34 The item "Bill of costs assessed by DG Thompson $16,781.62" is a solicitor/ client bill of costs prepared by DG Thompson setting out in itemised form the costs of Access Business lawyers for acting for the Liquidator from 2 May 2005 to 6 June 2008.
35 The item "Tax Invoice of Access Business Lawyers of 19 December 2008 $2,863.30" covers work allegedly done from 16 October 2007 to 5 December 2008. Most of the work claimed for is in the period 10 June 2008 - 5 December 2008. The item "Tax Invoice of Access Business Lawyers of 12 March 2009 $166.00" represents a filing fee of $166.00 for a Notice of Motion - presumably the Interlocutory Application filed 13 March 1999.
36 In the Liquidator's written submissions it is stated that the Liquidator has incurred additional work in progress costs since February 2006, in the amount of $8,969.68 and has written off work worth $35,893.17. I do not know how these amounts are calculated.
37 The Liquidator submitted that, while it was open to the Court to continue the process of having the liquidator's Work in Progress itemised, examined by Mr Kardiasmenos and objected to, there was merit in bringing the matter to a more sudden resolution in order to preserve funds.
38 The Liquidator submitted that the Court had a power to determine the Liquidator's remuneration and that the method of determining that remuneration was not limited. Under section 473(10) of the Corporations Act the Court must have regard to whether the remuneration is reasonable taking into account any or all of the matters listed in that subsection.
39 The Liquidator submitted that it was open to this Court to finalise this matter by assessing the material and coming to some lump sum determination. That was the Liquidator's preferred approach.
40 It was further submitted that, if all of the claims listed above totalling $73,764.30 were allowed and the total of the monies presently held in the controlled monies account ($59,381.29) were paid to the Liquidator, there would still be a shortfall in the amounts due to the Liquidator but it would result in some finality.
41 In his written submissions Mr Kardiasmenos contended that, as he had to pay some $15,689.06 in total for council rates and land tax to have the title to Lot 10 transferred from Pioneer to him, it would not be just and equitable for him to be left out of pocket for the amount he necessarily paid to cover those debts in circumstances where the Liquidator refused to pay them but agreed to allow a reimbursement for those expenses to be paid out of the funds held in trust. I have omitted his claim for $471.00 for miscellaneous expenses. At the stage when Mr Kardiasmenos spoke to Mr Barrett about payment of outstanding council rates and land tax the Liquidator held no funds and was not obliged to pay these amounts personally. It would have been surprising if he had. Mr Barrett explained to Mr Kardiasmenos that all outstanding amounts should be paid on settlement out of the proceeds of sale of Lot 10. Mr Kardiasmenos expected to be reimbursed for the amounts but there were no funds under the control of the Liquidator. The Council and the Office of State Revenue wanted the outstanding amounts paid promptly. The latter had caused a caveat to be placed on the title. That had to be withdrawn before settlement could take place. It would be unusual for the Council and Office of State Revenue to attend on settlement unless their costs and those of their solicitors were paid. Mr Kardiasmenos took a practical course that enabled settlement to take place.
42 Mr Kardiasmenos submitted that if the Liquidator had paid the amounts he would have been reimbursed for those expenses first in order of priority according to s 556(1)(a) of the Corporations Act. That is arguable, but that submission does not advance Mr Kardiasmenos' position when the Liquidator was under no obligation to make the payments and declined to do so because he did not have the funds and a regime had not been established to cover their payment. Further, I doubt if the expenses in question could be said to have been incurred in preserving, realising or getting in the property of the company, or in carrying on the company's business, under s 556(1)(a). The Court could have been asked to vary its orders, declarations and notations but that would have cost money and was not a practical alternative for the relatively small sum involved. Further, could the Court have made any useful order to overcome the looming problems?
43 Mr Kardiasmenos submitted that a strict application of the ranking of priority payments as set out in s 556(1)of the Corporations Act 2001 would result in an unjust and inequitable result, particularly if it results in him being left out of pocket for having covered these expenses.
44 I intended that the outstanding council rates and land tax would be paid out of the controlled monies account first. There was a practical difficulty. They had to be paid before settlement could take place whereas the declaration and notation envisaged that they would be paid out of the controlled monies account, such monies being set aside out of the proceeds of sale. That assumed settlement had taken place.
45 In the events which have happened the Liquidator treated Mr Kardiasmenos as being subrogated to the rights of the Council and the Office of State Revenue and possibly as an unsecured creditor. Those were not issues I addressed when I delivered the judgment of 20 July 2005 and made the orders, declarations and notations of that date. They had not received attention in argument. Neither the Court not the Liquidator has the power to vary the ranking of payments of unsecured debts and claims. See ss 555 and 556 of the Corporations Act. The Liquidator has yet to make a formal determination whether, in respect of the Council rates and land tax payments, Mr Kardiasmenos should be treated as a secured creditor or unsecured creditor and I should not pre-empt the Liquidator's determination. The affidavit of the Liquidator mentioned later suggests that he is inclined to treat Mr Kardiasmenos as an unsecured creditor.
46 From 23 June 2005 to 20 July 2005 the Court was concerned with the trust which it had found existed. This involved the transfer of Lot 10 to the plaintiff, facilitating the sale by him of Lot 10 and setting aside a fund sufficient to meet the expenses mentioned in Declaration 2. I did not take into account the difficulties that would be encountered with the outstanding rates and taxes. In Declaration 2 the equitable interest of the plaintiff in Lot 10 was stated to be "subject to Pioneer's right of indemnity against the assets of the trust including the right of Pioneer to be indemnified for (a) Debts incurred by Pioneer as trustee of [Lot 10]" for the plaintiff.
47 The company had incurred debts, that is, the liability for council rates and land tax. The Liquidator has furnished these explanations in his affidavit of 9 August 2007:
"6. I am aware that the Office of State Revenue had a Caveat over the subject property and Mr Kardiasmenos' payments resulted in them providing a Withdrawal of Caveat. There may be an argument that Mr Kardiasmenos, to that extent, under the rules of subrogation stands in place of a secured creditor. However as the security was a statutory charge, enjoyable only by the Commissioner for State Revenue, I am not certain that it was capable of assignment to Mr Kardiasmenos, or that he could enjoy the rights of the security as part of the subrogation. In that event, I assume he would stand as an unsecured creditor only.
7. In respect of his payment of the Council Rates, I am initially of the view that Mr Kardiasmenos would stand as an unsecured creditor under the principles of subrogation, particularly as the Campbelltown City Council did not seek to enforce its statutory charge or otherwise assert any security over the subject property."
48 I am not at liberty to intervene and give priority to repayment of the monies paid by Mr Kardiasmenos for council rates and land tax. Ultimately, it will be for the liquidator to adjudicate on this matter, subject to any appeal to or application for review by the court. These matters were not fully explored before the Court. There was no factual investigation.
49 The continuing disputes between the Liquidator and Mr Kardiasmenos are proving very costly and limited funds are rapidly being expended.
50 Mr Kardiasmenos should appreciate that the Liquidator is entitled to pursue his claims for remuneration and that if the Liquidator succeeds in his claims, Mr Kardiasmenos will have to meet the costs of the Liquidator and his solicitor of those claims and overcoming the objections. Mr Kardiasmenos was not able to lead adequate evidence rebutting the claims of the Liquidator. The Registrar made an assessment of the evidence. That has not been shown to be erroneous.
51 I appreciate the frustrations of Mr Kardiasmenos. He took a practical course in relation to the payment of the council rates and taxes. The company was a landholding company. He was effectively the only creditor as the other creditors (council rates and land tax) had been paid out by him. The Liquidator was required by law to deal with various proofs of debt and claims to be paid monies. The judgments delivered effectively disposed of one claim that was alleged to be secured. One claim was objected to by Mr Kardiasmenos and not pursued and another claim was not pursued. It did not appear to Mr Kardiasmenos that a lot of work was required of the Liquidator and Mr Kardiasmenos was largely instrumental in Lot 10 being transferred and sold. However, the law imposes extensive duties on a court-appointed liquidator who is not entitled to sit by and allow the company to be removed from the Register after the lapse of a number of years. In 2005 it was thought that $50,000 would cover the council rates, land tax and the items mentioned in Declaration 2. There is a substantial gap between the costs and expenses of the Liquidator envisaged in 2005 and those now claimed. That has caused me to look at the matter closely.
52 On the assumptions mentioned in the order, the prudent course is to order the transfer of the monies in the controlled monies account to the Liquidator and authorise him to appropriate $35,000 to himself and to pay all proper disbursements (including the costs of the petitioning creditor).
53 I make the following orders: