Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed)

In the matter of Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed), the court was tasked with determining various legal issues related to equitable liens, trust claims, registration of charges under the Corporations Act 2001, and the creation of secured interests and personal obligations in relation to solicitors' costs. The primary focus of the dispute was on the priority and registrability of certain charges over funds recovered in litigation, as well as the existence of equitable liens and trust claims over these funds.

The court was required to decide whether a "fruits of the action" lien, which arose in favour of the solicitor over moneys recovered from a litigation cross-claim, was registrable under the Corporations Act. Additionally, the court had to determine if an equitable charge created by a deed over money to be recovered in litigation was registrable and whether a trust had been established over the litigation proceeds. The court also needed to assess the competing priorities between a fixed charge and an administrator's statutory and/or equitable lien, and whether a grant of irrevocable authority to a solicitor to pay another solicitor created a secured interest in favour of the former solicitor. Furthermore, the court examined whether a personal obligation of the company's directors to pay solicitors' costs was created by either the retainer or the deed.

The court found that the "fruits of the action" lien did not need to be registered under the Corporations Act as it arose by operation of law and was exempt under section 262(2). It was held that an express charge over money claimed in litigation was registrable as a book debt, to the extent that the secured claim was for reimbursement of expenses incurred in the ordinary course of business. The court also concluded that an equitable lien may arise in favour of an administrator and take priority over a fixed charge under specific circumstances. The court rejected the claim that a grant of irrevocable authority to a solicitor to pay another solicitor created a secured interest. Finally, it was determined that no personal obligation was created by the deed, but the directors had a personal obligation arising from a joint retainer under which they were jointly and severally liable with the company for the costs of the proceedings.

In summary, the court determined that the "fruits of the action" lien did not need to be registered, and an express charge over litigation proceeds was registrable as a book debt. The court found that an equitable lien could take priority over a fixed charge in certain circumstances, but a grant of authority to a solicitor to pay another solicitor did not create a secured interest. Lastly, while no personal obligation was created by the deed, the directors were personally liable for the costs of the proceedings under the joint retainer.