Green v Bramston & Ors

The applicant trustee in bankruptcy, represented by Mr Morgan, seeks an order for an indemnity for his reasonable remuneration, costs and expenses of the realisation of three properties out of their net proceeds of sale. He needs to do so because although the properties were vested in the name of the bankrupt (in one case jointly with his former business partner Mr Michael Greensitt) it is now accepted that they were held on trust entirely for the benefit of Kingshouse Developments Limited ("the company") so that the properties were not part of the bankruptcy estate and the benefit of the Applicant's work has accrued to the company rather than that estate. The application is based on the jurisdiction identified in Re Berkeley Applegate (Investment Consultants) Ltd [1989] 1 Ch 32.

The company is in creditors' voluntary liquidation. The liquidator, represented by Mr Shaw, accepts in principle that the court would have been entitled to award the trustee an indemnity under the Berkeley Applegate jurisdiction, but says that such a claim is now precluded by the terms of a settlement deed dated 24 September 2008, at least in respect of matters occurring prior to that date. If that is not accepted, he submits that the trustee's claim in respect of matters prior to 8 October 2008 (when the company went into liquidation) ranks as an unsecured claim in the liquidation. From that date onwards, the liquidator says that there is no need to make a Berkeley Applegate award as he will accept the trustee's remuneration and expenses as expenses of the winding up. There is also an issue as to the scope of any Berkeley Applegate award; the liquidator contending that it should not extend to costs incurred in determining that the beneficial interest in the properties was held by the company, as distinct from the costs of realisation of those properties.

The background facts are not in dispute. The bankrupt Mr Tranckle and Mr Greensitt originally carried on business in partnership as property developers. In March 2002 they incorporated the company, with the intention of carrying on their property development business through it. Each of them became a director. Two shares were issued, one held by each of them. In the course of the business, they acquired a number of properties, but it seems that it was not possible to make all the acquisitions in the name of the company, because finance could not be obtained. Accordingly, most properties were purchased in the names of one or both partners, with the aid of mortgage finance advanced to them personally. The three properties relevant to this application were acquired in 2002 or 2003 and are known as "The Wokings" and "Kiln Ride" (bought in the sole name of Mr Tranckle), and "Rusticot" which was bought in the joint names of Mr Tranckle and Mr Greensitt.

The two partners fell out in 2004. Mr Tranckle resigned as a director of the company, which thereafter was controlled by Mr Greensitt. On 25 May 2006 Mr Tranckle was declared bankrupt on the petition of HMRC. His share in the company became vested in the trustee as part of the bankruptcy estate. There was a substantial dispute about beneficial ownership of the three properties, with Mr Tranckle maintaining that the registered owners were also the beneficial owners, and Mr Greensitt that all of them were beneficially owned by the company. Mr Greensitt made substantial claims in the bankruptcy for sums alleged to be due to him and to the company. The position as to ownership was not to be resolved for a considerable time, but the trustee nevertheless commenced work with a view to selling the properties. This required possession proceedings to be brought against a family called Hams who were occupying Rusticot and members of Mr Tranckle's family who were occupying Kiln Ride.

The Wokings was sold in May 2007. The proceeds of sale were exhausted in paying a first mortgage on the property in the name of Mr Tranckle, securing funds borrowed for its purchase, and a second charge in favour of Barclays bank securing liabilities of the company. The amount paid to Barclays (approximately £300,000) therefore benefited the company. Rusticot was sold in December 2007, realising approximately £301,000 net. The sale of Kiln Ride was not completed until September 2009 because of problems in evicting the Tranckle family. Eventually it realised a net amount of just under £144,000.

At various dates between late 2007 and early 2008, the trustee came to accept Mr Greensitt's position that each of the properties was beneficially owned by the company. In November 2007 he issued a petition for the winding up of the company on the just and equitable ground, with a view to realising the share in it held by the estate.

On 24 September 2008, the settlement deed was entered into between the trustee, Mr Greensitt and the company (acting by Mr Greensitt). In broad terms, it provided for Mr Greensitt to receive a transfer of another property (Moyne Place) which was an asset of the partnership, and a payment of £85,000 from the sale proceeds of Rusticot, in return for which he gave up his claims in the bankruptcy, gave up claims against the company for unpaid remuneration and repayment of directors loans, and transferred his share in the company to the trustee. It was recorded that the company was solvent, and Mr Greensitt warranted that he was not aware of any creditors other than two who were listed. The trustee agreed to withdraw his winding up petition and put the company into members' voluntary liquidation. All parties agreed to drop claims for costs. It is accepted on all sides that the intention of the trustee was that having gained sole control of the company and freed the company and the bankruptcy estate from any claims by Mr Greensitt, he would realise the remaining properties for the benefit of the company, pay off the company's creditors and distribute the expected surplus back to the bankruptcy estate as the sole shareholder. To this end, the company was put into members' voluntary liquidation on 8 October 2008 and a Mr Smith was appointed the liquidator.

Had that intention being carried through, no doubt all of the trustee's remuneration and expenses would have been paid out of the surplus (and other assets in the estate), leaving a balance to be distributed to creditors in the bankruptcy. The plan came to grief however when HMRC, which had been anticipated to be a creditor for only approximately £34,000, made a claim in the liquidation of the company for over £600,000 in respect of corporation tax on capital gains arising from the disposal of the various properties. I am told that it is not the case that a potential liability for tax on capital gains was overlooked, but that it was thought that the company had sufficient allowable expenses to eliminate any gain. HMRC did not however accept the company's records as sufficient evidence of these expenses and refused to allow them. There was also a substantial, though disputed, claim made against the company by Mrs Tranckle.

The consequence was that in August 2009 Mr Smith swore a statement of affairs showing the company to have an estimated deficiency exceeding £900,000, and on 10 August 2009 the liquidation became a creditors' voluntary liquidation, Mr Bramston replacing Mr Smith as the liquidator. There followed protracted correspondence between solicitors as to whether the trustee was obliged to pay over the whole of the proceeds of sale of the properties without any deduction for his remuneration and expenses. This application was issued on 19 July 2010. On 9 August 2010 the liquidator's solicitors wrote to the trustee's solicitors (page 429) saying that any entitlement under the Berkeley Applegate principle to deduct costs relating to the ascertainment of the beneficial ownership of the properties was disputed (this was referred to as the "scope argument"), but "insofar as the costs claimed by your client within the application relate solely and exclusively to the costs of possession and sale of Rusticot, Kiln Ride and The Wokings our client will not oppose your application in relation to entitlement". The position on quantum of such a claim was reserved, and does not arise before me.

In his witness statement in response to the application, Mr Bramston accepted the entitlement in principle to an award, subject to the scope argument, but took a new point, that any such entitlement in respect of work done down to the date of the settlement deed had been compromised by the terms of that deed. In his skeleton argument for the hearing, Mr Shaw appeared to be seeking to row back even further and submitting notwithstanding the terms of the letter and witness statement that the circumstances were not such as to invoke the Berkeley Applegate jurisdiction at all, or that if they did, the court should exercise its discretion against the making of any award. At the opening of the case however he clarified that in the light of those concessions he only sought to argue that no award should be made in respect of the period prior to the settlement deed because it had been compromised.

The first issue for me to decide therefore is whether the terms of the settlement deed are such as to prevent a Berkeley Applegate claim in respect of periods prior to 24 September 2008.

The settlement deed begins with a series of recitals about the formation of the property development partnership, the affairs of the company (defined as "Kingshouse") and some, but not I think all, of the various cross claims that had been made. Recital 16 (out of 17) is in the following terms:

“… the parties have agreed to compromise their various claims in respect of the Partnership [ie the partnership between Mr Tranckle and Mr Greensitt] and in respect of Kingshouse, in the manner set out below. ”

"The parties" included "Elliott Green (as trustee in bankruptcy of Geoffrey Alan Tranckle)".

The operative provisions of the deed deal with the various elements of the compromise that I have referred to above, and in particular set out acknowledgements as to the beneficial ownership of the various properties. Those relevant to other claims being compromised are as follows:

“5

It is declared and agreed that MJG [Mr Greensitt] has no claim against Kingshouse in respect of director's remuneration or salary…

6

MJG hereby releases any and all valid claims which he may have against Kingshouse and in particular any claim in respect of any director's loan.

9

MJG releases any and all claims which he may have against GAT [Mr Tranckle] and accordingly he will withdraw his claim in GAT's bankruptcy.”

The final clause, on which Mr Shaw's argument depends, reads as follows:

“12

This deed shall take effect in full and final satisfaction of all claims and causes of action vested in the Trustee or otherwise affecting the bankrupt estate of GAT and subsisting between (1) MJG and/or GAT and (2) Kingshouse and between (1) MJG and (2) GAT, and in particular of any claim for partnership accounts or otherwise in respect of the distribution of Partnership property. ”

Properly construed, Mr Shaw submits, this clause was intended to settle the entirety of the claims held by the bankruptcy estate and the trustee against the company. He points out that the trustee accepts in his witness statement that the intention at that stage was that he would recover his remuneration and costs out of the assets of the bankruptcy estate, as increased by distributions from the solvent winding up the company. In response to the argument that the trustee's claim for a Berkeley Applegate award does not derive through Mr Tranckle and is therefore not a claim "subsisting between" Mr Tranckle and the company, he submits that the language of the clause should be construed only to have the effect of excluding claims and causes of action not "subsisting" at the date of the deed.

Interpretation of the settlement deed is of course to be done on ordinary contractual principles; having regard primarily to the terms of the document itself, taken as a whole, and also to those matters which, looked at objectively, the parties to it may be considered to have intended by reason of the factual matrix in which it was executed.

The Berkeley Applegate jurisdiction was described in the following passage from the judgment of Mr Edward Nugee QC in that case, beginning at page 50:

“ the authorities establish, in my judgment, a general principle that where a person seeks to enforce a claim to an equitable interest in property, the court has a discretion to require as a condition of giving effect to that equitable interest that an allowance be made for costs incurred and for skill and labour expended in connection with the administration of the property. It is a discretion which will be sparingly exercised; but factors which will operate in favour of its being exercised include the fact that, if the work had not been done by the person to whom the allowance is sought to be made, it would have had to be done either by the person entitled to the equitable interest … or by a receiver appointed by the court whose fees would have been borne by the trust property … ; and the fact that the work has been of substantial benefit to the trust property and to the persons interested in it in equity …”

Although the jurisdiction is to be exercised in respect of property in which an equitable interest subsists and is to be enforced, it is not one which is to be exercised only in favour of someone standing in the position of trustee in relation to that property. Indeed, in Berkeley Applegate itself, the trust property consisted of investments held in the client accounts of an investment company, but the allowance was made in favour of the liquidator of that company although his appointment as such did not constitute him, as distinct from the company, trustee of the funds (see the judgment at page 52 letter D). The claim for an allowance is a claim made by a person who has done work or incurred expenditure which benefits the beneficiary. In this case, it is plainly not a claim which forms part of the bankruptcy estate, because Mr Tranckle had no such claim at the commencement of the bankruptcy. The claim has arisen because of the work done by Mr Green since that date.

In my judgment, Mr Shaw's construction of clause 12 of the deed is not correct. It has the effect of treating the words "subsisting between (1) MJG and/or GAT and (2) Kingshouse and between (1) MJG and (2) GAT" as if they read "subsisting at the date hereof", and ignoring entirely the references to the parties between whom claims are expressed to be subsisting.

There is in my view no warrant for doing such violence to the language of the clause. On the contrary, the clause makes good sense when read according to its ordinary meaning, which is in my view that the claims compromised are those which were both subsisting between the stated parties and either "vested in the trustee", i.e. claims which could originally have been brought by Mr Tranckle but which were now vested in the trustee as assets of the bankruptcy estate, or "otherwise affecting the bankruptcy estate", e.g. claims which could have been brought by Mr Greensitt or Kingshouse which might have resulted in debts provable in the bankruptcy or other obligations which would affect the administration of the bankrupt's estate. Of course it overlaps with the earlier more specific release clauses, but since clause 12 is clearly a sweeping up provision this is not surprising.

There is one respect in which it might have been said that the language used was less than clear -the reference to claims "subsisting between (1) MJG and/or GAT and (2) Kingshouse" would encompass claims between Mr Greensitt and the company. Such claims could not be "vested in the trustee" and nor would they be made, whoever was the claimant, against the bankruptcy estate. But, arguably at least, such claims whether made by or against the company would be ones which "affected" the bankruptcy estate, by virtue of its shareholding in the company. In any event, that is not a point which arises for present purposes.

This interpretation would have the effect that all the claims between the stated parties which were anticipated to require resolution in order to deal with its assets and liabilities were compromised. It would mean that clause 12 did not sweep up claims unrelated to the assets and liabilities in the bankruptcy, such as any claim which might have arisen between Mr Greensitt and Mr Tranckle after the commencement of the bankruptcy. Insofar as Mr Tranckle had the benefit of any such claim, it would not be one "vested in the trustee". It would be consistent with the earlier clauses which compromised specific types of claim between those parties, and obviously intended to generalise those specific provisions.

The present claim, that is to say the trustee's personal claim for a Berkeley Applegate allowance, does not fall within clause 12, for the simple reason that even if it could be said to be a claim "vested in the trustee" in the sense that he is the person entitled to bring it, it is not and never has been a claim "subsisting between" Mr Tranckle and the company. The effect of the plain language of the clause cannot, it seems to me, be overcome by any inference to be drawn from the recital referring to the intention of "the parties" to compromise their various claims where one of the parties is the trustee in his capacity as such- the extent of the compromise is to be determined from the operative provision and not, at least unless it is ambiguous, from the recital. Nor is it affected by the fact that it was not at the time the subjective intention of the trustee to bring any such claim (if, which is open to doubt, he had ever considered it).

I hold therefore that the trustee's entitlement to bring a Berkeley Applegate claim in respect of matters arising prior to the date of the settlement deed has not been compromised by entering into that deed.

The next issue, logically, seems to me to be the scope argument. The liquidator's position is that only costs incurred in connection with obtaining possession of the properties and realising them ought to be allowed, and specifically that nothing should be allowed in respect of costs incurred in investigating the position in relation to the beneficial ownership of the properties and negotiating the arrangements which eventually led to it being conceded that the beneficial interest was vested entirely in the company.

It is plain from the authorities to which I was referred that the allowance is discretionary, and not circumscribed by precise rules. Mr Morgan referred me to the summary of the work done by the liquidator in the Berkeley Applegate case, set out by the judge in five categories beginning at page 39 of the report. This included investigation prior to the liquidation, dealing with enquiries from investors and borrowers, the ascertainment of the assets held, being both what were referred to as the company's free assets, and those which were held on trust for investors, the management of investments, and general work in and about the liquidation. The judge did not determine which of these categories would be allowed out of the trust assets, or whether an allowance would only be made to the extent that the company's free assets were not sufficient to meet the costs and expenses. At the close of his judgment, on page 53 of the report, he said:

“ accordingly I propose to declare that the liquidator is entitled to be paid his proper expenses and remuneration out of the trust assets if the assets of the company are insufficient. I am not deciding how such expenses and remuneration should be borne as between the company's assets and the trust assets, nor as between the different classes of trust assets, nor whether any part of them should be borne by the trust assets if the company's own assets should in the end prove sufficient to meet them. It is premature to determine questions of incidence when the full extent of the liquidator's claims to expenses and remuneration are not yet known and the assets of the company may yet be swelled as a result of the litigation in which it is engaged. But the liquidator is entitled to know at this stage that his proper expenses and remuneration will be paid if necessary out of the trust assets and that he will not be left at the end of the winding up with the possibility of receiving no recompense for his work or of having to bear part of the expenses out of his own pocket.”

The question of the way in which the remuneration costs and expenses should be borne came on for decision subsequently before Peter Gibson J in Re Berkeley Applegate (Investment Consultants) Ltd (No3) (1989) 5 BCC 803. There were essentially two issues before him, firstly whether all such sums should first be paid out of the company's free assets, whether they related to dealing with the trust assets or the general affairs of the liquidation, only falling on the trust assets once the free assets were exhausted; and secondly, insofar as anything was paid out of the trust assets, how that should be apportioned between assets belonging to different categories of investors. It appeared that the company's free assets were no more than £80,000, and possibly as little as £45,000 (see page 804). On the same page the judge said:

“ I have already given directions as to the sums the liquidator should receive as remuneration by way of reimbursement of costs and expenses… The total amounts to about £686,000 of which some £41,500 are estimated by the liquidator to represent expenses of the liquidation only, as distinct from expenses of administering the trust, but these sums will increase as neither the liquidation nor the administration is complete. In addition there are solicitors costs to be paid. I am now asked to determine the incidence of the remuneration and costs and expenses which I have allowed. ”

Although it is not entirely clear from this passage, I think it must be inferred that the judge was referring throughout to amounts in respect of the remuneration of the liquidator and his costs and expenses, and not simply to reimbursement of out of pocket costs and expenses.

At page 805, Peter Gibson J held that remuneration costs and expenses incurred in relation to administering the trust assets could not be paid out of the free assets, because in dealing with the trust assets the liquidator was not acting in his role as liquidator of the company:

“The point is to my mind a short one, and largely one of first impression. Looking at s 115 [of the Insolvency Act 1986], for my part I have no doubt that the remuneration of the liquidator for administering trust assets which are not the assets of the company and the costs and expenses incurred by the liquidator, again not in getting in or paying out or distributing the assets of the company, but in administering trust assets, are outside the wording of the section. To my mind it is clear that the section is simply dealing with the winding up of the company, involving as it does the getting in of the assets of the company, ascertaining its creditors, paying its liabilities in accordance with the statutory provisions and distributing any surplus. I do not think that on any ordinary reading “expenses properly incurred in the winding up, including the remuneration of the liquidator” would include expenses and remuneration which the liquidator has incurred and has been awarded by the court in respect of the work he has done administering the trust property held by the company as trustee, and in my judgment the section must be construed as limited to the liquidator's expenses in, and remuneration for, dealing with assets of the company. Take the reference to the remuneration of the liquidator. There is no doubt to my mind that that does not include what the court in its inherent jurisdiction has awarded to the liquidator in respect of the work he has been doing not as liquidator but as trustee in administering the trust assets. Similarly the other expenses that are referred to as being incurred in the winding up cannot be expenses in relation to what are not the assets of the company.

On that short point therefore, I would hold that the remuneration in question and the costs and expenses are outside what it is permissible to pay out of the company's assets… The effect therefore is that if there be any surplus of corporate assets over expenses of the liquidation alone, unsecured creditors will be entitled to claim in respect thereof.”

He held, therefore, that the costs of dealing with the trust assets could not be paid out of the free assets. He did not, it appears, address what would happen if the costs of dealing with the liquidation (£41,500, but subject to increase) exceeded the amount of the free assets (possibly as little as £45,000) and whether an allowance could be made out of the trust assets for any shortfall in the general liquidation costs, although the passage I have quoted from the judgment of Mr Nugee QC in the original decision could certainly be read as indicating that he intended to give the liquidator the assurance that any such shortfall would be paid from the trust assets.

In Re Eastern Capital Futures Ltd (in liquidation) [1989] BCLC 371, Morritt J held that certain funds held by a business trading in commodity futures on behalf of investors were held upon trust for the clients and were not assets of the company itself. He went on to determine issues relating to the remuneration of the liquidators for dealing with those assets, holding that although they were not entitled to remuneration as liquidators for dealing with the trust assets, they should be paid out of those assets an amount determined on the same basis that it would have been had those assets been assets of the company. He gave directions for fixing an overall amount of remuneration on the basis of aggregating the trust assets and the company's own assets, and directed that a pro rata part of that total be paid out of the trust assets. There does not appear to have been any question of any deficiency of the company's own assets to pay the remuneration apportioned to dealing with those non-trust assets, and so again this is no authority for the making of any award out of the trust assets in respect of matters other than the administration and realisation of those trust assets.

In Re Sports Betting Media Ltd (in administration) [2007] EWHC 2085 (Ch) the company had had two sets of administrators appointed. The first administrators carried on the business for about four months, incurring liabilities pursuant to contract entered into in that period. They were then removed and replaced by the second set of administrators. On the first administrators leaving office, creditors in respect of the liabilities incurred by them became entitled to a charge on the assets of the company held at that time, pursuant to paragraph 99(4) of schedule B1 to the Insolvency Act 1986. It became apparent after the second administrators had been in office for some time that the assets were insufficient to meet these liabilities, so that the entire process of realisation of those assets would be for the benefit of the creditors entitled to the paragraph 99(4) charge. Furthermore, the second administrators' entitlement to remuneration would only normally be available out of the assets transferred to them after payment of the amounts secured by that charge. There was no specific provision in the statute for payment of their remuneration in priority to the holders of that charge.

Briggs J held that nevertheless, by parity of reasoning with Berkeley Applegate

“the court has an inherent jurisdiction to require persons beneficially interested in property to subject their beneficial entitlements to a right of payment to persons who have come otherwise than by officious intermeddling into the position of fiduciaries in relation to the relevant fund and have incurred time and cost in realising the fund and identifying the entitlements of the beneficiaries and paying out to those beneficiaries that entitlements.”

Applying that jurisdiction, he allowed to the second administrators a sum of £50,000 plus disbursements and VAT which on the evidence was "less than their time costs and as affording them only a proportion of an appropriate remuneration for the time spent". It does not appear that any attempt was made to separate time involved directly in the realisation and distribution of the charged assets from any other matters requiring to be done in the administration, but on the other hand since the entirety of the assets in the hands of the second administrators consisted of the charged property, there was no question of dividing the costs of the administrators into those falling on free assets and trust property, such as had been in question in Berkeley Applegate and Eastern Capital Futures.

Mr Morgan submitted that insofar as the trustee had to investigate and identify the beneficial ownership of the relevant properties, this was work which benefited the beneficiaries, and if not done by the trustee in bankruptcy would have had to have been done by the liquidator. He pointed out that in both Berkeley Applegate and Eastern Capital Futures, part of the work for which an allowance had been made had been the ascertainment of the interests of the various persons entitled to the investment funds held. But it seems to me a significant difference from those cases that insofar as the trustee was looking at the beneficial entitlement to the properties prior to conceding that it was vested in the company, he was either pursuing, or investigating whether he ought to pursue, the position that Mr Tranckle himself held (as he contended) a beneficial interest in the properties, which had vested in the trustee as part of the bankruptcy estate. He was thus pursuing an interest which was adverse, or potentially adverse, to the interest of the true beneficiary (ie the company), whereas in both Berkeley Applegate and Eastern Capital Futures the liquidator was remunerated for ascertaining the interests of the beneficiaries as between themselves. Further, it is not the case that if the trustee in bankruptcy had not done this work it would have fallen to be done by the liquidator. At the time this element of the work was done, the company was not in liquidation and the work of representing the company as beneficially entitled to the properties was done on its behalf by Mr Greensitt.

The allowance to be given is a matter of discretion. In my judgment in the circumstances of this case it would not be appropriate to make any such allowance in respect of the work of the trustee in the investigation and negotiations in relation to the beneficial ownership of the properties as between the bankrupt and the company. I do not say that there can be no circumstances in which an allowance can be given out of trust property in respect of work which would be recoverable from other sources such as the free assets of a company in liquidation, or would in principle be so recoverable if any such assets existed, but in my view it would be unlikely to be appropriate to make such an award if the effect of it is to subject the interests of the beneficiaries to the costs of advancing, or considering whether to advance, an interest adverse to their own, as distinct from matters involved in, or for the purposes of, enforcing and giving effect to their own beneficial interest.

Before moving on, I wish to deal with two points made by Mr Shaw in his skeleton. The first was that it was not clear from the evidence that the trustee in bankruptcy had obtained sanction before commencing proceedings for possession of the properties, as was required in order to sell them. Without sanction, he said, the costs of such proceedings would not be recoverable out of the bankruptcy estate. This it seems to me would be a deeply unattractive point to be pursued on behalf of the person who has benefited from the results of those proceedings and the sale of the properties with vacant possession. The short answer to it is that whether or not the absence of sanction might have been relevant to recoverability of costs under the rules applicable in the bankruptcy had matters proceeded as originally anticipated with distributions from the company flowing back into the bankruptcy estate, it has no bearing on the fairness of making a Berkeley Applegate allowance out of the assets coming into the company's hands, which is entirely a matter of the court's discretion.

The second was that I should direct that the remuneration of the trustee for dealing with the trust property should be determined in accordance with the realisation scale set out in schedule 6 to the Insolvency Rules 1986, such as would apply if the trustee had realised assets on behalf of a secured creditor. This he said was the approach applied by Morritt J in Eastern Capital Futures. But it is clear from the report of that case that Morritt J did not hold himself bound to apply that scale, nor did he select it himself as the starting point for the exercise of his discretion. It was the liquidator's own application that they be awarded remuneration on that scale, made with a view to avoiding the expense of a further application to the court, and one which the judge accepted as reasonable in part because it produced a lower figure than the estimated time cost. In the present case, where it was clearly necessary to engage in prolonged hostile proceedings to obtain possession, it seems to me particularly inappropriate to limit the allowance to be made to the trustee to a scale figure which takes no account of the additional time and expense that must have been involved. Accordingly I decline to impose any such limit and will direct that the allowance to be made should be based upon a reasonable charge for that time reasonably spent, and reimbursement of the expenses reasonably incurred, in connection with obtaining possession of and disposing of the properties.

Although no specific point was taken on it, I wish to make it clear that this amount should cover the work done in relation to all three properties. Although no net proceeds were paid to the company from the sale of the first, that sale discharged in part the company's liabilities secured on it and had the effect that a greater net realisation was made by the company from the subsequent disposal of the other properties.

So far as work after the date of the settlement deed is concerned, it was said that there is no need to make a Berkeley Applegate award, since the liquidator would accept reasonable remuneration costs and expenses as expenses of the liquidation, at least from the date on which the company went into members voluntary winding up on 8 October 2008. Certainly, the possibility of recovery in such a manner is a relevant factor in considering whether to make an award. But in my view such an award should still be made in this case. The factors that have led me to this conclusion are, firstly, that there is a short period between the two dates. If any time had been spent for costs incurred in that period (and I have no information as to whether it was or was not) it seems to me that could not be recouped as an expense of a winding up. Secondly, it is inevitable that there will be further proceedings in the present application to determine the amount to be allowed to the trustee. It would be likely to increase costs if those proceedings could only deal with the allowance up to the date of commencement of the liquidation, and any dispute as to his claims in respect of time and expense after that date had to be dealt with by way of a separate application in the liquidation proceedings.

The next issue is whether any amount which the trustee is allowed should rank as an unsecured creditor in the liquidation (which is the liquidator's contention, in so far as it relates to periods prior to the commencement of the winding up) or whether it is in effect a first charge on the trust property, ranking before any other claim in the liquidation, and even before the costs and expenses of the liquidation.

The answer to this is, in my view, also a short one. The allowance which the court gives in the exercise of this jurisdiction does not result in the creation of a personal claim against the beneficiary of the trust property. The jurisdiction operates by way of subjecting his beneficial interest to an obligation to pay the remuneration and costs allowed by the court. This is clear from the way in which the jurisdiction was expressed in the passages quoted above from Berkeley Applegate itself and Sports Betting Media. Mr Morgan referred me to passages in the authorities relied upon in Berkeley Applegate, which I do not think it necessary to repeat here, but which make it amply clear that the passages I have quoted are soundly based. It follows that the exercise of the discretion results in the creation of a proprietary interest in priority to that of the beneficiary whose equitable interest is to be enforced. If the trust property were insufficient, there could be no suggestion of the beneficiary being personally liable to pay any shortfall. Nor can the beneficiary be entitled to delivery of the property, leaving the fiduciary to enforce a personal claim against him for the remuneration and costs allowed to him by the court. Thus, in the present case, once the court has made a Berkeley Applegate award to the trustee, the asset available to the liquidator in the winding up of the company is the beneficial interest in the properties (or rather their proceeds of sale) after satisfaction of that award, and no personal claim arises against the company which would fall to be enforced by way of proof in the liquidation.