Topp (Liquidator), in the matter of Aidzan Pty Limited (in Liquidation) v Nazdia Pty Limited

RARES J: 1 On 20 November 2020, I dealt with part of the interlocutory application by the liquidators and receivers of Aidzan Pty Ltd (in Liq), the third plaintiff: Topp (Liquidator), in the matter of Aidzan Pty Ltd (in Liquidation) v Nazdia Pty Limited [2020] FCA 1764. This is the second stage of the interlocutory application filed on 29 July 2020. I will use the same defined terms that I used in my earlier reasons. The liquidators, in their capacity as receivers of the PAL Trust, now seek orders that their accounts be passed and that their appointment as receivers be terminated. They no longer press for an order today that the winding up of Aidzan also be terminated.

Background 2 Peter Laird informed the receivers' and liquidators' solicitors yesterday by email that if, upon the termination of the receivership, the winding up would also terminate so that, as the director of Aidzan, he would be returned to control it and the PAL Trust, he would seek to take steps to reappoint liquidators to Aidzan. He explained that this was because of proceedings that Mr Hayes, the liquidator of K. & A. Laird (N. S. W.) Pty Ltd, filed in the Supreme Court of New South on 11 December 2020 as plaintiff, against Aidzan, in its own behalf and in its capacity as trustee of the PAL Trust, Nazdia in its capacity as trustee of the Aidzan Superannuation Fund, and Peter Laird (the Supreme Court proceeding). Mr Hayes' claims are based substantively on alleged breaches of fiduciary duty by those defendants over the course of 30 years. The Supreme Court proceeding is listed before the Equity Registrar for first directions on 22 February 2021. 3 Mr Hayes opposed the liquidators remaining in office, and so giving effect to Peter Laird's wishes to avoid a new liquidation, as appear to have been expressed in the email. Mr Hayes' opposition was on the basis that any continuing, or new, liquidation would absorb, unnecessarily, funds in the PAL Trust that could otherwise be applied for the benefit of the successful party in the Supreme Court proceeding. 4 During the course of argument, a convenient alternate possibility emerged. Mr Hayes suggested that, upon further reflection, Peter Laird would be able to decide, having regard to his necessary personal involvement as a defendant in the Supreme Court proceeding, whether he wished to also have the responsibility of defending Aidzan's and the PAL Trust's positions in respect of what, at this stage, appears to be possibly common allegations against each of the defendants that would not require them to have separate representation. This may clarify when defences and any cross-claims come to be pleaded in the Supreme Court proceeding. The fate of this proceeding, and the question of what will happen to the liquidation of Aidzan, would then be able to be considered on a more informed basis when this matter comes back for case management before me on 5 March 2021. 5 In addition, Mr Hayes has sought an order nunc pro tunc under s 471B of the Corporations Act 2001 (Cth) authorising him to begin, and subsequently proceed with, the Supreme Court proceeding. It is common ground that it is appropriate to make such an order. 6 The receivers and liquidators seek facultative orders enabling them, when they relinquish their positions as receivers, to pay moneys held in that capacity to a bank account of Aidzan and the PAL Trust so that it could then require those moneys to be used for the purposes of the liquidation. At the moment, those purposes consist, essentially, of ensuring that any outstanding taxation issues are resolved, lodging statutory returns together and considering what defence, cross-claim or other action should be taken in the Supreme Court proceeding. The liquidators would be able to apply funds they hold to those purposes, together with paying the amount of receivers' remuneration and expenses.

Should the receivers' remuneration and expenses be approved? 7 The receivers seek that their remuneration of $39,052.50, excluding GST, up to and including today, be approved under s 425 of the Act. 8 In Templeton v Australian Securities and Investments Commission (2015) 108 ACSR 545 at 553-554 [28]-[32] and 599 [60], Besanko, Middleton and Beach JJ explained that, in approving or fixing the amount of remuneration paid to a person who has been appointed as a receiver, it was not necessary or appropriate for the Court to review, line by line, the work the receiver did. They said that the key question for the Court in considering the approval of a receiver's remuneration, was to identify whether the charges claimed were reasonable. They said that this involved, among other matters, having regard to the proportionality of the charges, the quality and complexity of the work done, the value and nature of the property dealt with and the time spent in performing the relevant tasks. They held that, ultimately, this involved the Court fixing the reasonable remuneration, which was not an exercise of discretion. 9 The receivers' claim remuneration for work done in the period up to the attainment of the objects of the receivership, namely to realise the property of the PAL Trust, pay the creditors of both the PAL Trust and Aidzan, and then to retire or be retired. I am satisfied on the evidence before me that the receivers have achieved the objects of the receivership identified in the order that Yates J made on 6 March 2019, and that it is appropriate to act on their application for their discharge once I fix their remuneration and approve their expenses: see Hosking (Liquidator); In the Matter of Business Aptitude Pty Ltd (In Liq) [2017] FCA 1417 at [8]-[9] per LG Foster J. 10 Mr Topp swore affidavits on 27 November 2020 and 16 December 2020 in which he explained in detail the work done by the receivers and liquidators. That comprised the sale of the Blacktown property, finalising all the expenses and debts in relation to it, managing the ordinary affairs of the receivership to its current stage, including the payment of legal fees and associated sale expenses, together with the fees incurred in relation to the foreshadowed claim by Mr Hayes, as it was until 11 December 2020, when it became an actual claim in the Supreme Court proceeding. 11 As Mr Topp pointed out, he is still waiting for the issue of a clearance certificate or confirmation from the Australian Taxation Office which, he anticipates, will not require the PAL Trust or Aidzan to pay any money. 12 He noted that the actual trust deed for the PAL Trust is missing, but a template prepared by the same firm of solicitors, Ebsworth & Ebsworth, that acted for Aidzan in establishing the PAL Trust contained a clause (cl 41(b)) that provided that the trustee would be disqualified from holding office if it went into liquidation. The template deed also provided that on the disqualification of the trustee under cl 41(b), the unit holders would be entitled, by a special resolution, to appoint a substitute trustee. 13 There is no direct evidence that a clause in the terms of cl 41(b) in the template, or one to its effect, was in the original trust deed for the PAL Trust. This state of affairs was a basis for Mr Topp wishing to terminate the liquidation so that Aidzan would continue to be eligible to be the trustee of the PAL Trust. This issue will require consideration in the mix of matters to which I have referred before this proceeding is listed for further case management on 5 March 2021. In the meantime, the funds held will be under the control of the liquidators as Court officers. It is not necessary, at the moment, to resolve whether, and if so what, particular provision applies to Aidzan, if it is to continue in liquidation, that might disqualify it from being the trustee of the PAL Trust. The orders, that I will make, for the liquidators to place surplus funds in a bank account will ensure that there is an interim regime and no danger to the trust fund by reason of any risk of its dissipation. 14 Having reviewed the evidence in Mr Topp's affidavits of 27 November 2020 and 16 December 2020, I am satisfied that the receivers' remuneration as claimed appears to be reasonable, having regard to the matters referred to in s 425(8) of the Act and the detailed explanations in both counsels' submissions and Mr Topp's evidence. 15 The receivers and liquidators pointed out, in the course of their submissions today, that there was an error in order 3(b) made on 20 November 2020. That was because the order authorised the receivers to pay, from the funds they held in that capacity, their remuneration and expenses already approved by the Registrar. However, the Registrar's prior orders culminated in his order of 25 September 2020, all of which approved the receivers' remuneration up to 8 September 2020, but not their expenses. 16 Mr Topp set out in detail in his two affidavits the basis of the expenses that the receivers have incurred for which they now seek approval. I am satisfied that the expenses claimed from the inception of the receivership were reasonable, because they were appropriate and justified as expenses of the PAL Trust, and that the receivers should be authorised to reimburse themselves from the trust fund for those expenses. I will also make an order varying order 3(b) by authorising the payment of the expenses as well as the remuneration approved by the Registrar.

Conclusion 17 Accordingly, I will make orders in the form that counsel and I clarified during the course of argument. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.