Re Kismet Trading Pty Ltd (in liquidation) [2010] NSWSC 1084

Re Kismet Trading Pty Ltd (in liquidation) [2010] NSWSC 1084

Liquidators are justified in distributing the funds as held on trust for individual investors in respect of those accounts where tracing is possible and no intermingling is shown. Where some funds are shown to be intermingled or tainted by loans from the general account, only the pure proportion traceable to each investor may be treated as held on trust for that investor, with the rest charged in favour of all investors generally. Orders made accordingly for each account, subject to specified contingencies and the opportunity for investors to contest within 42 days.

Jurisdiction
Australia
Judgment Date
21 September 2010
Procedural Posture
Application for Directions by Liquidators / Judgment
Outcome
Partial directions granted; orders made for distribution of funds as per court's reasoning, not in exact form sought by liquidators.
Legal Topics
['liquidation' 'trusts' 'distribution of Assets' 'intermingling of Funds' 'directions to Liquidators']
['corporations Law' 'equity'] ['liquidation' 'trusts' 'distribution of Assets' 'intermingling of Funds' 'directions to Liquidators']

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Procedural Posture

Application for Directions by Liquidators / Judgment

Legal Issues

  1. 1 ['Whether liquidators are justified in treating certain funds as held on trust for individual investors under s 479(3) Corporations Act 2001 (Cth)' 'Extent to which proceeds from sale of securities are to be distributed to individual investors where intermingling of investor funds occurred']

Ratio Decidendi

Liquidators are justified in distributing the funds as held on trust for individual investors in respect of those accounts where tracing is possible and no intermingling is shown. Where some funds are shown to be intermingled or tainted by loans from the general account, only the pure proportion traceable to each investor may be treated as held on trust for that investor, with the rest charged in favour of all investors generally. Orders made accordingly for each account, subject to specified contingencies and the opportunity for investors to contest within 42 days.

Court Disposition

Partial directions granted; orders made for distribution of funds as per court's reasoning, not in exact form sought by liquidators.

Orders

  • ['Directions for treatment/distribution of proceeds and balances for each account (as per para 75), contingent on satisfaction of factual predicates by liquidators.' "Liquidators' costs and expenses, and interest accrued, to be apportioned rateably from trust assets." 'Distributions to investors not to occur until...