The case of Hollis & Somerville v Total Debt Solutions (2009) Limited concerned an application by the liquidators of a company for directions that the liquidators could have recourse to all trust monies received by the company to meet their fees and expenses incurred in the liquidation.
Prior to liquidation, the company operated as a debt recovery agency. It received payments from debtors into what was effectively a trust account for the benefit of its clients. There was a balance in the trust account after liquidation and the company continued to receive payments. However, due to the company's poor record keeping, the liquidators could not determine which customers were entitled to the funds.
The Court held that it could allow the liquidators' reasonable costs for work relating to trust assets to be met from those trust assets. The Court was satisfied that the portion of the liquidators' fees and expenses that related to the recovery of trust monies (and dealing with claims to the trust monies) would well exceed the sum held in the trust account. The Court ordered that the liquidators could have recourse to all the funds for their fees and expenses in the liquidation.
See judgment here.