Lawrence, in the matter of Ozifin Tech Pty Ltd (in liq) v AGM Markets Pty Ltd (in liq) [2022] FCA 1478

Lawrence, in the matter of Ozifin Tech Pty Ltd (in liq) v AGM Markets Pty Ltd (in liq) [2022] FCA 1478

The Court held that statutory trust funds are to be distributed to clients in accordance with the claims-based approach under reg 7.8.03, after payment of reasonable remuneration, costs, and expenses of the liquidators from those funds. Non-statutory trust (surplus) funds are impressed with a remedial constructive trust (not institutional), allowing the Court to approve payment of remuneration, costs and general liquidation expenses from those trust assets before distribution to beneficiaries. There are no non-trust company assets available; thus, payment from trust assets is appropriate. Directions are made accordingly, and proposed orders are to be submitted.

Parties
First Plaintiffs: Richard Lawrence, Brent Kijurina and Richard Albarran in their capacity as liquidators of Ozifin Tech Pty Ltd (in liquidation); Second Plaintiff: Ozifin Tech Pty Ltd (in liquidation); Defendant: AGM Markets Pty Ltd (in liquidation); First Plaintiffs: John Ross Lindholm and George Georges in their capacity as the joint and several liquidators of AGM Markets Pty Ltd (in liquidation); Second Plaintiff: AGM Markets Pty Ltd (in liquidation); First Plaintiff: Mathew Terence Gollant in his capacity as liquidator of OT Markets Pty Ltd (in liquidation); Second Plaintiff: OT Markets Pty Ltd (in liquidation); First Defendant: AGM Markets Pty Ltd (in liquidation); Second Defendant: Authenticate Pty Ltd; Ozifin Liquidators: OT Markets Pty Ltd (in liquidation); Intervenor: Australian Securities and Investments Commission (ASIC)
Jurisdiction
Australia
Judgment Date
09 December 2022
Procedural Posture
Liquidators' Applications for Directions / Judgment on Applications for Directions and Orders Regarding Trust Funds Distribution
Outcome
Orders made directing parties to submit proposed orders for distribution of trust funds and directions to liquidators; costs reserved.
Legal Topics
Liquidator Remuneration, Statutory Trusts, Constructive Trusts, Client Money, Priority of Claims, Distribution to Beneficiaries, Remedial/institutional Constructive Trusts, Court Directions to Liquidators
Corporations Law Equity & Trusts Insolvency Law Liquidator Remuneration Statutory Trusts Constructive Trusts Client Money Priority of Claims +3 more

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Parties

Richard Lawrence, Brent Kijurina and Richard Albarran in their capacity as liquidators of Ozifin Tech Pty Ltd (in liquidation)

First Plaintiffs

Ozifin Tech Pty Ltd (in liquidation)

Second Plaintiff

AGM Markets Pty Ltd (in liquidation)

Defendant

John Ross Lindholm and George Georges in their capacity as the joint and several liquidators of AGM Markets Pty Ltd (in liquidation)

First Plaintiffs

AGM Markets Pty Ltd (in liquidation)

Second Plaintiff

Mathew Terence Gollant in his capacity as liquidator of OT Markets Pty Ltd (in liquidation)

First Plaintiff

OT Markets Pty Ltd (in liquidation)

Second Plaintiff

AGM Markets Pty Ltd (in liquidation)

First Defendant

Authenticate Pty Ltd

Second Defendant

OT Markets Pty Ltd (in liquidation)

Ozifin Liquidators

Australian Securities and Investments Commission (ASIC)

Intervenor

Procedural Posture

Liquidators' Applications for Directions / Judgment on Applications for Directions and Orders Regarding Trust Funds Distribution

Legal Issues

  1. 1 Whether funds held in various accounts are subject to statutory trust or constructive trust for investors or clients
  2. 2 Whether liquidators are entitled to be remunerated from trust assets or client money accounts, including for general liquidation costs
  3. 3 Whether non-statutory trust funds are subject to institutional or remedial constructive trust

Ratio Decidendi

The Court held that statutory trust funds are to be distributed to clients in accordance with the claims-based approach under reg 7.8.03, after payment of reasonable remuneration, costs, and expenses of the liquidators from those funds. Non-statutory trust (surplus) funds are impressed with a remedial constructive trust (not institutional), allowing the Court to approve payment of remuneration, costs and general liquidation expenses from those trust assets before distribution to beneficiaries. There are no non-trust company assets available; thus, payment from trust assets is appropriate. Directions are made accordingly, and proposed orders are to be submitted.

Court Disposition

Orders made directing parties to submit proposed orders for distribution of trust funds and directions to liquidators; costs reserved.

Orders

  • Within 7 days, parties to file and serve proposed minutes of orders to give effect to the reasons for judgment.
  • Costs reserved.