It is necessary to go back to the hearing of the suit and to look at the issues that were between the parties. However, I will only deal with these in bare outline because more than that is not necessary to deal with the present motion.

The key actors are doctors who grouped together under the vehicle of a trust, which was being administered by the first defendant, to provide impotency services for men. The plaintiff, and those that stand behind it, used to have a business in the same line of work and they, with the natural person defendants and those who were involved in the fifth defendant to which group I will refer collectively as "the majority", joined together to combine their businesses under the aegis of the trust. The trustee of the trust entered into various arrangements with service companies controlled, in the main, by the majority, to provide most of the services needed by the trust to carry out its business and the trustee also entered into contracts with various doctors.

The plaintiff and the majority became dissatisfied with each other and the plaintiff in proceedings which were commenced by statement of claim, sought an order that the trustee be removed and that Martin Madden, accountant, a partner in a large and respected insolvency practice, be appointed trustee in its stead.

On, I think, the third day of the hearing the majority agreed to the orders that the plaintiff sought and I made them by consent.

Following those orders Mr Madden applied to Cohen J, who was then the Duty Judge, for directions and his Honour gave those directions by order on 25 March 1998.

The advice was that the new trustee would be justified in not continuing to trade, and the following orders 2 and 3 were made:

"2. Martin Madden be appointed as Receiver without security of the Australian Men's Health Unit Trust with powers to investigate the existence of, get in and convert to money the assets of the Trust and pay those moneys into Court.

3. A right to apply for further powers is reserved."

Thereafter Mr Madden entered into discussions with the persons behind the two disputing groups of beneficiaries. He says he had not advertised the business for sale or looked elsewhere because the title as to the various assets of the business was doubtful and he would be unable to give a good title to the assets.

He received an offer from those behind the plaintiff, or a doctor associated with those people. He also received an offer from those associated with the majority. The latter was considerably in excess of the amount which the persons associated to the plaintiff were prepared to pay. Accordingly, the receiver considered, subject to him getting the advice of the court, that he should enter into an asset purchase agreement with two companies and divest himself of any of the rights, title and interest of the trust in the assets for $400,000.

There was one glitch, at least, in that some of the assets being sold were restricted products and could only be sold to persons with the relevant licence. The parties agreed to apply for the relevant licence, and the agreement was redrafted so that the restricted products would be excluded unless the licence was obtained.

The facts then are that if it was only a question of money the receiver would get rid of the assets for $400,000, if this agreement for purchase of assets went ahead, which is at least $100,000 more than he would get from the only other purchaser. Then the receiver says that he is already justified in not trading, which indeed was the only course he could have taken because of the difficulties in obtaining services through the service companies, and he has Cohen J's imprimatur on that decision.

Further, the assets, which include stocks of drugs, are only going to deteriorate if they are held, so that there is really no other alternative but for them to be sold for the best possible price.

The plaintiff says that this really would not be a just outcome. The plaintiff says that it has been a successful plaintiff, in that it achieved the orders, albeit by capitulation, that it sought in the suit. It complained about misconduct of those behind the former trustee (the majority) and that although those parties are not the actual purchaser, interests that are close to them are the purchasers. Accordingly, the net result will be that the interests of the majority will have acquired all the plaintiff's property and goodwill and all the assets of the former business for $400,000, and there will be little moneys really available for the parties to fight over in the accounting exercise which in due course will take place before the Master.

The plaintiff says that the receiver has $280,000 in kitty, every Sunday there are advertisements in the newspapers by the proposed purchasers' present business, which is closely similar in name to the current business and they are gradually acquiring by attrition the goodwill. The receiver has done absolutely nothing to stop that and to preserve the assets, and now just wishes to take the easy way out by selling the assets, paying himself his fees and let the parties fight it out over what little is left before the Master.

In answer to this, the receiver has said that he is not willing to take any curial action against these advertisements because he might be personally liable for the costs, he will have to give a personal undertaking as to damages and he is not willing to do this. It is unclear as to whether he has actually asked the plaintiff whether the plaintiff would be prepared to indemnify him against such a course, but as that attitude has become plain, and there has been no reaction, I must assume that at least at present the plaintiff is unwilling to give such an indemnity.

This really does seem to raise some fundamental points and, although I will try to deal with them as expeditiously as possible, they really go to the root of this particular matter.

First, I should say that the present situation is unusual. Mostly receivers are appointed as an interlocutory step in proceedings before they are heard and much of the law that I will quote shortly occurs in that area.

Again, receivers may be appointed by way of equitable execution after the rights and title have been decided. Again their role is fairly clear. The receiver in the instant case does not really fit into either of these categories. He was appointed under a special order of the court and that special order of the court appointed him receiver of the trust assets and gave him powers to investigate the existence of the assets of the trust and get those assets into money and pay the moneys into court. He was really somewhere between the two classic classes of receiver.

The first recorded order appointing a receiver was made in the reign of Edward VI. It would seem that prior to that time the court would appoint sequestrators and the appointment of an interlocutory receiver was a logical extension of that process. The sequestrator is an officer of the court and so it tended to be thought that a receiver was an officer of the court also.

However, up until the early part of the 19th century no-one had actually gone as far as to say so. The history of the appointment of receivers is set out in Spence's Equitable Jurisdiction of the Court of Chancery, vol 1, 1846 p 673 and that is reproduced in Picarda "The Law Relating to Receivers Managers and Administrators" 2nd ed Butterworths, London 1990 pp 2-3.

The basic authority that a receiver is an officer of the court appears to be an Irish equity case of Hutchinson v Massareene (1809) 2 Ball & Beatty 55 (a report which is not available in Sydney). That decision was followed by Lord Eldon in Angel v Smith [1804] EngR 147; (1804) 9 Ves 335; 32 ER 632 and also in Davis v Marlborough [1819] EngR 678; (1819) 2 Swans 108, 118; [1819] EngR 678; 36 ER 555, 559.

However, the furthest Lord Eldon seems to go is to say that receivers were like an officer of the court. In one sense they were like trustees, in that they owed fiduciary duties, but they were unlike trustees in that they had no property vested in them. They were, however, considered to be officers of the court in the United States. In Davis v Gray [1872] USSC 43; (1872) 83 US 203 at 217-218, Swayne J, giving the decision of the court, said that:

"A receiver is appointed upon a principle of justice for the benefit of all concerned ... [The receiver] is virtually a representative of the court, and of all the parties in interest in the litigation wherein he is appointed. He is required to take possession of property as directed, because it is deemed more for the interest of justice that he should do so than that the property should be in the possession of either of the parties in the litigation. He is not appointed for the benefit of either of the parties, but of all concerned. Money or property in his hands is in custodia legis. He has only such power and authority as are given him by the court, and must not exceed the prescribed limits. The court will not allow him to be sued touching the property in his charge, nor for any malfeasance as to the parties, or others, without its consent; nor will it permit his possession to be disturbed by force, nor violence to be offered to his person while in the discharge of his official duties."

I do not think that the status of the receiver is stated with any greater clarity than in that passage.

The receiver seeks directions of the court as an officer of the court. However, his status as an officer of the court is not quite the same as other officers. I said in Moclair v Moclair, 18 December 1986, unreported, following Re St George (1887) 19 LR Ir 566, that receivers are officers of the court and they should resort to the court for guidance when they think it is desirable to do so.

I stand by what I there said, but I think it should be appreciated that there is a difference between a liquidator, who is doing the work that last century the court did itself in the Master's Office, or even with a trustee, in that those people have unlimited functions, whereas a receiver has a very limited and usually relatively mechanical function. Instead of making a broad statement that receivers may always seek the opinion of the court, it would be better to put the proposition more narrowly, that if a receiver within his own limitations requires the guidance of the court, then normally he should have it.

Accordingly, I do not consider that many of the cases dealing with the sort of advice that is given to trustees, on the one hand, or liquidators, on the other hand, necessarily apply in the case of applications by receivers to get advice.

There are, of course, statutory rights for certain receivers under the Corporations Law to obtain the directions of the court under s 424 of the Corporations Law. This is not relevant to the present receiver. However it should be noted that even under that section the court does not give advice: Re North City Developments Pty Ltd (1990) 20 NSWLR 286; Re Geneva Finance Ltd (1992) 7 WAR 496.

One must first look to see the order appointing and empowering the receiver to see what his limitations are. Traditionally courts have made orders appointing receivers only upon security, so that disappointed parties have access to a fund should the receiver not carry out his fiduciary duties.

It has become customary to appoint official liquidators as receivers without security on the basis that their professionalism probably means that they will not create situations where they will be sued. However, the prime reason for granting security is that receivers are liable for breaches of fiduciary duty and it follows that they are not entitled to be completely indemnified against each step in carrying out their duties.

The second matter is that when a court is ordering a sale, it is customary to order that the sale take place either in court or out of court. If the sale is to take place in court then each step of the transaction needs to have the imprimatur of the court. Traditionally that happened by the receiver, or the like, submitting the contract to the Master and the Master would then endorse his approval on the contract (see Parker's Practice in Equity 2nd ed 1949 p 287). The matter was dealt with by an interview between the Master and the receiver.

There also seems to have been a practice in New South Wales that sales out of court were also subject to the approval of the Master. (See Parker at p 286). Why this custom grew up is a matter lost in antiquity. However, when the sale was out of court there was no reference to the court at all. In the addendum at p 342 to Miller and Horsell Equity Forms and Precedents NSW (Law Book Company 1934) the common form laid down by Long Innes J in Sutherland Shire Council v Glendon Court Ltd (unreported) is set out. The common order, still made today for enforcement of statutory charges or rates and taxes over property, is that the Public Trustee sell the property out of court by public auction or private contract on such terms as he thinks appropriate.

Accordingly, passages in the text books, that it is appropriate for the receiver to approach the court to empower him to sell and to deal with the terms of the sale, are inappropriate under an order for sale out of court made in New South Wales.

The order made by Cohen J is an order for sale out of court. Order 2, in contradistinction to the orders considered in Victoria in AIDC v Cooperative Farmers and Graziers Direct Meat Supply Ltd [1978] VicRp 59; [1978] VR 633; 3 ACLR 543, is an order that the receiver convert to money the assets of the trust and so empowers him to sell. The receiver needs no further authority. He needs no further empowerment. Accordingly, there is no warrant for this court to look at the question of empowerment.

The next matter is whether the court should make an order, assuming that it finds the facts the right way, that the receiver would be justified in selling the business and assets in the way in which he proposed. The word "justified" in this connection is one which seems to have crept into the law as a result of the type of advice that was given by judges to trustees earlier this century. See Re Mitchell (1913) 30 WN (NSW) 137.

There is no statutory requirement for that word to be used in any advice that is given even to a trustee. Probably what was meant when the word was originally used was that the trustee could consider himself immune from action by the beneficiaries if that particular course were taken. However, unfortunately its current meaning tends to be that the court has authorised the transaction.

However careful Mr Reeves for the receiver was in his submissions, he did lapse on at least half a dozen occasions into making a submission that the receiver had done what was authorised by Cohen J, or on which the court had given its imprimatur. This is the unfortunate result of using the word "justified". In one sense it is the court making the decision, but normally the receiver or the trustee makes the decision and the court merely lets the trustee protect his back from attack. The word "justified" sometimes makes people think that it is the court itself that has been the initiator of it.

However, in another sense it is right to say that the court is the initiator of the action. This is because before s 63 of the Trustee Act the trustee was able to say to the court "I abrogate all my power to make a discretionary judgment to the court and ask the court to make a decision".

This came about historically because all trusts were under the jurisdiction of the Court of Chancery and it was always open to the trustee to pay the whole of the property into court and to have an administration suit.

As Charles Dickens showed, this procedure made the Masters in Chancery, who could invest the money and pay the income to themselves pending the decision of the court, rich men, and it was abolished, along with the Masters in Chancery, and the originating summons procedure before a Judge substituted.

However, the basic right was to have the trust administered under the direction of the court. The court would then itself exercise the discretion of the trustee. In England still there is no section similar to our s 63 of the Trustee Act and the court still exercises this ancient jurisdiction. See Re Beddoe [1893] 1 Ch 547.

In New South Wales because of the statutory power, and Pt 67 of the Supreme Court Rules, general administration is only ordered in a very limited set of cases. See McLean v Burns Philp Trustee Co Ltd (1985) 2 NSWLR 623, which is cited in Underhill and Hayton Law of Trusts and Trustees 15th ed (Butterworths London 1995) p 820.

So then trustees would receive judicial advice really because they were surrendering all their discretion to the court and asking the court to make the decision. Liquidators really ask the court for advice because they are the delegates of the court and the delegate is asking his or her appointor to make the decision. However, a receiver, even though as Swayne, J pointed out is acting in the interest of all the parties, he is not a delegate of the court in the same sense, he is really only carrying out machinery tasks committed to him by the court.

Why, it should then be asked, is the receiver carrying out those mechanical tasks? The answer is, in the interest of the parties generally.

It is often a mistake to say that a trustee has a duty always to get the best possible price for the trust property. "Almost always" would be correct, as the proposition is not universally so.

Suppose, for instance, that there is a small Protestant church building of an independent denomination which was closing down for lack of patronage; two offers are received by the church trustees, one for a million dollars by a group of Christians with similar aims to the former congregation, and one by the Satanist Society for $1.5 million. The trustees might very well conclude that, even though the offer from the former is less than the amount which would be received by the sale to the Satanist Society, it is in the interest of the trust to take the lesser amount.

Likewise, with this receivership, one has got to look at what is the aim of the suit. The aim of the suit was to fairly deal with the beneficiaries' interests that were dealt with under the trust scheme. It may be that the beneficiaries' interests can be best dealt with by getting the greatest possible price for the assets, or it may be that some other way will best carry out those aims, even though the pool of money will not be as high.

The court when it is considering whether it will give advice and directions to the receiver must look to see the ultimate result. It just does not put in a receiver in this situation so the receiver can earn his commission by doing the easiest thing and making a sale in the shortest time. I am not saying that that is what this receiver is doing in this case, but that has been known to happen. The receiver must be carrying out the whole purpose of his appointment. In the present case his function is to be a neutral party holding assets in such a way as will not advantage one party or the other pending the accounting exercise before the Master.

There is surprisingly little as to how the court should approach the present sort of problem. Probably the best summary is given by Lord Oliver, when giving the decision of the Privy Council in Marley v Mutual Security Merchant Bank and Trust Co Ltd [1990] UKPC 44; [1991] 3 All ER 198 (see also Arab Bank PLC v Merchantile Holdings Ltd [1994] Ch 71, 90).

At p 202 his Lordship said that the question was not simply whether the trustees or receivers had exercised due diligence, and whether it appeared that they had done the best they could, what had to be shown to the court was that the contract negotiated, for which approval was being sought, was the best, reasonably obtainable in the interest of the beneficiaries.

His Lordship said that ordinarily that would require evidence to be put before the court as to the value of the property and there would need to be an informed professional assessment as to whether the proposed sale had been effected under the most favourable conditions, and the court would need to have before it evidence as to what efforts had been made to explore the market, and what advice had been received with respect to obtaining the maximum potential value for the property.

In the instant case, had this matter merely been one as to whether the receiver had acted reasonably, or whether the receiver had endeavoured to get the best price, the answer on the facts before me would have been in the affirmative. However, there was not the evidence before me last week, when the matter first came before me, that would enable me to determine the matters referred to by Lord Oliver.

At the request of the receiver, the proceedings were adjourned for a week, and in the interim a report was prepared by another well-known and respected insolvency practitioner, Mr Blackwell.

His report was to the effect that if he had been in the position of Mr Madden he would have done exactly the same thing. In particular he says he would not have pressed any court proceedings against those who were advertising in the Sunday papers without getting an indemnity as to the undertaking as to damages and the possible liability as to costs.

When this was placed before the court this morning, Mr Stevenson for the plaintiff said that it really did not take the matter any further. I would respectfully agree with that. It did not give us the information that was required under Lord Oliver's judgment. It really went no further than to say that what Mr Madden was doing was fair and reasonable.

Accordingly, I do not really consider that the facts are here for me to say that what Mr Madden is about to do is a course that the court should give its imprimatur to.

However, there is another matter that must be considered and that is what is the receiver's real aim. The aim cannot be to benefit one party rather than the other. Although the evidence is that the purchaser is not one of the majority, the clear inference that could be taken from the evidence is that it is closely associated with the same interests as the majority. The practical effect, accordingly, will be that the majority will have the whole of the business for a relatively small amount of money. I say small because the $400,000 is much less than the figures that were referred to in the evidence in the suit, and the $400,000 has to a great degree been arrived at because of the reluctance of the majority, for their own commercial reasons, to permit the service agreements with the trustee to be continued.

It seems to me that when one looks at why the receiver is there, and what are the respective points of view of the other parties to the litigation, that the court could not give its imprimatur to this particular sale.

That I know leaves the receiver in a dilemma. I can well understand why the receiver would want to get rid of the assets as soon as possible. However, the court is not prepared to give its imprimatur to a sale under these particular conditions.

The receiver must, accordingly, either do the deed on his own authority, because he has authority under the order made by Cohen J to do that if he feels so inclined, or alternatively, to renegotiate the matter, or, I suppose, also, perhaps with advice, to do nothing. Despite the receiver's problems, I am not prepared to make any order on the motion at this stage.

The costs of the receiver and the plaintiff are to be paid out of the assets of the trust. The receiver's costs are to have the priority referred to in Cohen, J's previous order. I make no order as to the costs of the defendants including the purchaser.