Stojanovski v Stojanovski [2024] NSWSC 369 | Case summary

Supreme Court of NSW|2024-03-28|Before: McGrath J, Lindsay J

INTRODUCTION

This judgment follows my earlier judgment in Stojanovski v Stojanovski [2023] NSWSC 1645 (Principal Judgment) in which I determined the amount of the Priority Costs, the Receivership Costs and the Sale Costs (as defined in the Principal Judgment) which the fifth and sixth defendants (Trustees/Receivers) were entitled to be paid by way of their remuneration, costs and expenses in their capacity as receivers and trustees in the bankruptcy of Robert Stojanovski (to whom I will refer by his first name without meaning any disrespect).
The remaining issue from the Principal Judgment is the extent to which the Trustees/Receivers are entitled to recover further costs for the work done by them in the period after 20 January 2023.
This judgment assumes familiarity with the Principal Judgment. Shorthand expressions and definitions used in the Principal Judgment are also used in this judgment.
The only active parties in the disputes which were the subject of the Principal Judgment were the Trustees/Receivers and the fourth defendant, Angelina Stojanovski, to whom I will continue to refer by her first name without intending any disrespect. The Trustees/Receivers and Angelina are also the only active parties in the dispute over the remaining issue.
The remaining issue arises by virtue of the orders made by Lindsay J on 18 May 2022 (May 2022 Orders). Those orders established the Receivers Fund, comprising the proceeds of sale of the Kemp Street Property and the Morts Road Property (the Properties) (order 3). Of particular importance are orders 6 and 8 of the May 2022 Orders which are as follows: 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. … 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.

EVIDENCE

The Trustees/Receivers rely on the following evidence: 1. the affidavit of Fabian Kane Micheletto affirmed 1 March 2024 and the exhibit to that affidavit; 2. the affidavit of Richard Alexander Lyne affirmed 1 March 2024 and the exhibit to that affidavit; and 3. the affidavit of Kerrie-Ann Rosati affirmed 1 March 2024 and the exhibit to that affidavit (which comprises her report dated 1 March 2024) (Rosati Report).
Angelina relies on her affidavit affirmed 24 March 2024 and the exhibit to that affidavit.

LEGAL PRINCIPLES

The applicable legal principles in relation to the remaining issue are those set out in [79]-[95] of the Principal Judgment, being those propounded in the following authorities: 1. In the matter of Cannuli Holdings Pty Ltd (in liq) (Court-appointed receiver acting) [2017] NSWSC 1562, by Black J at [8]-[9]; 2. In the matter of Banksia Securities Ltd (in liq) (receivers and managers appointed) [2017] NSWSC 540, by Gleeson JA at [37]-[46]; 3. In the matter of Octavia Administration Pty Ltd (in liq) [2020] NSWSC 927, by Rees J at [49]; 4. In the matter of Gondon Five Pty Ltd and Cui Family Asset Management Pty Ltd [2019] NSWSC 469, by Brereton J at [34(7)]; 5. In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396, by Brereton J at [6(9)]; 6. Templeton v Australian Securities and Investments Commission [2015] FCAFC 137, by Besanko, Middleton and Beach JJ at [32]-[34]; 7. Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr (2017) 93 NSWLR 459; [2017] NSWCA 38, by Bathurst CJ (with whom Beazley P; Gleeson JA; Barrett AJA and Beach AJA agreed) at [55]-[58]; and 8. In the matter of Idylic Solutions Pty Ltd as trustee for Super Save Superannuation Fund and others [2016] NSWSC 1292, by Black J at [36]-[43].
I summarised the essence of those principles at [106] of the Principal Judgment as requiring me 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. The court will usually work off time entries based on a professional scale of charges. As stated at [107] of the Principal Judgment, the authorities direct me to approach the matter as one of principle and not by undertaking a line-by-line analysis of time entries. In relation to disbursements, as stated at [91] of the Principal Judgment, I must be satisfied that they are reasonable and properly payable.

SUBMISSIONS OF TRUSTEES/RECEIVERS

The Trustees/Receivers have given evidence that they have incurred costs in the receivership generally, in the exercise of the power of sale of the Morts Road Property and as receivers of the rents of the Properties. I will deal with each of these costs in turn below.

Receivership generally

In the receivership generally, the Further Receivership Costs are said to have been incurred by the Trustees/Receivers taking the following steps and actions: 1. maintaining and attending to insurance cover for the Properties and requirements; 2. liaising with the lawyers in relation to the land tax payable for the Properties and facilitating any land tax adjustments and refunds; 3. liaising with the lawyers in relation to outstanding council rates and water rates; 4. seeking advice from and deliberating with appointed legal representatives in relation to issues arising in respect of the receivership, the proceedings and the settlement of them; 5. attending to the preparation and execution of an affidavit and receivership report to the court; 6. attending to matters associated with the proceedings, including the hearing before me, the settlement negotiations and the preparation of a further affidavit; 7. attending to matters associated with a review and consideration of the legal costs incurred and the assessment of them; 8. attending to accounting and banking matters arising from both receiverships; 9. attending to the release of funds from the Receivers Fund in accordance with the May 2022 Orders as approved by the court; and 10. attending to general and administrative management matters.
The amounts of the Further Receivership Costs claimed by the Trustees/Receivers as arising from these matters comprise the following fees and disbursements: Description Amount GST Total SV Fees $32,881.00 $3,288.10 $36,169.10 Insurance - Stamp Duty $48.11 Nil $48.11 Insurance $606.06 $60.61 $666.67 Printing $68.25 $6.83 $75.08 Total $33,603.42 $3,355.54 $36,958.96

The item "SV Fees" in the table above has been calculated based on timesheets entered on a daily basis using six-minute units and hourly charge out rates. The other items in the table are disbursements which are supported in the evidence by invoices.

Power of sale of the Morts Road Property

In the exercise of the power of sale of the Morts Road Property, the Further Receivership Costs are said to have been incurred by the Trustees/Receivers taking the following steps and actions (which are almost exactly the same descriptions as those involved in the receivership generally): 1. maintaining and attending to insurance cover and requirements; 2. liaising with the lawyers in relation to the land tax payable for the Properties and facilitating any land tax adjustments and refunds; 3. seeking advice from and deliberating with appointed legal representatives in relation to the sale issues and land tax issues, including the refund and its allocation; 4. attending to the preparation and execution of an affidavit and the receivership report to the court; 5. attending to matters associated with the proceedings, including the preparation of a further affidavit; 6. attending to matters associated with legal costs assessments; 7. attending to accounting and banking matters associated with the receivership; 8. attending to the release of funds previously approved by the court; and 9. attending to general and administrative management matters.
The amounts of the Further Receivership Costs claimed by the Trustees/Receivers as arising from these matters comprise the following fees and disbursements: Description Amount GST Total SV Fees $9,410.50 $941.05 $10,351.55 Insurance - Stamp Duty $32.07 - $32.07 Insurance - Stamp Duty $48.11 - $48.11 Insurance $444.04 $44.40 $488.44 Insurance $606.06 $60.61 $666.67 Total $10,401.78 $1,032.16 $11,586.84

The item "SV Fees" in the table above has also been calculated based on timesheets entered on a daily basis using six-minute units and hourly charge out rates. The other items in the table are disbursements which are supported in the evidence by invoices.

Rents of the Properties

As receivers of the rents of the Properties, the Further Receivership Costs are said to have been incurred by the Trustees/Receivers taking the following steps and actions: 1. seeking advice from and deliberating with appointed legal representatives; 2. attending to the preparation and execution of an affidavit and the receivership report to the court; 3. attending to matters associated with the proceedings, including preparation of a further affidavit; 4. attending to accounting and banking matters associated with the receivership; 5. attending to the release of funds previously approved by the court; and 6. attending to general and administrative management matters.
The amounts of the Further Receivership Costs claimed by the Trustees/Receivers as arising from these matters comprise the following fees and disbursements: Description Amount GST Total SV Fees $2,432.00 $243.20 $2,675.20 Disbursements Nil Nil Nil Total $2,432.00 $243.20 $2,675.20

The item "SV Fees" in the table above has again been calculated based on timesheets entered on a daily basis using six-minute units and hourly charge out rates. There were no disbursements.

Legal costs

A significant amount of the Further Receivership Costs claimed by the Trustees/Receivers are said to arise from the work performed by their solicitors, Polczynski Robinson, on their behalf. A description of the work performed by Polczynski Robinson and disbursements incurred by them is contained in an invoice dated 11 January 2024 (which was not previously identified by the Trustees/Receivers as forming part of the Receivership Costs) and in itemised work in progress reports by fee earner. The tasks performed are said to include: 1. finalising evidence for the application which led to the Principal Judgment (Remuneration Application); 2. ongoing liaising with the legal representatives for Angelina in relation to the Remuneration Application, rates notices, water notices and council tax; 3. preparing for and attending directions hearings and other hearings in these proceedings; 4. liaising with the counsel and solicitors for Angelina and the court in relation to the directions hearings in these proceedings; 5. preparing for and attending an informal settlement conference with Angelina and her solicitors and counsel; 6. providing advice, reports and conferring with the Trustees/Receivers on settlement discussions and negotiations; 7. reviewing evidence served by Angelina in relation to the Remuneration Application; 8. liaising with counsel in relation to the Remuneration Application and preparing for the hearing of it; 9. liaising with the solicitors and counsel for Angelina in relation to the preparation for the hearing of the Remuneration Application; 10. researching legal arguments raised by Angelina in relation to the Remuneration Application; 11. preparing for and attending the hearing of the Remuneration Application before me; 12. drafting schedules of the further Receivership Costs; 13. reviewing the Principal Judgment and liaising with the Trustees/Receivers on the next steps; 14. preparing further offers of settlement following the Principal Judgment; and 15. preparation of the costs review.
The disbursements incurred by Polczynski Robinson include counsel fees, transcript fees, judgment fees and the fees incurred to obtain the Rosati Report on the reasonableness of the costs and expenses incurred by Polczynski Robinson.
The amounts of the Further Receivership Costs claimed by the Trustees/Receivers as arising from these legal costs comprise the following fees and disbursements: Description Amount GST Total Legal costs $133,683.00 $13,368.30 $147,051.30 Counsel fees $29,037.52 $2,903.75 $31,941.27 Judgment fees $142.00 - $142.00 Transcript fees $1,005.00 - $1,005.00 DGT fees $6,250.00 $625.00 $6,875.00 Total $170,117.52 $16,897.05 $187,014.57

The Trustees/Receivers rely on the Rosati Report in which the following opinions were expressed: 1. the hourly rates charged by Polczynski Robinson for the work performed by them were fair and reasonable and were appropriate for work in the final stages of a complicated proceeding in this court; 2. the fees incurred by counsel were fair and reasonable; 3. the general disbursements incurred by Polczynski Robinson are fair and reasonable; 4. the narrations as to the work performed by Polczynski Robinson and the times for each task generally in the itemised account appear to be fair and reasonable for acting in a matter of some complexity where there is no significant involvement from counsel; and 5. the costs charged by Polczynski Robinson for the work described in the itemised account appear to be generally fairly, reasonably and proportionately incurred and are fair and reasonable on a solicitor client basis.

Summary

Based on each of these matters and the amounts set out in each of the tables above, the Trustees/Receivers claim total Further Receivership Costs as follows: Description Amount GST Total SV Fees $44,723.50 $4,472.35 $49,195.85 Disbursements $1,852.70 $172.44 $2,025.14 Legal fees $133,683.00 $13,368.30 $147,051.30 Legal disbursements $30,184.52 $2,903.75 $33,088.27 DGT fees $6,250.00 $625.00 $6,875.00 Total $216,554.72 $21,527.94 $238,235.56

SUBMISSIONS OF ANGELINA

Angelina contends that the court should not make orders indemnifying the Trustees/Receivers for the Further Receivership Costs on the basis that those costs were incurred by their own failure to disclose within a reasonable timeframe, are not reasonably or properly incurred and are excessive.
Furthermore, Angelina points to the fact that the respective interests held in the Morts Road Property are the subject of dispute between Angelina and Robert in proceedings presently before the Family Court (Family Law Proceedings), to which the Trustees/Receivers are also parties. In the Family Law Proceedings, Angelina is submitting that 50% of the sale proceeds of the Morts Road Property plus interest either be paid to the Federal Circuit and Family Court of Australia, or a third-party independent trust account, and that the remaining 50% of the proceeds of sale of the Morts Road Property plus interest be returned to her. Angelina submits that if the Trustees/Receivers apply the proceeds of sale of the Morts Road Property towards Further Receivership Costs, this would amount to a premature distribution of funds to the Trustees/Receivers without the determination of the Family Law Proceedings that may prejudice Angelina's claim to a proportionate share of the sale proceeds of the Morts Road Property.

CONSIDERATION

As stated above, the issue to be determined by me is whether the Trustees/Receivers are entitled to Further Receivership Costs in accordance with orders 6 and 8 of the May 2022 Orders.
Importantly, it does not lie for me to change any parts of orders 6 and 8, but rather, I must apply those orders in their terms.
I am satisfied based on the affidavit material which has been provided by the Trustees/Receivers that the work performed by them was reasonably necessary and the remuneration charged by them for that work amounts to fair and reasonable compensation given that it is recorded in timesheets and based on a professional scale of charges. I consider those charges to be proportionate to the difficulty, complexity and importance of the tasks undertaken in the context in which they were required to be performed. I also consider that a further $49,195.85 (in addition to their fees of $109,848.20 which formed part of the Receivership Costs determined by me in the Principal Judgment) is entirely reasonable in qualitative and quantitative terms.
I am also satisfied that disbursements incurred by the Trustees/Receivers are reasonable and properly payable by them. This is particularly so in relation to the fees and disbursements of Polczynski Robinson, which are supported by the opinions expressed by the independent costing expert in the Rosati Report.
In relation to the argument raised by Angelina concerning her claimed 50% interest in the 50% of the sale proceeds of the Morts Road Property, that claim is to be determined as part of the Family Law Proceedings. The Trustees/Receivers are parties to the Family Law Proceedings. Whatever rights Angelina has to the sale proceeds of the Morts Road Property can be the subject of determination in the Family Law Proceedings and any appropriate order would then be binding on the Trustees/Receivers. It is not my role to make any determination as between Angelina, Robert and the Trustees/Receivers in relation to Angelina's claim in that regard.

ORDERS

In the circumstances, I propose to make the following orders: 1. The Sale Costs and the Receivership Costs as defined in the orders of the court made on 18 May 2022 (May Orders) be fixed in the further sum of $238,235.56 to be paid to the fifth and sixth defendants in accordance with orders 6(i) and 8(k) of the May Orders. 2. The fourth defendant pay the fifth and sixth defendants' costs of and occasioned by this further application.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 April 2024

Stojanovski v Stojanovski

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