In the matter of J & Lee Property Investment Group Pty Limited [2020] NSWSC 368

Facts

1. The background facts are set out in J & Lee Property No 1 at [3]-[22]. Since then, Mr Hillig has undertaken further tasks described in detail in his affidavit sworn on 6 March 2020. Mr Hillig, Mr Smith and their staff have conducted investigations into the trust's business, property, affairs and financial circumstances including reviewing all books and records of the trust made available, corresponding with Seong Won Lee, attempting to locate the current unitholders of the trust and appointing accountants in respect of the trust. The applicants have instructed the accountant to review the books and records relating to the trust, advise on any accounting irregularities and complete lodgements on behalf of the trust relating to any tax liabilities and reporting requirements with the ATO. The applicants have assisted the accountant, corresponded with the ATO to seek a binding advice in respect of various taxation issues that have been identified in respect of the trust, and attended meetings held between the ATO and the receivers. The applicants have reported on affairs of the trust and undertaken further investigations in relation to real property, motor vehicle and ASIC searches in respect of the assets of the company and the trust.
2. Of particular note, in September 2019 the receivers sought directions from Black J as to whether the New South Wales Crime Commission's Proceeds Assessment Order under the Criminal Assets Recovery Act 1990 (NSW) amounted to a statutory charge such that the commission was effectively a secured creditor who had to be paid at the outset. In October 2019, Black J concluded that the New South Wales Crime Commission's statutory charge remained unaffected by the liquidation or receivership: In the matter of J & Lee Property Investment Group Pty Ltd (in liq) [2019] NSWSC 1337. On 10 October 2019, Black J granted declaratory relief consistent with his Honour's reasons and the Commission has since been paid in full, being $8.5 million plus interest.
3. Further, Mr Hillig has been in email communication with Seong Won Lee in Korea and has sought further information as to the addresses of the persons affected by this application or otherwise relevant to the receivership and liquidation. Mr Hillig has had some success in obtaining information from Seong Won Lee, although not much. In particular, in December 2019, Mr Lee emailed Mr Hillig challenging the steps which Mr Hillig was then taking to obtain vacant possession of the remaining property in Liverpool Street, Sydney. On 11 December 2019, Mr Lee said in an email: Ok...now you ignore my email. You think crime commission can take every thing? Hey my dad is smart man…my dept can paid and still have our asset and you try to fraud my asset? Doesnt matter what you guys do..hope you know this..tell your lawyers to send me email soon as possible..you think you got loope hole? Let see thats hole…[sic] Mr Hillig replied in detail seeking to explain to Mr Lee what was happening in Australia and urged him to obtain legal representation to assist him to understand what was occurring. On 16 December 2019, Mr Hillig further advised Mr Lee that Mr Hillig would not press for vacant possession of the Liverpool Street property at this stage whilst he worked out another way to settle the liabilities of the company and the trust.
4. In addition, Mr Hillig has been endeavouring to obtain further information as to who are the creditors of the company and/or trust. As already mentioned, it would appear that the ATO is owed between some $7 million and $13 million as no tax returns appear to have been lodged for some 10 years and the sale of two properties owned by trust or company (it is not entirely clear by which) has given rise to a substantial capital gains tax obligation. Mr Hillig has been involved in discussions and negotiations with the ATO to ascertain the extent of the liabilities of the company and the trust.
5. In addition, Mr Lee's criminal law solicitors have also lodged a claim for $1,573,000. A number of people in South Korea, who appear to be family members of Mr Lee, also claim to have lent money to the company and / or trust in amounts ranging between $800,000 and $3 million. Mr Hillig has requested further information in respect of the proofs of debt supplied by each of these parties but, to date, has not received any response. These matters will be the subject of continuing work by Mr Hillig going forward.
6. Mr Hillig deposed that this receivership has not been a straightforward matter. There has been a lack of assistance and communication from Mr Lee in regard to the liquidation of the company and receivership of the assets and undertakings of the trust generally. There has been a lack of books and records of the trust and its financial position. The trust records are significantly unreconciled and disorganised which has added to the complexity of administering the affairs of the company and trust. Extra work and tracing to relevant source documentation has been required in an attempt to reconcile and provide a more accurate representation of the property, business affairs and financial circumstances of the company and trust. There have also been various attempts by Mr Lee to have the wind-up order made against the company or consent orders set aside. Mr Hillig has been obliged to file various interlocutory processes and to be involved in legal proceedings to clarify the issues which have arisen in this liquidation and receivership. There is also a lack of records with respect to related party creditor loans with the company.
7. As matters presently stand, it is expected that there will be a dividend paid to creditors. If the related party creditor claims are not proved in the liquidation of the company or receivership of the trust, which is currently the case, Mr Hillig expects that the dividend will be more than 50 cents in the dollar.
8. The remuneration sought on this occasion represents approximately 0.6 percent of the net proceeds of the assets realised by Mr Hillig as receivers of the assets and undertakings of the trust to date for distribution to the creditors of the trust.
9. Going forward, it may well be the case that a further remuneration claim may need to be made by Mr Hillig in respect of the receivership of the assets and undertakings of the trust. The Liverpool Street property may need to be sold to finalise the liquidation and/or receivership, it being not entirely clear whether the property is owned by the trust or the company.

Consideration

1. I adopt the relevant principles concerning approval of a receiver's remuneration as set out in J & Lee Property No 1 at [28]-[32].
2. The evidence before the court in support of this application bears the characteristics which were apparent in the evidence before me in J & Lee Property No 1, described at [33]-[37]. The documentation in support of Mr Hillig's claim for remuneration is extensive and detailed. I have reviewed it, although not every single item in the WIP report, but by taking a broad brush approach. It seems to me from having reviewed this extensive documentary material together with the detailed affidavits of Mr Hillig that the remuneration sought is in a reasonable amount for work reasonably carried out in a reasonable fashion.
3. For these reasons I make the following orders: 1. Vary Order 2 made on 19 July 2019 in In the matter of J & Lee Property Investment Group Pty Ltd (in liquidation) [2019] NSWSC 927 to approve payment of the receivers' remuneration in the sum of $199,885.68 (inclusive of GST) for the period 16 August 2017 to 15 June 2019. 2. Approve payment of the receiver's remuneration in the sum of $58,501.30 (inclusive of GST), for the period 16 June 2019 to 29 February 2020.

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