FEDERAL COURT OF AUSTRALIA Australian Securities & Investments Commission v Primelife Corporation Ltd (ACN 010 622 901) [2007] FCA 1874 WINDING UP – liquidator's fees – where company being wound up is former trustee and liquidator has preserved trust assets – whether liquidator entitled to fees despite having knowledge that company not true trustee – liquidator entitled to fees incurred in securing and preserving trust assets where it has acted in absence of ability of true trustee to do so. Corporations Act 2001 (Cth): ss 473(3), 601EE 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (In Liq) (1999) 30 ACSR 337, applied Australian Securities and Investments Commission v Rowena Nominees Pty Ltd (2003) 45 ACSR 424, cited Re Interchase Corporation Ltd (In Liq) (1993) 44 FCR 501, cited Re WA Pines Pty Ltd (In Liq) (1994) 12 ACLC 328, cited IN THE MATTER OF THE WINDSOR VILLAGE PARTNERSHIP SCHEME AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v PRIMELIFE CORPORATION LTD (ACN 010 622 901), PRIMELIFE MANAGEMENT SERVICES PTY LTD (ACN 082 926 029), WINDSOR VILLAGE MANAGEMENT PTY LTD (ACN 088 339 913), GDK FINANCIAL SOLUTIONS PTY LIMITED (ACN 085 488 311), GLENDALE RETIREMENT NOMINEES PTY LTD (ACN 088 015 801), MELRA PTY LTD (ACN 088 202 091), AMBRIDGE PRODUCTIONS No 2 PTY LTD (ACN 088 161 979), GDK RETIREMENT NOMINEES (WINDSOR) PTY LTD (ACN 088 256 713), GLENRET PTY LTD (ACN 088 256 713), VILLAGE PARTNERSHIP (WINDSOR) NOMINEES PTY LTD (ACN 088 315 986), ERGO MANAGEMENT PTY LTD (ACN 088 394 705), BODERO AND ASSOCIATES PTY LTD (ACN 003 207 887), JONES FINANCIAL MANAGEMENT PTY LTD (ACN 077 909 883) and FORTIA FUNDS MANAGEMENT LTD (ACN 104 111 631) VID 1201 of 2004 IN THE MATTER OF GDK FINANCIAL SOLUTIONS PTY LIMITED PKF CHARTERED ACCOUNTANTS ADVISORS (A FIRM) v GDK FINANCIAL SOLUTIONS PTY LIMITED (ACN 085 488 311) VID 44 of 2006 GOLDBERG J 30 NOVEMBER 2007 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1201of 2004 IN THE MATTER OF THE WINDSOR VILLAGE PARTNERSHIP SCHEME BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff AND: PRIMELIFE CORPORATION LTD (ACN 010 622 901) First Defendant PRIMELIFE MANAGEMENT SERVICES PTY LTD (ACN 082 926 029) Second Defendant WINDSOR VILLAGE MANAGEMENT PTY LTD (ACN 088 339 913) Third Defendant GDK FINANCIAL SOLUTIONS PTY LIMITED (ACN 085 488 311) Fourth Defendant GLENDALE RETIREMENT NOMINEES PTY LTD (ACN 088 015 801) Fifth Defendant MELRA PTY LTD (ACN 088 202 091) Sixth Defendant AMBRIDGE PRODUCTIONS NO 2 PTY LTD (ACN 088 161 979) Seventh Defendant GDK RETIREMENT NOMINEES (WINDSOR) PTY LTD (ACN 088 256 713) Eighth Defendant GLENRET PTY LTD (ACN 088 256 713) Ninth Defendant VILLAGE PARTNERSHIP (WINDSOR) NOMINEES PTY LTD (ACN 088 315 986) Tenth Defendant ERGO MANAGEMENT PTY LTD (ACN 088 394 705) Eleventh Defendant BODERO AND ASSOCIATES PTY LTD (ACN 003 207 887) Twelfth Defendant JONES FINANCIAL MANAGEMENT PTY LTD (ACN 077 909 883) Thirteenth Defendant FORTIA FUNDS MANAGEMENT LTD (ACN 104 111 631) Fourteenth Defendant JUDGE: GOLDBERG J DATE OF ORDER: 30 NOVEMBER 2007 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. Andrew Reginald Yeo, in his capacity as liquidator of GDK Financial Solutions Pty Limited (In Liquidation) ("the Company"), is entitled to $190,224.50 by way of remuneration, to be paid out of the assets of the Company including assets held in trust and moneys held in Macquarie Bank Limited Corporate Cheque Account No 3016‑56492. 2. Andrew Reginald Yeo, in his capacity as liquidator of the Company, is entitled to reimbursement of costs, charges and expenses incurred in the winding up of the Company in the sum of $98,043.30 to be paid out of the assets of the Company, including assets held in trust and moneys held in Macquarie Bank Limited Corporate Cheque Account No 3016‑56492. 3. Andrew Reginald Yeo, in his capacity as liquidator of the Company, is entitled to be paid his future remuneration and costs, charges and expenses out of the assets of the Company, including assets held in trust and moneys held in Macquarie Bank Limited Corporate Cheque Account No 3016‑56492. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 44 of 2006 IN THE MATTER OF GDK FINANCIAL SOLUTIONS PTY LIMITED BETWEEN: PKF CHARTERED ACCOUNTANTS ADVISORS (A FIRM) Plaintiff AND: GDK FINANCIAL SOLUTIONS PTY LIMITED (ACN 085 488 311) First Defendant JUDGE: GOLDBERG J DATE OF ORDER: 30 NOVEMBER 2007 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. Andrew Reginald Yeo, in his capacity as liquidator of GDK Financial Solutions Pty Limited (In Liquidation) ("the Company"), is entitled to $190,224.50 by way of remuneration, to be paid out of the assets of the Company including assets held in trust and moneys held in Macquarie Bank Limited Corporate Cheque Account No 3016‑56492. 2. Andrew Reginald Yeo, in his capacity as liquidator of the Company, is entitled to reimbursement of costs, charges and expenses incurred in the winding up of the Company in the sum of $98,043.30 to be paid out of the assets of the Company, including assets held in trust and moneys held in Macquarie Bank Limited Corporate Cheque Account No 3016‑56492. 3. Andrew Reginald Yeo, in his capacity as liquidator of the Company, is entitled to be paid his future remuneration and costs, charges and expenses out of the assets of the Company, including assets held in trust and moneys held in Macquarie Bank Limited Corporate Cheque Account No 3016‑56492. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1201 of 2004 IN THE MATTER OF THE WINDSOR VILLAGE PARTNERSHIP SCHEME BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff AND: PRIMELIFE CORPORATION LTD (ACN 010 622 901) First Defendant PRIMELIFE MANAGEMENT SERVICES PTY LTD (ACN 082 926 029) Second Defendant WINDSOR VILLAGE MANAGEMENT PTY LTD (ACN 088 339 913) Third Defendant GDK FINANCIAL SOLUTIONS PTY LIMITED (ACN 085 488 311) Fourth Defendant GLENDALE RETIREMENT NOMINEES PTY LTD (ACN 088 015 801) Fifth Defendant MELRA PTY LTD (ACN 088 202 091) Sixth Defendant AMBRIDGE PRODUCTIONS NO 2 PTY LTD (ACN 088 161 979) Seventh Defendant GDK RETIREMENT NOMINEES (WINDSOR) PTY LTD (ACN 088 256 713) Eighth Defendant GLENRET PTY LTD (ACN 088 256 713) Ninth Defendant VILLAGE PARTNERSHIP (WINDSOR) NOMINEES PTY LTD (ACN 088 315 986) Tenth Defendant ERGO MANAGEMENT PTY LTD (ACN 088 394 705) Eleventh Defendant BODERO AND ASSOCIATES PTY LTD (ACN 003 207 887) Twelfth Defendant JONES FINANCIAL MANAGEMENT PTY LTD (ACN 077 909 883) Thirteenth Defendant FORTIA FUNDS MANAGEMENT LTD (ACN 104 111 631) Fourteenth Defendant IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 44 of 2006 IN THE MATTER OF GDK FINANCIAL SOLUTIONS PTY LIMITED BETWEEN: PKF CHARTERED ACCOUNTANTS ADVISORS (A FIRM) Plaintiff AND: GDK FINANCIAL SOLUTIONS PTY LIMITED (ACN 085 488 311) First Defendant JUDGE: GOLDBERG J DATE: 30 NOVEMBER 2007 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 On 25 May 2006 GDK Financial Solutions Pty Limited ("the Company") was wound up by order of the Court and Mr Andrew Reginald Yeo was appointed liquidator of the Company. 2 The matter now before the Court is an application by the liquidator for the following orders and directions: (a) an order pursuant to s 473(3)(b)(ii) of the Corporations Act 2001 (Cth) ("the Act") that his remuneration in the sum of $190,224.50 be approved; (b) directions pursuant to s 479(3) of the Act that : (i) he is entitled to his just and reasonable remuneration, in an amount to be fixed by the Court, to be paid out of the assets of the Company including monies held in Macquarie Bank Limited Corporate Cheque Account 3016‑56492 ("the Macquarie account"), even if such monies are held on trust; (ii) he is entitled to reimbursement of costs, charges and expenses incurred in the winding up of the Company in the sum of $98,123.30 to be paid of the assets of the Company including monies held in the Macquarie account, even if such monies are held on trust; (iii) he is entitled to be paid his future remuneration and costs, charges and expenses out of the assets of the Company including monies held in the Macquarie account, even if such monies are held on trust. 3 The Company was first registered on 8 December 1998 and its directors at that time were Mr Geoffrey Kenneth Woodham and Mr David John McLeod. On 15 December 1998 a Deed of Settlement was executed whereby the Company was appointed trustee of the Settlement and of The GDK Financial Solutions Trust ("the Trust"). The beneficiaries listed in the schedule to the Deed of Settlement were Yaltara Nominees Pty Ltd as trustee for the Munro Family Trust, Geoff Woodham Financial Services Pty Limited as trustee for the Woodham Family Trust and Boundup Pty Limited as trustee for the Babylon Trust. The third beneficiary represented the McLeod interests. 4 On 29 June 1999 the Company and a number of other companies (described as "investor partners") entered into two partnership agreements in relation to the acquisition, development and management of retirement village facilities. The first agreement was called The Windsor Village Partnership No 1 Agreement. By that agreement the Company agreed to act as manager of the partnership business on behalf of the investor partners who were listed in the schedule to the agreement. As well as being manager of the partnership business on behalf of investor partners, the Company was itself an investor partner. 5 The second agreement was called the Windsor Village Partnership No 2 Agreement and by that agreement the Company agreed to act as manager of the partnership business on behalf of the investor partners who were listed in the schedule to the agreement. The Company was not an investor partner in that partnership. 6 Each agreement provided that the Company was entitled to receive remuneration for services undertaken and the reimbursement of costs incurred in its capacity as manager of the partnership businesses. 7 In or about June 1999, Primelife Corporation Ltd and companies associated with it entered into a series of agreements with a number of investors and investor entities in relation to the acquisition, development and management of the Lexington Gardens Retirement Village and Hostel in Springvale. Each of the partnerships constituted by the Windsor Village Partnership No 1 Agreement and the Windsor Village Partnership No 2 Agreement, through nominees (Glendale Retirement Nominees Pty Ltd and GDK Nominees (Windsor) Pty Ltd) was one of the investors (together with Melra Pty Limited and Ambridge Productions No 2 Pty Ltd), in the Lexington Gardens Retirement Village and Hostel. The Company managed those investments of the two partnerships. 8 The Australian Securities and Investments Commission ("the Commission") claimed that the Lexington Gardens Retirement Village and Hostel project which became known as the Windsor Village Partnership Scheme and as the Windsor Gardens Retirement Village Scheme ("the Scheme") constituted a managed investment scheme which was not registered in accordance with the provisions of the Act. The Commission instituted proceedings against the various participants in the Scheme, including the Company, seeking, inter alia, declarations that the Scheme was an unregistered managed investment scheme and an order that the Scheme be wound up pursuant to the provisions of s 601EE of the Act. 9 Between June 1999 and early 2005 the Company acted as manager of the two partnerships which were participant partners in the Lexington Gardens Retirement Village and Hostel project. The Company was replaced as manager of the two partnerships by Fortia Funds Management Limited ("Fortia") in February 2005. The Company claimed that it was entitled to be paid money in respect of the management services it provided during this period. On 22 March 2006, prior to the Court order winding up the Company, a demand was made by letter on Fortia, as manager of the two partnerships, for payment of management fees and reimbursement of expenses for the years 2000 to 2004. The demand was apparently made by or on behalf of the beneficiaries of the Trust. The amount said to be due was $1,171,955 but the amount sought to be paid was "discounted to $600,000 pending the Prime Life arrangements". This was apparently a reference to the then pending proposal whereby the Primelife interests were to repay to investors in the Scheme an amount of the order of $17.25 million and various contracts and agreements were to be rescinded. Fortia challenged the Company's entitlement to be paid this amount and said that in any event even if it could prove that it had fulfilled its obligations in respect of management services the maximum amount due to it was $399,737. Fortia contended that the Company was not entitled to any management fees because the Company did not provide any management services or fulfil its contractual obligations. In December 2006, the liquidator and Fortia compromised the Company's claim on the basis that the Company would be paid $150,000. I approved that compromise on 13 February 2007. 10 On 8 June 2006, the Court declared that the Scheme was a managed investment scheme which was required to be registered under the provisions of the Corporations Law and the Act but was not registered. The Court ordered that the Scheme be wound up pursuant to s 601EE(1) of the Act. The Court ordered that Andrew James McLellan be appointed as independent accountant to enquire into and report to the Court on a number of matters specified in the order. As noted earlier, the Scheme had been involved in the development of the Lexington Gardens Retirement Village Facility in Springvale and involved the participation of a large number of investors who participated in the Scheme through a complex structure of partnerships, trusts and sub‑partnerships. The independent accountant delivered his report to the Court and the parties to the proceeding were given the opportunity to make submissions as to the manner in which the Scheme should be wound up. 11 It is common ground that all times the Company acted only as a trustee for the Trust. It did not carry on any business in its own right and all its activities were carried out in its capacity as trustee for the Trust. 12 Mr Geoffrey Kenneth Woodham and Mr David John McLeod were the first directors of the Company. Mr Kevin John Munro was appointed a director of the Company on 30 September 2002 and he and Mr Woodham ceased to act as directors from 5 February 2003. Mr Hector Charles McLeod was appointed a director of the Company on 19 January 2006 and ceased to be a director on 6 May 2006. Mr Roland Clive West was appointed a director of the Company and ceased to be a director on 17 May 2005. On 19 January 2006 Mr David John McLeod ceased to be a director. 13 On 20 May 2005 the Federal Court ordered that a company called Vertean Pty Ltd be appointed as trustee of the Trust in lieu of the Company and that Vertean Pty Ltd take into its possession, custody or control the property of the Trust. 14 The situation which then ensued in relation to the identity of the trustee of the Trust, the identities of the persons controlling the trustee of the Trust and the control and activities of the trustee of the Trust became complex and quite confused. It appears that there was a falling out between the Woodham, McLeod and Munro interests. It does not appear that Vertean Pty Ltd ever assumed the role as trustee of the Trust or took over control of its assets. A company called Equitable Overseers Pty Ltd became involved apparently, or purportedly, as trustee but issues and disputes arose as to who were the directors of that company and whether the directors had been properly appointed. Mr Peter Shiels QC claimed to control Equitable Overseers Pty Ltd as its sole director but Mr Shiels' role and control has been challenged by Mr Hector McLeod. David McLeod is Mr Hector McLeod's son and apparently became bankrupt in or about January 2006. There have also been allegations of the fraudulent alteration of entries in Company registers. 15 The liquidator of the Company has tried unsuccessfully to obtain the books and records of the Company from the various persons who have been involved in the Trust but he has had little success. 16 At the time the Commission instituted the proceeding for the winding up of the Scheme the Company in its capacity as trustee of the Trust was still the manager of the two partnerships which were themselves partners or investors in the Lexington Gardens Retirement Village and Hostel project. After the commencement of the Commission's proceeding the Company participated in the proceeding on behalf of the investor partners whose interests it had managed and sought to protect their interests and their entitlements. There were two entitlements of the Trust to be protected. There were management fees due to it and also its entitlement to be repaid or have returned to it the funds which the various investor partners had contributed to the Lexington Gardens Retirement Village and Hostel project. 17 The winding up of the Scheme by the Court involved the development and implementation of a proposal and process whereby various agreements between the Primelife interests and the investors would be rescinded, a deposit of $17.25 million paid by investors to Primelife interests in respect of the purchase of certain land would be repaid to the manager of the various partnerships involved in the Scheme, and funds would be made available by the Primelife interests to be paid to investors in return for what they had invested in the Scheme. A Deed of Settlement was entered into by all relevant parties and it was implemented by an order of the Court made on 13 February 2007. As a result funds were made available for distribution to investors in the Scheme. 18 Because of the issues which had arisen in relation to the claims of Messrs McLeod, Woodham, Munro and Shiels bearing on the control of the Trust and the identity of the trustee, the liquidator agreed not to disburse any monies received by him on the winding up of the Scheme, and to pay them into a bank account pending the determination by the Court as to the ultimate destination of those funds. 19 The amount due to the investors in the two partnerships managed by the Company was $346,070.48, and it was paid into an interest bearing account with Macquarie Bank Limited in the name of the Company ("the Macquarie account"). A further sum of $21,166.03 became payable to the investors in the two partnerships managed by the Company and it was also paid into the Macquarie account in the name of the Company. 20 The amount of $150,000 due to the Company as a result of the compromise between the liquidator and Fortia in respect of outstanding management fees and expenses was also paid into the Macquarie account. In due course the ultimate disposition of the funds remaining in that account after the payment out of any moneys due to the liquidator will have to be determined by the Court. 21 Although the Company was no longer trustee of the Trust after 20 May 2005 it continued, by its participation in the proceeding brought by the Commission, to act to preserve the assets of the Trust and preserve and represent the interests of the investor partners in the partnerships it had managed. The Company had been joined as a defendant in the proceeding brought by the Commission to wind up the Scheme in its capacity as a contracting party to some of the documentation which constituted the Scheme. As a defendant in the proceeding the Company was acting not to protect any assets in respect of which it had a beneficial ownership, but rather to protect the assets and interests of the Trust. 22 After the winding up of the Company, issues and disputes continued to arise in relation to the control and activities of the trustee of the Trust. Mr Hector McLeod, Mr Geoffrey Woodham and Mr Peter Shiels QC have all provided material which sets out in some detail, and with some complexity, the issues and disputes which had arisen between the parties competing to control the trustee of the Trust and its assets. During this period the process for the winding up of the Scheme was continuing. 23 The liquidator agreed that he would not make any application in relation to the disposition of the funds paid into the Macquarie account without first giving notice of his application to the parties who appeared to be claiming an interest in either the control of the trustee of the Trust or in the funds due to the Trust and the property of the Trust. 24 Accordingly, notice of the present application by the liquidator was given not only to the parties in the proceeding for the winding up of the Scheme but also to Mr Geoffrey Kenneth Woodham, Mr Kevin Munro, Mr Hector Charles McLeod, Mr Paul Weston as trustee in bankruptcy of Mr David John McLeod, Equitable Overseers Pty Ltd and Montgomery Mercantile Pty Ltd. 25 On 21 May 2007 the liquidator convened a meeting of the creditors of the Company. The meeting of creditors took place on 6 June 2007. A resolution was proposed for the payment of the liquidator's remuneration pursuant to s 473(3) of the Act but that resolution failed because a majority of the creditors in number voted against the resolution. 26 In carrying out his duties as liquidator of the Company, the liquidator has incurred expenses in relation to legal advice from his solicitors which total $84,811.26 to date. The liquidator has produced invoices evidencing those expenses. The liquidator has also received an invoice from the solicitors for the petitioning creditor of the Company which total $6,112.92. The liquidator has also incurred out of pocket expenses totalling $7,199.12. 27 In the course of performing his duties as liquidator, the liquidator has been involved in the winding up of the Scheme in which he has represented the interests of the two partnerships. He has provided considerable detail of the work carried out by himself and his staff and I am satisfied that that work has been carried out and that it was reasonable that it be carried out. 28 In the ordinary course a liquidator is entitled to be paid his costs and expenses incurred in the course of the liquidation and the winding up and his remuneration for acting as liquidator out of the assets and funds of the Company which are received and held by him. In the present circumstances the matter is complicated by the fact that the funds which the liquidator has received in respect of management fees and return of funds invested have been received by him as trust funds and as representing funds due to the Company and to him in the capacity of trustee only. The Company has no claim to beneficial entitlement of any of the funds received by the liquidator. 29 The procedure by which the liquidator establishes his claim and entitlement to be paid remuneration is found in s 473(3) of the Act which provides: "A liquidator is entitled to receive such remuneration by way of percentage or otherwise as is determined: (a) if there is a committee of inspection – by agreement between the liquidator and the committee of inspection; or (b) if there is no committee of inspection of the liquidator and the committee of inspection fail to agree: (i) by resolution of the creditors; or (ii) if no such resolution is passed – by the Court." As the meeting convened to consider a resolution to approve of remuneration for the liquidator did not pass that resolution, the Court now has power pursuant to s 473(3) of the Act to determine the amount of the remuneration which can be paid to the liquidator out of the Company's assets: Re Interchase Corporation Ltd (In Liq) (1993) 44 FCR 501; Re WA Pines Pty Ltd (In Liq) (1994) 12 ACLC 328; Australian Securities and Investments Commission v Rowena Nominees Pty Ltd (2003) 45 ACSR 424 at 444. 30 The Court also has to resolve the associated question whether the liquidator's remuneration can be paid out of trust assets. That question is addressed procedurally by the liquidator seeking directions to that effect pursuant to s 479(3) of the Act. The payment of the liquidator's costs and expenses is not covered by s 473(3) of the Act which applies only to the payment of remuneration to the liquidator. Authority for that payment is obtained by the liquidator applying to the Court pursuant to s 479(3) of the Act for directions as to the payment of those costs and expenses. This the liquidator has done. 31 The efforts and activities of the liquidator have preserved and protected the management fees claimed by the Company and the investment amounts now received for the benefit of the beneficiaries of the Trust. During the period of the winding up of the Scheme and amidst the disputations surrounding the trust that I have referred to earlier, the liquidator has ensured that the trust property and entitlements of the Trust to funds due as a result of the winding up of the Scheme have been preserved and protected. 32 The issue for determination is whether, as the Company has only acted as a corporate trustee, the liquidator is entitled to have his remuneration costs, charges and expenses paid out of Trust assets. In 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (In Liq) (1999) 30 ACSR 337. Finkelstein J considered a number of authorities in which this issue had arisen and said at 385: "These cases establish, clearly enough in my opinion, that provided a liquidator is acting reasonably he is entitled to be indemnified out of trust assets for his costs and expenses in carrying out the following activities: identifying or attempting to identify trust assets; recovering or attempting to recover trusts assets; realising or attempting to realise trust assets; protecting or attempting to protect trust assets; distributing trust assets to the persons beneficially entitled to them. The position is a little more involved as regards work done and expenses incurred in what may be described as general liquidation matters. If that work is unrelated to the beneficiaries and their claims it is difficult to see how the cost could be charged against their assets. In the case of a company that has carried on the business of trustee it might be that much of the work involved in the liquidation is chargeable against trust assets if it can be shown that the liquidation is necessary for the proper administration of the trust. But it is unlikely that this will be so where the company did not act solely as trustee or at least did not act in that capacity to a significant extent. In that event, the liquidator will be required to estimate those of his costs that are attributable to the administration of trust property and only those costs will be charged against the trust assets." 33 In the present case, the Company has acted solely as a trustee, so no issue of apportionment of costs and expenses and remuneration arises. 34 The present case is further complicated by the fact that although the liquidator may have preserved the Trust assets, at relevant times, to the knowledge of the liquidator, the Company was not the trustee of the Trust, the assets of which the liquidator was protecting. Nevertheless, I consider that the principles applied by Finkelstein J in 13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (In Liq) (supra) apply in circumstances where there has been confusion or difficulties in relation to the activities of the true trustee of the Trust and where the liquidator has filled a lacuna and acted in the absence of the ability of the true trustee to do so for the purposes of securing and preserving trust assets. The liquidator was inevitably drawn into the proceeding commenced by the Commission as the Company was an initial defendant in that proceeding. 35 At the time the Scheme was being wound up, although the Company was not then the trustee of the Trust, it was inevitably involved in the winding up of the Scheme process because it had been one of the participating parties when the Scheme was established in June 1999. It was the contracting party entitled on a winding up of the Scheme to receive the distribution of the return of investment funds. In short, the participation of the Company in the winding up process of the Scheme was an essential part of that winding up. The liquidator was a necessary party involved in the winding up of the Scheme. Further, so far as the management fees were concerned, the Company, and therefore the liquidator, was the contracting party entitled to recover it. The compromise of that claim could not have occurred without the participation of the liquidator. 36 In these circumstances it is proper and appropriate that the liquidator's remuneration and his costs, charges and expenses incurred in the winding up of the Company be paid out of the assets of the Company and the assets of the Company which are held in trust for the Trust including the funds held by him in the Macquarie account. 37 I am satisfied that the liquidator's remuneration is reasonable and that he has substantially, and in detail, justified and explained the work carried out and the quantum of it. I approve that remuneration pursuant to s 473(3)(b)(ii). I am also satisfied that the expenses have been appropriately and reasonably incurred and I direct that the liquidator be entitled to retain and have paid those costs, charges and expenses out of the assets of the Trust including the assets held in trust. 38 I will order and direct that the liquidator is entitled to remuneration of $190,224.50 to be paid out of the assets of the Company, including assets held in trust and is entitled to reimbursement of costs, charges and expenses incurred in the winding up of the Company in the sum of $98,043.30 to be paid out of the assets of the Company, including assets held in trust. I will also order and direct that the liquidator is entitled to be paid his future remuneration, costs, charges and expenses out of the assets of the Company, including assets held in trust. The orders and directions will be made and given in the proceeding in which the Company was wound up and in the proceeding in which the Scheme was wound up as the motion by the liquidator was filed in both proceedings. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate: Dated: 30 November 2007 Counsel for the Liquidator: Mr L Glick S.C. and Mr Rush Solicitor for the Liquidator Schetzer Brott & Apel Counsel for the Australian Securities and Investments Commission: Mr R Knowles Solicitor for the Australian Securities and Investments Commission: Australian Securities and Investments Commission Counsel for Equitable Overseers Pty Ltd: Ms A Kinghan Solicitor for the Equitable Overseers Pty Ltd: Kinghan & Associates Date of Hearing: 30 October 2007 Date of Judgment: 30 November 2007