This is an application by the plaintiff, Gavin Moss in his capacity as receiver of the Salvestrin Enterprises Trust (Receiver), for the passing of the Receiver's accounts, the payment of the Receiver's remuneration and expenses, the payment of the net proceeds of the receivership of the Trust (after the payment of the remuneration and expenses) to Sans Pareil Estate Pty Ltd (in liquidation) and the discharge of the Receiver.
There is no appearance by any other party and the orders are uncontested.
On 27 October 2022, before being appointed as the Receiver, Mr Moss was appointed as the liquidator of Salvestrin Enterprises Pty Ltd and several of its subsidiaries, including Sans Pareil Estate, and related companies. In his capacity as liquidator of Salvestrin Enterprises, I will refer to Mr Moss at the Liquidator. In his capacity as receiver of the Trust, I will refer to Mr Moss as the Receiver.
[2]
RELEVANT FACTS
On 9 November 2023, Williams J handed down judgment (In the matter of Salvestrin Enterprises Pty Ltd (in liquidation) [2023] NSWSC 1348) which set out many of the following relevant facts at [2]-[14], evidence of which is also before me:
1. On 12 August 2021, Salvestrin Enterprises was incorporated.
2. Aaron Salvestrin is the sole director and shareholder of Salvestrin Enterprises.
3. The Trust is a discretionary trust established by Trust Deed dated 4 September 2017, pursuant to which Mr Salvestrin was appointed as the trustee.
4. An undated Deed of Ratification and Amendment (Ratification Deed) in relation to the Trust provided for the removal of the "Old Trustee" and the appointment of the "New Trustee" but those terms were defined by reference to a schedule which was not attached to the Ratification Deed.
5. A further Deed of Amendment dated 23 June 2022 in relation to the Trust names Salvestrin Enterprises as the trustee.
6. On 1 February 2022, Salvestrin Enterprises entered into a contract to purchase land at 39 Brooks Street, Griffith, New South Wales, in its capacity as trustee of the Trust (Property). The transfer of the title to the Property to Salvestrin Enterprises was registered on 4 April 2022.
7. The available inference from the evidence is that Salvestrin Enterprises became the trustee of the Trust in place of Mr Salvestrin at some time between 12 August 2021 and 1 February 2022.
8. On 27 October 2022, Salvestrin Enterprises entered into liquidation in a creditors' voluntary winding up and the Liquidator was appointed as the liquidator of Salvestrin Enterprises, resulting in the termination of the appointment of Salvestrin Enterprises as trustee of the Trust pursuant to cl 49 of the Trust Deed.
9. The Liquidator was also appointed as the liquidator of several related companies of Salvestrin Enterprises, including Sans Pareil Estate. Mr Salvestrin is the sole director, and Salvestrin Enterprises is the sole shareholder, of Sans Pareil Estate.
10. San Pareil Estate was the main trading entity within the Salvestrin group.
11. Mr Salvestrin did not provide a Report on Company Activities and Property, and failed to provide all books and records of Salvestrin Enterprises, to the Liquidator.
12. The Liquidator's investigations led him to believe Salvestrin Enterprises acquired the Property as trustee of the Trust and Sans Pareil Estate provided the funds for the purchase of the Property to Salvestrin Enterprises. Business records of the solicitor who acted for Salvestrin Enterprises on its purchase of the Property record Sans Pareil Estate as the source of the funds paid into the solicitor's trust account to complete the transaction. A balance sheet for "Salvestrin Enterprises" records that entity's current assets as "Property Acquisition", and records that entity's non-current liabilities as including a loan in the same amount as the value of the "Property Acquisition".
On 9 November 2023, Williams J made the following orders:
1. Order pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) in Schedule 2 of the Corporations Act 2001 (Cth) that the liquidator of Salvestrin Enterprises Pty Limited ACN 652 772 284 (in liquidation) (the Company and the Liquidator) would be justified in treating the property described in land title reference 12/1104189 known as 39 Brooks Street, Griffith, New South Wales (the Property) as an asset of the Salvestrin Enterprises Trust (the Trust).
2. Order pursuant to s 67 of the Supreme Court Act 1970 (NSW) that the Liquidator is appointed as receiver and manager, without security, of the property, assets, and undertaking of the Trust (the Receiver), with the following powers:
1. the powers set out in s 420 of the Corporations Act 2001 (Cth), as if references therein to "the corporation" were references to the Trust;
2. the power to take possession of, preserve, maintain, and sell the assets comprising the Trust property, including the ability to execute a contract for sale of the Trust property and receive the sale proceeds from any such property into a separate bank account maintained by the Receiver for that purpose;
3. to investigate transactions that were undertaken using funds or assets that formed part of the assets of the Trust;
4. to demand books and records of the Trust from any person; and
5. to determine and make payment of any creditor claims against the Company in its capacity as trustee of the Trust conformably with s 556 of the Corporations Act 2001 (Cth).
1. Order that the Receiver is not to distribute any surplus funds or assets of the Trust without further order of the Court.
2. Order that the Receiver is to be paid remuneration on a time-spent basis to be calculated at the standard rates set out in the Liquidator's initial remuneration notice to creditors dated 10 November 2022 at pages 176-179 of Exhibit GM-1 to the Liquidator's affidavit affirmed on 10 October 2023, provided that the Receiver is not to draw remuneration from the Trust assets except with the prior approval of the Court and in an amount fixed by the Court.
3. Order that, within 14 days of the completion of the receivership, the Receiver:
1. is to lodge verified accounts with the Court; and
2. may apply to the Court for approval of the Receiver's remuneration and expenses.
1. Order that the Liquidator's costs of the originating process filed on 10 October 2023 be costs in the winding up of the Company.
Following the appointment of Mr Moss as Receiver, he caused to be established a new bank account for the receivership (Receivership Bank Account).
Before the appointment of the Receiver, the Property was the subject of a residential tenancy agreement (Lease). The Receiver directed the managing agent of the Property to pay the rent from the Lease to the Receivership Bank Account. The Receiver also took steps in relation to the termination of the Lease so that the Property could be sold with vacant possession.
On about 24 January 2024, the Receiver entered into an Agency Agreement with Fireyork Pty Ltd trading as LJ Hooker Griffith (Agent) to market and sell the Property. The Receiver also engaged Hunts.Law as his solicitors in respect of the sale of the Property.
On about 29 February 2024, the Receiver entered into a Contract for Sale of the Property and the purchaser paid the deposit.
Under the terms of the Contract for Sale, land tax was payable on or before settlement. The land tax for the 2023 and 2024 land tax years was assessed by the New South Wales government at $24,079.90.
Under the terms of the Contract for Sale, the purchase price was to be adjusted by amounts for rates and other monies owing to Griffith City Council (including water and sewerage rates), all of which totalled $6,944.05.
In addition, pursuant to the terms of the Agency Agreement, the Agent was also entitled to be paid its commission and marketing expenses on settlement, totalling $23,020.25.
On 15 March 2024, I gave judgment in In the matter of Sans Pareil Estate Pty Ltd (in liquidation) [2024] NSWSC 255 for the Liquidator against Mr Salvestrin, declaring that numerous transactions were unreasonable director-related transactions under s 588FDA of the Corporations Act and therefore voidable under s 588FE(6A) of the Corporations Act, and ordered that Mr Salvestrin pay $8.457 million to various companies in the Sans Pareil group.
On 22 March 2024, the Official Trustee in Bankruptcy was appointed to the bankrupt estate of Mr Salvestrin by debtors' petition.
On about 22 March 2024, settlement of the Contract for Sale occurred.
After the sale of the Property, the net amount of all receipts to and payments from the Receivership Bank Account as at 24 May 2024 is $699,119.08, which is also the amount held in the Receivership Bank Account. The Receiver has verified these accounts.
On 15 May 2024, emails were sent by the solicitors for the Receiver to Mr Salvestrin and the Official Trustee in Bankruptcy which attached the originating process, the interlocutory application and the supporting affidavits of the Receiver and informed them that the application was listed for hearing today. The Official Trustee in Bankruptcy has stated that it is aware of this application and does not oppose it. Mr Salvestrin has not responded to the communications sent to him and there was no appearance by him at the hearing after he was called outside the court.
[3]
Legal principles
In Sprowles, in the matter of Triumph N Triumph Pty Ltd (in liq) (No 2) [2021] FCA 405, Yates J at [13] observed that the object of passing accounts is to verify that all amounts received in the course of the receivership are accounted for and that all payments made in the course of the receivership have been properly made and are evidenced. This statement of principle was approved in Hebbel Constructions Pty Ltd v Bitar Pty Ltd (2021) 153 ACSR 500; [2021] NSWSC 810, Black J at [22].
[4]
Consideration
I am satisfied that all receipts and payments in the course of the receivership are accounted for, evidenced and verified by the Receiver. Accordingly, I propose to pass those accounts.
[5]
Legal principles
In Stojanovski v Stojanovski [2023] NSWSC 1645, I gathered together the principles from the authorities in relation to the remuneration of receivers at [85]-[90], saying:
[85] The principles to be applied to determine the issues before me are well settled on the authorities.
[86] In the matter of Cannuli Holdings Pty Ltd (in liq) (Court-appointed receiver acting) [2017] NSWSC 1562, Black J at [8]-[9] said:
[8] The principles applicable to the approval of a claim for remuneration by a court-appointed receiver are well established and no issue of controversy arises in respect of them in this application. A receiver's right to recovery of expenses is analogous to a trustee's right to indemnity: Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96; Re Stockford Ltd; Korda [2004] FCA 1682; (2004) 140 FCR 424; 52 ACSR 279 at [50]; AAA Financial Intelligence Ltd (in liq) (No 2) [2014] NSWSC 1270; (2014) 32 ACLC 14052; Re Wine National Pty Ltd [2016] NSWSC 4 at [12]. Mr Martin, who appears for Mr Smith, referred to my summary of the relevant case law in Re Wine National Pty Ltd above at [13]ff, where I observed that:
The remuneration of a Court-appointed receiver may be approved by the Court which appointed that receiver: Australian Securities and Investments Commission v Lawrenson Light Metal Die Casting Pty Ltd [1999] VSC 500; (1999) 33 ACSR 288. In Ide v Ide [2004] NSWSC 751; (2004) 50 ACSR 324 at [39]ff, Young CJ in Eq described the Court's role in determining such an application (omitting authorities) as follows:
First, the court constituted by a judge, never considers a review of quantum, but only matters of principle.
Secondly … a receiver is entitled to have his costs, charges and expenses properly incurred in the discharge of his ordinary duties, or in the performance of extraordinary services which have been sanctioned by the court.
Thirdly …:The receiver must justify the reasonableness and prudence of the tasks undertaken for which remuneration is sought, in the same way as he must justify the reasonableness and prudence of incurring disbursements for which he seeks allowance and reimbursement.
Thus, as with a falsification of accounts, the relevant onus is on the receiver.
Fourthly, it must always be remembered that a receiver's remuneration is not in the same category as costs … The receiver is making application for a fair recompense for what he or she has properly done. The award is in the discretion of the court according to well known guidelines …
Fifthly, the court's objective is to award a sum or devise a formula which will reasonably compensate the receiver for the time and trouble expended in the execution of his duties and, to some extent, the responsibility he has assumed … the vital question is what is the value to the estate of the work done by the receiver …
Sixthly, the court will usually work off time sheets created in the receiver's office provided that they do significantly more than merely detail the total number of hours spent by the receiver and officers of particular grades on his or her staff ….
Seventhly, the court is guided by professional scales of charges … What is important is the broad average or general rate charged by persons of the relevant status and qualifications who carry out the relevant type of work.
That approach was generally approved by Barrett J in Mohamed v Hurstville Tower Medical Clinic Pty Ltd (in liq) [2006] NSWSC 4 at [9], where his Honour also noted the observation of Branson J in Wenkart v Pantzer [2005] FCA 1572 that Young CJ in Eq may have expressed the first principle noted above too strongly and that it was "sufficient to note that it will rarely, if ever, be appropriate for the Court to review a decision of a taxing officer on a line by line basis".
In Australian Securities & Investments Commission v Letten (No 23) [2014] FCA 985, Gordon J in turn observed a receiver's remuneration (and also costs and expenses) must be reasonable and properly incurred; the sum to be fixed by the Court may properly be calculated on the basis of time reasonably spent at specified rates, with a possible qualification for small administrations which is not presently applicable; the Court will initially ascertain whether a prima facie case is made out; the receiver must provide sufficient information for the Court to properly assess the claim; and the onus is on the receiver to justify that the tasks done were reasonable and prudent, including that work was done at an appropriate level of seniority and done efficiently. That approach was approved by the Full Court of the Federal Court in Templeton v Australian Securities and Investments Commission [2015] FCAFC 137 at [15]. The Court may also have regard to proportionality and factors of the kind specified in s 425(8) of the Corporations Act 2001 (Cth) in that regard: Templeton at [31]. That section, which was introduced by the Corporations Amendment (Insolvency) Act 2007, has the effect that, in determining the remuneration of a receiver appointed under an instrument, the Court must have regard to whether the remuneration is reasonable, taking into account all or any of specified matters. Those factors include the extent to which the work performed or likely to be performed by the receiver was reasonably necessary; the period during which the work was, or is likely to be, performed by the receiver; the quality and complexity of the work; whether the receiver was, or is likely to be, required to deal with extraordinary issues, or accept a higher level of risk or responsibility than is usually the case; the value and nature of any property dealt with, or likely to be dealt with, by the receiver; whether the receiver was, or is likely to be, required to deal with other insolvency practitioners; the number, attributes and behaviour, or the likely number, attributes and behaviour, of the company's creditors; and, if the remuneration is ascertained, in whole or in part, on a time basis, the time properly taken, or likely to be properly taken, by the receiver in performing the work; and whether the total remuneration payable to the receiver is capped.
In Re Metal Storm Ltd [2015] NSWSC 1699 at [11], I noted that the relevant principles:
… include the fact that court appointed receivers are entitled to remuneration, and indeed their entitlement to remuneration is a necessary feature of the court's ability to appoint insolvency practitioners to such a position. … court appointed receivers are required to have their remuneration approved by the court before they are permitted to draw payment. There are many examples of cases where that has occurred including, for example, Re Application of Crouch [2005] NSWSC 1122 and Coeclerici Asia (Pte) Ltd v Gujarat NRE Coke Ltd (No 2) [2015] FCA 809.
[9] In Re Anglican Development Fund Diocese of Bathurst Board (recs and mgrs apptd) [2017] NSWSC 967 at [12], I summarised the applicable principles as follows:
the Receivers bear the onus of establishing that the remuneration claimed is fair and reasonable, including that the work was properly performed in the due course of administration and that the amount claimed is a fair and reasonable reward for it: Sanderson (as Liquidator of Sakr Nominees Pty Ltd (in liq)) v Sakr [2017] NSWCA 38; (2017) 118 ACSR 333 at [54]. … the factors listed in ss 425(8) and 473(10) of the Corporations Act 2001 (Cth) regarding privately appointed receivers' remuneration and liquidators' remuneration respectively are relevant by analogy to the assessment of the reasonableness of a Court-appointed receiver's claim to remuneration: Templeton v Australian Securities and Investments Commission [2015] FCAFC 137; (2015) 108 ACSR 545 at [23]; Re Banksia Securities Ltd (in liq) (recs and mgrs. apptd) [2017] NSWSC 540 at [42]. [Counsel] also recognises the significance of proportionality in such an assessment and that several of the factors in s 473(10) have that concept as their unifying theme: Sanderson (as Liquidator of Sakr Nominees Pty Ltd (in liq)) v Sakr above at [55]. [Counsel] rightly points out that the fact that work performed by an insolvency practitioner does not lead to an increase in the funds available for distribution does not necessarily mean that he or she is not entitled to be remunerated for it, for example, where work is done to comply with statutory obligations, and that the complexity of the work done is also a relevant factor: Templeton v Australian Securities and Investments Commission above at [52]; Sanderson (as Liquidator of Sakr Nominees Pty Ltd (in liq)) v Sakr above at [57]. [Counsel] submits, and I accept, that time-based remuneration can provide a starting point for the Receivers' claim for remuneration, which can then be assessed in light of the other relevant factors: Sanderson (as Liquidator of Sakr Nominees Pty Ltd (in liq)) v Sakr above at [60]; Re Clout (in his capacity as liquidator of Mainz Developments Pty Ltd) (in liq) [2016] NSWSC 1146; (2016) 115 ACSR 459 at [134].
[87] In the matter of Banksia Securities Ltd (in liq) (Receivers and managers appointed) [2017] NSWSC 540, Gleeson JA at [37]-[46] stated:
[37] The common bases for calculation of remuneration are: (a) time based charging; and (b) a commission based on a percentage of recoveries. It is a matter for the Court to determine what basis of calculation is more appropriate in the particular case having regard to the principle that the remuneration must be reasonable.
[38] Historically, courts were reluctant to award remuneration on the basis of time spent by the receiver and his or her staff. That is no longer the case and time-based remuneration has now become more common. However, time-based remuneration has not been always accepted without criticism and, in some cases, strong criticism: see, eg, the comments of Finkelstein J in Re Korda, Re Stockford Ltd (2004) 140 FCR 424; [2004] FCA 1682. Many of the authorities which have considered the appropriateness of time based charging, including the support of Finkelstein J in Re Korda, Re Stockford Ltd for the adoption of a "loadstar" approach, drawn from United States' authorities, are referred to by Black J in Idylic Solutions at [27]-[50]. It is sufficient to note the following matters.
…
[40] Second, the essential task of the Court, constituted by a judge, when asked to approve remuneration is encapsulated in the following observation by Barrett J in Anderson Group Pty Ltd; Mann v Anderson (2002) 20 ACLC 1607; [2002] NSWSC 764 at [12], in relation to the remuneration of a liquidator:
In the ordinary course, the process of determination comes down essentially to ensuring that the work upon which the claim was based was work undertaken in the due course of administration and that the amount claimed for having done that work is a fair and reasonable reward for it.
…
[43] The following propositions can be derived from the reasons of Bathurst CJ in Sakr and adapted to the present case involving a special purpose receivership.
[44] First, the onus is on the special purpose receivers to establish that the remuneration claimed is reasonable. It is the function of the Court, here under s 283HB of the Corporations Act, to determine the remuneration by considering the material provided and bringing an independent mind to bear on the relevant issues: Sakr at [54].
[45] Second, many of the factors in s 425(8), in particular, pars (d)-(e) and (g)-(h) can be seen to have as their unifying theme the concept of proportionality. The question of proportionality in terms of work done as compared with the size of the property the subject of the insolvency administration or the benefit to be obtained from the work, is an important consideration in determining reasonableness: Templeton v Australian Securities and Investments Commission (2015) 108 ACSR 545; (2015) FCAFC 137. The work done must be proportionate to the difficulty and importance of the task in the context in which it needs to be performed. This is what is encompassed in assessing the value of the services rendered: Sakr at [55].
[46] Third, the mere fact that the work performed does not lead to augmentation of the funds available for distribution does not mean that the special purpose receivers are not entitled to be remunerated for it. In the present case, the Trustee fee application and the time spent consulting with the committee of creditors on various issues, including obtaining approval of the special purpose receivers' remuneration will not result in the augmentation of the funds available for distribution. Provided it was reasonable to carry out the work and the amount charged is reasonable, there is no reason a liquidator should not recover remuneration for undertaking the work: Sakr at [57]-[58].
[88] In Re Octavia Administration Pty Ltd (in liq) [2020] NSWSC 927 at [49], Rees J distilled the following principles:
(a) A liquidator is entitled to reasonable remuneration for their services and bears the onus of establishing that the remuneration sought is fair and reasonable.
(b) The liquidator must lead evidence in sufficient detail to enable the Court to determine that question including an itemised account setting out the details of work, the persons who did the work, the time taken to perform the work and the remuneration and expenses incurred.
(c) The Court must bring an independent mind to bear on the question whether the remuneration is fair and reasonable.
(d) Relevant considerations include the complexity of the liquidation and the level of responsibility and risk taken on by the liquidator.
(e) The time-costing based approach to remuneration as well as the percentage-based approach - which compares the percentage that a liquidator's remuneration bears to the level of asset realisations achieved - are commonly used, and no particular approach is to be preferred.
(f) There is a need for proportionality between the cost of the work done and the value of the services provided. Some work by a liquidator may not generate a return to creditors but is nonetheless necessary.
[89] In circumstances where a time-based approach is adopted, In the matter of Gondon Five Pty Ltd and Cui Family Asset Management Pty Ltd [2019] NSWSC 469, Brereton J at [34(7)] said:
… the Court is guided by professional scales of charges, with emphasis on the broad average or general rate charged by persons of the relevant status and qualifications who carry out the relevant type of work. The Court will usually act on time sheets created in the receiver's office, provided that they do significantly more than merely detail the total number of hours spent by the receiver and officers of particular grades of his or her staff.
[90] Emphasising the reference made in Cannuli by Black J above, court-appointed trustees and receivers are entitled to remuneration and it is rarely if ever appropriate for the court to undertake a line-by-line analysis of their time recordings: Wenkart v Pantzer [2005] FCA 1572, Branson J at [35]; Mohamed v Hurstville Tower Medical Clinic Pty Ltd (in liq) [2006] NSWSC 4, Barrett J at [9].
[6]
Consideration
It is clear from a review of the authorities cited above that the relevant considerations before me are ones of reasonableness and proportionality, requiring the court to assess the extent to which the work performed by the Receiver was reasonably necessary and to arrive at a sum or devise a formula which will reasonably compensate the Receiver for the time and trouble expended in the execution of his duties. It is clear that the question of proportionality is one of the factors involved in the overall consideration of reasonableness. The authorities also direct me to approach the matter as one of principle and not by undertaking a line-by-line analysis of time entries.
The Receiver seeks payment of $48,059.00 (inclusive of GST) as remuneration. The remuneration has been calculated based on time recorded multiplied by hourly rates ranging from $165 for a Clerical Assistant, $275 for a Graduate, $350 for an Intermediate, $405 for a Senior, $520 for a Manager, $665 for a Principal and $695 for an Appointee, being the Receiver himself. The total number of hours recorded is 70.70 over the period between 9 November 2023 to 22 April 2024 (the date of the last time entry), with the Receiver having personally recorded 42 of those hours (59.4%), with the rest of the time delegated to others. The time records also contain the split between work undertaken on "Assets" (53.10 hours), the "Investigation" (10.30 hours) and "Admin" (7.30 hours).
The Receiver observed the principles and standards of conduct prescribed by the ARITA Code of Professional Practice in conducting his billing practices.
In relation to the work undertaken, the process leading to the sale of the Property and afterwards was not straightforward. It is clear that the work involved complexity which required the Receiver to be personally involved in the work undertaken and not delegate as much of it to others charging a lower hourly rate as would have occurred for a simpler set of transactions. The complexity is demonstrated by the following matters:
1. There were a large number of corporate entities and trusts associated with Mr Salvestrin, which meant that decisions to be made by the Receiver about the sale of the Property had to be made by someone at a high level of seniority who was familiar with the interaction and complexity surrounding the corporate group. Because the Receiver was also the liquidator of a number of those other group entities it was necessary for him to personally attend to a significant number of tasks.
2. It was necessary for the Receiver to determine how the net sale proceeds from the Property should be applied and, in particular, whether as liquidator of Sans Pareil Estate it was the entity entitled to all of those sale proceeds.
3. To enable the Property to be sold with vacant possession, it was necessary for the Receiver to deal with the managing agent on the termination of the Lease.
4. It was necessary to determine whether there were any creditor claims against the Trust.
The rates which have been charged are in excess of those which were the subject of the orders made by Williams J on 9 November 2023, which required them to be calculated at the standard rates contained in the Liquidator's initial remuneration notice to creditors dated 10 November 2022 at pages 176-179 of exhibit GM-1 to the Liquidator's affidavit affirmed 10 October 2023.
I am prepared to allow the slightly increased rates now in light of the fact that those hourly rates were those current as at July 2022, and nearly two years has passed since then with the consumer price index having risen 8.7% to the end of the March 2024 quarter. If the remuneration were calculated at the July 2022 rates, it would have been $44,581.90, an amount which is 7.2% lower than the $48,059.00 now sought. I consider that it is fair and reasonable to allow the increase in rates, which are less than the prevailing rate of inflation over the same period.
In terms of proportionality, the calculated remuneration of $48,059.00 is only 6.2% of the total amount of the receipts of $774,940.11 (inclusive of GST), which is a proxy for the value of the services provided.
I do not need to perform a line-by-line analysis of the time entries and have not done so.
In my judgment, the remuneration sought of $48,059.00 is fair and reasonable.
[7]
Legal principles
In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396, Brereton J at [6(9)] explained (citations omitted):
In respect of disbursements, no Court approval or specific order is necessary in the absence of a challenge, although receivers should scrutinise them to ensure that they are reasonable and properly payable, and the Court has an inherent jurisdiction to review receivers' disbursements as they are officers of the Court. However, a receiver may seek a direction that he would be justified in paying certain disbursements in order to obtain prior protection in respect of such a disbursement.
[8]
Consideration
Applying this approach, I am satisfied that each of the identified expenses was reasonable and properly payable, covering repairs and maintenance, agents/valuers fees, legal fees and disbursements, agent's marketing fees and commission, land tax, council rates, water rates, PEXA fees and rental management. These expenses variously arose as a consequence of the Property being owned by Salvestrin Enterprises as trustee, the Property being the subject of the Lease and the Property being marketed and sold.
[9]
ISSUE 4: PAYMENT OF FUNDS TO SANS PAREIL ESTATE
The evidence demonstrates that Sans Pareil Estate provided the funds to Salvestrin Enterprises for the purchase of the Property in 2022. Those funds would appear to have been loaned (although there is no supporting loan documents), which would give rise to a claim for Sans Pareil Estate in debt against Salvestrin Enterprises. Alternatively, Sans Pareil Estate has a proprietary claim over the Property because it has a resulting trust in its favour by reason of it having provided the funds to enable the acquisition of the Property to occur: Foundas v Arambatzis [2020] NSWCA 47, White JA (Bell P and Basten JA agreeing) at [48]-[49], applying Calverley v Green (1984) 155 CLR 242.
There do not appear to be any other unpaid creditors of the Trust, save for any legal fees and disbursements incurred as a result of this application.
I note that the Receiver is also the Liquidator of Sans Pareil Estate, so he will continue to control those net proceeds in that capacity.
In the circumstances, I authorise the Receiver to pay the net proceeds of the receivership of the Trust, after the payment of the Receiver's remuneration and expenses, to Sans Pareil Estate.
[10]
ISSUE 4: DISCHARGE OF RECEIVER
Once the Receiver's remuneration has been paid, the expenses of the receivership have been paid and the net proceeds of the receivership have been transferred to Sans Pareil Estate, the work of the Receiver will be completed.
As a result, I am prepared to order the discharge of the Receiver once those steps have all been completed without further application to the court.
[11]
ORDERS
For the reasons set out above, I propose to make the following orders:
1. Order that the accounts of the receivership of the plaintiff in his capacity as receiver (Receiver) of Salvestrin Enterprises Trust (Trust) as set out in the affidavit of Gavin Moss affirmed 24 May 2024 are passed.
2. Order that the Receiver is entitled to be paid from the assets of the receivership of the Trust the remuneration of the Receiver fixed in the amount of $48,059.00 (Remuneration).
3. Order that the Receiver would be justified in making payment of the expenses of the receivership of the Trust from the receivership assets of the Trust (Expenses), including the payment of legal fees of the application to appoint the plaintiff as receiver from the receivership assets of the Trust, notwithstanding the order on 9 November 2023 of Williams J that those fees be costs in the winding up of the defendant.
4. Order that the Receiver pay the net proceeds of the receivership of the Trust after payment of the Remuneration and Expenses to the liquidator of Sans Pareil Estate Pty Ltd (in liquidation).
5. Order that upon satisfaction of the matters set out in orders (1) to (4) above, that the Receiver is discharged as receiver of the Trust.
[12]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 28 May 2024