FEDERAL COURT OF AUSTRALIA

Caterpillar Financial Australia Limited v Ovens Nominees Pty Ltd [2011] FCA 677

THE COURT DECLARES THAT:

1.    Pursuant to s 1318 of the Corporations Act 2001 (Cth) (the Act), and further or alternatively s 67 of the Trustee Act 1958 (Vic) (the Trustee Act), Ross Andrew Blakeley (the Liquidator) in his capacity as liquidator acted honestly, and ought fairly to be excused, for any breaches, failures or omissions, relating to the administration of Ovens Nominees Pty Ltd (ACN 102 941 328) (the Company), referred to in paragraph 3 below.

AND THE COURT ORDERS THAT:

2.    Pursuant to s 479(3) of the Act and s 63 of the Trustee Act, the Company through its Liquidator be permitted to sell the assets of the Ovens Trust (the Trust) in the course of the winding up.

3.    Pursuant to s 479(3) of the Act, the sale by the Company under the control of the Liquidator of leased BMW motor vehicle Registration ISSHI being an asset of the Trust be deemed to be a sale within the power of the Company as trustee of the Trust.

4.    Pursuant to s 479(3) of the Act the proceeds of any sales of any Trust assets be dealt with by the Liquidator as assets in the winding up of the Company and accounted for accordingly.

5.    Pursuant to s 479(3) of the Act, the costs and expenses incurred by the Company and Liquidator in realising any Trust assets and otherwise dealing with any Trust be costs in the winding up.

6.    Pursuant to s 479(3) of the Act, the costs of this proceeding be costs in the winding up.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

APPLICATION

1    This is an application under ss 479(3) and 1318(2) of the Corporations Act 2001 (Cth) (the Act) and s 63 of the Trustee Act 1958 (Vic) (the Trustee Act) by Ovens Nominees Pty Ltd (ACN 102 941 328) (the Company) and its liquidator, Ross Andrew Blakeley (the Liquidator) seeking the following orders and relief:

1.    An Order under s 479(3) of the Act and s 63 of the Trustee Act that the Company through the Liquidator be permitted to sell the assets of the Ovens Trust (the Trust) in the course of the winding up;

2.    An Order under s 479(3) of the Act that the sale by the Company under the control of the Liquidator of leased BMW motor vehicle Registration ISSHI being an asset of the Trust (the BMW) be deemed to be a sale within the power of the Company as trustee of the Trust;

3.    A Declaration pursuant to s 1318 of the Act that the Liquidator in his capacity as liquidator acted honestly, and ought fairly to be excused, for any breaches, failures or omissions, relating to the administration of the Company, referred to in the preceding paragraph arising out of the sale of the said motor vehicle comprising a Trust asset;

4.    An Order under s 479(3) of the Act that the proceeds of any sales of any Trust assets be dealt by the Liquidator as assets in the winding up of the Company and accounted for accordingly;

5.    An Order under s 479(3) of the Act that the costs and expenses incurred by the Company and Liquidator in realising any Trust assets and otherwise dealing with any Trust be costs in the winding up; and

6.    An Order under s 479(3) of the Act that the costs of this proceeding be costs in the winding up.

BACKGROUND

2    On 10 February 2011, the Company was wound up by Court order and the Liquidator was appointed. The Company is recorded as trustee of the Trust constituted by a deed of trust dated 25 November 2002 (the Trust Deed).

3    The Liquidator’s investigations into the affairs of the Company revealed that the Company acted only as trustee of the Trust and in no other capacity and that all assets owned by the Company are held by it as trustee of the Trust and all liabilities incurred by the Company were incurred by it in its capacity as trustee of the Trust.

4    The principal asset of the Company consists of real property at 109 Panorama Drive, Doonan in the State of Queensland (the Queensland Property) which property is held by the Company as trustee of the Trust. Westpac Banking Corporation (the secured lender) (Westpac) holds a first registered mortgage over the Queensland Property.

5    In addition to Westpac as a secured creditor, the Liquidator’s investigations have identified other general unsecured creditors. These other general unsecured creditors have a claim against the Company which, in turn, has a right of indemnity out of the Trust Assets.

6    Clause 7.5 (b)(i) of the Trust Deed provides that the trustee will cease to be the trustee immediately if an official liquidator is appointed. Clause 7.2 of the Trust Deed provides that the appointor of the Trust may, by registered deed at any time, appoint a new trustee in the place of any trustee who resigns or ceases to be a trustee by operation of law. The evidence disclosed that Donna Anne Mottek (Ms Mottek), as appointor of the Trust, has not since the winding up of the Company exercised the power to appoint a replacement trustee under cl 7.2 of the Trust Deed and has no intention to exercise that power in the future.

7    As a result, the Company is currently a bare trustee and holds the assets of the Trust (including the Queensland Property) for the beneficiaries of the Trust.

8    As bare trustee, the Company has limited powers to deal with the assets of the Trust. The rights of exoneration and indemnity are not otherwise affected and the creditors’ rights of recourse against the assets of the Trust remain unaffected.

9    The Liquidator formed the view that the appropriate course is for the Liquidator on behalf of the Company as bare trustee to be given powers necessary to deal with the assets of the Company the subject of the Trust so as to realise those assets and otherwise account for those assets in the ordinary course of the winding up of the Company as corporate trustee.

10    Interestingly, there is a conflict in the authorities about the position of a corporate trustee in a winding up where the trustee is removed as trustee consequent upon the winding up, by virtue of a disqualification clause in a trust deed. In addition, the orders are sought because of the limited powers of a bare trustee to deal with trust assets. This impacts on the Liquidator’s position consequent upon the winding up of the bare trustee.

SERVICE OF THE INTERLOCUTORY PROCESS AND THE ATTITUDE OF THE INTERESTED PERSONS

11    A copy of the application was served on the Australian Securities and Investments Commission, Westpac and Ms Mottek. The application is not opposed.

12    In particular, the evidence disclosed that Ms Mottek, as appointor and sole beneficiary of the Trust, approves the sale of the assets of the Trust (including the Queensland Property) by the Company under the control of the Liquidator. The evidence also disclosed that Westpac approves the Company under the control of the Liquidator selling the Queensland Property and accounting to it as secured creditor in relation to the proceeds of sale in accordance with the terms of the securities it holds over the Queensland Property. Further, the evidence disclosed that Westpac approves of the sale of the remaining assets of the Trust by the Company under the control of the Liquidator.

RELEVANT LEGAL PRINCIPLES

13    The winding up of corporate trustees has been considered by the Courts on a number of occasions. As I noted earlier, the authorities are not easily reconciled where the trustee is removed consequent upon the winding up of the trustee and a disqualification clause in the trust deed. Before turning to consider those authorities, it is worth restating some established principles.

14    First, a liquidator of a corporate trustee may have recourse to trust assets to satisfy trust liabilities in the course of a corporate winding up: Octavo Investments Pty Limited v Knight (1979) 144 CLR 360, Vacuum Oil Company Proprietary Limited v Wiltshire (1945) 72 CLR 319 and In Re Suco Gold Pty Ltd (in liquidation) (1983) 33 SASR 99. That is consistent with the general principles that:

1.    Where a corporate trustee incurs a liability it has a right of indemnity out of trust assets and retains an equitable lien or equitable charge over trust assets to secure the right of indemnity;

2.    Where a trustee is still to incur a liability, it has a right of exoneration out of trust assets in respect of any prospective liability. The right of indemnity and/or right of exoneration out of trust assets is limited to circumstances where the trustee is properly acting in its capacity as trustee of the trust and is not guilty of any gross negligence or breach of trust; and

3.    A corporate trustee has a right to deal with trust assets in accordance with the terms of the trust for the purposes of satisfying any liabilities in respect of which the right of indemnity or the right of exoneration attaches, and this includes the power to sell trust assets.

15    What then is the position of the creditors of the corporate trustee in the winding up of that company? Creditors of the corporate trustee are entitled to claim in the winding up of the corporate trustee and to rank on the basis of any provable claim they have against the corporate trustee. This claim will be met by the corporate trustee out of the trust assets through the trustee’s right of indemnity (subject always to the availability of assets to meet the claim).

16    The trustee’s right of indemnity and/or exoneration is not automatically lost in the event that a corporate trustee is wound up in insolvency. Of course, to be payable out of the trust assets, the trust creditor’s claim must relate to a liability incurred by the corporate trustee in its capacity as trustee of the trust in respect of which the right of indemnity or right of exoneration attaches.

17    In addition, a liquidator has an entitlement to claim the costs and expenses incurred in winding up the affairs of the corporate trustee provided these relate to the performance of trust duties and, in respect of any liability incurred, the liquidator has a right of indemnity against trust assets and, in respect of any prospective liability, a right of exoneration against those assets.

18    The right of the corporate trustee to have recourse against trust assets to satisfy creditors’ claims and the liquidator’s costs of winding up when dealing with trust assets continues after the resignation or removal of the corporate trustee. However, as noted above, the authorities are in conflict where the trustee is removed as trustee consequent upon the winding up, by virtue of a disqualification clause in the trust deed.

19    In Re Suco Gold Pty Ltd (in liquidation) (1983) 33 SASR 99, King CJ observed (at 109):

The trustee’s lien is an equitable lien which confers on him a charge over the trust property, whether in his possession or not, for the purpose of protecting and enforcing the right of indemnity. It also confers on the trustee a right to possession of the trust property for the purpose of protecting and enforcing the right of indemnity, Jennings v Mather [1902] 1 KB 2. The right of possession of the trustee, until his right of indemnity is exercised, is superior to those of a new trustee or the cestuis que trust. The rights conferred by the lien passed to the liquidator. They would enable him to obtain and retain possession of the trust property until the right of indemnity has been exercised, and to realize the trust property in the course of exercising it. The lien is ancillary to the right of indemnity. When the right of indemnity has been exercised by recoupment of any amounts which the trustee has paid in connection with the trust and by payment out of the trust fund of any outstanding liabilities, the lien ceases and the balance of the trust property becomes available to a new trustee or the cestuis que trust as the case may be.

…

On these principles which I have discussed, the liquidator is entitled to have recourse to the property of each trust for the purpose of meeting the costs and expenses of winding up, the petitioner’s costs and the liquidator’s remuneration, so far as they are incurred in relation to each trust.

(Emphasis added).

20    As is apparent, King CJ’s analysis assumes that the corporate trustee remains as trustee of the trust notwithstanding being wound up. What happens though when the trustee is immediately removed as trustee consequent upon the winding up because of a disqualification clause in the trust deed? A corporate trustee retains its right of indemnity and right of exoneration and these can be enforced by a liquidator against trust assets. What is not so clear is how the corporate trustee, through its liquidator, would seek to enforce these rights.

21    As noted above, in Re Suco Gold, King CJ stated that on resignation or removal, the former trustee lost none of its rights including the right of dealing with the trust property as against a replacement trustee (or what was referred to as a “new trustee”) to the extent required to satisfy the rights of indemnity and exoneration.

22    In Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [2008] NSWSC 1344, Brereton J of the New South Wales Supreme Court dealt with an application by a company for orders and declarations that it was the properly appointed trustee of a trust consequent upon the winding up of the former trustee and the operation of a self-execution clause in the deed of trust which provided for removal of a trustee on winding up. The liquidator of the former trustee had also sought declarations concerning his entitlement to retain the trust assets as against the new trustee. Brereton J identified the following principles:

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.

(Citations removed)

23    The critical issue was “… whether the ninth proposition extend[ed] to allow a former trustee to retain assets pending exercise its right of indemnity, not as against a beneficiary, but as against a new trustee”. Brereton J noted that the authorities were far from clear and observed (at [50]):

To my mind, then, it follows in principle that a former trustee does not have a right to retain, as against a new trustee, the trust assets as security for an accrued right of indemnity, though the former trustee is entitled to ensure the new trustee does not take steps which will destroy, diminish or jeopardise the old trustee’s right of security, which subsists in the trust assets after their transfer to the new trustee. … It follows that I respectfully decline to follow the observations of the Full Court of Supreme Court of South Australia in Re Suco Gold (In Liq).

24    In general terms, the Court concluded that the old trustee held the assets as a bare trustee and that, as a bare trustee, it did not have the power to retain and sell those assets as against any new trustee. The Court made orders declaring that the new trustee was trustee of the trust in place of the old trustee but noting the entitlement of the old trustee to enforce its right of indemnity and right of exoneration against the assets of the trust in the hands of the new trustee. That is not surprising. There was a new trustee with all of the necessary powers including the power of sale.

25    In Ronori Pty Ltd v ACN 101 071 998 Pty Ltd [2008] NSWSC 246, a corporate trustee was the trustee of a trust containing a self-execution clause causing the removal of the trustee on the winding up of the trustee. A replacement trustee was anticipated and steps were put in place for that to occur. What is relevant for present purposes is that Barrett J observed that in the circumstances of that case, the self-execution clause was effective and caused the corporate trustee to be immediately removed. As a result, his Honour concluded that:

1.    it was open to interested parties to appoint a replacement trustee in accordance with the terms of the trust deed;

2.    the old trustee was a bare trustee of the assets pending such an appointment;

3.    the old trustee retained its right of indemnity and exoneration notwithstanding the winding up and the appointment of a replacement trustee;

4.    the replacement trustee would be bound to deal with the trust assets in a manner consistent with these rights of indemnity and exoneration.

Barrett J stood the matter over to enable the replacement trustee to be appointed and further ordered that the old trustee retain sufficient funds to meet any claims it may have under its rights of indemnity and exoneration.

26    As noted earlier, in the present case the position is different. There is no present likelihood of a new trustee being appointed. The appointor will not act and she is the only beneficiary of the Trust. No creditor has moved for appointment of a new trustee. The Company is and will remain a bare trustee. It may still hold the assets of the Trust. Its duties, powers and rights are limited to protecting the Trust assets: see, by way of example, Commissioner of Taxation v Bruton Holdings Pty Limited (in liq) [2008] FCAFC 184 at [79]; Commissioner of Taxation v Bruton Holdings Pty Limited (in liq) [2010] FCA 978 at [52] and Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 at 281. However, the bare trustee retains its right of indemnity or exoneration and its lien over the assets of the Trust.

27    Before turning to consider the duties, powers and rights of a bare trustee, reference should be made to Dalewon Pty Ltd (in liquidation) [2010] QSC 311. It dealt with a corporate trustee in liquidation which had incurred costs on behalf of two separate trusts. At [7] and [8] McMurdo J referred to the earlier authorities as follows:

[7]    In Octavo Investments Proprietary Limited v Knight, [367] Stephen, Mason, Aickin and Wilson JJ discussed the rights of a trustee to have recourse to trust assets to meet liabilities incurred in the discharge of the trust, and specifically where that trustee becomes a company in liquidation. Their Honours said that the following principles were not in dispute. A trustee which in the discharge of its trust enters into business transactions is liable to third parties for any debts that are incurred in the course of those transactions. However, it is entitled to be indemnified against those liabilities from the trust assets held by it and for the purpose of enforcing the indemnity the trustee possesses an equitable charge or lien over those assets. The charge applies to the whole range of trust assets in the trustee’s possession, except those assets, if any, which under the terms of the trust deed the trustee is not authorised to use for the purposes of carrying on the business. Where the trustee is entitled to this indemnity, there are two classes of persons having a beneficial interest in the trust assets: first, the cestuis que trust, those for whose benefit the trust was being carried on; and secondly, the trustee in respect of its right to be indemnified out of the trust assets, and of the two, it is the trustee’s interest which will be preferred. The creditors of the trustee may not execute against the trust assets, but in the event of the trustee’s bankruptcy or winding up, the creditors would be subrogated to the beneficial interest enjoyed by the trustee. Their Honours held that these principles led to the conclusion that the beneficial interests which, by subrogation, the creditors had in any assets held by the insolvent trustee formed part of the property of the trustee divisible amongst its creditors.

[8]    Further, the trustee’s right of indemnity accrues when the relevant obligation is incurred and is not lost if the trustee is replaced by another: Xebec Pty Ltd (in liq) v Enthe Pty Ltd [(1987) 18 ATR 893 at 898], Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olive Co Ltd [(2005) 31 WAR 162 at [30] and [62]], Dimos v Dikeakos Nominees Pty Ltd [(1996) 68 FCR 39 at 43]; Lemery Holdings Pty Ltd v Reliance Financial Services Pty Ltd [(2008) 74 NSWLR 550 at 554]. In that event and if the trust property is transferred to the new trustee, the charge or lien survives and the new trustee takes subject to that interest: Belar Pty Ltd (in liq) v Mahaffey [[2000] 1 Qd R 477 at 488]. Upon the liquidation of a trustee, its right of indemnity vests in the liquidator: Belar Pty Ltd (in liq) v Mahaffey [at 488].

The Court identified the critical requirement that the liquidator’s expenses be properly incurred in relation to the administration of a trust and, in the case of two trusts, properly apportioned between those trusts.

28    What then are the powers of a bare trustee? As noted, it has limited powers and these do not include a power of sale: see [26] above.

29    Section 63 of the Trustee Act provides:

(1)    Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument (if any) or by law, the Court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose on such terms and subject to such provisions and conditions (if any) as the Court thinks fit and may direct in what manner any money authorized to be expended, and the costs of any transaction are to be paid or borne as between capital and income.

(2)    The Court may from time to time rescind or vary any order made under this section, or may make any new or further order.

(3)    An application to the Court under this section may be made by the trustees, or by any of them, or by any person beneficially interested under the trust.

30    As a result, the Federal Court has the power to authorise the Company as a bare trustee to deal with trust assets and apply trust assets to meet claims under s 556 of the Act in the course of the winding up of the Company.

31    Finally, reference should also be made to ss 479(3) and 1318 of the Act and s 67 of the Trustee Act. Section 479(3) of the Act provides that a liquidator may apply to the Court for directions in relation to any particular matter arising under the winding up.

32    Section 1318 of the Act relevantly provides:

(1)    If, in any civil proceeding against a person to whom this section applies for negligence, default, breach of trust or breach of duty in a capacity as such a person, it appears to the court before which the proceedings are taken that the person is or may be liable in respect of the negligence, default or breach but that the person has acted honestly and that, having regard to all the circumstances of the case, including those connected with the person's appointment, the person ought fairly to be excused for the negligence, default or breach, the court may relieve the person either wholly or partly from liability on such terms as the court thinks fit.

(2)    Where a person to whom this section applies has reason to apprehend that any claim will or might be made against the person in respect of any negligence, default, breach of trust or breach of duty in a capacity as such a person, the person may apply to the Court for relief, and the Court has the same power to relieve the person as it would have had under subsection (1) if it had been a court before which proceedings against the person for negligence, default, breach of trust or breach of duty had been brought.

…

(4)    This section applies to a person who is:

…

(d)    a receiver, receiver and manager, liquidator or other person appointed or directed by the Court to carry out any duty under this Act in relation to a corporation.

…

33    Section 67 of the Trustee Act empowers the Court to excuse a breach of trust by a trustee who has acted honestly and reasonably. Section 67 provides:

If it appears to the Court that a trustee, whether appointed by the Court or otherwise, is or may be personally liable for any breach of trust, whether the transaction alleged to be a breach of trust occurred before or after the commencement of this Act, but has acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the Court in the matter in which he committed such breach, then the Court may relieve him either wholly or partly from personal liability for the same.

ANALYSIS

34    The Liquidator has formed the view that it is appropriate that all assets of the Trust be sold in the ordinary course and to allow for the proceeds of sale to be administered in accordance with the Act. There are two principal assets – the Queensland Property and the BMW. The Queensland Property has not been sold. The BMW has been sold for $90,000 and the Liquidator holds the proceeds of sale in the Company’s liquidation bank account pending the proper disbursement of the funds.

35    As is apparent, there are two questions. First, is it appropriate despite the absence of any power vested in the Company to sell assets of the Trust, for the Court to confer upon the Company the power of sale of the assets of the Trust (s 63 of the Trustee Act) and, if so, is it appropriate for the Court to excuse the Liquidator from selling the BMW when the Company did not have that power of sale.

36    The answer to the first question is yes. The Company became a bare trustee of the assets of the Trust immediately upon the winding up of the Company and the appointment of the Liquidator: see [26] above. Next, the Company acted only as trustee of the Trust and in no other capacity and all assets owned by the Company are held by it as trustee of the Trust and all liabilities incurred by the Company were incurred by it in its capacity as trustee of the Trust: see [3] above. Thirdly, where, as has occurred here, the appointor is unwilling for whatever reason to appoint a new trustee, it is appropriate for the Court to confer upon the Company the power of sale of the assets of the Trust pursuant to s 63 of the Trustee Act subject, of course, to the duties prescribed by that Act.

37    The next question concerns the fact that the BMW was sold when there was no power of sale conferred. No explanation was proffered by the Liquidator as to why or how that occurred. As a result, the Liquidator was called to give viva voce evidence at the hearing of the application.

38    The explanation is important because the duties and obligations differ depending on whether the Liquidator acted at a time when he knew or had reason to know that the Company was a bare trustee. If he did not know and did not have reason to know, the duties of a trustee cannot be imposed. The Liquidator is, however, compelled in equity to return the trust property and must pay compensation if this is not done. If, on the other hand, he did know or have reason to know, then the trustee must safeguard the property and account for it: Ford HAJ and Lee WA, The Law of Trusts, 4th ed, 2010, Thomson Legal & Regulatory Group Limited.

39    The Court referred the Liquidator to s 67 of the Trustee Act. In any event, s 67 will not assist a trustee which has failed to adduce evidence of honesty and reasonableness. In dealing with an equivalent provision in the United Kingdom, the Privy Council in National Trustees Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373 (PC) at 381 stated that:

Unless both [honesty and reasonableness] are proved the Court cannot help the trustees; but if both are made out, there is then a case for the Court to consider whether the trustee ought fairly to be excused for the breach, looking at all the circumstances.

See also Re Stuart [1897] 2 Ch 583 at 592 and Wilkie v McCalla (No 3) [1905] VLR 278 at 286, 293.

40    However, in Kerferd v Perpetual Executors and Trustees Association of Australasia Ltd (1893) 19 VLR 700 at 706, Holroyd J stated that if a trustee’s conduct would have been authorised by the Court had the trustee sought its directions, the trustee may expect to be excused.

41    As noted earlier, the Liquidator was called to give evidence and the Court was able to ask questions about the circumstances in which the BMW was sold. In general terms, the Liquidator’s evidence was that the BMW was a motor vehicle leased from BMW Finance, which was sold at public auction by Grays Auctioneers for a price not less than the value placed on the vehicle by the auctioneers. The BMW was sold with the approval of BMW Finance. The Liquidator has accounted to BMW Finance for the payout under the lease agreement and retains the balance (approximately $15,000) in his capacity as Liquidator. The Liquidator’s evidence, which I accept, was that the BMW was sold before the Liquidator was aware of the issues concerning the Trust Deed. The BMW was not sold at an undervalue. His conduct was both honest and reasonable.

42    In those circumstances, I consider that it is appropriate to grant the Liquidator a declaration pursuant to s 1318 of the Act and further or alternatively s 67 of the Trustee Act that in his capacity as liquidator he acted honestly, and ought fairly to be excused, for any breaches, failures or omissions, relating to the administration of the Company in relation to the sale of the BMW.

Associate:

Dated:    14 June 2011