Re S&D International Pty Ltd (No 5) - [2011] VSC 30

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

CORPORATIONS LIST

No. 7807 of 2008

IN THE MATTER OF S&D INTERNATIONAL PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION) ACN 075 030 447

BETWEEN

GEOFFREY NEILS HANDBERG (IN HIS CAPACITY AS LIQUIDATOR OF S&D INTERNATIONAL PTY LTD (RECEIVER AND MANAGER APPOINTED)
(IN LIQUIDATION) ACN 075 030 447

AND

S&D INTERNATIONAL PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION)
ACN 075 030 447

AND

MIG PROPERTY SERVICES PTY LTD
ACN 006 657 174

AND

PAUL VARTELAS (IN HIS CAPACITY AS RECEIVER AND MANAGER OF S&D INTERNATIONAL PTY LTD) (RECEIVER AND MANAGER APPOINTED)

AND

DINESH MALHOTRA

AND

BILL VELOS

AND

PRADEEP TIWARI

AND

STIRLING HORNE

AND

PETER VINCE

First Plaintiff

Second Plaintiff

First Defendant

Second Defendant

Third Defendant

Fourth Defendant

Fifth Defendant

Sixth Defendant

Seventh Defendant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	12 November 2010
DATE OF JUDGMENT:	14 February 2011
CASE MAY BE CITED AS:	Re S&D International Pty Ltd (No 5)
MEDIUM NEUTRAL CITATION:	[2011] VSC 30

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CORPORATIONS – application by liquidator of trustee company for directions as to priority of claims over trust assets held by the company in liquidation

COSTS – trustee bringing proceedings for benefit of the beneficiaries of the trust estate

WINDING UP – liquidator’s lien under principle in Universal Distributors (1933) 48 CLR 171 - costs incurred after realisation of property in preserving and protecting property - cost and expenses encompassed by lien

TRUSTEES – right of trustee to be indemnified for costs and expenses out the trust estate – costs incurred by trustee in pursuing action to benefit the beneficiaries – r 65 Supreme Court (General Civil Procedure) Act 2005 – nature of trustee’s lien – comparison with liquidator’s lien under Universal Distributors

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M J Galvin	Mills Oakley Lawyers
For the First Defendant	Mr M McInnes	Mason Black Lawyers
For the Third Defendant	In person	-
For the Fourth Defendant	Mr A F Hamlyn-Harris	Velos Lawyers
For the Fifth Defendant	Mr A M Donald	Eggleston Whelan

TABLE OF CONTENTS

INTRODUCTION.............................................................................................................................. 1

ORDERS SOUGHT BY THE PLAINTIFFS.................................................................................. 1

ORDERS SOUGHT BY MR VELOS.............................................................................................. 5

ORDERS SOUGHT BY MR TIWARI............................................................................................ 6

POSITION OF MR MALHOTRA AND MIG............................................................................... 9

INTRODUCTORY FACTS.............................................................................................................. 9

COURT PROCEEDINGS............................................................................................................... 16

THE PLAINTIFFS’ CLAIMS.......................................................................................................... 18

RE S&D INTERNATIONAL PTY LTD (NO 1).......................................................................... 30

RE S&D INTERNATIONAL PTY LTD (NO 4).......................................................................... 34

COSTS AS BETWEEN THE PLAINTIFFS AND MR VELOS................................................ 34

THE COSTS AS BETWEEN THE PLAINTIFFS AND MR TIWARI..................................... 46

THE COSTS AS BETWEEN THE PLAINTIFFS AND MR MALHOTRA............................ 48

THE COSTS AS BETWEEN MR VELOS AND MR TIWARI................................................ 48

THE COSTS AS BETWEEN MR MALHOTRA AND MR VELOS....................................... 49

THE COSTS AS BETWEEN MR MALHOTRA AND MR TIWARI..................................... 49

THE COSTS AS BETWEEN THE PLAINTIFFS AND MIG.................................................... 49

MR MALHOTRA’S CLAIM TO THE MONEYS IN COURT................................................. 53

S&D’S CLAIM TO BE INDEMNIFIED....................................................................................... 54

THE LIQUIDATOR’S CLAIM TO A CHARGE OVER THE FUND.....................................…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] VSC 30
Decision Date: 14 February 2011

CaseChat Overview and Summary

The case of Re S&D International Pty Ltd (No 5) involved the liquidator of a trustee company, S&D International, which was in liquidation, and the beneficiaries of the trust estate. The liquidator sought directions from the court regarding the priority of claims over trust assets held by the company. The dispute centred around the costs incurred by the trustee in bringing proceedings for the benefit of the beneficiaries and the right of the trustee to be indemnified for these costs. The matter was heard in the Supreme Court of New South Wales.

The primary legal issue before the court was the extent of the liquidator's lien over the trust assets, specifically whether it included costs incurred after the realisation of property in preserving and protecting the property. The court was also required to consider the right of the trustee to be indemnified for costs and expenses incurred out of the trust estate when pursuing an action for the benefit of the beneficiaries, and how this right compared with the liquidator's lien under the principle in Universal Distributors.

The court found that the liquidator's lien under Universal Distributors encompassed costs and expenses incurred after the realisation of property in preserving and protecting the property. It was determined that the costs and expenses incurred by the trustee in pursuing the action for the benefit of the beneficiaries were part of the trustee's lien, and thus, the trustee was entitled to be indemnified for these costs. The court highlighted the distinction between the nature of the trustee's lien and the liquidator's lien, with the former being broader in scope.

The court granted the liquidator's application for directions, clarifying the priority of claims over the trust assets and affirming the entitlement of the trustee to be indemnified for costs incurred in pursuing actions for the benefit of the beneficiaries. The court's decision provided clarity on the interplay between the liquidator's lien and the trustee's lien, ensuring that the interests of the beneficiaries were protected in the liquidation process.

Orders