LM Investment Management Limited v Whyte

The case of LM Investment Management Limited v Whyte involved a dispute between the liquidator of a fund and a respondent regarding the assessment of costs associated with a legal application. The Queensland Supreme Court was tasked with determining whether the liquidator's costs should be reduced based on a percentage of the costs attributable to a claim for Corporate Remuneration and whether the costs should be assessed on an indemnity basis.

The court had to decide two key issues: whether it was appropriate to reduce the liquidator’s costs by reference to a percentage of the liquidator’s assessed costs attributable to the claim for Corporate Remuneration, and whether the costs should be assessed on the indemnity basis. The liquidator sought full indemnity costs from the scheme property of the LM First Mortgage Income Fund, LM Australian Income Fund, and LM Australian Structured Products Fund. The respondent argued that the liquidator should only recover 50% of the costs due to his failure to obtain an order for payment of Corporate Remuneration from the LM First Mortgage Income Fund.

The court rejected the respondent’s argument that the costs should be apportioned based on the percentage of the liquidator’s total claim for remuneration represented by Corporate Remuneration. The court found that the amount of the claim was not a reliable measure for apportioning costs. The court also dismissed the respondent’s contention that a significant proportion of the liquidator's supplementary material and the court's time was spent on issues related to Corporate Remuneration. The court concluded that the opposition to Corporate Remuneration was based on multiple grounds and that a great deal of the added time and expense related to grounds that were not decided.

The court ultimately ruled that the costs of the application be assessed on the indemnity basis and paid from the property of the LM Australian Income Fund, LM First Mortgage Income Fund, and LM Australian Structured Products Fund in equal shares. Additionally, the court made specific orders regarding the accounting for GST in the event that the liquidator was not liable for it.