Australian Securities and Investments Commission v Letten

Federal Court of Australia|2020-06-24|Before: Gordon J, Davies J

NOTE: For the purpose of this order: (a) "Corporate Defendants", "Scheme" and "Secured Lender" have the meanings ascribed to those terms in the Orders of Justice Gordon made in this proceeding on 25 February 2010 (Appointment Order), 4 March 2010 (SY21 Appointment Order) and 30 July 2010 (Additional Schemes Appointment Order); (b) "Receiver" has the meanings ascribed to "Receivers" in the Orders of Justice Gordon made in this proceeding in the Appointment Order, the SY21 Appointment Order and in the Additional Schemes Appointment Order as amended following the order of Justice Gordon made in this proceeding on 29 April 2015 allowing the discharge of Mr Philip Arthur Hennessy as receiver and manager of the property of the Schemes; (c) "Remuneration Application" means the application of the Receiver by interlocutory process dated 8 May 2020 for approval of his remuneration, costs and expenses: (i) incurred in the performance of his duties and the exercise of his powers as Court appointed receiver and manager of each of the schemes listed in the Appointment Order, the SY21 Appointment Order and the Additional Schemes Appointment Order (Schemes) for the period 1 January 2016 to 31 December 2019 (inclusive); (ii) incurred in relation to the proceeding commenced by Nicholson Street Pty Ltd (Receivers and Managers appointed) (in Liquidation), The Glen Centre Hawthorn Pty Ltd (Receivers and Managers appointed) (in Liquidation) and Twinview Nominees Pty Ltd (Receivers and Managers appointed) (in Liquidation) against Mr Mark Letten and Mr Paul Lane in the Supreme Court of Victoria (Supreme Court of Victoria proceeding number S CI 2014 03756) (Letten and Lane Proceedings), (iii) incurred in relation to the proceedings commenced by the Liquidator of LGH Administration Pty Ltd (Receivers and Managers appointed) (in Liquidation) and Yarra Valley Golf Pty Ltd (Receivers and Managers appointed) (in Liquidation) referred to in paragraph [75] of the Sixty First Affidavit pursuant to s 588FF of the Corporations Act 2001 (Cth) (Preference Proceedings); and (iv) in relation to the Receiver's public examination of Mr Paul Lane (Public Examination). (d) "Sixty First Affidavit" means the Sixty First Affidavit of Damian John Templeton sworn and filed in this proceeding. UPON Damian John Templeton, in his capacity as Receiver and on behalf of KPMG, an Australian partnership, by his Counsel undertaking to the Court to pay back into the bank account from which the interim payment was made, in order to be dealt with in accordance with paragraph 1 of the Orders of Justice Gordon made on 11 November 2010 the amount (if any) by which the amount received by them as interim remuneration pursuant to the orders made hereafter exceeds the amount which in due course is fixed as their final remuneration for the matters covered by the Remuneration Application, such payment to be made within 14 days after the day on which their remuneration is fixed AND upon Mr Templeton, in his capacity as Receiver and on behalf of KPMG, an Australian partnership, by his Counsel further undertaking that he will pay interest on that difference at such rate or rates as may be determined by the Court or as may be determined by a person appointed for that purpose by the Court.

THE COURT ORDERS THAT:

The amounts specified in the Schedule to this order, as the Receiver's interim remuneration for the period 1 January 2016 to 31 December 2019 and in relation to the Letten and Lane Proceedings, the Preference Proceedings and the Public Examination (Relevant Period), are approved for payment to the Receiver on an interim basis.
The Receiver is justified in treating the costs of the liquidation of the Corporate Defendants as expenses of the receiverships.
Until further order, upon the drawdown of any funds for the purposes of payment of the Receiver's interim remuneration, costs and expenses, the Receiver is to file with the Court a Certificate in accordance with the form at Annexure 1 to these orders.
Subject to further direction, a Registrar of the Court review and fix the remuneration to which the Receiver is properly entitled and the costs and expenses they properly incurred in the performance of his duties and the exercise of his powers as Court appointed receiver and manager of each of the entities and schemes to which he was appointed receiver and manager by the Appointment Order, the SY21 Appointment Order and the Additional Schemes Appointment Order for the Relevant Period.
By no later than 4.00 pm on the seventh day after the date of this order, the Receiver is to serve upon all investors identified by the Receiver to be investors in any of the Schemes (Investors): (a) a copy of these orders; (b) a circular: (i) advising the Investors of the Remuneration Application; (ii) informing them that by no later than 21 days after service under this order (Objection Period) any Investor may file and serve a notice in writing identifying any of the Receiver's claims for remuneration, costs and expenses to which they object, together with a short but specific statement outlining the nature and grounds of the objection and the amount (if any) they say is claimable; (iii) informing them that a copy of the Remuneration Application and affidavit material filed in support of the Remuneration Application may be provided to each Investor upon request made to the email address maintained by the Receiver being lettenschemes@kpmg.com.au. (c) a copy of the Remuneration Application; (d) a copy of each affidavit (which has been masked in paragraphs [76] and [84] to reflect the confidentiality orders made relating to the settlement sum) and submissions filed in support of the Remuneration Application, together with the exhibits thereto (with the exception of Confidential Exhibit DJT-313).
Service for the purposes of paragraph 5 may be effected: (a) In the case of paragraph 5(a) and 5(b): (i) by email in respect of Investors who have notified the Receiver that email is their preferred method of communication; and (ii) otherwise by ordinary post; and (b) in the case of paragraphs 5(c) and 5(d), by providing copies of the documents to the Investors upon request.
The Secured Lender, any other party and any Investor, who wishes to do so, shall file and serve within 21 days after the date of service under paragraph 5 a notice in writing identifying any of the Receiver's claims for remuneration, costs or expenses to which they object, together with a short but specific statement outlining the nature and grounds of the objection and the amount (if any) they say is claimable in the form of Annexure 2 to these orders.
As soon as reasonably practicable after the expiration of the Objection Period, the Registrar will advise the Receiver if the Registrar requires further information to fix the remuneration, costs and expenses for the relevant period and copies of any such further information provided to the Registrar will also be provided to the Secured Lenders and the Australian Securities and Investments Commission.
If the Registrar requests further information to fix the remuneration, costs and expenses, the Receiver will provide such further information within 14 days of receipt of the Registrar's request.
As soon as reasonably practicable after receipt of the further information referred to in paragraph 9, the Registrar is to fix the Receiver's remuneration, costs and expenses for the relevant period and deliver short written reasons for his or her determination.
The Receiver, any other party, the Secured Lender and any Investor may apply to the Court to review the Registrar's determination and the Court may review the Registrar's determination and fix the remuneration, costs and expenses of the Receiver for the relevant period.
Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), on the ground that it is necessary to prevent prejudice to the proper administration of justice, subject to any further order of the Court: (a) Confidential Exhibit DJT-313 to the 61st Affidavit; and (b) the settlement amount paid by Mr Paul Lane in paragraphs [76] and [84] of the 61st Affidavit; be kept confidential and placed in a sealed enveloped by the Court and marked "Confidential - Not to be disclosed without further order of the Court".
The costs of this interlocutory application be costs of the receivership.
Costs reserved.

ANNEXURE 1 Certificate in respect of the Remuneration Application. Filed in Victoria District Registry

No. VID 95 of 2010 To: The Registrar Federal Court of Australia Victoria District Registry 305 William Street Melbourne VIC 3000 Fax: (03) 8600 3351 NOTE: For the purpose of this Certificate: (a) "Receiver", "Scheme" and "Property" have the meanings ascribed to those terms in the Orders of Justice Gordon made in this proceeding on 25 February 2010, 4 March 2010 and 30 July 2010; and (b) "Remuneration Application" means the application of the Receiver and Liquidator by interlocutory process dated 8 May 2020 for approval of his remuneration, costs and expenses: (i) in respect of the performance of his duties and exercise of his powers as Receiver during the period 1 January 2016 to 31 December 2019; and (ii) incurred as Receiver in relation to the proceeding commenced by Nicholson Street Pty Ltd (Receivers and Managers appointed) (in Liquidation), The Glen Centre Hawthorn Pty Ltd (Receivers and Managers appointed) (in Liquidation) and Twinview Nominees Pty Ltd (Receivers and Managers appointed) (in Liquidation) against Mr Mark Letten and Mr Paul Lane in the Supreme Court of Victoria (Supreme Court of Victoria proceeding number S CI 2014 03756); (iii) incurred in relation to the proceedings commenced by the Liquidator of LGH Administration Pty Ltd (Receivers and Managers appointed) (in Liquidation) and Yarra Valley Golf Pty Ltd (Receivers and Managers appointed) (in Liquidation) referred to in paragraph [75] of the Sixty First Affidavit pursuant to s 588FF of the Corporations Act 2001 (Cth); and (iv) incurred in relation to the Receiver's public examination of Mr Paul Lane. (c) "Common Fund" means the bank account referred to in paragraph 1(a)(iv) of the orders of the Honourable Justice Gordon made in this proceeding on 11 November 2010. On [insert date] the amount of [insert amount] was paid to the Receiver from the Common Fund in connection with the [specify scheme] as interim remuneration (including costs and expenses). In accordance with the Orders of Justice Davies dated 24 June 2020, the Receiver certifies that the above interim payment is consistent with those orders. Signed: ………………………… Date: ……………………….. Damian John Templeton

ANNEXURE 2 Notice of submission in respect of the Remuneration Application. Filed in Victoria District Registry

No. VID 95 of 2010 To: The Registrar Federal Court of Australia Victoria District Registry 305 William Street Melbourne VIC 3000 Fax: (03) 8600 3351 I, __________________________________________, wish to make objection in respect of the Remuneration Application regarding the Schemes, in which I am an investor: (specify schemes here) I object to the following claims for remuneration and expenses: (specify the claims objected to here. Attach additional pages as necessary) The details of my objection are: [Set out in the space below the nature and grounds for each objection and the amount (if any) which you say is properly claimable. Attach additional pages as necessary]: Signed: _________________________________________ Name: _________________________________________ Address: _________________________________________ Phone no: _________________________________________ Email address: _________________________________________ Date: _________________________________________

SCHEDULE OF REMUNERATION AND EXPENSES INCURRED BY THE RECEIVER AND LIQUIDATOR AND INTERIM REMUNERATION (85% OF RECEIVER'S FEES AND 100% OF EXPENSES INCURRED) Scheme Remuneration and expenses incurred Interim remuneration (85% of Receivers' fees and 100% of expenses incurred) ($ excluding GST) General 522,461.63 476,316.76 YVG 9,199.50 8,903.40 Letten and Lane Proceedings 1,079,233.12 1,048,935.52 Preference Proceedings 200,988.13 183,462.13

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 This is the 27th judgment in these proceedings, and should be read in conjunction with Australian Securities and Investments Commission v Letten (No 9) [2010] FCA 1459 (Letten (No 9)), Australian Securities and Investments Commission v Letten (No 19) [2012] FCA 375 (Letten (No 19)) and Australian Securities and Investments Commission v Letten (No 21) [2013] FCA 744 (Letten (No 21)). The background to the proceeding is set out in Australian Securities and Investments Commission v Letten (No 7) [2010] FCA 1231; 190 FCR 59 (Letten (No 7)). These reasons use the same terminology used in those decisions. 2 Each of those judgments approved payment on an interim basis of the remuneration, costs and expenses incurred by Mr Damian Templeton (the receiver) in the performance of his duties and the exercise of his powers as court-appointed receiver and manager of the schemes (as identified in the earlier decisions): Letten (No 9) in respect of the period from appointment (25 February 2010) up to and including 2 July 2010; Letten (No 19) in respect of the period from 3 July 2010 to 31 December 2011; and Letten (No 21) in respect of the period from 1 January 2012 to 31 March 2013. The Court also made orders in similar terms on 22 April 2016 referring the issue receiver's remuneration in respect of the period from 1 April 2013 to 31 December 2015 to a Registrar of the Court for determination, and on 3 February 2017 Luxton R made orders fixing the receiver's remuneration in respect of that period. 3 Orders are now sought by the receiver for payment on an interim basis of his remuneration, costs and expenses in the conduct of the receivership in respect of the period from 1 January 2016 to 31 December 2019 (relevant period). The receiver also seeks approval for the payment on an interim basis of all his remuneration, costs and expenses incurred in relation to: (a) preference proceedings brought by the receiver between 2012 and 2018 in his capacity as the liquidator of the Letten entities; (b) proceedings in the Supreme Court of Victoria brought by various companies against Mark Letten and Paul Lane and associated appeals between 2014 and 2018 ("Letten" and "Lane" proceedings); and (c) the public examination of Mr Lane. 4 The receiver's application is supported by his 61st affidavit in these proceedings, sworn on 29 May 2020. The remuneration orders proposed by the receiver are substantially identical to the orders approved by the Court in respect of the previous claims, namely the orders: (a) set up a regime to enable a Registrar to fix the appropriate amount of the receiver's remuneration and total costs and expenses for the relevant period; and (b) in the interim, allow the receiver to obtain payment of 85% of his remuneration and 100% of his expenses in respect of the relevant period from the available assets of applicable schemes. 5 The approach taken by the receiver in preparing this claim for remuneration is consistent with the approach in the previous claims. The receiver would recover on an interim basis 85% of his fees referrable to any particular scheme out of the proceeds of sale of that particular scheme's property or surplus cash flow generated by the scheme's property after the payment of all costs necessary to preserve the property (subject to the secured lender's consent) or from the common fund. In the interim, a taxation of his costs before a Registrar of the Federal Court, and subsequent determination of objections by the Court, would proceed on the basis that if any amounts recovered on an interim basis by the receiver were greater than the amount determined by the Registrar and any subsequent determination by the Court, the receivers would refund the relevant trustee company, secured creditor or the common fund, as the case may be, together with interest at a rate to be determined by the Court, and if the Court determined that the receiver was entitled to recover some or all of the additional 15%, then they could do so after the Court had considered the full claim by the receivers. 6 The proposed orders sought by the receiver include safeguards as follows: (a) each time an interim drawing is made, the receiver will file and serve a certificate confirming that the drawing is consistent with the orders allowing for the interim payment; (b) a Registrar of the Court must review and fix the remuneration to which the Receiver is properly entitled and the costs and expenses he properly incurred in the performance of his duties and the exercise of his powers as court-appointed receiver and manager of each of the entities and schemes to which he was appointed; (c) prior to any review of the remuneration claim by a Registrar of the Court, the secured lender, any other party and any investor may file and serve a notice in writing identifying any of the receiver's claims for remuneration, costs or expenses to which they object, together with a short but specific statement outlining the nature and grounds of the objection and the amount (if any) they say is claimable in a specified form; (d) the receiver, any other party, the secured lender and any investor may apply to the Court to review the Registrar's determination and the Court may review the Registrar's determination and fix the remuneration, costs and expenses of the receiver for the relevant period; and (e) the receiver and his firm, KPMG, must provide an undertaking to repay to the common fund any overpayments (including interest) if the amount determined by the Registrar (or the Court on reviewing the Registrar's determination) is ultimately less than 85% of the amount claimed and paid on an interim basis dealt with in accordance with the pooling orders (see Letten (No 7)). 7 These safeguards are to the same effect as those which the Court has found on the four previous occasions to be adequate. 8 Having regard to the approach taken by the receiver, which is consistent with the previous four claims, and to the decisions by the Court in respect of the prior claims, as to which the final determinations of the Court resulted in an award of remuneration ranging between 95% and 100% of the amount claimed and on each occasion all cost and expenses claimed were allowed, I am satisfied that the orders the receivers seek in relation to the interim payment of their remuneration costs and expenses for the relevant period should be made. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies.

SCHEDULE OF PARTIES VID 95 of 2010 Respondents Fourth Respondent: BLUEMIST HOLDINGS PTY LTD (ACN 097 306 922) Fifth Respondent: DELLWOOD HOLDINGS PTY LTD (ACN 098 505 803) Sixth Respondent: ENMORE ENTERPRISES PTY LTD (ACN 082 158 487) Seventh Respondent: FIRBANK ARCH PTY LTD (ACN 059 464 381) Eighth Respondent: GLENLINE PTY LTD (ACN 098 532 364) Ninth Respondent: GERLING HOLDINGS PTY LTD (ACN 091 726 457) Tenth Respondent: LGH ADMINISTRATION PTY LTD (ACN 007 165 069) Eleventh Respondent: LGH FINANCE PTY LTD (ACN 078 859 248) Twelfth Respondent: LOW HEAD VILLAGE PTY LTD (ACN 091 731 958) Thirteenth Respondent: NICHOLSON STREET PTY LTD (ACN 069 104 089) Fourteenth Respondent: HOLLOWAY CREST PTY LTD (ACN 091 731 967) Fifteenth Respondent: ROSEBERY ENTERPRISES PTY LTD (ACN 091 826 229) Sixteenth Respondent: SIMMS INVESTMENTS PTY LTD (ACN 093 504 511) Seventeenth Respondent: SY21 RETAIL PTY LTD (ACN 107 874 564) Eighteenth Respondent: THE GLEN CENTRE HAWTHORN PTY LTD (ACN 089 906 543) Nineteenth Respondent: CASTELLO HOLDINGS PTY LTD (ACN 088 204 175) Twentieth Respondent: TWINVIEW NOMINEES PTY LTD (ACN 097 307 278) Twenty-First Respondent YARRA VALLEY GOLF PTY LTD (ACN 066 632 479) Twenty-Second Respondent ADINA RISE PTY LTD (ACN 083 181 122) Twenty-Third Respondent ALBRIGHT INVESTMENTS PTY LTD (ACN 088 204 166) Twenty-Fourth Respondent ASHFIELD RISE PTY LTD (ACN 093 504 806) Twenty-Fifth Respondent BRADFIELD CORPORATION PTY LTD (ACN 088 204 371) Twenty-Sixth Respondent COPELAND ENTERPRISES PTY LTD (ACN 093 504 824) Twenty-Seventh Respondent DEVLIN WAY PTY LTD (ACN 088 264 813) Twenty-Eighth Respondent FIRST HAZELWOOD PTY LTD (ACN 093 505 303) Twenty-Ninth Respondent GLENBELLE PTY LTD (ACN 097 306 646) Thirtieth Respondent GLENVALE WAY PTY LTD (ACN 088 287 021) Thirty-First Respondent GREENVIEW LANE PTY LTD (ACN 093 505 312) Thirty-Second Respondent HALLMARK CORPORATION PTY LTD (ACN 093 505 312) Thirty-Third Respondent MOORLEIGH HOLDINGS PTY LTD (ACN 088 287 058) Thirty-Fourth Respondent NORTON RIDGE PTY LTD (ACN 078 821 066) Thirty-Fifth Respondent RALEIGH GLEN PTY LTD (ACN 088 204 380) Thirty-Sixth Respondent REDCREST HOLDINGS PTY LTD (ACN 100 836 486) Thirty-Seventh Respondent SURI CORPORATION PTY LTD (ACN 093 505 321) Thirty-Eighth Respondent SUTTON RISE PTY LTD (ACN 088 204 399) Thirty-Ninth Respondent THE VIRTUAL MLMER PTY LTD (ACN 065 374 665) Fortieth Respondent TIVENDALE PTY LTD (ACN 093 505 349) Forty-First Respondent TULLOCH DOWNES PTY LTD (ACN 078 895 048) Forty-Second Respondent MAINKING PTY LTD (ACN 100 790 485) Forty-Third Respondent TOPGLEN PTY LTD (ACN 096 857 564) Forty-Fourth Respondent ALLBLUE PTY LTD (ACN 100 836 388) Forty-Fifth Respondent ARANBAY PTY LTD (ACN 098 532 319) Forty-Sixth Respondent MELVILLE CORPORATION PTY LTD (ACN 091 911 045) Forty-Seventh Respondent TILLEY LANE PTY LTD (ACN 086 136 361) Forty-Eighth Respondent HPSC PTY LTD (ACN 059 930 139) Forty-Ninth Respondent JENSDALE PTY LTD (ACN 098 367 974) Fiftieth Respondent OAKDALE RISE PTY LTD (ACN 091 598 908) Fifty-First Respondent MAYWOOD INVESTMENTS PTY LTD (ACN 091 599 218) Fifty-Second Respondent ACETRAIN PTY LTD (ACN 100 820 282) Fifty-Third Respondent SAGE BAY PTY LTD (ACN 097 306 628) Fifty-Forth Respondent TOBAGO HOLDINGS PTY LTD (ACN 093 504 520) Fifty-Fifth Respondent WILHELMUS ANTONIUS JOANNES BOERKAMP Fifty-Sixth Respondent AUSTPAC FUNDS MANAGEMENT LIMITED Fifty-Seventh Respondent GOLDEN HERITAGE GOLF PTY LTD

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