Australian Executor Trustees (SA) Limited v Korda & Ors


Australian Executor Trustees (SA) Limited (AET) is the trustee for the investors in forestry plantations operated by companies now in the Gunns Group. These companies raised investor funds for the purpose of acquiring land and planting and harvesting timber. Following the appointment of Receivers to the Gunns Group, a dispute arose with the receivers about whether the proceeds of sale of this plantation timber and land were held on trust for the benefit of the investors, or whether the investors simply had a claim in debt against the companies, and ranked with other unsecured creditors.

Client objective

To protect and preserve the interest of investors, AET instructed us to advise on the trust arrangements and subsequently commence proceedings on behalf of AET in the Supreme Court of Victoria. AET sought declarations that the proceeds of sale were the subject of a trust in favour of the investors, and that certain moneys held by the receivers should be paid to AET accordingly.

Our role

We advised AET on the trust arrangements under complex trust and management documentation for the Gunns Group forestry schemes and the implications of the Gunns Group Receivership.

We also advised and acted on behalf of AET in subsequent litigation with the Receivers of the Gunns Group with the matter being heard in both the Supreme Court and Court of Appeal of Victoria.

Key issues

The documentation, trust structure and subsequent litigation was complex, involving interactions between equity and trusts law, contract and commercial law and insolvency law.

Specific issues included the proper construction and interpretation of the relevant documents, which were drafted a significant period of time ago.

The matter required the ongoing coordination of expertise and advice from our Banking & Finance and Commercial Litigation & Dispute Resolution teams.


On 6 February 2013, the Victorian Supreme Court held, in favour of our client in a judgment on a preliminary issue, that the sale proceeds of trees and land received by companies in the Gunns Group are subject to an express trust in favour of the investors, and that the funds are ring-fenced from the assets available for the receivership. This initial judgment was upheld by the majority in a decision of the Victorian Court of Appeal in April 2014. The matter is now subject to a special leave application before the High Court.