Australian Securities and Investments Commission, in the matter of GDK Financial Solutions Pty Ltd (in liq) v GDK Financial Solutions Pty Ltd (in liq) (No 4) [2008] FCA 858

Australian Securities and Investments Commission, in the matter of GDK Financial Solutions Pty Ltd (in liq) v GDK Financial Solutions Pty Ltd (in liq) (No 4) [2008] FCA 858

A pre-emptive costs order was granted in favour of WRVM (in liquidation) to be paid out of the fund because, consistent with equitable and insolvency principles, a liquidator defending trust/fund assets against hostile claims should be indemnified for costs from the fund irrespective of the outcome—especially where prior judicial directions contemplated this, where the other claimants (bondholders/investors) could not realistically fund the litigation, and opposition to the hostile claim was necessary for just administration.

Jurisdiction
Australia
Judgment Date
12 June 2008
Procedural Posture
Costs Application / Interlocutory (application for Pre Emptive Costs Order Before Trial)
Outcome
Application for pre-emptive costs order granted.
Legal Topics
['costs—pre Emptive Orders' 'liquidators and Receivers—fund Administration' 'representative Proceedings' 'managed Investment Schemes']
['civil Procedure' 'insolvency' 'trusts and Estates'] ['costs—pre Emptive Orders' 'liquidators and Receivers—fund Administration' 'representative Proceedings' 'managed Investment Schemes']

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Procedural Posture

Costs Application / Interlocutory (application for Pre Emptive Costs Order Before Trial)

Legal Issues

  1. 1 ['Whether the Court has jurisdiction to make a pre-emptive (prospective) costs order in advance of trial and irrespective of result' 'Whether such a pre-emptive costs order is appropriate where a liquidator/trustee defends trust property against hostile claims']

Ratio Decidendi

A pre-emptive costs order was granted in favour of WRVM (in liquidation) to be paid out of the fund because, consistent with equitable and insolvency principles, a liquidator defending trust/fund assets against hostile claims should be indemnified for costs from the fund irrespective of the outcome—especially where prior judicial directions contemplated this, where the other claimants (bondholders/investors) could not realistically fund the litigation, and opposition to the hostile claim was necessary for just administration.

Court Disposition

Application for pre-emptive costs order granted.

Orders

  • ['Pre-emptive order made that the costs of Western Retirement Village Management Pty Ltd (in liquidation) in prosecuting the action are to be paid out of the fund regardless of the result.']