An administrator’s right to remuneration out of trust property

13 December 2021
Scott Couper, Partner, Brisbane

In Australian Securities and Investments Commission v Marco (no 9) [2021] FCA 1306 the Administrators brought an interlocutory application seeking remuneration orders pursuant to section 60-10(1)(c) of the Insolvency Practice Schedule (IPSC) for the administration of the second defendant. The application was opposed by the Liquidators of the second defendant.

Justice McKerracher ultimately held that the Administrators were not entitled to exoneration under section 60-10(1)(c) of the IPSC because that right belongs to the trustee. However, the Administrators did have a right to remuneration under the more general entitlement for an external administrator found in section 60-5(1) of the IPSC.


The proceedings involved a managed investment scheme (Scheme) operated by Chris Marco, the first defendant, and AMS Holdings (WA) Pty Ltd (AMS), the second defendant in its own right. AMS was also the third defendant in its capacity as trustee of the AMS Holdings Trust (the AMS Trust).

The Scheme was wound up on application by ASIC in December 2020. Essentially, the Scheme was a Ponzi scheme where funds from investors went to Mr Marco’s personal bank accounts and were then transferred to AMS to purchase real property. Voluntary administrators (the Administrators) were appointed to AMS in September 2020 and subsequently on 7 December 2020 liquidators were appointed to the company (the Liquidators).


Investigations by the Liquidators and the Administrators determined that AMS never traded in its own right and was propped up by transfers of investor funds from Mr Marco. It was also revealed that AMS held its assets in its capacity as trustee of the AMS Trust, and not in its own right. By operation of the AMS Trust deed, AMS ceased to be trustee of the AMS Trust once the Administrators were appointed, and Mr Marco did not appear to have appointed a new trustee. The relevant property held in the name of AMS totalled approximately $8.6 million and consisted of cash, receivable loans and real property.

Section 60-10(1)(c) of the IPSC

The Administrators submitted that they were entitled to remuneration from the property of the Scheme under section 60-10(1)(c) of the IPSC because the property was held by AMS on trust and was available to AMS as a trustee, and by extension to the Administrators, in its right of exoneration.

The Liquidators objected on the basis that there was no property for the Administrators to draw their remuneration from. This was because the Administrators did not deal with the property and accordingly could not incur any remuneration in relation to it and regardless, there was no available property out of which to be paid.

Trust property?

The issue of remuneration is complicated because of the trusts involved. The Liquidators and Administrators both agreed that the property was held by AMS as a trustee, but the nature and terms of the trusts was disputed.

The Liquidators contended that AMS held the property as a bare trustee of the AMS Trust. As a bare trustee, the rights of exoneration and indemnity were limited to liabilities that were incurred in the protection and preservation of the trust property. The Liquidators’ submitted that, because they were in control of the property throughout the Administrators’ appointment, none of the Administrators’ activities were as bare trustee and cannot be claimed under the trustee’s indemnity.

In a separate action against Mr Marco, it was held there was an express trust between Mr Marco as trustee and the investor as a beneficiary.[1] Despite the fact that the investor funds were mixed with Mr Marco’s personal funds, Justice McKerracher found that there was no reason investors lost the protection of the trust. Further, the obligations upon Mr Marco were imposed upon AMS as the recipient of trust funds. His Honour determined that AMS held the funds on constructive trust for the investors and as a result, the property purchased by AMS never entered the AMS Trust.

His Honour also commented that the complexity of the Scheme should have made it clear that the Administrators would need to seek directions from the Court to determine the way forward.

Right of Exoneration

His Honour held that the Administrators would be entitled to remuneration for work performed in realising the property in the exercise of AMS’ right of exoneration. The right to exoneration belongs to the trustee, but the Administrator did not become the trustee on their appointment and the trust property did not vest in them.

Additionally, the Administrators’ work was limited to general liquidation work involving investigations into the Scheme and adjudicating investor claims. Therefore, His Honour held that the Administrators never had control of, and could not have incurred any liabilities with respect to the property, and consequently never possessed any right to be exonerated from the trust assets.

Section 60-5(1) of the IPSC

Justice McKerracher noted that the Liquidators and the Administrators did not address the well-recognised right in section 60-5(1) of the IPSC that entitles an external administrator to receive remuneration for work performed in relation to the external administration. His Honour held that there was no reason to think this entitlement was lost because the Administrators were appointed to a company that solely operated as a trustee.

As the Administrators were required by statute to perform certain work in relation to the external administration, they are entitled to be remunerated out of the property of AMS under section 60-5(1). In allowing the remuneration, His Honour was clear that this was not a ‘rubber stamp’ for the significant sum claimed by the Administrators and the quantum of the remuneration was referred to mediation.

Key takeaway

Where the external administration involves a trust, external administrators will not have a right to remuneration through section 60-10(1)(c) of the IPSC if they are not trustees.

Notwithstanding the above, an external administrator can still be paid remuneration because of section 60-5(1) of the IPSC, which offers a more general right to remuneration.

If the external administration involves complicated trust issues, external administrators should seek directions from the Court.

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Authored by:

Scott Couper, Partner
Caitlin Miller, Graduate


[1] Markopoulus v Marco [2020] WASC 79 at [49]-[51], [58].

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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