Liquidator and receiver at odds over adverse costs

FTI Consulting’s John Park.
LMIM receiver David Whyte.

FTI Consulting’s John Park is not helping former BDO Partner David Whyte walk away from insolvency without a care, not when there’s a fight over $5 million in adverse costs still to be had.

Despite retiring in 2021 Whyte is still in the thick of it in respect of at least one appointment thanks to Park and thanks to orders made in the Supreme Court of Queensland in 2013.

In my consideration, there are real issues, involving issues of law and fact, as to whether the Dalton J orders conferred upon Mr Whyte, expressly or impliedly, a power to act in relation to the Fund in the way he now proposes as regards the adverse costs liability.” Justice Declan Kelly.

Almost a decade ago a judge of the Supreme Court of Queensland required Whyte to take charge of the LM Investment Management Ltd (LMIM) in its capacity as the responsible entity for the LM First Mortgage Income Fund (The Fund). Whyte was ordered to ensure The Fund was wound up in accordance with its constitution.

The orders were made because Park, who had been appointed voluntary administrator (VA) of LMIM some months earlier, had conflict issues.

So while Park went on to be appointed liquidator of LMIM, he has since been restrained in discharging the duties and responsibilities of that role by the orders elevating Whyte, and Park doesn’t like it.

The consequence of those 2013 orders has included the delivery of multiple judgments recording various instances of litigation between the pair, with the most recent dropping last week in LM Investment Management Ltd (in liquidation) & Ors v Whyte [2023] QSC 132.

This judgment flows from proceedings Park commenced in November last year, shortly after Whyte settled adverse costs orders relating to his discontinued pursuit of former LM directors.

That settlement saw Whyte agree to pay the directors $5 million, which Whyte intended to charge against the assets of The Fund by invoking a claimed right of indemnity in line with those 2013 orders that empowered him to litigate.

Within weeks Park had commenced proceedings to try and prevent Whyte from having recourse to The Fund assets.

Whyte then countered by applying to have Park’s pleading struck out and orders made prohibiting Park from repleading.

Despite racking up multiple wins against Park over the years White has stumbled here, with the court dismissing his strike out application and ordering the parties to commence preparations for trial.

Further reading:

Going out slow-mo in a blaze of fees

Retired, But Fight For Fees Endures

Liquidator Of LMIML Challenges Receiver’s Fees

Receiver Denied Bid To Use “Other People’s Money”

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