In LM Investment Management Limited & Anor Whyte  QSC 245, the Supreme Court of Queensland considered an application by the Liquidator of LM Investment Management Limited (LM), for payment of some or all of his remuneration from trust property. The trust property comprised by a number of registered investment schemes, including the LM First Mortgage Income Fund (the Fund).
Of particular interest in this case was the Liquidator’s claim for ‘Corporate Remuneration’ described by the Liquidator as work carried out during both the period of voluntary administration of LM and the subsequent period of the liquidation of LM. The Corporate Remuneration was not related to any particular scheme or to the schemes generally, but was carried out in the administration of the winding up of LM.
The respondent to the Liquidator’s application, David Whyte (Mr Whyte), was a receiver appointed by the Court to take responsibility for ensuring that the Fund was wound up in accordance with its constitution and the orders of the Court. Mr Whyte opposed the Liquidator’s application on a number of grounds, most relevantly that none of the claimed Corporate Remuneration may be ordered to be paid from the Fund because the remuneration for that work was not recoverable against it as a trust.
In considering the applicable principles that enable a liquidator to make a personal claim for remuneration directly against the assets of the scheme, His Honour Justice Jackson referred to his earlier decision in the related case of Park & Muller (Liquidators of LM Investment Management Ltd) v Whyte (No. 2) (the First Remuneration Decision). In that case, his Honour noted that, although there is no shortage of cases in Australian law to suggest that a liquidator may not be entitled to a complete indemnity for the general costs of a liquidation, that reasoning does not appear to apply where the only business of the company identified is that the company acted as trustee of the relevant trust(s).
While the Liquidator submitted LM did not carry on business in its own right, it was ultimately held that LM’s operation as funds manager and responsible entity of schemes and funds, in exchange for substantial remuneration, was in fact the business of LM carrying on business in its own right.
His Honour then turned his attention to whether, and in what circumstances, a liquidator could then recover remuneration for work not related to the trusts, from the assets of those trusts.
His Honour again referenced the First Remuneration Decision in which he explained that, in circumstances where a trustee also carries on non-trust business, a liquidator is required to keep records adequate enough to separate the liquidator’s remuneration and expenses that are attributable to the trust, from the part of the liquidator’s costs and expenses attributable to the company’s non-trust business.
Having regard to a number of authorities, it was also held that, where a trustee does not act solely as trustee, a liquidator will be required to estimate the costs that are attributable to the administration of trust property and only those costs will be charged against the trust assets.
In this case, where it was clear that the Corporate Remuneration related to non-trust related work and was general in nature, Justice Jackson decided that:
This case serves as a reminder that liquidators may have recourse to trust assets for their costs and expenses and remuneration incurred in a liquidation, but only to the extent to which the work concerned the assets of the trust. Further, it once again confirms the principle that where a company is the trustee of a trading trust and has no other activities, the liquidators are entitled to be paid their costs and expenses for general liquidation work out of the trust assets.
  2 Qd R 413.
 Ibid at 93.
Scott Couper, Partner
Laura Fraser, Solicitor