611 Pty Ltd (in liq), in the matter of 611 Pty Ltd (in liq) (No 3) [2019] FCA 858

611 Pty Ltd (in liq), in the matter of 611 Pty Ltd (in liq) (No 3) [2019] FCA 858

The Court was satisfied that the second and third plaintiffs had provided sufficient evidence identifying the legal work performed and charges incurred, had critically reviewed the legal invoices, and had shown that the costs and disbursements were properly incurred at competitive rates. It was also satisfied that the itemised trading commitments were debts incurred during the voluntary administration and liquidation periods. Given Order 4 of 8 March 2019, directions permitting payment were appropriate, and that order should be varied because its intended effect was to prevent distributions or dividends to unsecured creditors or beneficiaries pending resolution of priority issues, not to...

Jurisdiction
Australia
Judgment Date
10 July 2019
Procedural Posture
Corporations Application by Receivers to Use Trust Funds to Pay Liabilities Incurred in the Course of the Receivership / Interlocutory Process Seeking Directions, Variation of a Prior Order, and Costs Orders
Outcome
Application granted; directions made, Order 4 made on 8 March 2019 varied, and plaintiffs' costs ordered to be costs in the winding up and paid from trust funds.
Legal Topics
['receivership' 'liquidation' 'use of Trust Funds' 'payment of Legal Costs and Disbursements' 'payment of Trading Commitments' 'variation of Orders' 'priority of Payments' 'corporations Act 2001 (cth), S 556']
['corporations' 'corporate Insolvency' 'trusts'] ['receivership' 'liquidation' 'use of Trust Funds' 'payment of Legal Costs and Disbursements' 'payment of Trading Commitments' 'variation of Orders' 'priority of Payments' 'corporations Act 2001 (cth), S 556']

Case Brief

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Procedural Posture

Corporations Application by Receivers to Use Trust Funds to Pay Liabilities Incurred in the Course of the Receivership / Interlocutory Process Seeking Directions, Variation of a Prior Order, and Costs Orders

Legal Issues

  1. 1 ['Whether the second and third plaintiffs, as receivers, were justified in using proceeds of sale of trust property and surplus trading or other proceeds to pay legal costs and disbursements incurred in the receivership.' 'Whether the second and third plaintiffs were justified in using those funds to pay itemised trading commitments incurred during the voluntary administration and liquidation periods.' 'Whether Order 4 made on 8 March 2019 should be varied to clarify that it did not prevent payment of liabilities incurred in the liquidation and/or receivership from proceeds of trust assets.' "Whether the plaintiffs' costs of the application should be costs in the winding up of the first plaintiff and paid from funds held by the first plaintiff as trustee."]

Ratio Decidendi

The Court was satisfied that the second and third plaintiffs had provided sufficient evidence identifying the legal work performed and charges incurred, had critically reviewed the legal invoices, and had shown that the costs and disbursements were properly incurred at competitive rates. It was also satisfied that the itemised trading commitments were debts incurred during the voluntary administration and liquidation periods. Given Order 4 of 8 March 2019, directions permitting payment were appropriate, and that order should be varied because its intended effect was to prevent distributions or dividends to unsecured creditors or beneficiaries pending resolution of priority issues, not to...

Court Disposition

Application granted; directions made, Order 4 made on 8 March 2019 varied, and plaintiffs' costs ordered to be costs in the winding up and paid from trust funds.

Orders

  • ['The second and third plaintiffs are justified in using the proceeds of sale of certain real property formerly owned by the first plaintiff in its capacity as trustee of the Zumbo Trust, and surplus trading or other proceeds held by the second and third plaintiffs, in payment of disbursements incurred by the second...