The rule in Clayton's Case (first in, first out) should not be used to allocate losses suffered by beneficiaries whose funds are mixed in a trust account. This conclusion is arrived at as a matter of principle, regardless of whether sufficient information exists to enable an allocation in accordance with Clayton's Case. In the absence of facts showing that claimants should be divided into classes with different dividends, a liquidator is justified in distributing a mixed trust fund pari passu among all claimants proportionate to their claims. A liquidator has no automatic entitlement to charge all costs of the liquidation against trust assets; the entitlement is limited to costs properly attributable to the administration of the trust assets, assessed on a case-by-case basis.
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