Stojanovski v Stojanovski

EVIDENCE

1. Angelina relied on the affidavit of Peter Maatouk sworn 17 May 2023.
2. The Trustees/Receivers relied on the following evidence: 1. affidavit of Fabian Kane Micheletto affirmed 16 February 2023 (Micheletto affidavit) and the exhibit to that affidavit; 2. affidavit of Richard Alexander Lyne affirmed 17 February 2023 (Lyne affidavit) and the exhibit to that affidavit; and 3. affidavit of Kerrie-Ann Rosati sworn 16 February 2023 and the exhibit to that affidavit.
3. Mr A Paterson appeared for Angelina instructed by Maatouks Law Group. Ms E Holmes appeared for the Trustees/Receivers instructed by Polczynski Robinson.

HISTORY OF PROCEEDINGS

1. On 30 June 2017, as stated above, the Trustees/Receivers were appointed as trustees in bankruptcy of Robert's estate. At that time, Steven had already commenced proceedings in this court against Robert in March 2012 (Supreme Court Proceedings) and they were already part-heard before Robb J, with hearing dates held on 28 November 2016, 2 December 2016 and 17 February 2017.
2. The bankruptcy of Robert's estate has, at all times, been unfunded, with the only assets of the estate being the Properties.
3. On 2 October 2017, the creditors of Robert's bankrupt estate approved a resolution which provided for the Trustees/Receivers to receive $141,697.50 by way of remuneration and $5,158.25 by way of internal disbursements 'to finalisation of the estate'.
4. The Trustees/Receivers gave evidence, which I accept, that due to the lack of liquidity in Robert's bankrupt estate, no amounts have been drawn in respect of the Trustees/Receivers' remuneration or disbursements.
5. On 19 March 2018, the Trustees/Receivers engaged Polczynski Robinson to act as their solicitors pursuant to a costs agreement (Initial Costs Agreement).
6. Following the appointment of the Trustees/Receivers, Steven commenced separate proceedings in the Federal Court of Australia seeking orders for leave to join the Trustees/Receivers to the Supreme Court Proceedings, which was granted by Flick J on 27 April 2018.
7. On 20 June 2018, Robb J granted the cross-vesting of various Federal Court matters to the Supreme Court Proceedings.
8. On 25 June 2018, the Trustees/Receivers became parties to the Supreme Court Proceedings.
9. Throughout the Supreme Court Proceedings, Steven sought, inter alia, to have the Properties transferred to him for no consideration pursuant to various testamentary claims.
10. On 15 October 2018, the Trustees/Receivers filed a cross-claim in the Supreme Court Proceedings seeking orders pursuant to s 120 of the Bankruptcy Act 1966 (Cth) that the transfers of Robert's interest in the Properties to Angelina, which had been made on 31 May 2013, be declared void and sought summary judgment on that claim.
11. On 5 December 2018, Ward CJ in Eq (as her Honour, the President, then was) heard the application by the Trustees/Receivers for summary judgment on their cross-claim.
12. On 17 December 2018, Ward CJ in Eq delivered judgment in respect of the cross-claim (Stojanovski v Stojanovski [2018] NSWSC 1967) and, inter alia, ordered (December 2018 Orders): 1. Angelina to deliver to the Trustees/Receivers in registrable form transfers of her interest in: 1. Morts Road and Breakwell Street, transferring her interest to the Trustees/Receivers and herself as tenants in common in equal shares; and 2. Kemp Street, transferring her interest to the Trustees/Receivers; 1. Angelina to serve an affidavit setting out all rents, profits and benefits derived by her from the use of the Properties since 25 March 2016; 2. Angelina to pay the Trustees/Receivers' costs of the summary judgment motion and cross-claim (First Costs Order); and 3. the Trustees/Receivers be appointed as receivers of rent being paid in respect of the occupation of the Properties.
13. As a result, from this point onwards, the Trustees/Receivers acted as receivers of rent from the Properties.
14. On 1 February 2019, Angelina filed an affidavit of the rents, profits and benefits she had received from the Properties since 25 March 2016.
15. Following the December 2018 Orders, Angelina failed to comply with order 1 of them.
16. On 8 February 2019, Angelina commenced proceedings in the Family Court of Australia (Family Court Proceedings) seeking a declaration that she retains all right, title and interest at law and in equity in the Properties, filed an application in this court to stay the December 2018 Orders and sought to cross-vest the Supreme Court Proceedings to the Family Court (Stay and Cross-Vesting Application).
17. On 11 February 2019, the Trustees/Receivers filed a notice of motion seeking that Angelina be found in contempt (Contempt Application), in that she engaged in conduct constituting an improper interference with the performance by the Trustees/Receivers of the duties, and applying for the costs pursuant to the First Costs Order to be assessed by the court.
18. On 27 February 2019, the Trustees/Receivers filed an application to the Registrar of this court for the execution of the transfers of the Properties in accordance with the December 2018 Orders, which were subsequently filed in the New South Wales Land Registry to transfer Angelina's interest to the Trustees/Receivers in accordance with the December 2018 Orders.
19. From March 2019 to June 2021, the Family Court Proceedings were stood over on numerous occasions to enable the Supreme Court Proceedings to be fully determined.
20. On 15 May 2019, executed transfers were filed with the New South Wales Land Registry registering the Trustees/Receivers as tenants in common of the Properties in accordance with the December 2018 Orders.
21. On 30 May 2019, the Stay and Cross-Vesting Application brought by Angelina was dismissed by Robb J.
22. From 30 May to 6 June 2019, Robb J continued the hearing of the Supreme Court Proceedings.
23. On 8 July 2019, the First Costs Order was assessed by this court and Angelina was ordered to pay the Trustees/Receivers' costs assessed in the sum of $37,645.48 (First Costs Assessment).
24. The First Costs Assessment was reviewed by this court and, on 3 December 2019, Angelina was ordered to pay $72,280.25 under the First Costs Order (Amended First Costs Assessment).
25. The Trustee/Receivers' evidence, which I accept, is that as at 16 February 2023, the Amended First Costs Assessment remained unpaid and as at 31 January 2023, had accrued $14,763.69 in interest.
26. On 4 December 2019, Robb J delivered judgment in Stojanovski v Stojanovski [2019] NSWSC 1713, in which his Honour made the following observations: 10 This is another case where the children of a deceased parent have fought so fiercely over the estate of the parent that they have substantially dissipated that estate and destroyed the testamentary intentions of the parent. It seems that Nada, who worked as a cleaner, was an exceptionally frugal and astute investor, who accumulated an enviable portfolio of properties that she ultimately wished to divide between her two sons on an approximately equal basis. … Breakwell Street, Mortdale (Breakwell) 16 A residence is erected on Breakwell which, for some time, has been the home of Angelina and the children of Angelina and Robert, following their separation. 17 Breakwell was acquired in the sole name of Nada, and was owned by her at her death. By her will, Nada left the whole of her interest in Breakwell to Robert. As will be explained in more detail below, Jordan transmitted the title to Breakwell to Robert, who initially transferred Breakwell to himself and Angelina in equal shares, and, later still, Robert gave his half-interest in Breakwell to Angelina. The trustees now have an interest in Breakwell, which is better explained later in these reasons. Kemp Street, Mortdale (Kemp) 18 Kemp was originally acquired by Nada and Robert as joint tenants, and held by them in that manner at the time of Nada's death. Robert became entitled to the whole of Kemp at that time by survivorship. Robert gave the whole of his interest in Kemp to Angelina. Subsequently, the trustees have obtained an interest in Kemp. Morts Road, Mortdale (Morts) 19 Morts was for many years the matrimonial home of Robert and Angelina. Notwithstanding the involvement that Nada had in the purchase of Morts, it was agreed by Nada and Robert that the title to the property would be put solely in Robert's name. Robert continued to own Morts at the date of Nada's death. In two steps, Robert first transferred a half-interest in Morts to Angelina, and then, at a later time, Robert transferred his remaining half-interest in Morts to Angelina. The trustees now have an interest in Morts. 20 Steven initially claimed by his pleadings in these proceedings that, by reason of the circumstances in which Robert obtained his half-interest in Kemp and the whole of the title to Morts, Robert held his interests in both properties on a resulting trust for Nada. Steven has abandoned his claim that Nada's estate is beneficially entitled to Robert's interests in Kemp and Morts on that basis. Steven no longer makes any claim on Morts at all.
27. Robb J concluded that Breakwell Street and Morts Road are to be registered jointly by Angelina and the Trustees/Receivers as tenants-in-common and Kemp Street is to be registered in the names of the Trustees/Receivers.
28. On 2 November 2020, Robb J delivered judgment in relation to the costs of the proceedings decided on 4 December 2019: Stojanovski v Stojanovski (No 3) [2020] NSWSC 1540, in which his Honour reached the following conclusion in respect of the Trustees/Receivers' costs of the proceedings: Trustees' claim for costs 297 The Trustees also opposed the Court making the costs orders sought by Steven. 298 The Trustees proposed that the Court make the following orders for their costs, instead of the orders sought by Steven: T1. Order the plaintiff to pay the fifth and sixth defendants' costs of these proceedings on the ordinary basis. T2. The Court notes that the fifth and sixth defendants' costs of proceedings NSD 2146/2017 in the Federal Court of Australia shall form part of their costs of this proceeding. 299 From the time the Trustees filed their defence to Steven's fifth further amended statement of claim, they have admitted Steven's entitlement to the benefit of the testamentary agreement: see [48]. The Trustees have done nothing to impede Steven's success on that claim. Steven complained that the Trustees had spent too long in assessing how they should plead to the testamentary agreement claim, but the validity of that complaint will be a matter for the assessment process. 300 The only course taken by the Trustees was to defend Steven's family provision claim, effectively standing in the shoes of the bankrupt Robert. They acted to protect the bankrupt estate from Steven's claim that property held by them in their official capacity should be declared to be notional estate of Nada. 301 Specifically, the Trustees at no time acted as representatives of Nada's estate. When the issue of the standing of the active parties in the proceedings was considered in May 2019, the Trustees expressly declined to be the subject of any order that they be appointed to represent the estate. Apart from other considerations, the absence of consent from the Trustees prevented such an order being made: see UCPR r 7.10(2)(b). As I stated on 9 May 2019, in the circumstances the Court could not appoint the Trustees as representatives: see T 11.30. 302 Not only do the Trustees not seek the order proposed by Steven that an order be made that the Trustees' costs be paid out of Breakwell, but there is no basis in principle for such an order to be made. 303 The Trustees succeeded on all issues in their defence of the family provision claim made by Steven. There is no reason why the costs should not follow the event: see UCPR r 42.1. I will therefore make proposed order T1 sought by the Trustees. 304 The remaining question is whether the Court should make proposed order T2, which is a note having the effect that the costs recoverable by the Trustees under order T1 shall include the Trustees' costs of the Federal Court proceedings before Flick J. 305 I have set out the considerations relevant to this issue in the discussion above concerning Angelina's application for a similar notation to that which is sought by the Trustees. 306 The position of the Trustees is different to that of Angelina, in that they had an obvious interest in ensuring that the application made by Steven under the Bankruptcy Act was dealt with properly in the interests of the bankrupt estate. There is no suggestion that the Trustees conducted themselves otherwise than appropriately. 307 As Steven abandoned the claims for which he sought leave to proceed in this Court, the Trustees must be considered the successful parties for the purpose of the agreement as to costs recorded by Flick J. 308 Accordingly, the Trustees are entitled to the notation that they have sought.
29. The Trustees/Receivers' evidence, which I accept, is that as at 16 February 2023, the Trustees/Receivers had not taken steps to assess and enforce the costs order contained in Stojanovski (No 3) against Steven (Second Costs Order). The Trustees/Receivers estimate the amount of costs and disbursements which are the subject of the Second Costs Order to be $741,168.35.
30. On 2 July 2021, the Trustees/Receivers gave notice to Angelina of their intention to take steps to deal with the Properties.
31. On 9 September 2021, there was an unsuccessful conciliation conference in the Family Court Proceedings.
32. On 22 September 2021, Angelina filed an application in the Family Court Proceedings seeking injunctive relief to restrain the Trustees/Receivers from taking any steps in relation to the Properties. This application has been before the Family Court on multiple occasions and has been adjourned but is still yet been resolved, including the question of the payment for the costs of it.
33. The Trustees/Receivers submitted that Angelina should pay the Trustees/Receivers' significant costs related to the Family Court Proceedings, however, as they have not been resolved, it is not for me to decide how the costs of the Family Court Proceedings are to be apportioned.
34. On 27 September 2021, the Trustees/Receivers filed a notice of motion seeking orders to provide for the payment of their costs, expenses and remuneration for the work undertaken by them as both trustees in bankruptcy and as receivers, including in relation to defending the claims made by Steven against the Properties (Priority Costs Application). It is the Priority Costs Application which later led to the May 2022 Orders (over 9 months later), dealt with below.
35. On 30 November 2021, Polczynski Robinson sent a letter to the Trustees/Receivers varying the hourly rates which were contained in the Initial Costs Agreement, taking effect from 1 January 2022.
36. On 7 December 2021, Steven was made bankrupt by the Federal Court of Australia in relation to an act of bankruptcy on 17 August 2021. The Trustees/Receivers are liaising with Steven's trustee in bankruptcy in relation to the Second Costs Order.
37. On 7 February 2022, Angelina filed a further application in the Supreme Court Proceedings seeking an order that they be transferred to the Family Court (Second Cross-Vesting Application).
38. On 25 February 2022, Lindsay J heard the Second Cross-Vesting Application and the Priority Costs Application.
39. On 28 April 2022, Lindsay J delivered judgment in relation to the Second Cross-Vesting Application and the Priority Costs Application: Stojanovski v Stojanovski [2022] NSWSC 508. His Honour concluded: 15 There is no occasion now for a cross vesting order to be made. There is no relevant connection between the motion of the fifth and sixth defendants and the proceedings in the Family Court. The family law proceedings are concerned with the division of property of the marriage between the first and fourth defendants. What property there is to be divided is a prior and separate question. 16 Nothing about the entitlements of the fifth and sixth defendants to remuneration is related to the division of property of the marriage. Nor are Family Law proceedings a means by which the creditors of the first defendant can properly be overridden in the circumstances of this case. 17 The interests of justice favour this Court determining the motion of the fifth and sixth defendants. The orders sought by the fifth and sixth defendants are consequential upon the receivership order and other orders made by this Court. The fifth and sixth defendants have been unfunded for over five years; a transfer of proceedings to the Family Court would involve continuing delays in administration of the receivership and the first defendant's bankruptcy. A sale of property as proposed by the fifth and sixth defendants is likely to allow the receivership to be concluded and an opportunity for the first defendant's bankruptcy to be annulled, leaving him to contest the fourth defendant's Family Law proceedings without the impediments of receivership or bankruptcy. 18 Accordingly, subject to allowing the parties an opportunity to make submissions about the form of the orders, I propose: (a) to order that the fourth defendant's notice of motion filed 7 February 2022 be dismissed with costs; (b) to make orders substantially in the form claimed in the fifth and sixth defendants' further amended notice of motion filed on 25 February 2022 (authorising their sale of the Kemp Street Property and the Morts Road Property as receivers and managers appointed for that purpose).
40. On 29 April 2022, Lindsay J heard the Contempt Application and made orders by consent in relation to it, as follows: 1. NOTE that, on a without admission basis, the fourth defendant (by her counsel, Mr L Fermanis) gives to the Court an undertaking that: (a) by no later than 6 May 2022 she will serve on the 5th and 6th defendants an affidavit setting out, and identifying in detail, all payments received by her in respect of rent in relation to the occupation of the Morts Road Property and the Kemp Street Property since 17 December 2018; and (b) by no later than 13 May 2022, she will pay to the 5th and 6th defendants in their capacity as receivers appointed by the Court: (i) the sum of $2,120 plus interest on that amount calculated from 11 January 2019 to the date of payment at the rate for which s 100 of the Civil Procedure Act 2005 NSW provides; and (ii) such other sum as is equal to any rent beyond the sum of $2,120 disclosed by the fourth defendant in her affidavit in relation to the occupation of the Morts Road Property and the Kemp Street Property in the period since 17 December 2018, together with interest on that additional amount received by her to the date of payment at the rate for which s 100 of the Civil Procedure Act 2005 NSW provides. 2. ORDER that the notice of motion filed by the 5th and 6th defendants on 11 February 2019 be listed before Lindsay J for further consideration, or directions, as the nature of the case might require at 9 am on 17 May 2022. 3. RESERVE all question of costs.
41. On 17 May 2022, the Contempt Application was again before Lindsay J and orders were made for it to be dealt with on the papers by Lindsay J.
42. On 18 May 2022, the Trustees/Receivers were appointed as receivers with a power of sale in relation to Morts Road and Kemp Street. The May 2022 Orders also provided for a fund to be established out of the proceeds of sale which is to be applied in respect of: 1. the reasonable costs and expenses properly incurred by the Trustees/Receivers in the performance of their duties and the exercise of their powers as trustees of the bankrupt estate in relation to steps taken by them in the preservation and protection of assets of the bankrupt estate specifically the Properties from claims in these proceedings (Priority Costs); 2. the reasonable costs and expenses properly incurred by the Trustees/Receivers in the performance of their duties and the exercise of their powers as receivers of the rent of the Properties (Receivership Costs); 3. Any reasonable costs and expenses properly incurred by the Trustees/Receivers, in their capacity as trustees of the bankrupt estate of Robert, and incurred in the performance of their duties and the exercise of their powers as trustees, which are not included in (a) above, and which have been approved in accordance with the provisions of the Bankruptcy Act 1966 (Cth) (Bankruptcy Costs); and 4. The remuneration and expenses of the Trustees/Receivers and disbursements relating to: 1. the sale of the Properties at the rates charged from time to time for work of that type by the firm SV Partners; 2. the legal expenses of and relating to transferring the Properties to the respective purchasers; 3. valuation fees, insurance premiums and all other out of pocket expenses; and 4. any legal costs ordered in respect of these proceedings. (Sale Costs).
43. Relevantly, the entirety of the May 2022 Orders are as follows: By and with the consent of the parties Lindsay J makes the following notations and orders: 1. ORDER that the fifth and sixth defendants have the power to conduct and complete the sale of 17 Kemp Street Mortdale NSW 223 (the Kemp Street Property) and 169 Morts Road Property NSW 2223 (the Morts Road Property) in accordance with these Orders and convey the Properties upon completion of the sale, together with the power to do anything necessarily ancillary to these steps. 2. Pursuant to section 67 of the Supreme Court Act 1970 (NSW), ORDER that the fifth and sixth defendants: a. be appointed as receivers of the Kemp Street Property and Morts Road Property: b. are given the power to sell the Kemp Street Property and Morts Road Property. 3. ORDER that the proceeds of sale of the Kemp Street Property and the Morts Road Property (together the Properties) shall constitute a fund (the Receivers Fund). 4. ORDER that no later than 30 May 2022 the fourth defendant shall: c. deliver to the fifth and sixth defendants such Certificates of Title for the Properties which are in her possession or under her control; d. take all steps to remove any caveat registered against the Properties so as to facilitate the sale of the Properties. 5. ORDER that within 7 days of receiving any request in writing from the fifth and sixth defendants, the fourth defendant shall deliver to the fifth and sixth defendants any documents in her possession or under her control relating to the Properties which are reasonably required by the fifth and sixth defendants to conduct or complete the sale of the Properties. 6. In order to exercise the power or powers granted by order 2, ORDER that the fifth and sixth defendants: e. are entitled to take all reasonably necessary steps required (including, but not limited to, appointing a real estate agent and auctioneer) to sell the Properties by public auction. f. are to obtain a valuation of the Properties by a registered valuer appointed by the fifth and sixth defendants and upon receipt of the valuation is to apply to the Court for the setting of a reserve price for the sale of the Properties by public auction (the Reserve Price). g. must not sell the Properties for less than the Reserve Price except by leave of the Court. h. if, at a public auction of the Properties the Reserve Price is not reached, then the Properties are to be passed in and the fifth and sixth defendants are to take all reasonably necessary steps required to sell the Properties by further public auction or by private treaty at or above the Reserve Price. i. The fifth and sixth defendants have the Power to: i. appoint agents, valuers, solicitors and/or conveyancers as required to sell the Properties; ii. make all necessary adjustments of rates and taxes on settlement of sale of the Properties; iii. do all things necessary and incidental to effect the sale of the Properties; iv. deduct, from the proceeds of sale of the Properties, the commission and other expenses of any real estate agent employed by the fifth and sixth defendants; v. deduct, from the proceeds of sale of the Properties, the remuneration and expenses of the fifth and sixth defendants relating to the sale of the Properties at the rates charged from time to time for work of that type by the firm SV Partners; vi. deduct, from the proceeds of sale of the Properties, the legal expenses of and relating to transferring the Properties to the respective purchasers; vii. deduct, from the proceeds of sale of the Properties, the legal expenses and disbursements in respect of the sale including (without limitation) valuation fees, insurance premiums and all other out of pocket expenses; viii. deduct, from the proceeds of sale of the Properties, any legal costs ordered in respect of these proceedings. 7. RESERVE to the fourth defendant liberty to purchase the Properties on whatever terms or basis the fifth and sixth defendants determines the Properties should be sold. 8. ORDER that the fifth and sixth defendants shall pay from the Receivers Fund the following amounts in the following order of priority: j. the reasonable costs and expenses properly incurred by the fifth and sixth defendants in the performance of their duties and the exercise of their powers as trustees of the bankrupt estate in relation to steps taken by them in the preservation and protection of assets of the bankrupt estate specifically the Properties from claims in these proceedings (the Priority Costs); k. the reasonable costs and expenses properly incurred by the fifth and sixth defendants in the performance of their duties and the exercise of their powers as receivers of the rent of the Properties pursuant to their appointment as such by the Court on 17 December 2018 (the Receivership Costs); l. any reasonable costs and expenses properly incurred by the fifth and sixth defendants, in their capacity as trustees of the bankrupt estate of the first defendant, and incurred in the performance of their duties and the exercise of their powers as trustees, which are not included in (a) above, and which have been approved in accordance with the provisions of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Costs); m. an amount sufficient to annul the bankruptcy of the first defendant, provided that all other legal requirements are complied with, including but not limited to reporting requirements contained in the Bankruptcy Act 1966 (Cth); n. any balance is to be paid into an appropriate account held by this Court pending final determination of proceedings number (P) SYC 754 of 2019 in the Federal Circuit and Family Court of Australia or further order of this Court. 9. ORDER that the fifth and sixth defendants shall file and serve on the fourth defendant an affidavit or affidavits containing a detailed breakdown of: o. the work, costs and expenses incurred by them and which are said to be the Priority Costs p. the work costs and expenses incurred by them and which are said to be the Receivership Costs; q. the amounts referred to in order 6(e)(v)-(viii) above (the Sale Costs). 10. ORDER that, within 14 days of the provision by the fifth and sixth defendants to the fourth defendant of the affidavit referred to in order 9 above, the fourth defendant shall file and serve any objections to the costs being claimed by the fifth and sixth defendants as Priority Costs, Receivership Costs and/or Sale Costs. 11. ORDER that, within 14 days of the receipt of any objections referred to in order 10 above, the fifth and sixth defendants shall be at liberty to file and serve any response to the objections (if any) raised by the fourth defendant to either the Priority Costs, Receivership Costs and/or the Sale costs. 12. ORDER that any issue as to the quantum of the Priority Costs and the Receivership Costs be listed before Lindsay J at 9am on 31 August 2022 for directions. 13. RESERVE to the fifth and sixth defendants liberty to seek directions from the Court on any matter arising from their appointment or these orders. 14. ORDER that the fourth defendant's motion dated 7 February 2022 be dismissed. 15. ORDER that the fourth defendant pay the fifth and sixth defendants costs of the further amended notice of motion filed by the fifth and sixth defendants and dated 25 February 2022 and also the fourth defendants notice of motion dated 7 February 2022. 16. RESERVE liberty to apply to Lindsay J on three (3) days' notice. 17. ORDER that these orders be entered forthwith.
44. The Trustees/Receivers gave evidence, which I accept, that as at 16 February 2023 they have not taken steps to assess and enforce the costs order in order 15 of the May 2022 Orders (Third Costs Order). The Trustees/Receivers estimate the amount of costs and disbursements which are the subject of the Third Costs Order to be $262,421.87.
45. On 19 May 2022, Lindsay J made the following orders by consent in relation to the Contempt Application: 1. ORDER that the notice of motion filed 11 February 2019 be dismissed. 2. ORDER that the fourth defendant pay the fifth and sixth defendants' costs, be to assessed if not agreed, on an indemnity basis.
46. The Trustees/Receivers gave evidence, which I accept, that as at 16 February 2023 they have not taken steps to asses and enforce the costs order made on 19 May 2022 (Fourth Costs Order). The Trustees/Receivers estimate the amount of costs and disbursements which are the subject of the Fourth Costs Order to be $173,093.53.
47. On 31 August 2022, Lindsay J set the reserve price for the sale of Kemp Street and Morts Road at public auction.
48. On 24 September 2022, Kemp Street was sold at auction for $1,400,000 (above the reserve), with settlement taking place on 29 November 2022. The net proceeds from the sale of Kemp Street were $1,344,008.90.
49. On 24 September 2022, Morts Road was passed in at auction, with an offer of $850,000 well below the reserve price.
50. On 14 October 2022, on the application of the Trustees/Receivers to reduce the reserve price for Morts Road, which was opposed by Angelina, the reserve price for Morts Road was reduced by Lindsay J.
51. On 21 October 2022, the creditors of Robert's bankrupt estate approved a resolution which provided for the Trustees/Receivers to receive $265,312.00 by way of remuneration and $5,000.00 by way of internal disbursements 'to finalisation of the estate'.
52. On 2 November 2022, on the application of the Trustees/Receivers which was opposed by Angelina, Lindsay J ordered that the reserve price for Morts Road be again reduced to enable an offer received to be accepted.
53. On 4 November 2022, Morts Road was sold for $1,200,000, with settlement taking place on 2 December 2022. The net proceeds from the sale of Morts Road were $1,170,808.08.
54. In selling Kemp Street and Morts Road, the Trustees/Receivers appointed a real estate agent and auctioneer, obtained a valuation of the Properties from a registered valuer, applied to the court for the setting of a reserve price, and auctioned both of them.

PRIORITY COSTS, RECEIVERSHIP COSTS AND SALE COSTS CLAIMED

1. By way of this application, the Trustees/Receivers seek that the Priority Costs be fixed at $1,555,193.44, the Receivership Costs (not otherwise claimed as Priority Costs) be fixed at $245,267.18 and the Sale Costs be fixed at $154,648.60, totalling $1,955,109.22. Each of these categories covers amounts for the remuneration of the Trustees/Receivers and for the disbursements incurred by them, including the fees and disbursements charged by Polyczynski Robinson.
2. I am not required to determine the Bankruptcy Costs as defined in order 8(l) of the May 2022 Orders, save to the extent they are Priority Costs. I am satisfied that the Trustees/Receivers have avoided duplication of claims in relation to the remuneration approved by the creditors ($265,312.00 excl GST) by ensuring that where the remuneration related to the Supreme Court Proceedings and is claimed as a Priority Cost (being $165,871.50 excl GST), it is being claimed as a Priority Cost, and where the remuneration cannot be claimed as a Priority Cost, it is claimed as a Bankruptcy Cost but the approved remuneration has been reduced by the amount claimed as a Priority Cost ($265,312.00 less $165,871.50 excl GST).
3. If payment of the three categories of Priority Costs, Receivership Costs and Sales Costs set out in the May 2022 Orders in the total amount of $1,955,109.22 is made, there will be insufficient funds to pay an amount to annul the bankruptcy of Robert (as provided by order 8(m) of the May 2022 Orders), and there will not, accordingly, be any balance to be paid into court (as provided by order 8(n) of the May 2022 Orders).
4. According to the Trustees/Receivers, the current proceedings in this court have involved 19 substantive (meaning "more than directions hearings") hearings. The Trustees/Receivers submit that they have obtained six judgments in their favour and four substantial costs orders, valued by the Trustees/Receivers at over $1,200,000. On any view, the Trustees/Receivers have been engaged in lengthy, complex and protracted litigation on behalf of the bankrupt estate of Robert.
5. As stated above, shortly after the appointment of the Trustees/Receivers, they engaged Polczynski Robinson pursuant to the Initial Costs Agreement. The Initial Costs Agreement provides that Polczynski Robinson is only entitled to receive payment of its legal costs in the event that a successful outcome is achieved, including a realisation of funds. Under the terms of the Initial Costs Agreement, Polczynski Robinson were engaged to act on behalf of the bankrupt estate of Robert in relation to: 1. the administration of the bankrupt estate generally; 2. the Supreme Court Proceedings, including in relation to Steven's application to join the Trustees/Receivers as parties to the Supreme Court Proceedings; 3. the ongoing Federal Court Proceedings; and 4. recovering assets for the benefit of the estate, including the preparation of a cross-claim in the Supreme Court Proceedings.
6. As part of the Initial Costs Agreement, any disbursements incurred by Polczynski Robinson were to be invoiced and paid by the Trustees/Receivers.
7. On 30 November 2021 the hourly rates charged under the Initial Costs Agreement were varied with effect from 1 January 2022.
8. The calculation of each category of costs, comprising the Priority Costs, Receivers Costs and Sale Costs were set out in the Micheletto affidavit and the Lyne affidavit as follows: Priority Costs Description Total (GST Inc) The remuneration and costs incurred by the Trustees/Receivers which relate to the Supreme Court Proceedings (as identified at paragraph 86 [Table FM6] of the Micheletto affidavit) $182,458.65 The disbursements incurred and paid by the Trustees/Receivers which relate to the Supreme Court Proceedings (as identified at paragraph 83 [Table FM5] of the Micheletto affidavit) $102,363.44 The fees of Polczynski Robinson which have been identified as relating to the Priority Costs (as identified at paragraph 111 of the Micheletto affidavit and paragraph 167 of the Lyne affidavit) $1,116,822.30 The disbursements incurred by Polczynski Robinson which have been identified as relating to the Priority Costs (as identified at paragraph 111 of the Micheletto Affidavit) $153,549.05 TOTAL PRIORITY COSTS $1,555,193.44 Receivership Costs The remuneration owing to the Trustees/Receivers acting as receivers of the rents (as identified at paragraph 121 [Table FM10] (rental only) of the Micheletto affidavit) $109,848.75 The disbursements incurred and paid by the Trustees/Receivers which relate to the Receivership (as identified at paragraph 119 [Table FM9] of the Micheletto affidavit) $11,871.64 The fees of Polczynski Robinson relating to the receivership (as identified at paragraph 111 of the Micheletto affidavit and paragraph 172 [Table 13] of the Lyne affidavit) $108,112,40 The disbursements incurred by Polczynski Robinson relating to the Receivership (as identified at paragraph 111 of the Micheletto affidavit) $15,434.39 TOTAL RECEIVERSHIP COSTS $245,267.18 Sale Costs The remuneration owing by the Trustees/Receivers acting as receivers with a power of sale (as identified at paragraph 121 [Table FM10] (sales only) of the Micheletto affidavit) $40,535.00 Deductions and apportionments from the proceeds of sale of Morts Road for council rates, water rates, PEXA fees, NSW land tax and agents commission (as identified in paragraph 158 [Table 5] of the Lyne affidavit) $30,106.91 Deductions and apportionments from the proceeds of sale of Kemp Street for council rates, water rates, PEXA fees, NSW land tax and agents commission (as identified in paragraph 156 [Table 4] of the Lyne affidavit) $64,498.89 The fees of Polczynski Robinson relating to the sale of Kemp Street and Morts Road (as identified at paragraph 181 [Table 15] of the Lyne affidavit) $17,596.16 The disbursements incurred by Polczynski Robinson relating to the sale of Kemp Street and Morts Road (as identified at paragraph 181 [Table 15] of the Lyne affidavit) $1,911.64 TOTAL SALE COSTS $154,648.60

1. The Receivers rely on an independent report prepared by Kerrie-Ann Rosati of DGT Costs Lawyers dated 16 February 2023, which concluded as follows: General Observations and Summary of Opinion 162. The breakdown of the costs for the work performed by PR [Polczynski Robinson] appears to me to be appropriate for these matters. The costs charged for the work described in the itemised accounts also appear to be generally fairly, reasonably and proportionately incurred. I make the following general comments and observations. 163. The hourly rates charged by PR in the itemised accounts are the hourly rates disclosed to the Trustees in the costs agreements and as updated. Whilst the hourly rates of some fee earners are quite high, the rates charged were agreed to by the Trustees and are within the ranges of rates that in my experience are charged for work in similar matters by lawyers in Sydney. The rates charged by the two counsel briefed are clearly reasonable and I note that they performed work only on discrete parts of the Proceedings. 164. The size and scale of this matter is large. It appears from my inspection of the itemised accounts that the matter was run predominantly by email. This is an entirely usual manner of modern litigation and communication. It is also apparent that there were a significant number of internal attendances (and with counsel) for email, team conferences and telephone conferences. Time is sometimes recorded for many of these meetings and conferences by more than one fee earner. These are often short 1-unit or 2-unit attendances for conferences, phone calls or emails. 165. I also note that much of the work was done in 2020 and 2021 which were during periods of lockdown and work from home orders due to Covid 19. As such, it is likely that many of these meetings and conferences, particularly between the junior lawyers and their supervising practitioners would have been necessary to ensure the smooth operation of this litigation as the team were working from home rather than from the office. 166. There are only a few attendances recorded in the itemised accounts that exceed a usual work-day. The largest single attendance in the 202103 itemised account is for 11.1 hours by Ms Latham on one day and there were just 6 other large attendances of more than 7 hours for preparation for and attendance at hearings or the mediations. I note that counsel was not briefed to appear at the mediations. 167. As outlined above, there are no attendances that appear to relate to work in relation to costs or processing of invoices, I also note only a very small amount of time is recorded in the itemised accounts for work related to payment of counsels' invoices and there is no charge for any work done by administrative staff at PR and only a very small charge of $1.20 plus GST for internal copying. 168. In my opinion, the breakdown of the work between the different levels of fee earners from PR appears appropriate as much of the work was done by the mid-level lawyers with supervision from the partner with assistance from the more junior lawyers. It is also notable that counsels' fees were only around 1% of the total costs incurred. 169. Costs are also recorded in the itemised accounts for work related to research, mainly performed by Ms Latham and Mr Krise. Due to the minor role of counsel in this matter and the usual issues that arose in the Supreme Court Proceedings and the other ancillary proceedings, I consider the time spent on research is fair and reasonable on a solicitor own client basis. 170. In my opinion, the costs charged by PR to the Trustees for work done in each of the matters are fair and reasonable on a solicitor client basis.

Remuneration

1. Putting aside the May 2022 Orders, the entitlement of trustees in bankruptcy to their remuneration is legislatively provided.
2. Divisions 60-5 and 60-10 of the Insolvency Practice Schedule (Bankruptcy) are set out in Schedule 2 to the Bankruptcy Act 1966 (Cth) and provide: 60-5 Trustee's remuneration Remuneration in accordance with remuneration determinations (1) The trustee of a regulated debtor's estate is entitled to receive remuneration for necessary work properly performed by the trustee in relation to the administration of the regulated debtor's estate, in accordance with the remuneration determinations (if any) for the trustee (see sections 60‑10 and 60‑11). Remuneration for trustees if no remuneration determination made (2) If no remuneration determination is made in relation to necessary work properly performed by a trustee in relation to the administration of the regulated debtor's estate, the trustee is entitled to receive reasonable remuneration for the work. However, that remuneration must not exceed the maximum default amount. Remuneration to be paid from the funds in the estate (3) The remuneration is to be paid from the funds in the regulated debtor's estate. 60-10 Remuneration determinations - creditors or committee of inspection A determination, specifying remuneration that a trustee of a regulated debtor's estate is entitled to receive for necessary work properly performed by the trustee in relation to the administration of the estate, may be made: (a) by resolution of the creditors; or (b) if there is a committee of inspection and a determination is not made under paragraph (a) - by the committee of inspection.
3. Rule 26.4 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides: 26.4 Remuneration A receiver is to be allowed such remuneration (if any) as may be fixed by the court.
4. Rule 42.25 of the UCPR provides: 42.25 Costs of trustee or mortgagee (1) Subject to subrule (2), a person who is or has been a party to any proceedings in the capacity of trustee or mortgagee is entitled to be paid his or her costs in the proceedings, in so far as they are not paid by any other person, out of the fund held by the trustee or out of the mortgaged property, as the case may be. (2) The court may order that the person's costs not be so paid if - (a) the trustee or mortgagee has acted unreasonably, or (b) in the case of a trustee, the trustee has in substance acted for his or her own benefit rather than for the benefit of the fund.
5. None of the disentitling considerations in r 42.25(2) of the UCPR arise in the present case.
6. The external disbursements of a trustee are subject to the trustee's right of indemnity from the trust property for obligations incurred in the bankrupt's capacity as a trustee: Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49, Bell, Nettle, Gordon and Edelman JJ at [92].
7. The principles to be applied to determine the issues before me are well settled on the authorities.
8. 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]."
9. 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].
10. 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.
11. 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.
12. 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].

Disbursements

1. In respect of contested disbursements, 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.

Proportionality

1. The application of the principle of proportionality to the question of reasonableness of remuneration has been considered in a number of authorities.
2. The issue was considered in Templeton v Australian Securities and Investments Commission [2015] FCAFC 137, Besanko, Middleton and Beach JJ at [32]-[34] stating: 32 The question of proportionality in terms of the work done as compared with the size of the property or activity the subject of the insolvency administration or the benefit or gain to be obtained from the work is an important consideration in determining overall reasonableness: see In the matter of AAA Financial Intelligence Ltd (in liquidation) [2014] NSWSC 1004 at [18] and [19] per Brereton J, In the matter of AAA Financial Intelligence Ltd (in liquidation) (No 2) [2014] NSWSC 1270 at [35], [36], [43] and [45] per Brereton J, Mirror Group Newspapers plc v Maxwell [1998] 1 BCLC 638 at 645, 651, 652 per Ferris J (also reported at [1998] BCC 324), In the matter of On Q Group Ltd (in liquidation) [2014] NSWSC 1428 at [20] per Brereton J, Bank of Nova Scotia v Diemer [2014] ONCA 851 at [33], [45], [55] and [56] per Pepall JA, Re Roslea Path Ltd (in liquidation) [2013] 1 NZLR 207 at [108], [115] and [121] per Heath and Venning JJ, Brook v Reed [2012] 1 WLR 419 at [51], [86] and [87] per Richards J, referring to the relevant 2004 UK Practice Statement [2004] BCC 912, Re Korda; in the matter of Stockford Ltd (2004) 140 FCR 424 at [47] per Finkelstein J, although we do not endorse his Honour's obiter observations on the "lodestar" methodology as being the required approach as distinct from merely one practical way to proceed in a particular case. 33 Generally, in looking at proportionality, the value of the services rendered must be considered. We would endorse the observations of McLure JA in Conlan as liquidator of Rowena Nominees Pty Ltd (in liquidation) v Adams (2008) 65 ACSR 521 at [47] where her Honour observed: As to the performance of a task reasonably embarked upon, the work done must be proportionate to the difficulty or 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. Using an example from the law, the time spent by an appropriately qualified and experienced practitioner in drafting a statement of claim should be proportionate to the amount in issue. 34 Finally, even if one was not to address proportionality as an express factor, nevertheless its absence may have forensic significance in determining reasonableness. Another way to look at proportionality can be to conclude from a lack of proportionality between the cost of the work done relative to the value of the services provided that there has been overcharging or excessive remuneration claimed (see Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144 at [64] per Davies J).
3. In Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liquidation) v Sakr (2017) 93 NSWLR 459; [2017] NSWCA 38, Bathurst CJ (with whom Beazley P; Gleeson JA; Barrett AJA and Beach AJA agreed) at [55]-[58] stated: 55 That is not to say that the question of proportionality has no bearing on the task to be undertaken by the Court. As the Federal Court said in Templeton v ASIC (at [31]) the question of proportionality is a well recognised factor in considering the question of reasonableness and the factors in s 425(8)(d)-(e) and (g)-(h) (the equivalent to s 473(10)(d)-(e) and (g)-(h)) have as their unifying theme the concept of proportionality. The Court in that case recognised (at [32]) that 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. The Court also stated (at [33]), endorsing the observations of McClure JA in Conlan v Adams supra (at [47]), that the work done must be proportionate to the difficulty and importance of the task in the context in which it needs to be performed, stating that that is what is encompassed in assessing the value of the services rendered. 56 Further, as was pointed out by Black J in Idylic Solutions Pty Ltd [2016] NSWSC 1292 at [50], evidence as to the percentage that remuneration constitutes of realisation, will at least provide a measure of objective testing of the reasonableness of the remuneration claimed and will identify those cases in which there ought to be a real concern in that respect. 57 I would add two matters. First, the mere fact that the work performed does not lead to augmentation of the funds available for distribution does not mean the liquidator is not entitled to be remunerated for it. The most obvious example is work done by a liquidator in complying with his or her statutory obligations. As Farrell J pointed out in Warner, Re GTL Tradeup Pty Ltd supra at [71] it is relevant to consider whether the work was necessary to be done. If it was, there is no reason the liquidator should not be remunerated for it. 58 Secondly, there are commonly cases where work is undertaken in an unsuccessful attempt to recover assets whether at the request of creditors or otherwise. Provided it was reasonable to carry out the work and the amount charged for it was reasonable, there is no reason a liquidator should not recover remuneration for undertaking the work. Indeed, as was pointed out in Hall v Poolman (2009) 75 NSWLR 99; [2009] NSWCCA 64 at [128]-[129] there is a public interest in liquidators bringing recovery proceedings such as proceedings against directors for breach of duty or insolvent trading and proceedings for recovery of unfair preferences. However, the liquidator is obliged to make any decision to bring such proceedings with care, and negligence in the exercise of the power to bring proceedings may lead to a liquidator being deprived of costs: Hall v Poolman supra at [144]-[145].
4. In the matter of Idylic Solutions Pty Ltd as trustee for Super Save Superannuation Fund and others [2016] NSWSC 1292, Black J at [36]-43] stated: 36 The importance of proportionality was also emphasised in Templeton v Australian Securities and Investments Commission [2015] FCAFC 137; (2015) 108 ACSR 545 (on appeal from the decision in Australian Securities and Investments Commission v Letten (No 23) above), where the Full Court of the Federal Court rejected (at [26]) a contention that whether a court-appointed receiver's remuneration was reasonable could be determined solely by whether the time spent was reasonable and the application of fixed rates to that time. The Court observed (at [26]-[35]) that the question of proportionality, involving a comparison of the claim to remuneration with the property or activity that was the subject of the insolvency administration or the benefit or gain to be obtained, was an important consideration in determining the overall reasonableness of remuneration. The Court also observed (at [30]) that: "[T]he question of proportionality is an anterior question to consider in order to determine whether time was reasonably spent. If the relevant work plan underpinning the actual time spent and the allocation of personnel at the requisite level of seniority was disproportionate to the nature, importance and complexity of the task and the benefit to be achieved from the task, then it might be said that the time spent on the task was not time reasonably spent." 37 The Court noted (at [34]) that a lack of proportionality between the cost of the work done and the value of the services provided may support a conclusion of overcharging or excessive remuneration. The Court also recognised (at [60]) that a court could appropriately apply a discount to a claim, after making findings as to whether work was necessary and appropriate to be done, and whether it had been done by an appropriate level of staff and efficiently, although their Honours allowed an appeal against the discount that had been applied in that case.

Trustees/Receivers

1. The Trustees/Receivers submitted that they are entitled to be fully indemnified for the expenses incurred and to receive remuneration in respect of their performance of their obligations, on the following grounds: 1. The two receiverships (for rent and sale) arose as a result of Angelina's refusal to comply with various court orders. 2. As the only assets in Robert's bankrupt estate comprise the Properties, the Trustees/Receivers had no choice but to preserve the Properties in order to realise any funds to satisfy the creditors, even if the costs of doing so exceeded the amount owed to creditors. 3. The preservation of the Properties was for the benefit of Angelina as much as for Robert. 4. The majority of the remuneration and expenses claimed by the Trustees/Receivers in respect of the receivership were necessarily incurred as a result of the actions of Angelina. 5. Nothing in the material served by Angelina establishes any unreasonableness or impropriety in the remuneration and expenses claimed by the Trustees/Receivers.
2. In respect of the legal costs incurred by the Trustees/Receivers, being third party disbursements, the Trustees/Receivers submitted that they acted reasonably in obtaining an independent report to ensure they were properly payable. Accordingly, in those circumstances, they say it is not for Angelina to insist on an assessment of those costs.
3. Further, the Trustees/Receivers submitted that the application of the principles stated by Brereton J in Say Enterprises as set out above places the burden on Angelina in the case of disbursements (including legal costs) to establish that the Trustees/Receivers did not fulfil their obligation to ensure that they were reasonable and properly payable.
4. In respect of the Trustees/Receivers' remuneration, the Trustees/Receivers submitted that the court's role is to value or determine a reasonable value for the services or the actions which have been performed.

Angelina's Submissions

1. Angelina submitted that the question of proportionality is relevant in the following ways: 1. the total costs being claimed ($1,860,503.05) can be compared to the total of the creditors' claims and petitioning creditor's costs of about $392,691; 2. the total costs being claimed ($1,860,503.05) ought to be compared to the value of the fund available to pay the Trustees/Receivers, being $2,535,128.33; 3. the costs of the Contempt Application (estimated to be $173,093.53) can be compared with the amount agreed to be paid to purge the alleged contempt ($2,444.70 including interest); and 4. the total rents recovered ($106,116.48) can be compared with the charges made by the Trustees/Receivers for the time spent in recovering such rent ($109,848.20 including GST, not including legal fees).
2. Accordingly, Angelina submitted that where issues of proportionality arise, the time records of the Trustees/Receivers ought to be scrutinised carefully due to the significant criticisms that have been made about time costing (see Idylic Solutions at [38]-[41]; Re Solfire Pty Ltd (No 2) [1998] QSC 92; Venetian Nominees Pty Ltd & Ors v Mark Anthony Conlan & Ors [1998] WASCA 273).
3. Further, Angelina submitted that a detailed analysis of the conveyancing costs is appropriate as the total number of items is relatively small and it will provide an insight into the way in which the solicitors acting for the Trustees/Receivers charged.
4. In support of this submission, Angelina relied on the evidence of Mr Maatouk, her solicitor, said to be experienced in conveyancing, the thrust of which is that the amounts charged by Polczynski Robinson in respect of the conveyances of Kemp Street and Morts Road were unreasonably high.
5. Angelina also submitted that as the Trustees/Receivers owed fiduciary duties to her, arising out of her 50% direct interest in one of the Properties and a family law claim over the balance, the Trustees/Receivers ought to have undertaken negotiations in order to ensure that they obtained the services of a solicitor at the best possible rate.
6. Angelina also alleged that the hourly rates charged by the Trustees/Receivers were relatively high and that the solicitors charged excessively for research, there was a lack of adequate costs disclosure, there was a duplication of disbursements, there were inadequate narrations contained in invoices, and the costs for the conveyance were above (in excess of 400%-500%) the going rate.

CONSIDERATION

1. 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 Trustees/Receivers was reasonably necessary and to arrive at a sum or devise a formula which will reasonably compensate the Trustees/Receivers for the time and trouble expended in the execution of their duties. It is clear that the question of proportionality is one of the factors involved in the overall consideration of reasonableness.
2. The authorities direct me to approach the matter as one of principle and not by undertaking a line-by-line analysis of time entries. I reject the suggestion of Angelina that I should look at individual time entries to determine whether the costs were reasonable, including those in relation to the conveyancing of Kemp Street and Morts Road.
3. There are several considerations which lead me to the conclusion that the work undertaken by the Trustees/Receivers was at all times reasonably necessary, including: 1. The Trustees/Receivers were appointed in circumstances where the only significant assets of Robert's bankrupt estate were the Properties, valued in excess of $4,550,000, of which Angelina was the sole registered proprietor. 2. The Trustees/Receivers owed fiduciary obligations to the various creditors of Robert's bankrupt estate to recover and preserve the assets subject to potential distribution, which they have done through the court proceedings involving Steven and Angelina and the enforcement of court orders against Angelina that have been necessary to secure the interest of Robert's bankrupt estate in the Properties and the rent obtained from them. 3. Angelina consistently resisted and obstructed the Trustees/Receivers' efforts to perform their obligations through multiple applications to the court, failing to transfer the Properties and account for the rental income from them, as well as by resisting the sales of Kemp Street and Morts Road and generally opposing them at every turn. 4. Accordingly, if the Trustees/Receivers had not acted in the manner that they had, it is a reasonable conclusion that any relevant interest in the Properties would not have been transferred to Robert's bankrupt estate and been lost. 5. Therefore, it is clear to me that the acts of the Trustees/Receivers were entirely directed towards augmenting the funds available for distribution to the creditors of Robert's bankrupt estate.
4. Relevantly, the Trustees/Receivers have been required to actively participate in numerous legal proceedings of significant complexity over a period of more than 5 years due to consistent attempts by Angelina to frustrate the performance of their obligations, and have been successful in obtaining four successive costs orders in those proceedings.
5. Having reviewed the affidavits and reports relied upon by the Trustees/Receivers, I am satisfied that the remuneration sought is appropriate. In addition, where possible, the Trustees/Receivers appear to have appropriately delegated tasks to employees of SV Partners with lower charge-out rates than the Trustees/Receivers, with little involvement or reliance on counsel.
6. The quality of the work undertaken by the Trustees/Receivers, including having successfully obtained the four costs orders in their favour, appears to have been diligently performed. The Trustees/Receivers have been successful in maintaining an interest, on behalf of the Robert's bankrupt estate, in all of the Properties.
7. It is clear to me that charges for the work undertaken by the Trustees/Receivers was proportionate to the difficulty, complexity and importance of the tasks in the context in which they were required to be performed.
8. In any event there is nothing disproportionate about the remuneration components of what the Trustees/Receivers seek to recover for their work. They are seeking $182,458.65 for their remuneration as part of the Priority Costs, $109,848.20 for their remuneration as part of the Receivership Costs and $40,535.00 for their remuneration as part of the Sale Costs. The remuneration they are seeking to recover totals $332,841.85, which is well in proportion to the nature, importance and complexity of the tasks that were required to be conducted by the Trustees/Receivers and the benefit to be achieved by the task to secure the Properties for Robert's bankrupt estate, thereby supporting them as fair and reasonable amounts for remuneration in respect of work reasonably undertaken (applying Templeton). Both in qualitative and quantitative terms, the remuneration of the Trustees/Receivers was clearly reasonable.
9. In addition, the nature of Robert's bankrupt estate being unfunded leads to the conclusion that the participation of the Trustees/Receivers in the various proceedings involved significant risk on behalf of the Trustees/Receivers for the benefit of the creditors, with minimal involvement from counsel. This underlines even more that the work undertaken was reasonable.
10. In this case, the Trustees/Receivers have submitted a time-based approach to the determination of the amount sought and, in those circumstances, the court is guided by professional scales of charges. This is a common basis for charging: Banksia at [37] and Gondon at [34(7)]. In my opinion, that is a reasonable approach to be taken for the charging of their remuneration.
11. Accordingly, I reject Angelina's submission that detailed analysis of the Trustees/Receivers' costs is appropriate.
12. The vast majority of the costs that the Trustees/Receivers seek to recover are the amounts they have incurred as disbursements for the fees and disbursements of Polczynski Robinson acting for them across the period in which they have been acting for Robert's bankrupt estate. Within this context, Ms Rosati, an officer of the court who was not challenged and whom I have no reason to doubt, has provided a report which concludes that the fees charged by Polczynski Robinson to the Trustees/Receivers are fair and reasonable.
13. It is clear from the statement of Brereton J in Say Enterprises at [6(9)] that the Trustees/Receivers were required to scrutinise disbursements to ensure that they are reasonable and properly payable. In my opinion, including by obtaining a report from an independent costing expert who has reviewed and analysed the charges of Polczynski Robinson, they have done so. In addition, it is clear to me that the rates charged by individual solicitors at that firm were within the range of what is reasonably accepted to be charged by a Sydney CBD-based law firm.
14. In addition, the submission from Angelina that the Trustees/Receivers ought to have undertaken negotiations in order to ensure that they obtained the services of a solicitor at the best possible rate is not made out when Angelina has not provided me with any evidence indicating in what manner they contend that the solicitors obtained did not provide the services they did at the best possible rate. The word best must be distinguished from the word cheapest in this context. Accordingly, in circumstances where the Trustees/Receivers, with assistance from Polczynski Robinson and minimal involvement from counsel, were successful in recovering the Properties and the rent from them, and in the absence of evidence to the contrary, the only conclusion I can reach is that this submission ought to be rejected.
15. In this regard, I was not assisted by the evidence of Mr Maatouk, which was most general in nature and did not bear on precisely what had been done on the conveyance of Kemp Street and Morts Road. Those conveyances were made all the more complex by Angelina's efforts to frustrate them, including by opposing applications to reduce the reserve price for the sale of them.
16. In regard to proportionality, it is clear to me that in the circumstances whereby the only assets of any real value within the bankrupt estate were the Properties, the task that the Trustees/Receivers embarked upon, being to ensure that a portion of the proceeds of sale of the Properties and any rent from them would be available for distribution to the creditors, was clearly proportionate as absent those actions, the estate would not be able to satisfy any amount sought by the creditors.
17. In regard to the amount of time spent recovering the rent as compared to the amount of rent received, that must be viewed in the context whereby the Trustees/Receivers were appointed as receivers of the rental income in circumstances where Angelina was improperly retaining it. The logical conclusion, in the absence of any evidence from Angelina to the contrary, is that the expense incurred in relation to recovering the rental income was significantly inflated as a direct result of the opposition actions of Angelina. Accordingly, I reject Angelina's submission that the charges made by the Trustees/Receivers for the recovery of rent ought to be reduced.
18. Whilst the Full Court of the Federal Court in Templeton at [34] noted that a lack of proportionality between the cost of the work done and the value of the services provided may support a conclusion of overcharging or excessive remuneration, this is clearly a case whereby the work undertaken by the Trustees/Receivers, regardless of the amount (if any) which is ultimately available for distribution to the creditors, was a reasonable attempt to recover and retain assets on behalf of the creditors: Sanderson at [58]; Hall v Poolman (2009) 75 NSWLR 99; [2009] NSWCCA 64 at [128]-[129].
19. Consequently, the decision to undertake that course of action was clearly not an improper exercise of the Trustees/Receivers' powers.
20. In addition, the submission by Angelina that the costs incurred by the Trustees/Receivers in prosecuting the Contempt Application were not proportionate must be rejected in circumstances where the application was, by consent, dismissed with indemnity costs in favour of the Trustees/Receivers. There was nothing improper in them taking that action.

CONCLUSION

1. Accordingly, in light of the conclusions I have reached above, the orders I propose to make are as follows: 1. Order that the Priority Costs as defined in the orders of the court made on 18 May 2023 (May Orders) be fixed in the sum of $1,555,193.44 (Priority Costs) to be paid to the fifth and sixth defendants in accordance with order 8(j) of the May Orders. 2. Order that the Receivership Costs as defined in the May Orders (and not otherwise claimed as Priority Costs) be fixed in the sum of $245,267.18 to be paid to the fifth and sixth defendants in accordance with order 8(k) of the May Orders. 3. Order that the Sale Costs as defined in the May Orders be fixed in the sum of $154,648.60 to be deducted from the proceeds of sale of the Properties in accordance with order 6(i) of the May Orders. 4. Direct that in the absence of agreement between the fifth and sixth defendants and the fourth defendant, any further Receivership Costs as defined in the May Orders (and not otherwise claimed as Priority Costs) relating to the period from January 2023 to date shall be determined by McGrath J in chambers following receipt of any further evidence and brief submissions (no more than 2 pages, 1.5 spacing, 12 font) to be served and provided to the associate to McGrath J by 14 February 2024. 5. Order that the fourth defendant pay the fifth and sixth defendants' costs of and occasioned by this application.

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