In the Matter of French Caledonia Travel Service Pty Limited (in liquidation) - Application of Roderick Mackay Sutherland

French Caledonia Travel Service Pty Limited, a company in liquidation, was the subject of an application by Roderick Mackay Sutherland, a creditor. The application sought an order for the tracing of trust money held by the company, which had been mixed with other funds in a bank account. The Federal Court was called upon to determine the principles by which the proprietary right to the money in the bank account should be decided, particularly when the account did not have sufficient funds to meet all claims. The court also needed to address the role of the liquidator in administering trust assets and the procedure the liquidator should follow to bar unknown claims to those assets. Additionally, the entitlement of the liquidator to costs from the trust assets was a matter before the court.

The court considered whether the liquidator, as a trustee, had the authority to trace and claim the trust money from the mixed bank account. It also examined the principles for determining the proprietary right to the money in the account when it was insufficient to cover all claims. The court further deliberated on the steps the liquidator should take to protect trust assets from unknown claimants and whether the liquidator was entitled to recover costs from the trust assets.

The court held that the liquidator, as a trustee, could trace the trust money and claim it from the mixed bank account, provided the trust money could be identified and segregated. The court outlined the principles for determining the proprietary right to the money in the account, emphasising the importance of proportionality and the order in which creditors were paid. The court also established a procedure for the liquidator to follow to bar unknown claims to trust assets, including public notices and the setting of a cut-off date. Finally, the court determined that the liquidator was entitled to recover costs from the trust assets if the costs were reasonably incurred in the administration of the trust.

The court made orders allowing the liquidator to trace and claim the trust money from the mixed bank account, setting out the procedure for barring unknown claims, and permitting the recovery of costs from the trust assets. The orders provided clarity and guidance for the liquidator in administering the trust assets and managing the claims of creditors in the liquidation process.