Agusta Pty Ltd v Official Trustee in Bankruptcy as Trustee of Estates of Gustavo Ferella and Angelo Ferella

Agusta Pty Ltd (the appellant) appealed to the Court of Appeal of New South Wales against orders made by Nicholas J in proceedings concerning the Official Trustee in Bankruptcy's (the respondent) right of indemnity over a trust fund. The dispute centred on whether the respondent, as trustee in bankruptcy for Gustavo and Angelo Ferella, had a lien over the Cavallino Unit Trust fund for actual or contingent debts, claims, and liabilities, including costs and expenses incurred after the date of the sequestration orders. The appellant sought declarations regarding the extent of the respondent's right of indemnity and the proper calculation of interest on funds held.

The primary legal issues before the Court of Appeal were: (1) whether the respondent's right of indemnity extended to liabilities arising after the date of the sequestration orders; (2) if so, whether such a right constituted after-acquired property under the *Bankruptcy Act 1966* (Cth); (3) the entitlement of the trust fund owner to interest at the rates prescribed by s 20J(4) of the *Bankruptcy Act 1966* (Cth) and/or s 100 of the *Civil Procedure Act 2005* (NSW); and (4) the appropriate basis for awarding costs of the proceedings at first instance.

The Court of Appeal, comprising Beazley JA, Tobias JA, and Macfarlan JA, allowed the appeal. The court held that a trustee's right of indemnity in respect of liabilities incurred after the date of sequestration orders does not constitute after-acquired property under the *Bankruptcy Act 1966* (Cth). Instead, such a right is a proprietary right that arises from the trustee's administration of the trust. The court also determined that interest should be calculated in accordance with s 20J(4) of the *Bankruptcy Act 1966* (Cth).

Consequently, the Court of Appeal set aside certain declarations made by the primary judge, remitted specific issues for redetermination, and ordered that a portion of the funds held by the respondent, with interest calculated as per s 20J(4) of the *Bankruptcy Act 1966* (Cth), be paid to Riva (NSW) Pty Limited as trustee of the Cavallino Unit Trust. The respondent's cross-appeal was dismissed, and the respondent was ordered to pay the appellants' costs of the appeal and cross-appeal.