How should the liquidator of an insolvent trustee company ensure
payment out of trust assets of the entirety of his or her
remuneration and expenses?
According to the Federal Court1, from the outset the
liquidator should seek appointment as a receiver of the trust
assets rather than rely upon pre-appointment amendments to the
trust deed designed to keep the trustee in office after liquidation
starts. The right of indemnity does not confer a self-help right
upon an insolvent trustee to sell trust assets for the payment of
creditors.
The facts
Mr Giovanni Carrello was the liquidator of Gembrook Investments
Pty ltd (in liq). Gembrook was the trustee of the Bailey Family
Trust. On the day prior to Mr Carrello's appointment, a power
of amendment in the terms of the trust was exercised to prevent the
trustee of the trust being removed by the appointor if a liquidator
was appointed to the trustee. The amendment also provided that all
remuneration and expenses of the
