Park, in the matter of Queensland Nickel Pty Ltd (in liq) (No 3)

This case concerns a dispute over the distribution of trust assets, specifically the judgment sum recovered from a successful litigation, among various parties, including the liquidators of Queensland Nickel Pty Ltd (QNI), the new trustee Queensland Nickel Sales (QNS), and the litigation funding providers Vannin. The litigation funding agreement (LFA) between the liquidators and Vannin allowed for the recovery of debts from a related company, Mineralogy, which resulted in the judgment sum of approximately $103 million. The liquidators sought advice on whether they could pay the trust creditors from the judgment sum, along with expenses and their own remuneration, before transferring any surplus to QNS. QNS and the beneficiaries opposed this, arguing that the debts were not properly incurred and that the liquidators should transfer the trust property to QNS immediately.

The court addressed several legal issues, including whether the trust property was confined to funds held in a bank account or the joint venture property, whether the trust creditors should be paid from the judgment sum, and whether the former trustee had an obligation to recover trust property after being replaced. The court concluded that the liquidators were justified in paying the trust creditors, expenses, and their remuneration from the judgment sum before transferring any surplus to QNS. The court also dismissed the claims for declarations and orders related to the transfer of trust property to QNS, as the claims were released by a settlement deed and because there was a risk that QNS might not be the current trustee.

The court found that the liquidators were justified in refusing to pay the judgment sum to QNS until it was established that QNI held a surplus of trust assets over liabilities and expenses. This decision was based on the argument that it would be unjust for the Palmer parties, who had made the litigation process difficult and expensive, to benefit from the judgment sum without bearing their share of the costs. The court ordered that the liquidators could pay certain amounts from the trust assets, including the litigation funding liabilities, their approved remuneration, and admitted creditor proofs, before transferring any surplus to QNS. The court also set deadlines for filing submissions and affidavit material regarding the issue of costs.

In summary, the court ruled in favor of the liquidators' proposed course of action, allowing them to pay certain debts and expenses from the judgment sum before transferring any surplus to the new trustee. The court dismissed claims for declarations and orders related to the transfer of trust property and set deadlines for submissions on the issue of costs.