Kite v Mooney, in the matter of Mooney's Contractors Pty Ltd (in liq) (No 2)

In the matter of Mooney's Contractors Pty Ltd (in liq) (No 2), the plaintiffs, Messrs Kite and Hutchins, were appointed as receivers and managers of the assets of a trust established by the insolvent defendant company. The plaintiffs sought declarations and directions from the court regarding the administration of the trust assets and their entitlement to costs and fees. The key legal issues centred around whether the trust assets were available to satisfy the claims of creditors, the nature of the trustee's right of indemnity, and whether the trust assets should bear the costs of the proceedings.

The court considered the statutory priority regimes under the Corporations Act, the nature of the trustee's right of indemnity, and the principle that where a trustee acts reasonably and in good faith, trust assets should bear the costs of the trustee's application for advice and directions. The court found that the plaintiffs were justified in treating the trust assets as available to satisfy the claims of creditors and in seeking costs and fees from the trust assets. The court held that the plaintiffs were entitled to an equitable lien over the trust assets for their fees and that the costs of the proceedings should be borne by the trust assets.

The court granted the declarations and directions sought by the plaintiffs, confirming their entitlement to an equitable lien over the trust assets for their fees and costs. The court also declared that the liquidators were justified in treating the trust assets as available to satisfy the claims of creditors and in calling for proofs of debt and having recourse to the trust assets to satisfy those claims. The court further declared that the liquidators were entitled to a lien over the assets of the trust in respect of fees incurred in their various capacities.