FEDERAL COURT OF AUSTRALIA
DATE OF ORDER:
THE COURT ORDERS THAT:
(a) The plaintiff as liquidator of Gembrook Investments Pty Ltd (in liq) (Company) is justified in treating and shall treat:
(i) all of the business and assets of the Company as assets of the Bailey Family Trust (Trust);
(ii) all of the debts and liabilities which are provable in the winding up of the Company as having been incurred in the conduct of a business as trustee of the Trust;
(iii) all of the assets of the Trust, including the proceeds of assets realised by the plaintiff in the course of the external administration of the Company (Proceeds) as being subject to an indemnity in favour of the Company as to its power to exonerate the debts and liabilities provable in the winding up.
(b) The plaintiff is justified in distributing and shall distribute the Proceeds:
(i) first, in payment of his remuneration, costs, disbursements and expenses as approved by these orders;
(ii) second, in payment of creditors afforded priority under s 556 of the Corporations Act in the order of priority afforded under that section;
(iii) third, in respect of any remaining amount in payment of a dividend to unsecured creditors of the Company
(c) The plaintiff is entitled to be paid remuneration, costs, disbursements and expenses in the amount of $64,600 (inclusive of GST where applicable) for the period from 12 September 2017 to 12 April 2019.
(d) The plaintiff is entitled to be paid further reasonable remuneration from and including 13 April 2019 up to an amount of $5,500 (including GST).
2. The plaintiff shall give notice of these orders by circular sent by ordinary post within 7 days of the making of these orders to each of the Company's creditors, persons known to be claiming to be creditors of the Company and persons known to be beneficiaries of the Trust.
3. There be liberty to any party claiming to be prejudiced by the making of these orders to apply to vacate or vary the orders on or before 20 August 2019.
4. These orders shall not take effect unless and until there has been compliance with order 2 and shall, in any event, be stayed until 20 August 2019.
5. There be no order as to costs of the application.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
1 Mr Giovanni Carrello is the liquidator of Gembrook Investments Pty Ltd (in liq) (Gembrook). He was appointed on 12 September 2017. At the time of his appointment, Gembrook was, and had been for some time, the trustee of the Bailey Family Trust which traded as Hogs Breath Café Joondalup. All of the assets of Gembrook are assets of the Trust. The assets have been realised and preferences recovered. There are priority creditors with employee entitlement claims. There are insufficient funds to meet creditor claims.
2 Mr Carrello seeks orders authorising the distribution of the realised proceeds of assets of the Trust and recovered preferences to pay remuneration, then to pay priority creditors in the order of priority stated in s 556 of the Corporations Act 2001 (Cth) and to pay any balance to ordinary unsecured creditors. He also asks the Court to determine the amount of the remuneration.
3 Notice of the application has been given to known creditors and those claiming to be creditors and identified beneficiaries of the Trust. However, the class of beneficiaries is wide and Mr Carrello does not claim to have notified all beneficiaries given the impracticalities of doing so. No party appeared to oppose the orders. Mr Carrello seeks orders on the basis that their operation be stayed for a period of 14 days after notice of the orders has been given by way of circular so as to provide a further opportunity to any interested party to apply to set aside the orders if there be a proper reason to do so. As the application is brought ex parte such a right exists in any event: r 39.05(a) of the Federal Court Rules 2011 (Cth). However, if the orders proposed are made it would be appropriate for steps to be taken to draw that possibility to the attention of interested parties and to set a time by way of directions for bringing such an application (recognising that there would remain the possibility, in an appropriate case, for further time to be granted to an applicant who had not delayed unreasonably in bring the application).
4 The terms of the Trust conferred a power of amendment that could be exercised with the consent of the guardian. The terms were amended by deed on the day before the appointment of Mr Carrello. The amendment provided that the Trustee of the Trust could not be removed by the appointor if a liquidator was appointed to the Trustee. It also provided that where a liquidator was appointed 'all remuneration, fees, charges and expenses of [the liquidation] shall be expenses properly incurred by the Trustee in the administration of the trust and payable from the Trust Fund'. The guardian consented to the amendment.
5 However, cl 23 of the deed recording the terms of the Trust remained unchanged. It stated:
Any Trustee hereunder being a company may from time to time charge and retain out of the Trust Fund such Trustee's commission as it may think fit but not exceeding in any accounting period five per centum of income of the Trust Fund arising during such period but shall not be entitled to charge any commission on capital profits or accretions to capital.
6 The deed also makes no provision for any priority for the application of the funds of the Trust where there are insufficient funds to meet all claims against the Trust assets. However, there is an express power conferred to sell the assets of the Trust. Mr Carrello seeks no orders in respect of the steps taken to realise the trust assets, save that he seeks remuneration for having taken those steps. He says that notwithstanding its liquidation, Gembrook continued as trustee of the Trust and it was authorised by the terms of the Trust to sell the assets.
7 Plainly, the amendment to the trust deed was made at a time when the insolvency of Gembrook was known. The extent of the amendment power is to be determined by construction of the trust instrument: Byrnes v Kendle  HCA 26; (2011) 243 CLR 253 at , , . The power of amendment in the present case is expressed in the same terms (as to the operative part) as the power of amendment considered in Mercanti v Mercanti  WASCA 206; (2016) 50 WAR 495. In that case, the provision was given broad effect. However, there remains a question whether the amendment power has been exercised in circumstances that would amount to a fraud on the power. In Mercanti, Buss P concluded that the power could only be exercised for the purpose for which it is conferred and not for any extraneous or ulterior purpose: at . Newnes and Murphy JJ considered the same point at -, dealing with the point on the facts, but recognising that the equitable rule of fraud on the power might apply. Their Honours found it unnecessary to examine whether there was a separate principle that constrained the exercise of a power of amendment in a manner that would destroy the substratum of the trust: at .
8 In this case, the amendment power appears to have been exercised in the interests of creditors rather than the beneficiaries of the trust. The terms in which the amendment are expressed suggest that its purpose was to enable the liquidator to continue to control Gembrook as trustee so that steps could be taken to sell the assets of the trust and then apply the proceeds by way of exoneration on the basis that the trustee had a right to be indemnified out of the assets of the trust to the extent of liabilities incurred to creditors. Viewed in that way it was an amendment made for the benefit of the trustee (and indirectly the creditors of the trustee).
9 No argument was made to support the validity of the amendment. The application was advanced on the basis that it was valid and effective. Having regard to the nature of the present application it is not necessary to finally determine the question. No party has taken objection to Gembrook continuing to act as trustee of the Trust and there is no ipso facto clause that would disqualify Gembrook from acting as trustee of the Trust upon the commencement of its insolvent administration.
The appropriate course
10 The liquidator of an insolvent former trustee can exercise the statutory authority of a liquidator to realise the assets of a trust in the exercise of a lien or charge that secured the trustee's right of indemnity. However, in such instances, a court order is required: Jones (Liquidator) v Matrix Partners Pty Ltd, in the matter of Killarnee Civil & Concrete Contractors Pty Ltd (in liq)  FCAFC 40; (2018) 260 FCR 310 at  (Allsop CJ, Farrell J agreeing at ). Once the sale has been effected, the proceeds may be appropriated by way of exoneration as part of the conduct of the administration and must be paid in accordance with the priority under s 556 of the Corporations Act: Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth  HCA 20 at - (Kiefel CJ, Keane and Edelman JJ), - (Bell, Gageler and Nettle JJ),  (Gordon J).
11 In this case, Gembrook's right to exoneration from the assets of the Trust substantially exceeds the amount of those assets. There are no general creditors, only trust creditors. As recently noted by Moshinsky J in Cremin, in the matter of Brimson Pty Ltd (in liq)  FCA 1023 at , in such a situation 'the proceeds from the exercise of the right of exoneration are to be distributed to the trust creditors in accordance with the order of priority prescribed by the Corporations Act'.
12 Therefore, if Mr Carrello had followed the course of seeking to be appointed as a receiver of the trust assets for the purpose of their realisation in order for the proceeds to be applied to satisfy the right of exoneration, there would be no need for the orders that are sought as to the remuneration of Mr Carrello in acting as liquidator of Gembrook as trustee. Further, Mr Carrello would be entitled to remuneration for his work as liquidator in doing so: Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 at 110 (King CJ).
13 However, even though Mr Carrello did not seek an order that he be appointed as receiver, once he was appointed as liquidator of Gembrook there was no prospect of any distribution of property to beneficiaries of the Trust. The trust assets were burdened with a lien or charge to the extent of the substantial right of exoneration of Gembrook. The creditors could claim the benefit of that right. Gembrook as trustee could then realise the assets for the benefit of creditors or allow a receiver to do so. There was no means by which Gembrook as trustee could oppose the realisation of the assets for the benefit of the creditors of Gembrook.
14 In submissions in support of the application, reliance was placed upon decisions in which the view was expressed that the Court could make orders for the payment of the expenses and remuneration of a liquidator of an insolvent corporate trustee: see, for example: Re Mamounia Pty Ltd (in liq)  VSC 230; and In the matter of Independent Contractor Services (Aust) Pty Ltd (No 2) (in liq)  NSWSC 106 and In the matter of AAA Financial Intelligence Ltd (in liq)  NSWSC 1004. However, those decisions were made before the recent clarification of the law in this area, particularly the decisions in Matrix Partners and Carter Holt Harvey Woodproducts.
15 Further, the course of the decisions concerning the circumstances in which it may be appropriate for a liquidator to be remunerated for actions taken in the administration of a trust of which the company under administration is trustee were traced with some care by Robson J in Re Mamounia at -. They begin with the reasons of Dixon J in Re Universal Distributing Co Ltd (in liq)  HCA 2; (1933) 48 CLR 171. The reasoning in that decision was to the effect that the liquidator could deduct from a fund created from assets realised by the liquidator that were the subject of a debenture, the expenses reasonably incurred in the care, preservation and realisation of the property. This is a right that arises where the assets are realised for the benefit of the party to be burdened with paying the costs. That is not the position of the beneficiaries where assets of an insolvent trust fund are realised for the benefit of creditors of the trustee.
16 Then there is the decision in Octavo Investments Pty Ltd v Knight  HCA 61; (1979) 144 CLR 360 where the High Court recognised that the right of indemnity held by a trustee over the assets of the trust meant that in the event of the trustee's insolvency, the creditors of a business conducted by the trustee as part of the affairs of the trust may resort to the assets of the trust to the extent of the indemnity. However, the issue that then arises concerns how that right may be exercised.
17 Robson J then referred to the following summary by Brereton J in AAA Financial Intelligence at - of the principles to be applied where a liquidator of an insolvent trustee sought to claim remuneration in respect of the administration of the trust (dealing with a case where the company in administration was both a trustee holding trust property and had activities in its own interests):
[T]he applicable principles may be stated as follows:
(1) Where the company is trustee of a trading trust and has no other activities, the liquidators are entitled to be paid their costs and expenses, whether for administering the trust assets or for 'general liquidation work', out of the trust assets.
(2) Where the company does not act solely as trustee, costs and expenses referable to work done in relation to trust assets which may nonetheless be considered as having been done for the purpose of winding up the company ought ordinarily be borne primarily by the (non-trust) property of the company, to the extent that the assets permit.
(3) At least where the non-trust assets do not permit that course, and perhaps even when they do, a liquidator is entitled to be indemnified out of trust assets for his costs and expenses, but only to the extent that they are referable to administering the trust assets. This is pursuant to the court's equitable jurisdiction to allow a trustee remuneration costs and expenses out of trust assets, which extends to a person such as a liquidator who is, for practical purposes, controlling a trustee.
(4) In principle, where the liquidator does work which would entitle him both to remuneration as liquidator by the company, and recovery from the trust assets, there are two funds liable and there should be contribution between them. However, where there are no assets of the company available, it is unnecessary to consider the question of contribution. If a liquidator has done work which is attributable equally to the winding up of the company and the administration of trust assets, and there are no assets of the company at all to meet his expenses in doing so, the expenses are payable solely from the trust assets.
(5) Where the liquidator is administering, through the company of which he/she is liquidator, more than one trust, the liquidator is not entitled to charge the beneficiaries of one trust with the costs and expenses incurred in relation to the other, although where allocation is not possible a pari passu allocation may be permitted.
In this case, the company did not act solely as a trustee. Prima facie, costs and expenses of the winding up should be borne by its non-trust assets. However, it appears that it has none (although this remains to be proven). Subject to that, the liquidators are entitled to their reasonable and proper costs and expenses from the trust assets, but only in respect of such work as is referable to administration of the trust assets. That result accords with the direction and advice the liquidators seek.
18 Significantly, Robson J concluded his analysis by recognising that a question remains as to whether a liquidator may, as a right, exercise powers as to trust assets of a kind that the courts have recognised on applications for directions or whether the power to access the trust assets must be sought from the Court: at . The answer to that question has now been provided by the decisions in Matrix Partners and Carter Holt Harvey Woodproducts. Save perhaps for resort to cash funds held by the trustee that can be used for the exoneration of creditors, it is necessary to apply to court and the appropriate course is to seek the appointment of a receiver. The right of indemnity does not confer a self-help right on the part of an insolvent trustee to sell trust assets so that the proceeds can be applied to pay creditors.
19 Further, and importantly, the right of the liquidator to resort to trust assets on the basis of an entitlement to remuneration for acting as trustee has been limited by the authorities to undertaking work referable to 'the administration of trust assets'. It may be questioned as to whether the sale of assets for the purposes of exercising the trustee's right of indemnity upon insolvency of the trustee is part of the administration of trust assets. Therefore, it may also be questioned as to how remuneration for action taken on that basis might be determined by reference to principles and statutory provisions concerned with trustees performing their responsibility to undertake the due administration of a trust in the interests of the beneficiaries.
20 In my view, the appropriate course in a case like the present is to consider whether to make orders in the exercise of the power conferred by the Corporations Act to make such orders as the Court thinks fit in relation to the external administration of an insolvent company (see below). Those orders might now approve the actions of Mr Carrello on the basis that the steps that were taken reflected rights that existed at the time that the assets of the Trust were realised, there being no suggestion that Gembrook acted improperly in a manner that might compromise those rights. Mr Carrello has an obligation to disclose all matters that might bear upon the Court making the orders sought and I deal with the application on that basis. The reasonable costs incurred by Mr Carrello in realising the assets have been for the benefit of creditors and for that reason may be approved on the basis that they were properly costs of the liquidation. Approaching the matter on that basis, as I do, it is not necessary to consider whether Gembrook may be remunerated as trustee for actions that were taken solely in its own interest to realise the assets of the trust so it might be exonerated to the extent possible (and, if so, what might be the appropriate basis upon which to assess that remuneration). Rather, the work undertaken by Mr Carrello in realising the assets of the trust can be viewed as being, in effect, costs of the external administration to be assessed on a similar basis.
21 I am fortified in taking this approach by recent decisions by judges of this court to the effect that the appropriate course for a liquidator to take when seeking to sell assets of a trust in the exercise of the trustee's right to indemnity is for the liquidator to apply to be appointed as a receiver to realise the assets of a trust in the exercise of a lien or charge securing a trustee's right of indemnity: Matrix Partners at  (Allsop CJ, Farrell J agreeing); Amirbeaggi, in the matter of Simpkiss Pty Ltd (in liq)  FCA 2121 (Markovic J); Taylor (Liquidator) v CJ & KL Bond Super Pty Ltd (Trustee), in the matter of CJ & KL Bond Pty Ltd (in liq)  FCA 1430 (White J); Cremin, in the matter of Brimson Pty Ltd (in liq) (Moshinsky J); and Deputy Commissioner of Taxation, in the matter of The Mai Family Pty Ltd (in liq) v The Mai Family Pty Ltd (in liq)  FCA 865 (Besanko J).
22 If such a course is followed then, on the application for appointment as a receiver, the Court can scrutinise whether there are indeed interests of the beneficiaries of the trust that might need to be provided for, such as in cases where the power to resort to trust assets for exoneration of creditors has been compromised by the actions of the trustee or where the trust includes the benefit of rights (such as causes of action) that might be exercised by a trustee in the interests of the beneficiaries (but not by a receiver acting in the interests of realising assets pursuant to the trustee's right of indemnity) that need to be provided for in the making of such orders. Otherwise, such matters are left until after the event when the Court is asked to scrutinise whether particular actions were undertaken in the due administration of the trust in order to approve remuneration of the liquidator and the manner of distribution of proceeds recovered by the sale of trust assets.
Power to make the orders sought
23 Mr Carrello invites the Court to make the orders as directions under s 92 of the Trustees Act 1962 (WA), or alternatively in the inherent jurisdiction of the Court, approving all remuneration on the basis that it constitutes costs of administering the trust. The application also seeks to invoke, in the further alternative, s 90-15(1) of the Insolvency Practice Schedule (Corporations) (IPS) which forms Schedule 2 to the Corporations Act. It provides that the Court 'may make such orders as it thinks fit in relation to the external administration of a company'. Then, without limiting the generality of that provision, s 90-15(3)(a) provides that the Court may make 'an order determining any question arising in the external administration of a company'. A power of that kind was previously conferred under s 511 of the Corporations Act and to the extent that the jurisdiction under the IPS provisions is invoked, the same approach should be adopted. The relevant principles were summarised by Gleeson J in Walley, in the matter of Poles & Underground Pty Ltd (Administrators Appointed)  FCA 486.
24 I also note that Part 3 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) has provisions that deal with the remuneration of liquidators. The process starts with an initial remuneration notice to creditors which must briefly explain the types of methods that could be used to calculate remuneration, identify the method that is proposed and explain why it has been chosen: s 70-35. Then there are provisions by which reports about remuneration must be given to enable the reasonableness of the remuneration to be assessed: s 70-45. There are also specific provisions about the Commonwealth requesting information from liquidators about claims for financial assistance in relation to unpaid employee entitlements: s 70-55 IPS and s 70-55 IPR.
25 For the following reasons, I take the view that the power conferred by s 90-15(1) enables me, in the circumstances of the present case, to make orders for the funds that have been realised to be distributed according to the statutory regime for priorities and approving reasonable remuneration to be paid to Mr Carrello as part of that priority.
26 In Preston, in the matter of Sandalwood Properties Ltd  FCA 547, I dealt with the nature of the statutory power conferred upon the Court to give directions to trustees, receivers and insolvency administrators (and their equitable origins): at ff. Although such powers have some similarity to the power of the Court in the exercise of equitable jurisdiction to give judicial advice to trustees, care must be taken to consider the terms of particular statutory provisions which have adopted language that confers a broader jurisdiction. On that occasion I noted that the terms in which s 90-15 are expressed enable the Court to 'determine any question arising in the administration of the company': at . However, as I have noted, the power to determine any question is just one of the orders that may be made under the terms of the very general power conferred by s 90-15(1) which provides that the Court may make such orders as it thinks fit in relation to the external administration of a company.
27 The terms of s 90-15(4) contemplate that orders under s 90-15(1) may be made in circumstances where there has been a failure to perform a duty or some failure to comply with the law. Section 90-15(5) contemplates orders being made that an external administrator has to bear certain costs or cannot be reimbursed for certain costs. These matters show that s 90-15(1) is not confined to the making of orders confined by and giving effect to applicable law. In effect, s 90-15(1) extends to orders that have a dispensing effect. In deciding whether to make such orders and in framing their terms the court may be expected to have regard to that which is just and beneficial for the efficient and effective conduct of an external administration, taking account of the scheme for such administration enacted by the Corporations Act. These aspects of the power were recognised recently by Derrington J in Staatz v Berry, in the matter of Wollumbin Horizons Pty Ltd (in liq) (No 3)  FCA 924. It is a power of a kind that should be interpreted widely so as to facilitate the performance of the functions of an external administrator: In the matter of Octaviar Administration Pty Ltd (in liq)  NSWSC 1556 at  (where the statutory jurisdiction to give directions was described in those terms - all the more so given the broader language in s 90-15 as a whole).
28 For reasons I have given, I would be more circumspect about the power of the Court to make such orders by way of directions under the Trustees Act power. However, it is not necessary for me to express a final view on that aspect given the approach that I take concerning s 90-15.
Remuneration for which approval is sought
29 Mr Carrello is an insolvency practitioner with more than 26 years of experience. He has provided an affidavit in which he has described the work done and the amount charged for the work as well as costs and disbursements incurred. He deposes to the reasonableness of the charges. The insolvency administration has also involved the calculation, at some cost, of employee entitlements the subject of the Fair Entitlements Guarantee (FEG amounts). Those costs have been met under the terms of arrangements made with the Commonwealth Government that included agreed hourly rates for the work. However, as there are assets of the Trust that can be applied to meet those costs there is an obligation to repay to the Commonwealth any amount that can be received by Mr Carrello for that work.
30 As I have noted, Mr Carrello seeks orders because some of his actions did not relate to the liquidation of Gembrook, but rather related to Gembrook's continuing actions as trustee in realising the assets of the trust. However, not all of the actions for which remuneration is now sought were of that character. The calculation of the FEG amounts were undertaken as liquidator for the purpose of identification of the entitlements of employees as creditors of Gembrook. Mr Carrello also prepared the necessary circulars and undertook steps to recover preference payments. All these amounts were merged in one set of remuneration for which approval was sought.
31 In those circumstances, I requested a breakdown of the remuneration as it related to the administration of the trust and as to statutory compliance. As to trust administration the amount is $59,360.50 plus $167.87 in disbursements. As to work relating to the FEG amounts, the remuneration is $14,600 (with the work relating to the entitlements of some 56 employees). As to statutory compliance, the amount is $11,837.90 and disbursements of $394.18. Mr Carrello also seeks provision for future remuneration of $5,000 for statutory compliance and $15,000 for work relating to the administration of the trust. The total of these amounts is $106,360.45.
32 At a meeting of creditors on 11 October 2017, the creditors approved an initial remuneration claim of $17,866 plus GST and a resolution was passed by creditors approving further remuneration up to a capped amount of $30,000 plus GST. Remuneration of $46,467.30 and disbursements of $610.66 had been paid as at 12 April 2019. This does not appear to include the work relating to the FEG amounts the cost of which at this stage has been met by the Commonwealth, subject to a right of reimbursement from any surplus. Mr Carrello has deposed that the creditors have considered and approved remuneration claimed for the period from 12 December 2017 to 17 September 2018, but does not specify the amount approved. Two invoices have been produced which total $47,077.96 for remuneration and disbursements which correspond with the amounts that have been paid to date (and relate the period up to 14 February 2018). On the evidence this is the extent of the approved remuneration. There is no further amount that has been identified as having been approved by creditors in accordance with the IPR requirements.
33 The receipts generated in the course of the liquidation have been $143,529.82. Plant and equipment was realised at $33,000 and preferences of $105,500 were recovered without proceedings.
34 Whether acting as liquidator or as trustee, Mr Carrello is only entitled to reasonable remuneration. It must be proportionate to the nature and extent of the administration: Independent Contractor Services (Aust) Pty Ltd (corrected as to a different aspect in Carter Holt Harvey Woodproducts at - (Kiefel CJ, Keane and Edelman JJ)).
35 A summary of tasks undertaken to 12 April 2019 has been provided. There is some information about what was done but mostly it is in general terms. There is no overall description of the nature of the insolvency and what the main tasks were that needed to be done in order to effect an orderly winding-up of Gembrook.
36 There is a claim for $16,424 for 54.2 hours of work done in relation to assets which, as I have noted realised $33,000. There is a claim of $19,321.50 for 63.8 hours of work for employee inquiries and dealings as to the FEG amounts. There is a claim of $28,666 for 87.2 hours of work in investigation. There is a claim of $11,483.90 for creditor inquiries and reporting and $14,180.90 for administration. These amounts are to be evaluated in the context of the original cap that was agreed of $30,000 and the absence of any explanation as to unexpected work that was required after that cap was proposed and accepted by creditors.
37 As to the estimate of further costs to be incurred in finalising the winding-up, there is an amount of $11,000 relating to employees, $5,000 relating to creditors and $4,000 for investigation and administration. Given these are tasks to simply effect distribution and conclude the administration I do not accept that they have been shown to be reasonable.
38 Generally, I am not satisfied that the level of remuneration sought is appropriate having regard to the size of the liquidation and the limited extent of the task to be undertaken in the administration which, on the evidence before me, involved the closure of a business operating from a single premises, the sale of the plant and equipment at those premises for a modest amount, the calculation of employee entitlements and limited correspondence to recover preference claims. There is no suggestion that there were complex or difficult matters to consider relating to preservation of assets, disclaiming of agreements or the claims of third parties. The remuneration sought would amount to almost 75% of the amount administered.
39 Further, if the usual course had been followed and an order obtained appointing Mr Carrello as receiver of the assets of the trust for the purposes of realisation of the assets for their application to satisfy the right of exoneration for the benefit of the creditors of Gembrook, then the complexities of the present application would have been avoided. Provision could have been made for all remuneration could have been approved by creditors in the usual way. Therefore, I am not satisfied that creditors should be burdened with the additional costs associated with making the present application which, in the result, has involved Mr Carrello making three affidavits and legal submissions being prepared in some detail as to the legal principles to be applied.
40 I accept that the employee claims would involve some complexity given the number of employees and the need to review records. I would allow the calculation of the FEG amounts in full at $14,600. As to the administration generally, I would allow an amount of $50,000 (based on the initial remuneration and estimate approved by creditors) in addition to the costs of preparing the calculation of the FEG amounts and I would allow a further amount of up to $5,500 for finalisation. All amounts are inclusive of GST and liquidator's disbursements.
41 In those circumstances, I consider it appropriate to make orders to the effect that Mr Carrello as liquidator of Gembrook is justified in treating the assets of the Trust as subject to an indemnity in relation to all the debts and liabilities of Gembrook, that the distribution of those assets should first be applied in paying his approved remuneration and otherwise according to the statutory priority regime. Mr Carrello's remuneration should be fixed at $64,600 inclusive of GST and liquidator's disbursements. His future remuneration should be approved up to an amount of $5,500. There should be no order as to costs.