JCL Law Partners Director Adrian Robins and Practice Manager Justine Fletcher Visit New Orleans for IR Global ‘On the Road’ Conference
Last week, Adrian Robins (Director) and Justine Fletcher (Practice Manager) of JCL Law Partners attended IR Global’s ‘On the Road’ Conference in the vibrant city of New Orleans.
The event brought together professionals from a wide range of jurisdictions, offering a valuable opportunity to connect with like-minded individuals from across the globe, particularly those operating within the US.
Throughout the week, attendees participated in a packed agenda that included panel discussions, breakout sessions, and a variety of networking opportunities in some of New Orleans’ most iconic venues. From the opening drinks reception to the luxury networking dinner and cultural walking tour, the event combined professional growth with meaningful connection in a uniquely atmospheric setting. Justine also co-hosted a session on new AML Laws with the network’s practice management committee.
Maintaining a strong global network is essential, and attending these events allows us to continue expanding our international presence, strengthening our capabilities, and delivering enhanced value to our clients.
We are grateful to IR Global and the sponsors for hosting such a memorable and well-organised event, and we look forward to continuing our engagement with the network in the months and years to come.
Why Adrian Robins thinks learning never stops – even at the top (IR Global June 2025 Member Spotlight)
JCL Law Partners Director, Adrian Robins, featured as one of the IR Global network's June member spotlights. Read the full piece below:
Adrian Robins, a Director at Brisbane-based JCL Law Partners, has built a career defined by calm amidst conflict. He balances leadership, strategy, and deep legal expertise to support clients through high-stakes commercial litigation.
“I’m responsible for managing the practice, supervising staff, and overseeing the legal work alongside Jim (Conomos),” he says. “But at its core, my role is about resolving disputes and helping people find clarity in difficult circumstances.”
With over 17 years at the firm and 20 in legal practice, Adrian has seen the firm evolve – and personally, he’s held nearly every title going. “I started here as a solicitor, moved through associate, senior associate, salaried partner, and eventually director,” he explains.
The road from Sydney to Brisbane (and into litigation and insolvency)
Adrian’s career in law began in a niche area as a legal costs consultant. “That was just something I did after I’d finished university, in part because I didn’t know what I wanted to do,” he laughs.
The role gave him broad exposure to many areas of legal practice and insight into how firms operate behind the scenes. It also helped him quickly identify the practice areas he was most drawn to: commercial litigation and insolvency: “It was the sort of work that interested me the most and was most suited to my personality and skill set.”
Originally from Sydney, Adrian relocated to Brisbane through a short-term opportunity with a former firm. “It was meant to be just a bit of an adventure,” he says. “I very quickly found that Brisbane was a lot easier and a lot cheaper to live in than Sydney.”
What was supposed to be a one-year secondment turned into a long-term career and a life built in Queensland at what was then known as James Conomos Lawyers.
“Even when I was in my twenties, 17 years at a firm was exceptional. It wasn’t the norm. It just happened, I’ve enjoyed working here and with the people I’ve worked with.”
No two days alike
As a commercial litigator, Adrian is drawn to the variety and intellectual challenge of his work. “The beauty of commercial litigation is there’s no typical workday,” he says, “the litigation is the mechanics of what you do, but the subject matter varies markedly between matters.”
His role as a Director also includes supervising legal staff, managing client relationships, and overseeing strategic decisions at the firm. “There’s more responsibility for the day-to-day management of the practice,” he explains. “More of a strategic focus, I suppose.”
Despite holding a senior leadership role, Adrian continues to remain closely involved in legal matters. “I think everybody finds this, but when things get busy, you revert to type – you just knuckle down and get it done,” he explains.
In addition to court appearances, he frequently spends time advising clients, preparing for mediations, and managing complex disputes. “It could well be a whole day of conferring with clients and client meetings,” he says. “It could be a day in court or in mediation.”
However, court appearances are less frequent than many people assume: “You don’t spend as much time in court as people think. A lot of the work is preparing for court; putting your clients in the best position for when the time comes.”
Adrian’s day-to-day work also includes mentoring junior staff and ensuring the firm remains efficient and client-focused. “Not being the person doing as much of the grunt work, but trying to delegate and lead,” he adds. “It can be hard, though, particularly when the team is busy, because you often have to jump back in and do the work yourself, just to keep things moving.”
Finding purpose in people, not just the courtroom
Though he’s had his share of court victories, Adrian finds the greatest satisfaction in helping clients find peace during stressful times.
“As a litigator, one of the most satisfying things is when you have a matter that goes all the way through to trial… and you get a written judgment. It completely vindicates your client’s position.”
But often, it’s the more intangible moments that matter most. “Sometimes you can actually visibly see when you’ve put a client at ease. When they come in, they’re worried, they’re stressed…if you resolve a proceeding at mediation… sometimes you can even see the relief on your client’s opponent’s face.”
Overcoming imposter syndrome and industry pressure
Adrian is open about the challenges he’s faced, particularly early in his career. “I had a sense that I struggled to be taken seriously by more senior practitioners,” he shares.
“I suspect that was probably more a function of some kind of imposter syndrome.”
Back then, it wasn’t uncommon for senior lawyers to ignore junior correspondence and only respond to partners. “You don’t know whether that’s just because they were in a hurry… or whether it was a deliberate thing.”
Another ongoing challenge is work-life balance. “I’ve lost track of the amount of family dinners I’ve missed during the week or concert tickets I’ve had to forego,” he admits.
Stressing the importance of finding a good balance as early as possible, he warns “if you don’t pay attention to it, your health and fitness can really suffer.”
It’s OK to not know the answer immediately
To young professionals experiencing self-doubt, Adrian offers a reassuring perspective.
“One of the best pieces of advice anyone ever gave me early on was a senior practitioner who said: ‘I’ve been doing this for 25 years and I still don’t know the answer.’” That stuck with him; learning never stops.
“What you manage to work out as a junior associate is probably just as good as what anybody else might know,” he adds.
He also stresses the value of community. “Joining professional associations, particularly those aimed at young professionals. It’s a good place to know that you’re not alone.”
His parting advice: “You just have to roll with the punches and keep proving yourself.”
Connecting through IR Global
Although Adrian is relatively new to IR Global, he’s already seen the benefits firsthand. “Several years ago, through IR Global, I was able to very quickly source somebody in New Zealand who could do the work for our client. Without IR Global, it would’ve taken a long time.”
He’s now preparing to attend his first IR Global conference in New Orleans. “It’s a long trip, so I want to make the most of it.”
Looking ahead, he’s also eager to tap into the network’s expertise around compliance. “Australia’s new anti-money laundering legislation comes into force next year, and New Zealand members, who’ve already had similar laws in place, will be a great resource for us.”
Preparing for the future, and embracing the unexpected
For now, Adrian sees the firm continuing on its current path, but keeping a close eye on how technology will continue to reshape legal practice. “In the 20 years I’ve been in practice, technology has had a significant impact,” he says.
“The buzzword at the moment is obviously AI, which is going to change things in ways that we can’t even imagine.”
He’s also watching blockchain developments. “Things like smart contracts and tokenisation, that also potentially has the ability to change the way that law is practiced.”
Adrian stresses the importance of staying current. “It’s not going to make litigators obsolete, but it will change the way we work.”
Swimming lessons and dinosaurs
Outside the legal world, Adrian’s life has shifted into a new phase: fatherhood. “Despite being in my mid-forties, we’ve got a three-year-old toddler. That’s my life outside of work at the moment,” he laughs, “swimming lessons and dinosaurs.”
Adrian’s other hobbies have included photography and attending live sporting and music events. “Just before the COVID-19 pandemic hit, I took up digital photography as a hobby, but unfortunately that has taken a back seat lately.”
Still, he’s embracing this time fully: “You never get that time back, he’s only going to be young once. He won’t always want to hang out with me, so I’m making the most of it now!”
How proactive restructuring can save your business
Financial difficulties can creep up on a business when least expected. Whether it's due to market shifts, unexpected costs, or operational setbacks, many businesses find themselves at a crossroads: How do we turn this around before it's too late? The key is acting early and having the right plan in place.
At JCL Law Partners, we see restructuring as more than just damage control. It’s about making smart, strategic decisions that set a business up for long-term success. With years of experience helping businesses across Queensland and Australia, we’ve seen firsthand how the right approach can mean the difference between recovery and insolvency.
Timing matters
One of the biggest mistakes businesses make is waiting too long to seek help. Financial struggles don’t fix themselves, and delays can limit your options. The sooner you act, the more choices you’ll have to stabilise and move forward.
By working with an experienced restructuring team early on, businesses can explore a range of solutions, from debt negotiations to operational changes. The right strategy can put a company back on track before things spiral out of control.
Waiting too long can also damage relationships with creditors, suppliers, and customers. A proactive approach reassures stakeholders that steps are being taken to secure the business’s future. It can also help to maintain staff morale, as employees feel more secure when they see decisive action being taken.
Helping businesses to restructure
At JCL Law Partners, we provide a range of services to help businesses in financial distress, including:
- Private restructuring agreements - Custom solutions to reorganise debts while keeping control of operations.
- Emergency sales - When a quick sale is needed to preserve value, we help businesses navigate the process effectively.
- Deeds of company arrangement (DOCA) - A structured agreement that allows businesses to work with creditors on a manageable plan.
- Schemes of arrangement - A court-approved restructuring tool that can help negotiate better terms with creditors.
- Management of distressed companies and trusts - Practical guidance to help businesses stabilise and regain control.
- Tax issues - Addressing tax concerns that arise during restructuring to ensure compliance and avoid unnecessary liabilities with the aid of experienced tax advisers.
Seeking professional advice
Restructuring can be complex, and every business has unique challenges. Seeking professional legal and financial advice ensures that decisions are informed and legally sound. A well-executed restructuring plan helps protect valuable assets and reduce financial losses, allowing businesses to continue operating while avoiding insolvency. Effective debt restructuring improves cash flow management, giving companies the breathing room they need to rebuild.
Moreover, a clear recovery strategy enhances stakeholder confidence, reassuring creditors, suppliers, and employees that the business is taking the necessary steps to regain stability. Lastly, legal compliance is a critical factor - navigating restructuring with expert guidance minimises risk and ensures all actions align with regulatory obligations.
Engaging a restructuring expert not only helps navigate the technicalities but also provides a fresh perspective on how a business can adapt and thrive under new financial conditions.
Don’t wait until it’s too late
If your business is struggling, ignoring the problem won’t make it go away. Restructuring isn’t about failure, it’s about making smart choices that secure your future.
At JCL Law Partners, we don’t just provide legal advice; we offer practical, results-driven solutions to help businesses navigate tough times and come out stronger.
If you’re facing financial uncertainty, now is the time to act. A conversation today could make all the difference tomorrow. Contact us here to start taking control of your business’s future.
JCL Law Partners Welcomes Former ASIC Lawyer Adam Carr as Senior Associate
March 21, 2025Insights,Insolvency,Commercial Litigation
JCL Law Partners is pleased to announce the appointment of Adam Carr as a Senior Associate.
Adam brings close to a decade of experience in insolvency and litigation. Having worked at regulators for both personal and corporate insolvency, he offers a unique and intimate understanding of the industry from a regulatory perspective. His insights put him in a strong position to better advise clients on potential risks and issues with regulators.
His most recent role was at ASIC, where he was an executive-level lawyer responsible for the successful administration of the Assetless Administration Fund and worked within the enforcement and compliance group regulating registered liquidators. Adam has also worked in private practice with specialist litigation and insolvency law firms and the Australian Financial Security Authority (AFSA).
Adam’s deep regulatory experience provides a unique perspective on insolvency matters. He is among few lawyers in Australia who have worked in a team responsible for the regulation of liquidators, equipping him with an exceptional understanding of the industry. This first-hand experience allows him to provide strategic and informed advice to insolvency professionals, including liquidators and bankruptcy trustees. Additionally, he has worked across a broad range of insolvency and litigation matters in private practice.
Admitted as a solicitor of the Supreme Court of Victoria and the High Court of Australia, Adam currently holds an unrestricted practising certificate in Queensland. He takes a proactive approach with his clients and has a ‘get it done’ attitude when tackling complex legal issues.
Welcome to the team Adam - we look forward to the expertise and insight that you will bring to our clients.
Read the original article here.
Optimism in the face of uncertainty
How can proactive risk management strategies help businesses navigate regulatory and economic uncertainties?
Typically, crisis planning involves the management of many sorts of risks. No matter what industry, you should have risk plans in place that are relevant to your industry. Whilst it may not be possible to plan for every eventuality, a risk plan ought to be in place for the challenges you can predict, also called known unknowns.
Firstly, having a risk management strategy is important, even if it is costly to establish because being prepared minimises risk. Secondly, if you operate effectively then changes in economic policy are less likely to drastically affect you. When designing your risk management strategies, commonly, the following steps are useful:
Assess the impact of the uncertain regulatory issue on your firm, then assess your degree of regulatory
uncertainty. Next you should identify your current coping strategies, including a review of their breadth and consistency. Finally, using this knowledge you can devise an appropriate strategic posture. Further potential strategies include:
• Investigation: Collect additional information; draw on professional expertise to be applied in decision making.
• Influencing: Manipulate determining circumstances or actors that constitute uncertainty.
• Stabilisation: Implement standard procedures or establish long-term contracts.
• Integration: Restructure business portfolios through divestitures, acquisitions, and mergers.
• Internal design: Change organisational design by establishing modular structures, low degree of formalisation, or decentralisation.
• Postponement: Defer decisions and wait for more certainty.
• No-regret moves: Execute activities that are advantageous regardless of how uncertainty resolves.
• Substitution: Replace uncertain decision criteria with assumptions derived from comprehensive consideration or detailed analysis.
• Cooperation: Collaborate with suppliers, customers, or competitors, e.g. in research or production; engage in trade associations.
• Imitation: Examine and copy the strategy of your competitors.
• Withdrawal: Exit the business in uncertain markets and focus on predictable environments.
In times of economic distress and change, how can professional services firms assist in maximising value while minimising disruptions?
Typically, the size or structure of a business will dictate how to minimise disruptions. In a large firm, there are greater resources, whereas in a smaller firm, there is greater scope to react quicker to change. The ability to modify an organisation’s business model as a consequence of a crisis is called antifragility.
The issues to consider include being flexible enough to enable change where necessary. As an example, smaller businesses tend to be able to address change promptly because they can make faster decisions, with potentially better results. Larger businesses have a larger bureaucracy but may have greater resources to enable experienced person to make prompt decisions. To make the best decision, it is important to have strong and decisive leaders.
Also, embracing technology is key in any business, large or small. During COVID-19, shifting quickly to online + digital services was vital to survival.
How can clients approach the risk of uncertainty and turn it into opportunity?
In general, risk and uncertainty are different concepts. On the one hand, risks are generally known unknowns,
whereas uncertainty deals with unknown unknowns. Being flexible and optimistic enables one to have the best mindset, which involves thinking “how can maximise this opportunity?”, rather than “how do I minimise this risk?”. In this respect:
Firstly, human resource management is critical, you should make sure the person who can create the most value is on the project/task.
Secondly, it is critical to make sure that your business is generally aligned with customer needs.
Thirdly, knowledge is always key and therefore overconfidence needs to be avoided.
Fourthly, it is wise to underestimate the value of any kind of knowledge gained from previous experience.
Fifth, having a proactive risk management strategy is also an effective way to know how a situation should be handled.
The real issue is failing to embrace uncertainty and subsequently failing to innovate, which can lead to failure. History is littered with examples of businesses failing to take risks and thereby missing out on opportunities – for example, Kodak missed the opportunity to invest in Instagram when available, while Yahoo passed up the opportunity to buy Google for $1 million in 2002.
Key Takeaways
- Developing a comprehensive risk management strategy helps businesses navigate uncertainties by minimising risks, adapting to economic changes, and leveraging tools like AI. Effective strategies include assessing regulatory impacts, adopting flexible structures, and employing techniques like stabilising operations or diversifying portfolios.
- Flexibility, decisive leadership, and embracing technology are vital for mitigating disruptions, especially during crises. Smaller firms can quickly adapt due to agility, while larger firms benefit from extensive resources. Antifragility—modifying business models during crises—ensures resilience and growth.
- Viewing uncertainty as an opportunity fosters innovation and growth. Aligning with customer needs, leveraging human resources effectively, and learning from past experiences can uncover new opportunities. Failure to embrace uncertainty risks missed innovations, as seen in Kodak and Yahoo’s missed investments.
This is James Conomos' submission to IR Global's 'The Visionaries'. Read the full publication here.
JCL Law Partners to Sponsor IR Global’s ‘On the Road’ Conference Dinner in New Delhi
Next month, James Conomos (Managing Director) will be attending IR Global’s latest ‘On the Road’ Conference in New Delhi. JCL Law Partners will have the pleasure of sponsoring the event’s exclusive networking dinner in the Shah Jehan Ballroom of the luxurious Taj Palace Hotel.
Jim will be meeting with professionals from a variety of jurisdictions, all active in the Asia-Pacific region offering an invaluable opportunity to connect with like-minded individuals from across the globe.
Throughout the event, there will be numerous opportunities to both learn and network - from presentations and breakout sessions to social activities in luxury venues, all in the backdrop of India’s vibrant capital.
In the modern world, having a global network is more important than ever. Through attending these events, we hope to continue to expand our international presence and capabilities, expanding our client offerings.
Recovery of costs by solicitors acting on their own behalf – another nail in the coffin
In the recent decision of Manzo v CSM Lawyers Pty Ltd [2024] FCAFC 96, the Full Court of the Federal Court of Australia determined that an incorporated legal practice which had represented itself in litigation was not entitled to recover its professional costs from its unsuccessful opponent.
In doing so, the Court considered conflicting authority from the Courts of Appeal in both Victoria and New South Wales and also seemingly closed-off a possible loophole which had been left ajar by the decision of the plurality in the High Court in Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333 (Bell Lawyers Decision).
Background
The Chorley Exception (so named after the decision London Scottish Benefit Society v Chorley (1884) 13 QBD 872) is (or was, in Australia) an exception to the well-established rule that because an order for costs is intended to provide an indemnity for costs actually incurred (as opposed to providing compensation for productive time expended), a self-represented litigant is not entitled to professional costs for acting for him or herself in legal proceedings. The Chorley Exception provided that self-represented litigants who are solicitors are entitled to recover professional costs for work they have undertaken in legal proceedings.
In Pentelow v Bell Lawyers Pty Ltd [2018] NSWCA 150, the New South Wales Court of Appeal held that the Chorley Exception applied to work undertaken by self-represented litigants who were barristers, in addition to those who were solicitors.
On appeal, in September 2019 the High Court of Australia overturned the decision of the NSW Court of Appeal, finding that the Chorley Exception did not form a part of the common law of Australia ([2019] HCA 29). In so doing, the High Court effectively abolished the Chorley Exception in Australia.
The plurality in the High Court left the door slightly ajar in respect of whether a self-represented incorporated legal practice (ILP) may recover costs of acting on its own behalf (Bell Lawyers Decision at [51]).
Since the Bell Lawyers Decision, conflicting authorities have arisen in the Courts of Appeal in Victoria and New South Wales regarding whether a self-represented ILP may recover costs of acting on its own behalf.
In United Petroleum Australia Pty Ltd v Freehills [2020] VSCA 15 (United Petroleum) the Victorian Court of Appeal denied an ILP its costs in respect of work done on its behalf by its employed solicitors.
In Atanaskovic v Birketu Pty Ltd [2023] NSWSC 312 (Atanaskovic), although at first instance the partners of an unincorporated practice had been denied costs in respect of work undertaken by their employed solicitors, on appeal the NSW Court of Appeal determined that the inclusion of “remuneration” within the definition of “costs” in the relevant NSW legislation entitled an ILP to recover costs incurred by its employed solicitors in representing the firm. That decision, however, turns upon the specific terms of the NSW legislation.
The present proceeding
The firm, CSM Lawyers Pty Ltd (CSM) is an ILP.
An issue arose as to whether CSM ought to be entitled to recover its costs in respect of work undertaken by its employed solicitors on its behalf against Mr Manzo relating to an appeal proceeding instituted by Mr Manzo.
In support of its application for its costs CSM submitted, in effect, that because it was an ILP with more than one director and shareholder (i.e. it was not a sole-director and sole-shareholder ILP), there was sufficient independence (or detachment) between the firm as party and the employed solicitors undertaking the work on its behalf so as not to infringe the indemnity principle if it were to be awarded its costs of the proceeding. That position was consistent with the observations of the plurality in the Bell Lawyers Decision.
After considering the Bell Lawyers Decision and those decisions that have followed in Victoria and NSW, the Full Court preferred the approach taken by the Victorian Court of Appeal in United Petroleum and stating that if CSM’s submissions were accepted, “[i]n effect, it would create an artificial distinction based on the size of an incorporated legal practice.”
The Full Court did, however, permit CSM to recover their outlays in the proceeding, including counsel’s fees.
The effect of the decision
The decision closes the door, at least in courts in the Federal jurisdiction, on the potential loophole left in the decision of the plurality in the Bell Lawyers Decision in respect of the costs of self-represented ILPs acting on their own behalf in proceedings.
Although not strictly binding upon courts in the state jurisdictions, the decision is likely to be persuasive in the state courts (perhaps other than in NSW, where it is inconsistent with the Atanaskovic Decision).
Furthermore, the decision will likely serve as an effective block upon the pursuit of bankruptcy proceedings founded upon costs orders awarded in favour of self-represented ILPs.
Where to now?
The Atanaskovic Decision is the subject of an appeal to the High Court, special leave having been granted in April 2024.
The determination of that decision may resolve, once and for all, whether the last limited element of the Chorley Exception remains in Australian Law.
James Conomos Lawyers Becomes JCL Law Partners
As of 10 June 2024, the firm has rebranded from James Conomos Lawyers to JCL Law Partners.
We have operated as James Conomos Lawyers since 1 July 1992, when the firm was first established by James Conomos. Since that time, we have built a reputable brand name in JCL - something we have sought to retain as part of the rebrand.
The words “Law Partners” signify a move forward and a new structure in the form of James Conomos and Adrian Robins as directors and will enable further growth, including the introduction of further directors and lawyers.
We are also excited to announce that the rebrand coincides with our move to a new office on Level 4 of Turbot Place.
Whilst our visual identity has changed, our dedication to exceptional client service has and will not. We would like to take this opportunity to thank you for your ongoing support. We look forward to welcoming you to our new office in the near future!
James Conomos Lawyers Sponsors IR Global 'On the Road' Conference in Dubai
Last week, James Conomos (Managing Director) & Justine Fletcher (Practice Manager) attended IR Global’s latest ‘On the Road’ Conference in Dubai. James Conomos Lawyers had the pleasure of being a headline sponsor of the event.
Jim and Justine were pleased to have met with 130+ members from a variety of jurisdictions, offering an invaluable opportunity to connect with like-minded individuals from across the globe.
After landing, we hosted a pre-event private dinner at the incredible Prime 68 restaurant, alongside Dubai-native Paoletti Law Group, membership sponsors of the event.
Throughout the event, there were numerous opportunities to learn from and connect with members from a variety of jurisdictions - from presentations and breakout sessions to opening and closing drinks receptions and a luxury networking dinner. We enjoyed strengthening our relationships with fellow IR Global members while learning so much about the region.
In the modern world, having international connections is more important than ever. We look forward to future events with IR Global where we can continue to expand our international presence and capabilities.
Federal Court outlines when a liquidator may recover general liquidation remuneration and costs from trust assets
In the Federal Court liquidator trust assets case, Lawrence, Ozifin Tech Pty Ltd (in liq) v AGM Markets Pty Ltd (in liq) [2022] FCA 1478, the Federal Court of Australia provided useful guidance on when a liquidator may recover general liquidation remuneration and costs from trust assets.
Background
In this judgment, liquidators of multiple companies were successful in obtaining directions and declarations they sought regarding the distribution of statutory trust funds, and obtaining payment of their fees from trust assets.
AGM Markets Pty Ltd (in liquidation) (AGM), OT Markets Pty Ltd (in liquidation) (OT) and Ozifin Tech Pty Ltd (in liquidation) (Ozfin) were service providers offering web-based trading platforms to retail clients for opening and closing margin foreign exchange contracts and ‘contracts for differences’ positions.
AGM was the only entity to hold an Australian Financial Services Licence (AFSL). OT and Ozifin were authorised to provide certain financial services on behalf of AGM through separate agreements. AGM’s role was mainly as an issuer of financial products, and the custodian of the client funds of OT and Ozifin.
Between February 2018 and October 2020, ASIC led Federal Court proceedings against the Companies for various breaches of the Corporations Act 2001 (Cth) (Act), including unconscionability and profiting from conflicts of interest. As a result of those proceedings, AGM’s AFSL was cancelled and pecuniary penalties of $75 million ordered. The Federal Court also held that the Companies be wound up, with separate liquidators appointed to each entity. The Companies liquidators (Liquidators) sought directions and declarations regarding the distribution of trust funds held by the Companies.
Intervention by ASIC
ASIC intervened in each application and took an opposing view to the liquidators in terms of the characterisation of the constructive trust funds and whether the liquidators could take out their general liquidation costs and expenses in priority to the investors who are the beneficiaries of such non-statutory trusts. ASIC asserted that each of the relevant trusts involved an institutional constructive trust rather than a remedial constructive trust. Accordingly, the Liquidators sought to use constructive trust funds to pay general liquidation costs and expenses.
His Honour Beach J rejected ASIC’s submissions that the constructive trusts should be characterised as institutional for the following reasons:
- the application of a remedial constructive trust is preferred where funds are held by the constructive trustee as a result of their own misconduct;
- the client accounts were not static after the Companies’ wrongdoing occurred, making the determination of funds payable very intricate;
- the element of judicial discretion was absent from ASIC’s submissions, which is required in institutional and remedial constructive trusts;
- an institutional constructive trust is unpreferable where it has the effect of preventing a liquidator from recouping their general liquidation costs and expenses.
Beach J further determined that even if an institutional constructive trust were to be imposed, the Liquidators would still be entitled to deduct from it their general liquidation costs and expenses.
His Honour lastly considered the Court’s “expansive jurisdiction to allow a liquidator’s remuneration to be paid out of assets of a trust” and held that the liquidators’ general liquidation work had the effect of indirectly benefitting the trust and its beneficiaries.
Key takeaways
Beach J relevantly provides that:
- neither Staatz or Park are authority for any principle that liquidators cannot recover general liquidation costs from trust funds in an appropriate case. Both are an application of the broad discretionary power to the circumstances of the relevant case. The question is one of discretion with each case turning on its own facts (at [210]);
- generally, whether general liquidation costs can be recovered from trust assets is a matter for the Court to determine, and relevant factors include the extent to which the relevant company acted in its capacity as trustee of a trust and whether there are separately identifiable company assets from which the remuneration of the liquidators might be paid (at [220]).
This decision resolves the history of uncertainty in cases recovering general liquidation expenses from trust assets and considers the appropriate characterisation of funds subject to constructive trusts. The outcome reinforces the notion that courts will ensure to prevent a liquidator from being exposed for their costs and expenses. It also highlights that courts will generally support arrangements that result in cost-effective distributions to beneficiaries.