Dwyers Legal - Case Update

The Supreme Court of Western Australia has provided guidance on when an administrator appointed to a law firm will be entitled to be indemnified out of the law firm’s assets in priority to creditors and the partners themselves.

Mervyn Kitay of Worrells, the administrator of Dwyers Legal formerly trading as Dwyer Durack, sought a confirmation from the Court that he is entitled to an indemnity secured by an equitable lien against the assets of the partnership for the costs of the administration, including his remuneration.

The Court granted the direction sought, agreeing with previous authorities holding that administrators have a right of indemnity for the costs of caring for, preserving and realising assets, secured by an equitable lien.

The Court found that the steps reasonably taken and costs and expenses reasonably incurred by the administrator in the care, preservation and realisation of the partnership property will benefit creditors, and it is appropriate for his costs and expenses to be recouped from the partnership property in priority to the claims of the partnership creditors and the partners themselves.

Read the decision here.