Re S&D International Pty Ltd (No 5)

The case of Re S&D International Pty Ltd (No 5) involved an application by the liquidator of a trustee company for directions regarding the priority of claims over trust assets held by the company in liquidation. The primary dispute centred on the allocation of costs associated with the winding up process and the protection of the trust assets. The case was heard in the Supreme Court.

The central legal issues before the court were the priority of costs incurred by the liquidator in preserving and protecting the trust assets and the rights of the trustee to be indemnified for these costs. The court had to determine whether the liquidator's lien under the principle in Universal Distributors should encompass these costs, and if the trustee had a right to be indemnified under rule 65 of the Supreme Court (General Civil Procedure) Act 2005.

The court ruled that the liquidator's lien under Universal Distributors extended to costs incurred after the realisation of property in preserving and protecting that property. This meant that the costs incurred by the liquidator were to be considered part of the assets in the winding-up process. Furthermore, the court held that the trustee was entitled to be indemnified for costs incurred in pursuing an action that would benefit the beneficiaries of the trust estate. The court compared the nature of the trustee's lien with that of the liquidator's lien, confirming the trustee's right to indemnity under the relevant statutory provision. The outcome was that the liquidator's costs were to be prioritised in the distribution of the trust assets, subject to the trustee's right to indemnity.

The final orders of the court mandated that the liquidator's costs were to be paid from the trust assets before any distribution to the beneficiaries, unless the trustee successfully claimed indemnity under rule 65 of the Supreme Court (General Civil Procedure) Act 2005.