The Trust Company (Australia) Ltd v Diverseport Fixed Income Ltd (Receivers and Managers Apptd) (In Liq)

The Trust Company (Australia) Ltd sought advice and authority from the court regarding the construction of a trust deed. The Trust Company was the trustee for debenture holders under the trust deed, and the issuing company had defaulted. The Trust Company had appointed receivers and managers of the trust property, and was seeking directions on the construction of the trust deed. The central issue was whether application moneys accompanying applications for debentures, which had been lodged prior to the appointment of the receivers and managers, but for which debentures had not been issued, formed part of the trust property. The Trust Company had given notice to the receivers and managers under clause 19.1 of the trust deed that any principal redeemed in respect of debentures had to be paid to the Trust Company. Several debenture holders had made requests for redemption of debentures that matured between the date of appointment of the receivers and managers and the giving of the notice under clause 19.1, but none of the redeemed amounts had been repaid to debenture holders prior to the Trust Company giving notice under clause 19.1. The court had to decide whether the principal redeemed formed part of the trust property.

The court considered the terms of the trust deed and the relevant law on trusts and trustees. It found that the application moneys did not form part of the trust property, as they were not part of the trust property at the time of the default. The court also found that the Trust Company was entitled to give notice under clause 19.1, and that the principal redeemed did not form part of the trust property. In relation to the order of repayment, the court found that the Trust Company was entitled to exercise its discretion to repay principal first and then interest, as the amount obtained from the sale of investments was insufficient to meet all principal and interest outstanding on the debentures.

The court's reasoning and outcome were based on the terms of the trust deed and the relevant law on trusts and trustees. The court found that the application moneys did not form part of the trust property, and that the Trust Company was entitled to give notice under clause 19.1. The court also found that the Trust Company was entitled to exercise its discretion to repay principal first and then interest. The orders were made as per the amended draft initialled and placed with the file.