenditure was incurred, the Company was not in fact the trustee of the Super Fund, it is simply not possible on the material before me to make an assessment of how much, if any, of the cost of the claimed attendances constituted expenditure reasonably incurred in the administration of the Super Fund.  To the extent that I can glean that much of it related to the proceedings before Henry J, I would, for the reasons given above, not have allowed indemnity for that component of the remuneration.  But beyond that, in the absence of some sworn evidence about the tasks performed and the relationship of those tasks to the administration of the Super Fund, it is impossible for me to make any proper assessment of an entitlement to an indemnity.  Counsel for the present applicant asserted in his submissions that “The liquidator was obliged to undertake work to administer the trust estate after the date of his appointment”.  That assertion was not, however, backed up by sufficient evidence.

[35] Accordingly, I will not allow the claim for indemnity in respect of the liquidator’s remuneration.

[36] The orders, therefore, will be that:

(a)The respondent indemnify the applicant from the $60,000 fund paid into Court on 22 November 2011 (“the Monies”) in the sum of $1,999.68 for the debt payable in that sum to the Deputy Commissioner of Taxation;

(b)The balance of the Monies (and any accretions) be paid out of Court to the respondent.

[37] I will hear the parties as to costs.

Footnotes

[1] [2011] QSC 399.

[2] [2009] NSWSC 895.

Close

Editorial Notes

  • Published Case Name:

    Robsyn Pty Ltd (in liquidation) v O'Brien

  • Shortened Case Name:

    Robsyn Pty Ltd v O'Brien

  • MNC:

    [2012] QSC 285

  • Court:

    QSC

  • Judge(s):

    Daubney J

  • Date:

    21 Sep 2012

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Comcare v Grimes (1994) 121 ALR 485
1 citation
Commissioner of Stamp Duties for New South Wales v Buckle & Ors (1998) 192 CLR 226
1 citation
Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) (1999) 30 ACSR 377
1 citation
Dayroll Pty Ltd (in liq) v Dayroll NSW Pty Ltd [2009] NSWSC 895
2 citations
French Caledonia Travel Service Pty Ltd (in liq) (2003) 59 NSWLR 361
1 citation
Glazier Holdings Pty Ltd (in liq) v Australian Men's Health Pty Ltd (in liq) [2006] NSWSC 1240
1 citation
Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344
1 citation
O'Brien v Robsyn Pty Ltd [2011] QSC 399
2 citations
Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360
1 citation
Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99
2 citations
Suco Gold Pty Ltd (in liq), In re (1983) 7 ACLR 873
1 citation

Cases Citing

Case NameFull CitationFrequency
CSR Building Products Ltd v Jonco Imports P/L [2013] QMC 91 citation
Park v Whyte [2015] QSC 2872 citations
Robsyn Pty Ltd (in liquidation) v O'Brien (No 2) [2012] QSC 3672 citations
1

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