Re Mamounia Pty Ltd (in liq) (No 3)

In the matter of Re Mamounia Pty Ltd (in liq) (No 3), the liquidators of the trustee company sought directions from the court under section 511 of the Corporations Act 2001 (Cth). The primary issue was whether the liquidators had the authority and were justified in releasing the trustee's interest in the funds held by the solicitors to cover the substantial fees owed by the trustee for the work carried out on behalf of the trustee. The solicitors claimed a possessory common law lien over all the trust funds held by them, asserting that the trustee had acted as a bare trustee.

The court was tasked with determining whether the principles established in Re Universal Distributing Co Ltd (in liq) could be applied to trust assets in this case. Specifically, it needed to decide if the liquidators could be granted orders under section 63 of the Trustee Act 1958 to release trust assets to the solicitors to meet the liabilities owed by the trustee, and to remove the solicitors' lien over the trust funds, to the extent that the principles in Re Universal Distributing Co Ltd (in liq) did not apply.

The court concluded that the principles in Re Universal Distributing Co Ltd (in liq) could be extended to trust assets, and that the liquidators had the power to apply for orders under section 63 of the Trustee Act 1958. The court found that the liquidators were justified in releasing the trustee's interest in the funds held by the solicitors to cover the fees owed. Consequently, the court issued the orders sought, allowing the liquidators to release the trust assets to the solicitors to meet the trustee's liabilities and to remove the solicitors' lien over the trust funds, as long as the principles in Re Universal Distributing Co Ltd (in liq) did not apply.