FEDERAL COURT OF AUSTRALIA Woodgate, in the matter of Bell Hire Services Pty Ltd (in liq) [2016] FCA 1583 File number: NSD 1350 of 2015 Judge: FARRELL J Date of judgment: 23 December 2016 Catchwords: CORPORATIONS – application by liquidator for directions pursuant to s 479(3) of the Corporations Act 2001 (Cth) – where insolvent company corporate trustee – where sole purpose of the trust was carrying on the business of the insolvent company – whether the liquidator would be justified in treating the assets and liabilities of the company as assets and liabilities of the trust – whether appropriate for the liquidator's remuneration, the costs of this application and the costs of the petitioning creditor to be paid out of the assets of the trust Legislation: Corporations Act 2001 (Cth) ss 473(10), 479(3), 556 Trustee Act 1925 (NSW) s 63 Cases cited: Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 In the matter of AAA Financial Intelligence Ltd (in liquidation ACN 093 616 445 ) [2014] NSWSC 1004 Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550; [2008] NSWSC 1344 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 Re Suncoast Restoration Pty Ltd (in liq) (2013) 211 FCR 203; [2013] FCA 355 Trim Perfect Australia v Albrook Constructions [2006] NSWSC 153 Warner, in the matter of GTL Tradeup Pty Ltd (in liq) [2015] FCA 323 D'Angelo N, Commercial Trusts (LexisNexis Butterworths, 2014) D'Angelo, N "Commercial trusts in practice: the trust as a surrogate company" (Paper presented at the Annual Commercial and Corporate Law Conference, Supreme Court of New South Wales, 15 November 2016) LexisNexis, Austin & Black's Annotations to the Corporations Act Date of hearing: 30 November 2016 Date of last submissions: 23 December 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 39 Solicitor for the Applicant: Ms F Reynolds of Turks Legal ORDERS NSD 1350 of 2015 IN THE MATTER OF BELL HIRE SERVICES PTY LTD (IN LIQ) ACN 136 116 991 BETWEEN: WORKERS COMPENSATION NOMINAL INSURER ABN 83 564 379 108 Plaintiff AND: BELL HIRE SERVICES PTY LTD ACN 136 116 991 Defendant IN THE INTERLOCUTORY APPLICATION: GILES GEOFFREY WOODGATE IN HIS CAPACITY AS LIQUIDATOR OF BELL HIRE SERVICES PTY LTD (IN LIQ) AS TRUSTEE FOR THE VERCOE FAMILY TRUST ACN 136 116 991 Applicant JUDGE: FARRELL J DATE OF ORDER: 23 DECEMBER 2016 THE COURT GIVES DIRECTIONS AND ADVICE PURSUANT TO SECTION 479(3) OF THE CORPORATIONS ACT 2001 (CTH) AND SECTION 63 OF THE TRUSTEE ACT 1925 (NSW) THAT: (1) Mr Woodgate is justified in treating the assets and liabilities incurred by Bell Hire Services Pty Ltd in the conduct of its business as assets and liabilities of the Vercoe Family Trust. (2) Mr Woodgate be allowed remuneration in respect of the administration of the Vercoe Family Trust in the sum of $25,000 (GST inclusive). (3) Mr Woodgate would be justified in distributing the assets of the Vercoe Family Trust as follows: first, in paying Mr Woodgate's costs of this application fixed in an amount of $7,732; and second, in paying to Mr Woodgate up to $25,000 (GST inclusive) by way of remuneration. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT 1 On 17 February 2016, District Registrar Wall ordered that Bell Hire Services Pty Ltd (Company) be wound up in insolvency, that Mr Giles Woodgate of Woodgate & Co be appointed as liquidator of the Company and that the costs of the plaintiff creditor, the Workers Compensation Nominal Insurer (AAI Limited now trading as GIO), be fixed in an amount of $8,940.38. 2 The Company was incorporated on 25 March 2009, with Mr Barry William Vercoe appointed as its sole director. Mr Vercoe held that position until Mr Woodgate was appointed as liquidator. Mr Vercoe and Ms Louise Elizabeth Vercoe are the Company's sole shareholders. The Company was appointed as trustee of the Vercoe Family Trust (or Trust) under a deed dated 26 March 2009. Clause 10 of the deed provides that the appointment of the trustee automatically terminates when it is wound up. Mr Vercoe has declined to exercise his right to appoint a new trustee. Application 3 By interlocutory application accepted for filing on 5 October 2016 and amended on 7 November 2016, Mr Woodgate in his capacity as liquidator of the Company as trustee for the Vercoe Family Trust applied for directions under s 479(3) of the Corporations Act 2001 (Cth) and s 63 of the Trustee Act 1925 (NSW). Mr Woodgate's affidavit sworn on 19 September 2016 was read and Exhibit GW1 was tendered in support of the application. The directions sought are that: (1) Mr Woodgate be allowed remuneration in respect of the administration of the Vercoe Family Trust in the sum of $25,503.50 (plus GST). Exhibit GW1 contains a schedule of work done by Mr Woodgate and others at Woodgate & Co in support of this claim. (2) Mr Woodgate would be justified in distributing the assets of the Vercoe Family Trust as follows: first, reimbursing GIO its costs of obtaining the winding up order in the amount of $8,940.38; second, in paying the amount fixed by the Court as Mr Woodgate's costs of this application. Mr Woodgate has sought a fixed amount of $7,822 (exclusive of GST). The affidavit of Fiona Adele Reynolds sworn on 24 November 2016 (Ms Reynolds' affidavit) was read in support of this claim; and third, payment to Mr Woodgate of up to $28,053.85 by way of remuneration. Background 4 Since his appointment, Mr Woodgate has received books and records of the Company including monthly invoice packets for business and personal expenditure for the period June 2013 to December 2014 and June 2015 to February 2016, including MYOB reconciliation reports; bank statements and receipts; bundle of bank reconciliations and bank statements; tax invoices for work carried out and remittance advices from customers; the trust deed for the Vercoe Family Trust; a tax return for the Trust for the 2013 financial year; and MYOB electronic records. He has conducted investigations into the financial and business affairs of the Company. 5 As at the date of Mr Woodgate's appointment on 17 February 2016, the Company operated an earthmoving and excavation business located at Morpeth in New South Wales. Mr Woodgate believes that it did so as trustee of the Vercoe Family Trust and that that was the Company's sole activity. This view is based on: The fact that the Company entered into the trust deed under which the Vercoe Family Trust was established on the day after the Company was incorporated. The Vercoe Family Trust's tax return for the 2013 financial year indicates that "Bell Hire Pty Ltd" is the trustee and describes the main business activity of the company as "hire of construction machinery with operator". ASIC's records indicate that "Bell Hire Pty Ltd" was deregistered on 23 July 2008. Mr Woodgate believes the reference in the tax return is a reference to the Company. The Company maintained two bank accounts, both with the Commonwealth Bank of Australia. Those accounts were maintained in the name of the Company as trustee of the Vercoe Family Trust. Invoices in evidence direct payments to be made to those accounts. Assets 6 The records of the Company and discussions held by members of Mr Woodgate's firm with Mr Vercoe indicate that the Company leased the plant and equipment required to operate its business from Barry Vercoe Excavations Pty Ltd (subject to a deed of company arrangement) ACN 113 779 865, of which Mr Vercoe is the sole director. 7 Mr Woodgate believes that the only asset of the Vercoe Family Trust is an amount of approximately $30,000 standing to the credit of an account maintained by Mr Woodgate as liquidator of the Company with the National Australia Bank. This includes an amount of $20,885 recovered from Daracon Engineering, a debtor of the company, and an amount which had been in the Company's accounts with the Commonwealth Bank of Australia. Mr Woodgate deposed that he has not identified any other assets available to the Company that would enable him to realise funds for the benefit of creditors. Following the hearing, Ms Reynolds confirmed that if the proposed directions are given and implemented, Mr Woodgate will take steps to have the Company deregistered. 8 Mr Woodgate seeks directions from the Court as to whether he would be justified in treating the money held by him as an asset of the Trust and not the Company. For the reasons given by Mr Woodgate, I will give those directions. Creditors 9 As at the date of his affidavit, Mr Woodgate believed that the aggregate amount owed to creditors of the Trust is $291,267. That amount has increased slightly as a result of inspection of MYOB records of the Company, but no additional proofs of debt have been submitted. 10 The proof of debt register records the following creditors (identified creditors): Preferred Unsecured and Secured Creditors Debt Workers Compensation Nominal Insurer (GIO) $8,940 Barry Vercoe Annual Leave $20,000 Murray Martin Superannuation $8,000 Barry Vercoe Excavations Pty Ltd – DOCA contributions $32,000 Total Preferred Unsecured and Secured $68,940 Ordinary Unsecured Creditors Debt Australian Taxation Office $98,390 Workers Compensation Nominal Insurer (GIO) $10,039 East Maitland Bowling Club Ltd (the Club) $77,809 Steve Vercoe $35,000 Australian Securities and Investments Commission (ASIC) $1,089 Total Ordinary Unsecured $222,327 Total Creditors $291,267 11 Mr Woodgate understands that the Club prepaid the Company $86,000 for work to be performed. Notice to creditors and ASIC 12 A number of affidavits of service were read. I am satisfied that: A copy of the interlocutory application accepted for filing on 5 October 2016 and Mr Woodgate's affidavit were served by post or email on 7 October 2016 to the identified creditors (other than GIO & the Club) and by post or email on 10 October 2016 to the following potential creditors: PLH Accountants; Vermont Sands; Eastern Turf Traders Pty Ltd; BOC Limited; Castle Quarry Products Pty Ltd; Flynn Haulage; Jackson Haulage; Saddingtons Building Supplies; Telstra Corporation Limited; Toyota Finance Australian Limited; T.C. Waste Services; and the Club. A copy of the amended interlocutory application filed on 8 November 2016 and a letter advising of the time and date of the hearing was sent by post or email on 9 November 2016 to the identified creditors and the potential creditors. A copy of the interlocutory application accepted for filing on 5 October 2016 and Mr Woodgate's affidavit, and a copy of the amended interlocutory application filed on 8 November 2016 and a letter advising the time and date of the hearing was served on GIO by hand at its office at 18 Jamison Street, Sydney on 10 October and 9 November 2016. A copy of Ms Reynolds' affidavit was sent by post on 24 November 2016 to the identified creditors, other than the Club. This omission was not identified and it appears to have been an oversight. 13 Ms Reynolds tendered a letter dated 28 November 2016 from Ms Patricia Hu (lawyer, Insolvency Practitioners at ASIC) advising Ms Reynolds that the matters raised in these proceedings are properly left to the Court and that it did not propose to intervene or seek leave to appear. The letter acknowledged receipt of copies of the interlocutory application and Mr Woodgate's affidavit and the amended interlocutory application on 7 October and 9 November 2016. 14 Ms Reynolds represented Mr Woodgate at the hearing. When the hearing commenced, the matter was called outside the courtroom. No one else appeared. Notice of the original and amended application was given to certain identified creditors and potential creditors (see [10] and [12] above). ASIC was also notified. In the circumstances and having regard to the relatively small value of the assets held by the liquidator, I formed the view that the hearing should proceed even though there was no contradictor. 15 At the hearing, Ms Reynolds advised that: Mr Vercoe had made contact on 16 November 2016 and requested access to Exhibit GW1. That access was provided by electronic link. Mr Vercoe made no comment or further request for information. Mr Woodgate has established that Toyota Finance is not a creditor. GIO has advised that it neither supports nor opposes the proposed directions. No creditor has advised of its intention to appear at the hearing or of any objection to the Court making the proposed directions. 16 There were a number of factual issues on which I sought further information and gave Ms Reynolds leave to provide it following the hearing. I received responses to those questions and I have no reason to doubt that Mr Woodgate and his representatives have sought to provide the Court with all necessary information in connection with Mr Woodgate's application. 17 Since the hearing, I also afforded Mr Woodgate and GIO the opportunity to provide submissions on whether, in relation to costs incurred in obtaining the winding up order, GIO is a creditor of the Company but not of the Vercoe Family Trust with the result that trust assets cannot be used to pay those costs. Alternatively, if GIO were to be treated as a creditor of the Trust for those costs, on what basis s 556 of the Corporations Act can apply to afford GIO priority over other creditors of the Trust. Ms Reynolds has advised that neither Mr Woodgate nor GIO wished to provide oral or written submissions on this issue and were content for the application to be determined. Consideration 18 For the reasons given by Mr Woodgate, I am satisfied that the Company's sole business activity has been the conduct of the business of the Vercoe Family Trust. In those circumstances, the proceeds of the bank accounts with the Commonwealth Bank of Australia and the recovery from Daracon Engineering which are now held in Mr Woodgate's account with the National Australia Bank constitute property of the Vercoe Family Trust. 19 As the Company's winding up was ordered by the Court, Mr Woodgate as liquidator may apply to the Court under s 479(3) of the Corporations Act for directions "in relation to any particular matter arising under the winding up". The Court may give directions that provide guidance on matters of law and the reasonableness of a contemplated exercise of discretion, but it will typically not do so where a matter relates to making and implementing a commercial or business decision. Where a question concerns the respective rights of beneficiaries of a trust or their identity, it is generally considered inappropriate to give advice under s 63 of the Trustee Act. This application deals with matters on which the Court has typically been willing to give directions and advice. 20 In Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd (2008) 74 NSWLR 550; [2008] NSWSC 1344 at [14]-[22], Brereton J identified the following principles concerning a trustee's right of indemnity against trust assets, adopting in large part the analysis of Austin J in Trim Perfect Australia v Albrook Constructions [2006] NSWSC 153 at [20]. Citations have been deleted: First, as against a third party, a trustee is personally liable for debts and liabilities incurred in its capacity as trustee. Second, however, the trustee has a right of indemnity out of the trust assets for expenses or liabilities incurred by the trustee, by recoupment of expenditure and exoneration from liability. Third, this right of indemnity, recoupment and exoneration is secured by an equitable lien over the trust assets, which arises by operation of law and confers a proprietary interest, in the nature of a security interest, in the trust assets, and takes priority over the claims of beneficiaries. Fourth, this equitable lien extends to all of the trust assets, save only those that are specifically excluded by the trust instrument. Fifth, being an equitable lien, the security is enforceable by the trustee only by judicial sale or appointment of a receiver, and not by foreclosure or by sale out of Court. Sixth, the right of indemnity accrues at the time the obligation is incurred. Seventh, upon bankruptcy or liquidation of a trustee, its right of indemnity vests in its trustee in bankruptcy or liquidator. Eighth, if the trust property is transferred to a new trustee, the lien survives and the new trustee takes subject to the lien of the old trustee — except perhaps in the exceptional case of a bona fide purchaser for value without notice. Ninth, a trustee is entitled to retain possession of trust property against a beneficiary until its indemnity is exercised. 21 If, as here, a replacement trustee is not appointed, then the former trustee continues as bare trustee of the trust assets and retains its right of indemnity and exoneration over those assets, but does not have a power of sale: see Caterpillar Financial Australia Ltd v Ovens Nominees Pty Ltd [2011] FCA 677 at [13]-[25]; Re Suncoast Restoration Pty Ltd (in liq) (2013) 211 FCR 203; [2013] FCA 355 at [26]-[28] and Austin & Black's Annotations to the Corporations Act (LexisNexis, subscription service) at [5.473] (update 23). Remuneration and expenses 22 The liquidator's remuneration and expenses in respect of work relating to trust assets which is properly done for the purpose of winding up the company's affairs should be paid out of non-trust property of a trustee company to the extent that such property is available. However, if non-trust property is not available and a liquidator would not otherwise be required to undertake that work, it would normally be appropriate for the cost of the work to be paid from trust assets: see In the matter of AAA Financial Intelligence Ltd (in liquidation ACN 093 616 445 ) [2014] NSWSC 1004 (AAA) per Brereton J at [13]. 23 In these circumstances, the Court approaches the application on the basis that the liquidator will be entitled to be paid "reasonable remuneration" out of trust assets having regard to the factors set out in s 473(10). The liquidator bears the onus of establishing that the remuneration claimed is fair and reasonable, including that the work was properly performed in the due course of administration and that the amount claimed is a fair and reasonable reward for it. It does not follow that the liquidator will simply be allowed remuneration at their firm's standard hourly rates for time spent. The essential question is whether the work done, expenses incurred and rates charged were proper and reasonable: see AAA at [18]-[19]. I accept that it is relevant to take into account the size of the fund and the return gained, but see my discussion of this issue in Warner, in the matter of GTL Tradeup Pty Ltd (in liq) [2015] FCA 323 at [70]-[71]. Costs of this application 24 Where a trustee acts reasonably and in good faith, the general rule is that the trust assets bear the costs of a trustee's application for advice and directions either directly or under the trustee's indemnity. 25 Mr Woodgate relies on Ms Reynolds' affidavit. The items of work done set out in the schedule to Ms Reynolds' affidavit and the amounts charged are not obviously inappropriate, save that one item was duplicated and the amount now sought is $7,732. The schedule includes an amount for anticipated costs of Ms Reynolds' appearance at the hearing; given that Ms Reynolds has also been required to respond to issues raised by the Court, I consider that that amount was not excessive. None of the creditors or potential creditors has indicated any objection to this claim. 26 In the context of an insolvent trustee of a trading trust, it was appropriate for Mr Woodgate to approach the Court for directions and advice. I consider that Mr Woodgate would be justified in paying this expense from the assets of the Trust. Remuneration 27 Mr Woodgate claims remuneration in an aggregate amount of $25,503.50 (plus GST). For a period of work between 17 and 28 February 2016, Mr Woodgate claims $18,125.70 (plus GST) and for the period between 29 February and 7 March 2016, he claims $7,377.80 (plus GST). He explains that this is for work done by himself, his partner Mr Rowley (who appears to have primary conduct of the matter) and staff at Woodgate & Co at hourly rates set out in a schedule attached to his consent to act as liquidator, which was filed as part of the winding up application. The document indicates that the rates are Woodgate & Co's standard rates from 1 July 2015 to 30 June 2016. Detailed remuneration reports based on computer based time records are contained in Exhibit GW1. 28 Mr Woodgate summarised the work done "in connection with the liquidation of the Company" in his affidavit. 29 Taking into account the matters set out in s 473(10), it appears that the work done by Mr Woodgate and his firm was reasonably necessary having regard to the issues which were obvious and those which emerged. The allocation of the work among personnel of different skills and experience and time spent appear to be proportional to the difficulty and importance of the tasks, although there was some duplication which should be taken into account. It is also increasingly difficult to justify typists costs. The matter was not complicated, but there were two issues which required clarification: the ownership of assets (noting the role of Barry Vercoe Excavations) and the pre-payment by the Club, which necessitated discussions with Mr Vercoe and solicitors for Mr Vecroe and the Club. Mr Woodgate identifies no issues of real risk, although the nature of the trading trust is a complicating factor as to the identification of to whom payments should be made and in what priority (leading to this application). Although the period in which the work was undertaken was brief and realisations were not high, it does not appear that there has been any attempt to charge excessive remuneration when calculated by reference to hours worked. It all relates to the identification of assets, their protection or realisation (through debt recovery) and identification of liabilities. The work also covers associated notifications to regulators consequent on the winding up of the Company and of the trading activities of both the Company and the Trust. 30 As a practical matter, if payments were to be made in the manner specified in Mr Woodgate's application (that is, paying the costs of this application and paying GIO the costs of its application to wind up the Company), having regard to the available funds of approximately $30,000, he would recover approximately $13,327 (GST inclusive) by way of remuneration. That amount would be plainly justified, even though creditors generally would not receive any dividend. 31 For reasons set out below, I do not consider that GIO should be paid the costs of the winding up application in priority to the liquidator's remuneration. That means that after the costs of this application for directions, there remains approximately $22,000 cash at bank, less than the $25,503.50 (plus GST) claimed as remuneration by Mr Woodgate. Taking into account some minor duplication in tasks and the dearth of assets to satisfy the claimed remuneration, I am satisfied that an amount of $25,000 (GST inclusive) would be reasonable remuneration even though it would result in no creditor sharing in the assets of the Trust. This eventuality must have been apparent to creditors and potential creditors when they were advised of this application and more recently to GIO when submissions were sought in relation to the question of whether the costs of its application to wind up the Company should have priority. No one has appeared to make submissions or to object. Mr Woodgate has indicated that he intends that the Company be deregistered following distribution of the cash at bank and there is therefore little prospect of any further recoveries. I will give directions accordingly. Costs of winding up application 32 Mr Woodgate has sought directions which would prioritise GIO's claim for the costs of the winding up application over his recovery for remuneration and the costs of this application. 33 Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 is a case which dealt with the winding up of a company whose sole business was to act as trustee of a trading trust. The Full Court of the Supreme Court of South Australia (SASC) found that the costs of the creditor's petition are costs of the company which are covered by the trustee's right of indemnity on the basis that the company's obligation to pay debts incurred in carrying out the trust cannot be performed unless the liquidation proceeds. The Court also found that the trust assets should be paid according to the statutory order of priority in a winding up: see King CJ at 110. 34 The Court's view that the costs of the winding up application are trust debts may be open to question since winding up is about the status of the company as such, not its functions as trustee. An available view is that the costs of the winding up application are a debt imposed on, and personal to, the company under the Corporations Act. If Mr Vercoe had exercised his right to appoint a new trustee of the Trust, there is no obvious reason why the costs of the winding up application of a company that was the former trustee should be treated as a debt which should be recovered out of trust assets. If that view is right, trust assets could not be used to pay the costs of the winding up. Having not had the benefit of submissions and despite my doubts, I am not persuaded that the view adopted in Re Suco Gold is plainly wrong on the issue of whether the costs of winding up are to be regarded as a trust debt. I would follow it on that issue. 35 However, if the costs of the winding up application are an incident of the Trust's business, then having regard to the reasoning of Brereton J in In the matter of Independent Contractor Services (Aust) Pty Limited ACN 119 186 971 (in liquidation)(No 2) [2016] NSW 106, any claim by GIO as a creditor of the Trust for its costs of the winding up application must rank pari passu with other Trust creditors, outside the priority conferred by s 556(1)(b). That is contrary to the result in Re Suco Gold but consistent with the otherwise orthodox principles discussed by King CJ in Re Suco Gold at 104 and 107-108 and with the decision of the High Court in Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61. In my view, criticisms of the approach taken by Brereton J are misplaced and I will adopt that approach. 36 The fact that the trustee enjoys an indemnity secured generally over trust property and that it is proprietary in nature does not automatically bring trust property within the general pool of creditors' claims in a winding up or the statutory order of priority for payment. A trustee company is not entitled, in exercise of its indemnity, to appropriate trust property before payment of a trust debt so that the amounts appropriated become available to the company's creditors generally in the liquidation. It is only if the creditors of the trust have been paid out of the trustee company's own funds that the company's general creditors are entitled to be paid out of trust assets appropriated to satisfy the trustee's right of recoupment; the statutory order of priority for payment then applies. Unpaid trust creditors are entitled to stand in the shoes of the trustee and to obtain payment from the trust property; the right of subrogation must be exercised in their favour; trust property is therefore not property divisible among the trustee's creditors generally and the statutory order priority does not apply. 37 It has been observed that careful attention must be paid to whether the trustee's indemnity is being asserted as a right of recoupment or exoneration. Where it is exoneration, the trustee may resort to trust property only for the purpose of discharging trust liabilities. "Company law ends and trust law takes over" at a point earlier than where the right being exercised is the right of recoupment: see the useful discussion in D'Angelo, N "Commercial trusts in practice: the trust as a surrogate company" (Paper presented at the Annual Commercial and Corporate Law Conference, Supreme Court of New South Wales, 15 November 2016) and in his book Commercial Trusts (LexisNexis Butterworths, 2014), particularly at 5.124–5.127 under the heading "The true nature of the exoneration limb: a power to apply assets for the benefit of creditors". I endorse that view. It is inconsistent with principle to apply the statutory order of priority for payment of the company's debts out of its own property to the order of distribution of trust property. That this might result is two regimes (for trust property and property of the company) is unfortunate, but it is something which courts have had to accommodate. 38 Ultimately, it is irrelevant on this application whether GIO's costs of the winding up application are treated as a personal debt of the Company (so that they cannot be paid out of trust assets) or as a trust debt which ranks pari passu with other trust creditors. This is because the liquidator's claim for the costs of this application and for his remuneration (in the amount which I have allowed) is in aggregate, greater than the assets of the Trust held by the Company. If other trust assets were to emerge so that it became possible to make a distribution to trust creditors, the liquidator would, in my view, be justified in making any distribution to admitted trust creditors on a pari passu basis without according GIO's costs of the winding up application any priority. Disposition 39 I will make the following directions under s 479(3) of the Corporations Act and s 63 of the Trustee Act: (1) Mr Woodgate is justified in treating the assets and liabilities incurred by the Company in the conduct of its business as assets and liabilities of the Vercoe Family Trust. (2) Mr Woodgate be allowed remuneration in respect of the administration of the Vercoe Family Trust in the sum of $25,000 (GST inclusive). (3) Mr Woodgate would be justified in distributing the assets of the Vercoe Family Trust as follows: first, in paying Mr Woodgate's costs of this application fixed in an amount of $7,732; second, in paying to Mr Woodgate up to $25,000 (GST inclusive) by way of remuneration. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell. Associate: Dated: 23 December 2016