Park, in the matter of Queensland Nickel Pty Ltd (in liq) (No 3) [2022] FCA 1301

FEDERAL COURT OF AUSTRALIA

Park, in the matter of Queensland Nickel Pty Ltd (in liq) (No 3) [2022] FCA 1301 File number(s): QUD 235 of 2021

Judgment of: DOWNES J

Date of judgment: 2 November 2022

Catchwords: BANKRUPTCY AND INSOLVENCY – application for directions under s 90-15 of Schedule 2 of the Corporations Act 2001 (Cth) (Insolvency Practice Schedule) – debts incurred by corporate trustee while manager of joint venture – trustee went into administration and was replaced by new trustee – former trustee obtained funding pursuant to litigation funding agreement and brought successful proceeding to recover debt from related company – entry into funding agreement approved by committee of inspection – new trustee demanded payment of judgment sum – liquidators of former trustee seek advice that they would be justified in paying trust creditors from judgment sum along with expenses associated with recovery of debt and their remuneration before transferring any surplus to new trustee – new trustee and beneficiaries challenge payment to creditors on basis that debts were not properly incurred in the performance of the trust – new trustee and beneficiaries challenge payment of expenses associated with recovery of debt and remuneration on basis were improperly incurred – direction opposed on basis that former trustee failed to obtain court approval of litigation funding agreement prior to entering into it – direction opposed on basis of incomplete information – orders made TRUSTS AND TRUSTEES – application for judicial advice under s 96 of the Trusts Act 1973 (Qld) – whether trust property confined to funds held in bank account or to joint venture property as defined in joint venture agreement – whether trust creditors should be paid from proceeds of judgment sum following successful recovery of debt – whether former trustee has obligation to get in trust property after being replaced – whether former trustee acted in breach of trust by bringing proceeding to get in trust property – whether former trustee was required to transfer trust property to new trustee – where any such transfer would place trust property at risk – advice given