GEMI 169 Pty Ltd v F & L Violi Pty Ltd (No 8)

Representation: Counsel: D R Stack (Applicant)
Solicitors: ERA Legal (Applicant)

File Number(s): 2022/00181916

Publication restriction: Nil

JUDGMENT

1. On 29 May 2024, the applicant, Mr Lakomy, was appointed as the receiver and manager of two commercial properties, in Strathfield and Griffith NSW, owned by the third defendant, F & L Violi Pty Ltd (FLV), pursuant to s 67 of the Supreme Court Act 1970 (NSW).

2. By way of Notice of Motion filed on 10 June 2025, the applicant now seeks to have his remuneration as the receiver and manager of FLV’s properties, for the period of 29 May 2024 to 31 March 2025, fixed in the sum of $439,671 plus GST. The application is not opposed by any party.

3. For the reasons that follow, I consider it appropriate to make the orders sought by the applicant.

Background

4. The substantive proceedings concern the validity of mortgages on the FLV properties’ title.

5. The plaintiffs are related lending companies, which advanced over $22 million to the defendants under a series of loan agreements. The plaintiffs commenced the proceedings seeking to recover this sum of money, plus interest, and also to enforce their rights pursuant to mortgages granted over the Strathfield and Griffith properties.

6. Another lending consortium filed a cross-claim seeking to recover $2.2 million advanced to FLV pursuant to another loan agreement, but that claim has since settled.

7. On 11 June 2022, the plaintiffs appointed receivers and managers pursuant to the loan agreements. On 15 July 2022, Slattery J sitting as Duty Judge ordered those receivers to retire and FLV to facilitate the sale of the Strathfield property.

8. On 19 May 2023, Ball J (as his Honour then was) appointed a real estate agent and an independent solicitor to conduct the sale of the Strathfield property.

9. As noted above, the applicant was appointed on 29 May 2024 as receiver and manager, to preserve the properties and effect the sale of the Strathfield property.

Principles

10. The principles relevant to the Court’s power to fix a receiver’s remuneration under r 26.4 of the Uniform Civil Procedure Rules 2006 (NSW) are well-known. They are set out in, inter alia, Re BBY Ltd (recs and m**grs apptd) (in liq*)* [2021] NSWSC 1299 at [52]-[59] (Gleeson JA) and Re Salvestrin Enterprises Pty Ltd (in liq) (No 2) [2024] NSWSC 642 at [20] (McGrath J). In short, they are that:

11. the essential question is whether the remuneration is reasonable;

12. the Court must ensure that the work upon which the claim for remuneration is based, and the amount claimed, is fair and reasonable;

13. the onus is on the liquidator (or receiver) to establish that the remuneration claimed is reasonable;

14. the Court must determine whether the remuneration claimed is reasonable by considering the material provided and bringing an independent mind to the relevant issues;

15. remuneration is reasonable when proportionate; the work done is compared with the size of the property the subject of the administration or the benefit to be obtained from the work, including the difficulty and importance of that work; and

16. the mere fact that the work performed does not lead to augmentation of the funds available for distribution does not mean that the liquidator (or receiver) is not entitled to be remunerated for it.

17. Section 425(8) of the Corporations Act 2001 (Cth), which sets out factors relevant to determining the remuneration of receives appointed under an instrument, is relevant to the current application by analogy. These factors emphasise the requirement of proportionality.

Determination

12. The applicant seeks remuneration for different work, explained further below.

13. I note that no interested party opposes the application. On 29 April 2025, the applicant received a notice of objection from Mr Violi, the sole director and shareholder of FLV. However, the objection has not been progressed. Mr Violi, and other interested parties, were served a copy of the motion and the applicant’s related affidavits on 13 June 2025.

Strathfield property

14. The applicant seeks $37,795 (plus GST) for work undertaken in relation to the Strathfield property. I consider that the work undertaken in relation to the Strathfield property is reasonable and proportionate. The applicant managed the sale of this property, including obtaining a valuation and insurance for the property, engaging and instructing lawyers and real estate agents, engaging a security firm to preserve the property and accepting an offer of $14 million plus GST. The applicant managed requests for information from interested parties. The applicant invested the proceeds of sale, which has now matured, with interest of $350,000 being applied. The applicant has, with permission of the interested parties, applied $1.5 million of the Strathfield property sale proceeds to the Griffith property, to secure a long-term lease at the latter property.

Griffth property

15. The applicant seeks $371,072 (plus GST) for work undertaken in relation to managing the Griffith property, which is a shopping centre.

16. I also consider that the work undertaken in relation to the Griffith property is reasonable and proportionate. While the sum sought is much higher, the applicant has provided evidence of the work he has undertaken in managing the property. This includes “complex” negotiations with two parties regarding long-term leases which included arrangements that the landlord contribute large sums of money for fit out. The applicant also attended the Griffith property on four occasions, obtained insurance, engaged a new managing agent for the property, engaged lawyers to draft new commercial leases, managed repair and maintenance issues as well as safety compliance, and communicated with the 35 tenants in the building. Additionally, the applicant communicated with the parties in these proceedings. As at 31 March 2025, the applicant held net rental income of $217,610.

Receivership generally

17. The applicant seeks $30,804 (plus GST) for the receivership generally. These costs include reporting to the Australian Taxation Office and other statutory entities such as the Office of State Revenue and activities described as “Planning / Review”, which include reviewing Court orders and preparing ASIC forms, meeting with Mr Violi and his lawyers to discuss the properties and the receivership, and ROCAP (report on company activities and property) correspondence with ASIC.

Time costing

18. The applicant’s remuneration has been calculated using a time costing method. This method is permitted by the Australian Restructuring Insolvency & Turnaround Association and has been widely accepted by the Court: see e.g. Re Octavia**r Administration Pty Ltd (in liq) [2020] NSWSC 927 at [49(e)] (Rees J).

19. I note that tasks have been delegated to more junior staff where appropriate, ensuring proportionality of costs being claimed.

Appropriate orders

20. For the above reasons, I make the following orders:

21. An order that the applicant’s remuneration as court-appointed receiver of the property situated at 15-17 Redmyre Road, Strathfield NSW 2135 and described in title reference 30/1125305 (Strathfield Property) and the property situated at 10-12 Yambil Street, Griffith NSW 2680 and described in title reference 101/1115198 for the period of 29 May 2024 to 31 March 2025 be fixed in the amount of $439,671 plus GST.

22. An order that the applicant be authorised to draw remuneration referred to in 1 above from the proceeds of sale of the Strathfield Property.

23. An order that the applicant’s costs and expenses of and incidental to this notice of motion be paid on an indemnity basis, out of the proceeds of sale of the Strathfield Property.

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