Re Kismet Trading Pty Ltd (in liquidation)

The case of Re Kismet Trading Pty Ltd (in liquidation) involved the liquidators of a company seeking directions from the court regarding the distribution of funds under their control. The liquidators had taken over the company's affairs after it was found to be insolvent. The dispute centred around the appropriate beneficiaries of the funds held by the liquidators, given that the company had engaged in securities and derivatives trading on behalf of clients without a financial services licence. The liquidators were seeking to determine whether they were justified in treating the funds as held on trust for the investors and, if so, whether they could distribute the proceeds from the sale of securities to the individual investors, despite some intermingling of funds.

The court was required to decide whether the liquidators were correct in treating the funds as held on trust for the investors, and if so, whether it was appropriate to distribute the proceeds from the sale of securities to the individual investors, given that some of the investors' funds had been intermingled. The court had to consider the extent of the intermingling of funds and whether this justified the distribution of proceeds to individual investors.

The court determined that the liquidators were justified in treating the funds as held on trust for the investors, as the company's activities were not authorised and the investors had placed their trust in the company to manage their investments. The court also found that the liquidators were justified in distributing the proceeds from the sale of securities to the individual investors, as the intermingling of funds did not alter the fact that the funds were held on trust for the investors. The court emphasised that the intermingling was not so extensive as to preclude the identification of the individual investors' funds, and thus, the distribution to individual investors was appropriate.

The court made orders directing the liquidators to distribute the proceeds from the sale of securities to the individual investors, subject to any claims or objections that may arise. The court also directed that the liquidators provide a detailed report on the distribution of funds to the court, to ensure transparency and accountability in the process.