Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] - [2010] WASC 318

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 2] [2010] WASC 318

CORAM: SIMMONDS J

HEARD: 7 & 13 OCTOBER 2009, 3 SEPTEMBER 2010

DELIVERED : 10 NOVEMBER 2010

FILE NO/S: CIV 2265 of 2006

BETWEEN: COMPUTER ACCOUNTING AND TAX PTY LTD (in liq)
Plaintiff
AND
PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Defendant
DONALD CAMPBELL-SMITH As Executor of the Estate of MARTIN PAUL BANNING
Second Defendant

Catchwords:

Enforcement of judgments - Receivership orders - Cancellation of receivership orders and discharge of receiver - Cancellation where assigned task performed - Cancellation where services of receiver not likely to be required for a significant period or not required at all - Whether 'judgment debt' satisfied - Meaning of 'judgment debt' - Whether grounds for cancelling receivership orders made out

Enforcement of judgments - Receivership orders - Discharge of receiver - Discharge where irregularity - Whether irregularity in receiver's failure to obtain prior court authorisation to obtain legal assistance and to participate in legal proceedings - Whether irregularity in receiver's continuing to act as receiver in the face of serious allegations against him by execution debtors - Whether receiver should be discharged where any or a combination of irregularities made out

Enforcement of judgments - Receivership orders - Directions and declarations sought by receiver - Directions sought as to lien - Whether there was a lien - Directions sought as to costs and expenses - Whether costs and expenses should be allowable where there were irregularities

Legislation:

Civil Judgments Enforcement Act 2004 (WA), s 3, s 86, s 87, s 103, s 105
Civil Procedure Rules 1998 (UK), r 69.7
Civil Judgments Enforcement Regulations 2005 (WA), reg 59
Corporations Act 2001 (Cth), s 232, s 234, s 444, s 444D, s 471B, s 553C, s 1071F
Corporations Regulations 2001 (Cth), reg 5.3A.06, reg 59, sch 8A
Criminal Justice Act 1988 (UK), s 76, s 77
Value Added Tax Act 1994 (UK)

Result:

Receivership orders to be cancelled
Directions and declarations to be made

Category: B

Representation:

Counsel:

Plaintiff:     Mr C P Stokes & Mr D W John
First Defendant             :     Mr T R Stephenson
Second Defendant         :     Mr T R Stephenson
The Receiver                 :     Ms K F Banks-Smith

Solicitors:

Plaintiff:     Chris Stokes & Associates, Freehills
First Defendant             :     Eastwood Law
Second Defendant         :     Eastwood Law
The Receiver                 :     Tottle Partners

Case(s) referred to in judgment(s):

Andrew v Vuleta (Unreported, WASC, 17 June 1987)
Australian Securities and Investments Commission v Atlantic 3-Financial (Aust) Pty Ltd (No 3) [2003] QSC 386; [2004] 1 Qd R 591
Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (in liq) (No 3) [2008] FCA 448; (2008) 246 ALR 580
Boehm v Goodall [1911] 1 Ch 155
Bowesco Pty Ltd v Cronin [2008] WASC 296; [2010] ALMD 1448
Capewell v Revenue and Customs Commissioners [2007] UKHL 2; [2007] 1 WLR 386
Clark Equipment Credit of Australia Ltd v Como Factors Pty Ltd (1988) 14 NSWLR 552
Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [2010] WASCA 171
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (S)
Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 4] [2009] WASC 407
Duffy v Super Centre Development Corp Ltd [1967] 1 NSWR 382
Eady v Eady (1895) 16 LR (NSW) Eq 70
Harrison v Boydell (1833) 6 Sim 211; 58 ER 573
Hughes v Customs and Excise Commissioners [2002] EWCA Civ 734; [2003] 1 WLR 177; [2002] 4 All ER 633; [2002] All ER (D) 293 (May)
Mellor v Mellor [1992] 1 WLR 517; [1992] 4 All ER 10; [1993] BCLC 30; [1992] BCC 513
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S)
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2010] WASC 113
Re Andrews [1999] 1 WLR 1236; [1999] 2 All ER 751
Wayland v Nidamon Pty Ltd (1986) 11 ACLR 209; (1987) 5 ACLC 73
Wilton v Commonwealth Trading Bank of Australia [1974] 2 NSWLR 96

SIMMONDS J:

Introduction

Graeme Lean (Mr Lean, or the receiver) is the receiver appointed by orders I made who was to appropriate and realise certain property of the second defendant, Martin Paul Banning (Mr Banning), to satisfy the 'judgment debt' that at that time Mr Banning, together with Professional Services of Australia Pty Ltd (PSA), owed to the plaintiff, Computer Accounting and Tax Pty Ltd (CAT or the plaintiff) (the receivership orders). The judgment debt arose out of the judgment in favour of CAT that I gave in its action against PSA and Mr Banning. See Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (CAT WASC). That action was for damages for loss arising out of certain conduct and representations made by PSA for which PSA's sole director and secretary, Mr Banning, was the maker or in which he was involved.
Mr Banning died not long after the delivery of the judgment in CAT WASC. His personal representative, Mr Donald Campbell‑Smith (Mr Campbell‑Smith, to whom I will refer in that capacity, unless otherwise indicated), and PSA (together, PSA and Mr Campbell‑Smith, or the defendants) have applied by chamber summons dated 13 August 2009 to have Mr Lean discharged from his receivership. PSA and Mr Campbell‑Smith made their application on two bases.
One basis is what they say is the power of the court to cancel the receivership orders when it should be seen that the receiver has performed the task assigned to him. An alternative form of this basis is what they say is the power of the court so to order when the services of a receiver are not likely to be required for a significant period, or indeed are not likely to be required at all.
PSA and Mr Campbell‑Smith say that the task assigned to the receiver has been performed because he has sold the only property, a share, that it was contemplated he would take into his possession. While the completion of that sale by registration of the transfer by the company is presently the subject of proceedings by the purchasers against the company's directors, proceedings to which the receiver is a party, they say that this does not change the fact that the receiver performed his assigned task, which is the position he has taken in those proceedings.
PSA and Mr Campbell‑Smith say that the receiver's services are not likely to be required for some significant period because the proceedings referred to are expected to run for some time yet. PSA and Mr Campbell‑Smith say that the receiver's services are likely not to be required at all because of either of two other sets of circumstances. The first of these is that the judgment debt has been substantially paid, and any remaining amounts which might arguably form part of the judgment debt, being the costs of the action and the costs of enforcement, are, in the first case, not presently payable, as they await the outcome of taxation, and in any event are otherwise provided for; while in the second case the amount is disputed. The taxation process is also expected to run for some time yet, while the dispute is not expected to be resolved soon.
The other basis put for the discharge of the receiver is what PSA and Mr Campbell‑Smith say is the power of the court to correct an irregularity in the carrying out of the receivership orders. There were irregularities, they say, of two kinds. One irregularity was that Mr Lean, without prior authority from the court, obtained legal advice and representation from early in the receivership, and then later, in the proceedings in which he was named as a co‑plaintiff. The other kind of irregularity was that Mr Lean continued to act as receiver after being asked by Mr Campbell‑Smith and PSA to cease doing so, following their making serious allegations concerning his conduct.
At the hearings on 7 and 13 October 2009 (the October 2009 hearings) before me both CAT and Mr Lean were represented. CAT opposed the granting of the application to discharge Mr Lean, while Mr Lean appeared to neither oppose nor to consent to that discharge. However, counsel for Mr Lean sought directions and declarations, principally as to the meaning of 'judgment debt' in the order appointing him and whether or not he had an equitable lien for his costs on the asset of which he was receiver or on the proceeds of its sale. As I will explain, I consider I have the power to issue such directions and declarations, and I consider it is appropriate to respond to that request, not least in view of the overlap of the issues the directions and declarations involve with issues PSA and Mr Campbell‑Smith have raised by their application to discharge the receiver.
Following my reservation at the conclusion of the October 2009 hearings of my decision on the application to discharge the receiver and the matter of the directions, there were a number of further events (the further events) to which my attention was called in supplementary submissions for PSA and Mr Campbell‑Smith dated 10 June 2010 (the defendants' supplementary submissions). I understood those submissions to be for the purposes of an application for leave to re‑open the application for cancellation of the receivership orders and the matter of the directions.
The overall effect of those submissions, as I understood them, was that the further events made it clear that the services of the receiver were likely not to be required. The further events were of two kinds: one kind had to do with the appeal against the damages orders following CAT WASC; the other kind had to do with CAT's winding up in insolvency.
As to the further events of the first kind, by a decision following the October 2009 hearings, an appeal against the damages orders following CAT WASC succeeded as to the greater part of the judgment debt ordered to be paid. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (PSA [No 2] WASCA). Subsequently, the Court of Appeal for the reasons given in a supplementary judgment made orders to give effect to its conclusions, including ones ordering the greater part of the judgment debt paid to be repaid and remitting the matter of the costs of the trial to me. See Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S) (PSA [No 2] WASCA (S)). PSA and Mr Campbell‑Smith say that, while there remains the matter of the costs of the action to be addressed, it is likely as a result of the basis on which the appeal was successful that there will be no costs payable to CAT, and indeed a balance payable to PSA and Mr Campbell‑Smith.
Further, an application for special leave to appeal the decision in PSA [No 2] WASCA to the High Court was dismissed.
As to further events of the second kind, subsequent to the October 2009 hearings orders were made to wind up CAT in insolvency. An appeal has been made against those orders, although it now appears that that appeal is only being pursued as to certain of the costs orders and not the order to wind up itself. PSA and Mr Campbell‑Smith say, as I understand their submissions, that, as a result of the statutory right in insolvency for them to set off any amounts for costs including enforcement costs of this action that they may still owe CAT against the amount to be repaid by CAT to them, there will be no balance left due to CAT. Thus, there will be no amount left in respect of which there is a need for enforcement by means of the receivership orders.
As a result of the distribution of the defendants' supplementary submissions of 10 June 2010, efforts were made to determine if there was consent to having leave to re-open with any necessary leave so to proceed notwithstanding the winding up of CAT in insolvency, under Corporations Act 2001 (Cth) s 471B. When those efforts proved unavailing I called the parties back for submissions as to how I should proceed. At a hearing on 3 September 2010, and without opposition, I granted the leave to re-open and the leave to proceed. I also made programming orders to permit the receiver within 14 days to make written submissions to respond to the defendants' supplementary submissions of 10 June 2010, which I was told by counsel for the receiver had not been received by her or by her instructors before the hearing of 3 September 2010. I further provided for a decision to be made no less than seven days thereafter without the need for a further hearing, as well as for a liberty to apply. In the event there were no submissions received from the receiver within the time so provided for.
However, the receiver subsequently provided to the court and to the other parties supplementary written submissions, in the form of the 'Receiver's Supplementary Submissions in Response to Defendants' Submissions' dated 15 October 2010 (the receivers supplementary written submissions). As I was informed the other parties had no objection to my considering the receiver's supplementary written submissions, I have done so.
I note that the receiver's supplementary written submissions, among other things, states that, in view of the successful appeal against the damages orders, the receiver's position was that there was no need for the receivership to continue and that 'subject to resolution of issues as to his costs and remuneration, he can retire or be discharged'.
Also at the hearing of 3 September 2010 counsel for PSA and Mr Campbell‑Smith handed up a document entitled 'Minute of Final Orders sought by Defendants in relation to Discharge of Court Appointed Receiver' dated September 2010 (the minute of September 2010 of PSA and Mr Campbell‑Smith). The proposed orders under the minute of September 2010 of PSA and Mr Campbell‑Smith appear to replace the orders sought by their chamber summons dated 13 August 2009, while a number of the proposed orders appear to be put to substitute for a number of the directions sought by the receiver. I will consider the application for discharge of the receiver and the matter of the directions by reference to that understanding of the minute of September 2010 of PSA and Mr Campbell‑Smith.
I turn now to deal with the issues in the application for discharge of the receiver and the matter of the directions.

Discharge where the task assigned under the receivership has been performed

I consider that I have the power to make an order cancelling the receivership orders the receiver under Civil Judgments Enforcement Act 2004 (WA) s 103 (CJE Act) with the effect of discharging the receiver. The contrary was not put to me.
CJE Act s 103 says this:
103. Amending and cancelling orders etc.
(1)If a court makes an order under this Act (the original order), a person ‑
(a)who obtained the original order;
(b)to whom the original order is addressed;
(c)who is authorised to do anything under the original order; or
(d)who is affected by, or whose property is affected by, the original order,
may apply to the court for an order that amends or cancels the original order.
(2)The court may make an order that amends or cancels the original order and may do so on terms as to costs or otherwise.
(3)The person who made the application under subsection (1) must serve the order made under subsection (2) on each of the other persons referred to in subsection (1).
(4)Unless it orders otherwise, the order made under subsection (2) has effect ‑
(a)if the person referred to in subsection (1)(b) or (c) applied for it, when it is made; or
(b)otherwise, when it is served on the person to whom the original order was addressed.
It was common ground that my jurisdiction to make a cancellation order with the effect of discharging a receiver was under s 103. I consider that, by reference at least to the provision of the receivership orders making the costs of the receiver 'primarily payable by the judgment debtors' (order 8), and provided that s 103 applied to the receivership orders, PSA and Mr Campbell‑Smith have standing to apply for such an order, by virtue of CJE Act s 103(1)(d). I return to order 8 below. It was common ground s 103 applied to the receivership orders, and in any event I consider that s 103 does so apply, as those orders were made under s 86 and s 87, to which I return below. CJE Act s 103, in permitting the cancellation of a receivership order and thereby the discharge of a receiver, appears to represent a provision of the kind the absence of which for other receivers was noted in Bowesco Pty Ltd v Cronin [2008] WASC 296; [2010] ALMD 1448 [14] (Sanderson M).
If an order cancelling the receivership orders were made on the basis that the assigned task had been performed, or on either of the alternative forms of that basis, then it seems to me that no question of whether or not I should appoint a replacement receiver would arise. The order should simply be terminated. As I indicate below, I consider different considerations would arise with respect to an order discharging Mr Lean on the other basis Mr Campbell‑Smith and PSA contend for, that of irregularity.
I must first determine if Mr Campbell‑Smith and PSA have made out that Mr Lean has performed the assigned task. If they have made that out, it seems to me that my discretion to make the order applied for should be exercised. See the authorities on discharge of a receiver at common law 'when the object of his appointment has been fully effected' cited in Walton R, (ed) Kerr on the Law and Practice as to Receivers (16^th ed, 1983) (249).
The receivership orders were made on 20 November 2008. The material provisions were as follows:
1.Until further order Graeme Trevor Lean, is appointed as the Receiver of the property pursuant to s 86(1)(b) alternatively s 86(1)(e) of the Civil Judgments Enforcement Act 2004.
2.For the purposes of these orders the Receiver is appointed in this action to appropriate and realise the property so as to satisfy the judgment debt.
3.For the purposes of these orders the property is that described and referred to in the schedule hereto.
4.The Receiver shall have the following powers in respect of the property:
…
c.the power to register the shares comprising the property in the name of the receiver and to sell those shares in satisfaction of the judgment debt …
The property referred to in the schedule to the receivership orders for the purposes of order 3 was described in a list of eight numbered items. It was common ground that the only property of substantial value that CAT, PSA and Mr Campbell‑Smith contemplated Mr Lean would 'appropriate and realise' under order 2 was item (i)4, being 'one share (50% shareholding)' (the share) in Banning Holdings Pty Ltd (Banning Holdings), a company of which the late Mr Banning and his widow, Mrs Sandra Banning (Mrs Banning), were the only directors, and the only shareholders, in equal shares.
I now describe events subsequent to the making of the receivership orders. Except as noted, these matters are not in contest.
The share was an asset of the estate of the late Mr Banning. Following the registration of Mr Lean as the holder of the share, Mr Lean conducted a sale process in November 2008. This process included what the receiver and CAT contend was a form of auction for the share.

As a result of that process a contract of sale (the contract of sale) was entered into between Mr Lean as seller and Mrs Angela Frigger (Mrs Frigger) and Mr Hartmut Frigger (Mr Frigger) (together, the Friggers) as the highest bidders at that auction. The Friggers were the only directors and shareholders in CAT. Mr Lean executed a transfer of the share to the Friggers (the transfer). The Friggers paid Mr Lean the purchase price of $730,000. However, it became apparent to Mr Lean that registration of the transfer would not occur without court order. On advice from his solicitors Mr Lean did not pay this amount to CAT, but rather returned to the Friggers all but $20,000 of the purchase price. This followed the Friggers not agreeing to indemnify Mr Lean in respect of any on‑payment to CAT. The $20,000 held back was the deposit under the contract of sale. Mr Lean understood the return to the Friggers was pending a determination by the court as to whether or not the Friggers were entitled to become registered as holders of the share.
Subsequently to the return of the purchase price of the share, proceedings in CIV 1727 of 2009 were commenced in which the Friggers and Mr Lean were named as plaintiffs, and Mr Campbell‑Smith and Mrs Banning (in their capacities as directors of Banning Holdings) and Banning Holdings the defendants. Not long afterwards Mr Lean ceased to be a co‑plaintiff, but was joined as a further defendant. CIV 1727 of 2009 is presently an action under Corporations Act 2001 (Cth) s 1071F in which the Friggers seek registration of the transfer of the share to them. In the same proceedings Mr Campbell‑Smith, Mrs Banning and Banning Holdings have filed a defence and counterclaim in which among other things they plead a pre‑emptive rights provision (article 22A) in the constitution of Banning Holdings to which Mr Lean was required to have due regard and which 'enured to the benefit of' Mrs Banning; and that the sale of the share by the contract of sale was, to the knowledge of the Friggers and Mr Lean, 'improvident', as one half of the net assets of Banning Holdings was 'truly valued at in excess of twice the value of the Plaintiffs' bid for the Share'. Mr Campbell‑Smith, Mrs Banning and Banning Holdings in their claim for relief seek among other things a declaration that the sale by the contract of sale was invalid and an order for a mandatory injunction that Mr Lean offer the share to Mrs Banning in the terms of article 22A. In their counterclaim Mr Campbell‑Smith, Mrs Banning and Banning Holdings plead that Mr Lean breached duties owed to Mr Campbell‑Smith as executor of the estate of the late Mr Banning and to Mrs Banning as equitable owner of the share, in that Mr Lean did not obtain any advice or opinion from a qualified person or persons as to the market value of the share and purported to value it at what was a 'gross undervalue'; and in that he failed to offer the share to Mrs Banning pursuant to her rights of pre‑emption under article 22A.
Mr Lean is defending the counterclaim. In particular by his defence to counterclaim he has, as to article 22A, pleaded estoppel, waiver, that article 22A did not apply in the circumstances and that he complied with it; and, as to the undervaluation matters, including that he failed to obtain any advice or opinion from a qualified person or persons as to the value of the share, he denies the pleaded allegations.
The proceedings in CIV 1727 of 2009 are continuing, and there has not yet been a listing for trial. However, at the time of writing these reasons there is a possibility as I will indicate below that the judge in charge of the matter will order a permanent stay of the proceedings.
Counsel for PSA and Mr Campbell‑Smith submitted that I should find that Mr Lean completed the task assigned to him by the receivership orders. Counsel acknowledged that Mr Lean has not passed on to CAT the proceeds of realisation of the share and continues to hold the deposit. Of course Mr Lean also remains as the registered shareholder in respect of the share formerly held by the late Mr Banning. However, as I understood counsel's submission, in the event Mr Lean was discharged, those matters could be the subject of appropriate consequential orders, such as for the payment of the deposit and any amount received by him from the Friggers (for example, an amount paid by them following the resolution of CIV 1727 of 2009) into court. I should add that questions of enforcement of the contract of sale might also arise dependent on such resolution and the position adopted by the Friggers for which consequential orders would also be needed. Neither counsel for CAT nor counsel for Mr Lean submitted to me that it was not possible to craft suitable consequential orders of either of the two types referred to. I consider such orders could be crafted.
However, I am of the view that in circumstances where the effectiveness of the sale under the contract of sale is in question, and payment of the purchase price under the contract of sale has been largely reversed, it is not possible to say that Mr Lean has achieved the purposes of the receivership orders order 2. In the terms of order 2, Mr Lean, while he has succeeded in appropriating the share, has not been able 'to realise [the share] so as to satisfy the judgment debt'. It is true Mr Lean has taken the position, not least in CIV 1727 of 2009, that the sale was properly made and Banning Holdings should register the transfer. However, I do not draw from that that I am precluded from finding that Mr Lean has not yet achieved the purposes of order 2.
At the same time, on further facts I will reach there is a question whether or not steps other than action by Mr Lean have been taken, successfully, to 'satisfy the judgment debt'. Were that question to be answered affirmatively, it might be said that the purposes of the receivership orders order 2 have been achieved. For the reasons I will indicate when I consider whether or not the services of the receiver are likely to be required at all, it seems to me that at least since the insolvency of CAT that question indeed should be answered in the affirmative.
Accordingly, I would not cancel the receivership orders, and thus discharge Mr Lean, on the basis that Mr Lean has achieved the purposes of order 2. However, I will return to the matter of the achievement of the purposes of order 2 by other means.

Discharge where the services of the receiver are not likely to be needed for some time

The submissions for PSA and Mr Campbell‑Smith rest on the proposition that the proceedings in CIV 1727 of 2009 are unlikely to conclude for some time. I did not understand that proposition to be in contest, although I will have occasion to return to the matter below. In those circumstances, the submission was that there will be no need for any significant services from Mr Lean for some time. It appeared to be common ground that until those proceedings concluded, Mr Lean's only responsibilities under the receivership orders were those given by order 5, which is as follows:
The Receiver shall report in writing to the judgment creditor and to the court from time to time and not later than one month after the issue of these orders regarding:
(a)the nature and details of the property identified including any interest in any trust (including as a beneficiary of a discretionary trust, whether named or not, and a power or appointment of the trustee of any trust or power of direction);
(b)the assets and liabilities of the judgment debtors and Banning Holdings Pty Ltd;
(c)the costs of her appointment, the future costs thereof and the cost that may be incurred by her in the future;
(d)any other information in relation to the property that the Receiver thinks necessary to protect the interests of the judgement creditor, in respect of the judgment debt.
I leave aside the matter of Mr Lean's defence in CIV 1727 of 2009. For reasons I give below, I consider the reasonable costs incurred in that defence, whether or not he is discharged, represent costs for which he is entitled to claim under the receivership orders.
The reference to 'her' in order 5(c) I take to be a reference to Mr Lean. In the initially proposed receivership orders, provision was made for the appointment of Mrs Frigger as the receiver, a provision which was removed from what became the receivership orders.
To and including his report of 15 September 2009, Mr Lean appears to have provided the court with five reports. In them, for the most part, he provides information on the affairs of Banning Holdings. It did not appear to be in contest that his reporting obligations while CIV 1727 of 2009 continues did not represent a great deal for Mr Lean to do.
However, the submissions for PSA and Mr Campbell‑Smith were that the probable costs of those services would not be warranted by any benefits in continuing to have a receiver in such circumstances.
Counsel for PSA and Mr Campbell‑Smith put to me that I should approach the present matters for the purposes of the exercise of my discretion to cancel the receivership orders under CJE Act s 103(2) in the same way I had been required to approach the question of whether or not to make the receivership orders. It was common ground that the latter question had to be approached by reference to CJE Act s 86 and s 87, which are as follows:
86 . Appointing a receiver, injunctions etc.
(1)If an available asset of a judgment debtor cannot be conveniently appropriated or realised under this Part for the purposes of recovering a judgment debt, whether due to acts or omissions of the judgment debtor or otherwise, the judgment creditor may apply to the court for any or all of the following ‑
(a)an order that determines the nature and extent of the asset;
(b)an order that appoints a receiver of the asset;
(c)an order that the judgment debtor or any person in possession or control of the asset ‑
(i)deliver the asset to a person named in the order;
(ii)do, not do, or cease from doing, any act that relates to the asset and that is specified in the order;
(d)an order that prohibits the judgment debtor or any other person from disposing of or otherwise dealing with the asset;
(e)an order that facilitates the appropriation or realisation of the asset.
(2)The court may make any such order, subject to section 87.
(3)The court may make any such order even if no other proceedings have been taken to enforce the monetary judgment concerned.
87. Receiver, appointment of etc.
(1)In determining whether to appoint a receiver under section 86 the court must consider at least the following ‑
(a)whether appointing a receiver would be an effective means of realising the property;
(b)the probable cost of the receivership in relation to the probable benefits to be derived by appointing a receiver;
(c)whether appointing a receiver would cause undue hardship or prejudice to the judgment debtor or any other person;
(d)the likelihood of the judgment debt being recovered by means of any other enforcement order without realising the available asset in question.
(2)A court must not appoint a person as a receiver unless ‑
(a)the person satisfies the qualifications, if any, prescribed by the regulations; and
(b)the person has agreed in writing to act as receiver in respect of the available asset in question.
(3)Unless otherwise ordered by the court, a receiver appointed by the court may take into the receiver's custody and control the available asset in respect of which the receiver is appointed.
(4)When or after appointing a receiver the court may make any ancillary or consequential order needed to enable the receiver to realise from the available asset sufficient money to satisfy the judgment debt.
(5)Without limiting subsection (4), the court may make ‑
(a)any order needed to give the receiver power to take custody or control of, manage, sell, dispose of, divert income from, or take proceedings in relation to, the available asset;
(b)any order needed as to the payment of the receiver's fees and expenses.
Counsel for PSA and Mr Campbell‑Smith as I understood his submissions laid particular emphasis on the factors in s 87(1)(b) - (d).
Counsel for PSA and Mr Campbell‑Smith did not cite to me any authority in support of his submission as to the relevance of CJE Act s 86 and s 87, and there appears to be no authority on the discharge of a receiver by cancellation of a receivership order under CJE Act s 103.
In my view, because of their subject matter, CJE Act s 86 and s 87 are relevant, mutatis mutandis, to the exercise of my discretion under s 103(2). In particular I should note the factors in CJE Act s 87(1)(b) ‑ (d). However, in my view greater account than counsel for PSA and Mr Campbell‑Smith appeared to allow for should also be taken of the different nature, from the making of a receivership order, of a cancellation of a receivership order under which actions have been taken. In the latter context the receiver may have done substantial work towards achieving the purposes of the receivership. In this case I consider such work has been done, involving appropriating the share, including having Mr Lean registered as its holder, and his familiarising himself with the affairs of Banning Holdings. This in my view would render inapplicable the consideration in s 86(1) which must be satisfied to enliven the discretion to make a receivership order.
I turn to consider each of the three matters on which counsel for the applicants laid particular emphasis.
On the evidence before me the quantum of the probable cost of continuing the receivership following the entry into the contract of sale to the Friggers and the execution of the transfer, and the nature and quantum of the probable benefits to be derived from not cancelling the receivership orders (see CJE Act s 87(1)(b)), were not made clear to me. I draw from the evidence my best assessment of those costs and those benefits as I now explain.
The costs of the receivership are provided for in the receivership orders order 8, which is:
The costs of the Receiver including his remuneration, the cost of obtaining his appointment, of completing his security, of passing of accounts and of obtaining his discharge shall be taxed unless assessed by the master and shall be primarily payable by the judgment debtors by making payment of the taxed costs to the judgement creditor within such time as the Master may allow on taxation or assessment or is otherwise ordered by this honourable court.
It was common ground that the costs in question are the proper costs of Mr Lean, being those incurred in activities reasonably undertaken incidentally to performing the function created by his employment: see Civil Procedure in Western Australia [51.4.2] as at 28 October 2010, referring to Wayland v Nidamon Pty Ltd (1986) 11 ACLR 209; (1987) 5 ACLC 73, 222 (Hodgson J). That function is described in order 2, which in my view is to be read with order 5, the obligation to report. I have already indicated why in my view the function in order 2 has not yet been completed. I would confirm that in my view the issuance of reports with the monitoring of the matters the subject of those reports would be capable of being activities reasonably undertaken incidentally to performing the function to be served by Mr Lean's employment.
I should add that Eady v Eady (1895) 16 LR (NSW) Eq 70, 79 (Owen CJ in Eq) is the authority commonly referred to in relation to what costs, charges and expenses of a receiver that receiver is entitled to recoup:
It is a most extreme course to adopt to refuse a receiver his costs, charges and expenses, and this Court would never make such an order unless it was shewn that the receiver had acted without the authority of the Court or had deliberately acted in the wrong; no mere error of discretion would be sufficient. I see nothing of that nature in the present case, and I am therefore satisfied that the receiver is entitled to be recouped the costs, charges and expenses he has incurred in defending these bankruptcy proceedings.
However, I further note the following from Civil Procedure in Western Australia [51.4.4] (as at 28 October 2010) as to remuneration:
A receiver is entitled to have his or her costs, charges and expenses properly incurred in the discharge of his or her ordinary duties or in the performance of extraordinary services that have been sanctioned by the court. The receiver has the burden of justifying the reasonableness and prudence of the tasks undertaken for which remuneration is sought. A receiver's remuneration is not in the same category as costs and is a fair recompense for what he or she has actually done. 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 or her duties and, to some extent, the responsibility he or she has assumed.
I have already indicated there is not a great deal for Mr Lean to do at present, the matter of conducting his defence in CIV 1727 of 2009 aside.
The probable benefits to be derived from not cancelling the receivership orders include that the steps taken by Mr Lean to appropriate the share would not have to be taken again if, as counsel for PSA and Mr Campbell‑Smith had in argument accepted at the October 2009 hearings, it is necessary to appoint a new receiver after the conclusion of the proceedings in CIV 1727 of 2009. Of course account would also have to be taken of the degree of likelihood of such a new appointment, a matter to which I return.
Further, depending on the outcome of CIV 1727 of 2009 and the position of the Friggers under their contract of sale, having Mr Lean continue as receiver might (subject to the effect on that continuation of the further events since the October 2009 hearings) involve him in recovering from them the balance of the proceeds of the sale, or re-starting the process of selling the share, including the possibility of negotiating a new sale to the Friggers. In respect of any such negotiation, although counsel for PSA and Mr Campbell‑Smith put the contrary to me, I do not consider I have a reason to believe Mr Lean would not conduct himself in accordance with his duties as a court-appointed receiver. In either moving to recover that balance, or restarting that process, Mr Lean would in my view be in a position to turn to account both his position as the registered holder of the share and the knowledge of Banning Holdings he had acquired in the performance of his duties under order 5 of the receivership orders.
However, the realisation of any such benefits would await the outcome of CIV 1727 of 2009, and the probable benefits described must be discounted accordingly.
As to whether or not cancelling the receivership orders would cause undue hardship or prejudice to PSA and Mr Campbell‑Smith as judgment debtors, or to any other person (see CJE Act s 87(1)(c)), I consider the only hardship shown was the probable costs of not cancelling the receivership orders, being the costs of the reports and monitoring referred to earlier.
As to the likelihood of the judgment debt being recovered by means of any other enforcement order without realising the share (see CJE Act s 87(1)(d)), I consider that, while there is no other enforcement order in this case, that factor warrants me in the exercise of my discretion under CJE Act s 103(2) considering the likelihood of satisfaction of the judgment debt the result of other matters than another enforcement order.
As I have previously indicated, and will consider in the next section of these reasons, there has been recovery of the largest portion of the judgment debt, as well as the further events since the October 2009 hearings. As I will explain below, I consider that prior to the insolvency of CAT there still remained the possibility of an amount due to CAT in respect of the judgment debt, being an amount for costs of the action and enforcement costs net of amounts for costs due from CAT to PSA and Mr Campbell‑Smith, which could not be set off against the amount CAT had to repay. However, if after insolvency that amount could be so set off, it would be improbable that that set‑off would leave a net amount due from PSA and Mr Campbell‑Smith to CAT. The consequence would be that it would be unlikely the services of the receiver would be required at all. As I will explain in the next section of my reasons, it is my conclusion that since the insolvency, but not before, it is in fact unlikely the services of the receiver will be required at all.

Weighing all the factors I have referred to, I would only cancel the receivership orders on the present basis as a result of the insolvency of CAT.
I turn then to the matter of whether or not the services of the receiver are not likely to be required at all.

Discharge where the services of the receiver are not likely to be required at all

It was common ground that on 2 and 5 June 2009 CAT was paid amounts totalling $1,165,661.54 (the paid amount). It was also not in contest that the paid amount was all or almost all of what under the orders entering judgment for CAT was made payable by PSA and the late Mr Banning. There appears to be a contest as to a relatively very small amount in respect of that last sum. Those orders, made on 9 July 2008 (the trial judgment orders), were in relation to that sum as follows:
1.1The sum of $287,125.00 together with the sum of $89,440.80 being interest thereon at the rate of 6 per centum per annum from 1 May 2003 to 9 July 2008, and thereafter $47.19 per day from 9 July 2008 to the date of payment.
1.2the sum of $4,999.50 together with the sum of $1,444.24 being interest thereon at the rate of 6 per centum per annum from 15 September 2003 to 9 July 2008, and thereafter $0.82 per day from 9 July 2008 to the date of payment
1.3the sum of $675,078.00 together with the sum of $47,939.79 being interest thereon at the rate of 6 per centum per annum from 3 May 2007 to 9 July 2008, and thereafter $110.97 per day from 9 July 2008 to the date of payment.
It was not in contest that the paid amount included no part of the costs of the action before enforcement costs. The trial judgment orders had provided for written submissions as to the orders to be made on costs (order 2). Orders as to costs (the trial costs orders) were made on 6 May 2009 following the delivery of the reasons in Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (S) (CAT WASC (S)). The trial costs orders relevantly provided that 'the Defendants pay 90% of the plaintiff's costs of the action to be taxed if not agreed' (order 1).
It was also not in contest that the paid amount included no amount for enforcement costs, which include both the costs of the receivership, which as has been seen are by the receivership orders made 'primarily payable' by PSA and the late Mr Banning (the receivership orders, order 8), and the costs under a property (seizure and sale) order made on 25 September 2009 (the September 2009 PSSO). The September 2009 PSSO provides that it is for the satisfaction of previous enforcement costs and interest as well as the enforcement costs of the September 2009 PSSO itself.
There is a question whether or not the costs of the action and the enforcement costs were included in the 'judgment debt' for the purposes of the receivership orders. I understood counsel for PSA and Mr Campbell‑Smith to contend that neither class of costs was included, although it was not clear he pressed the point. Counsel for Mr Lean sought clarification of the matter as part of directions the receiver sought to which I return below. In my view it is necessary to provide that clarification at this point, in order to resolve the present basis for cancellation of the receivership orders.
I note the following provisions of CJE Act s 3 defining 'enforcement costs', 'judgment debt' and 'judgment sum' as follows:
3. Terms used
In this Act, unless the contrary intention appears ‑
…
enforcement costs, of a judgment, means ‑
(a)any fees, expenses, or other amounts, that are paid, ordered to be paid, or payable, under this Act or another written law in connection with enforcing the judgment; and
(b)any costs of taking, or in relation to, any proceedings under this Act to enforce the judgment that are ordered by a court to be paid by the person against whom the judgment is given;
…
judgment debt means the unpaid amount of any of the following ‑
(a)a judgment sum;
(b)interest on the judgment sum;
(c)enforcement costs of the judgment;
…
judgment sum means the amount of money ordered to be paid under a monetary judgment, whether or not the money is or includes costs or pre‑judgment interest;
…
As I understood the positions of the parties, there was no contest that the costs of the receivership and the costs of the September 2009 PSSO are enforcement costs within CJE Act s 3. However, there was a sharp contest over what the proper costs in each case were, as will shortly appear.
Further, in my view it is clear from the statutory provisions I have just quoted, the relevant language of which is used in the receivership orders, that the costs of the action are part of the judgment sum within CJE Act s 3.
In my view it follows that the costs of the receivership and the costs under the September 2009 PSSO as well as the 'judgment sum' are included within the meaning of CJE Act s 3 'judgment debt'.
In my view, given that the receivership orders were made under CJE Act s 86 and s 87, and given that they used 'judgment debt' in order 2, the meaning to be given that term in order 2 is that given by CJE Act s 3.
It follows that the paid amount did not provide satisfaction of the judgment debt for the purposes of the receivership order order 2, leaving aside the contest as to the relatively very small amount I referred to.
It was common ground that taxation of the costs of the action will not occur for some time, and that there are questions as to the quantum of the costs, if any, which will be taxed out and become payable by PSA and Mr Campbell‑Smith, in view of the setting aside of the trial costs orders as a result of the decision in PSA (No 2) WASCA.
In any event, counsel for PSA and Mr Campbell‑Smith put to me that adequate provision is made for the payment of the costs of the action by provisions of a deed of company arrangement entered into in respect of PSA on 20 March 2009 and amended since (the DOCA). The DOCA cl 5.1.3 provides as follows:
5.1.3Subject to the condition set out in clause 6.3, the remaining liability to the Judgment Creditor for the taxed costs of the Action after the payments made pursuant to clauses 5.1.1 and 5.1.2, is to be satisfied from the proceeds of the sale of the Property on or before 31 December 2009, provided that the marketing of the Property for sale shall not be commenced until on or after 31 July 2009. Should the costs not be taxed by 31 December 2009 then the date for payment of the remaining liability for costs shall be extended to a date 7 days after such taxation is completed.
Neither 'taxed costs' nor 'costs' is defined, while 'Action' is defined as the action in CIV 2265 of 2006 (cl 1.1). It seems to me that such costs would include, not only 'costs' as that term is used in CJE Act s 3 'judgment sum' (apparently, to the exclusion of 'enforcement costs' there defined: see s 3 'judgment debt'), but also enforcement costs and costs in the appeal, including the application for leave to appeal to the High Court. The 'Property' referred to is the premises at 11 Lacey Street Perth (DOCA cl 1.1).
At the hearing before me on 13 October 2009 counsel for PSA and Mr Campbell‑Smith referred me to what I took to be the evidence as to the adequacy of this provision, evidence which was before me at the hearing on 17 September 2009 of an application by CAT for variation of freezing orders obtained by CAT against PSA and Mr Campbell‑Smith and on which I made findings in the reasons I delivered on that day, reasons that were subsequently published. See Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 4] [2009] WASC 407 (CAT [No 4] WASC). See [56] ‑ [61], on the amount that might, on the evidence referred to, be expected to be left from the proceeds of a sale of the Property after payment of the remaining unpaid amounts in cl 5.1.1 and cl 5.1.2, of $358,163. See also [31] ‑ [36], on the estimates in the evidence referred to of the costs of the action, of approximately $701,000 (on the evidence for CAT) and $315,000 (on the evidence for PSA and Mr Campbell‑Smith). However, the estimates of the costs of the action were made before the decision in PSA [No 2] WASCA (S), a matter to which I will return.
However, I consider that there are three qualifications on the DOCA cl 5.1.3. One is that on the range of estimates described before allowance for the decision in PSA [No 2] WASCA (S) it is not clear the provision in the DOCA cl 5.1.3 will be adequate for the costs of the action. Further, I note that the source of the payment, PSA, is a company under a deed of company arrangement, which I consider would ground a concern that it might be insolvent at the point at which payment is to be made after taxation of the costs of the action. Finally, I note that it is not clear that enforcement costs are covered by the DOCA cl 5.1.3.
I have noted that CAT has taken the position that the DOCA is not valid, on a number of grounds. However, there has yet to be a hearing of any application to set it aside, and I do not consider that I am in a position to reduce on that account the weight that I would give to the DOCA in my deliberations.
As to the enforcement costs in the forms of the costs of the receivership and the costs under the September 2009 PSSO, there was evidence referred to in CAT [No 4] WASC as to the former, for an amount of $150,000 before any disallowance of costs of the kinds sought in the present application (see [39] and [43]); and as to the enforcement costs prior to the September 2009 PSSO, for an amount of about $32,000 which was (and remains) in dispute (see [44]).
It seems to me that I should leave aside the costs of the receivership. This is because, as I will explain below, in my view they are not chargeable to CAT, and the receiver has a lien for his costs on the share or its proceeds. That lien survives his discharge: see Re Andrews [1999] 1 WLR 1236; [1999] 2 All ER 751, 1243 (Ward LJ), referring to Mellor v Mellor [1992] 1 WLR 517; [1992] 4 All ER 10; [1993] BCLC 30; [1992] BCC 513. In those circumstances it seems to me the continued services of the receiver are not likely to be required simply to satisfy the costs of the receivership.
However, in my view, allowing for the costs of the action under the trial costs orders and the enforcement costs under the September 2009 PSSO, with the limitations of the DOCA cl 5.1.3 to which I have referred, it could not be said that it was likely the services of the receiver would not be required at all.
However, there is further matter to be taken account of, that of the further events. As to the first kind of the further events, in respect of the appeal against the damages orders following CAT WASC, I note that, following the October 2009 hearings, the Court of Appeal on 23 October 2009 delivered its judgment in PSA [No 2] WASCA. The court's decision was that the award of damages plus interest for the loss on acquisition of the property in Armadale, which as a result of the decision in CAT WASC was $287,125 plus interest, should be reduced by $6,500 with a corresponding reduction in the interest on that sum; and that the award of damages for the loss of investment opportunity plus interest, which was $675,078 plus interest, should be set aside altogether: [122] (Martin CJ, Buss & Newnes JJA agreeing).
On 7 December 2009, following the decision in PSA [No 2] WASCA, the Court of Appeal delivered a supplementary judgment, PSA [No 2] WASCA (S), in which it stated that the orders made in the appeal (the appeal orders) were the following, in [21]:
In addition to orders 1, 2 and 7 pronounced on 23 October 2009, allowing the appeal, setting aside the judgment of the trial judge and ordering the payment out of court of the $38,000, the following orders are made:
3.In lieu of order 1 of the orders made by the trial judge it is ordered that:
1.The defendants do pay to the plaintiff:
1.1the sum of $280,625.00 together with the sum of $87,370.48 being interest at the rate of 6 per cent per annum from 1 May 2003 to 9 July 2008, and thereafter $60.49 per day from 9 July 2008 to the date of payment.
1.2the sum of $4,999.50 together with the sum of $1,444.24 being interest thereon at the rate of 6 per cent per annum from 15 September 2003 to 9 July 2008, and thereafter $1.06 per day from 9 July 2008 to the date of payment.
4.The respondent do pay to the appellants the sum of $716,188.45 plus interest at 6 per cent per annum from 2 June 2009 until 23 October 2009 in the sum of $16,835.33 plus further interest at 6 per cent per annum from 23 October 2009 being $117.73 per day to the date of payment.
5.The respondent do pay to the appellants the sum of $59,634.27 plus interest at 6 per cent per annum from 5 June 2009 until 23 October 2009 in the sum of $1,372.41 plus further interest at 6 per cent per annum from 23 October 2009, being $9.80 per day to the date of payment.
6.The respondent do pay to the appellants 80% of their taxed costs of the appeal, save that in respect of the appellants' costs of the issues relating to the orders to be made upon publication of the court's reasons, the respondent do pay the entirety of the appellants' costs to be taxed on an indemnity basis, in that the appellants are to be awarded all costs reasonably incurred which are reasonable in amount.
…
8.The costs orders made on 6 May 2009 by the trial judge be set aside and the question of the costs of the trial be remitted to the trial judge for reconsideration in light of the reasons of this court.
9.Liberty to apply within 14 days in relation to whether there should be a stay of any of orders 4, 5 and 7.
No stay under order 9 was granted.
I further note that special leave to appeal to the High Court against the decision in PSA [No 2] WASCA was refused on 28 May 2010, with costs to the respondents (the defendants).
It would seem that the effect of order 1.1 is that the amount there referred to before interest represents the portion of the paid amount which is to be credited to CAT, while the effect of order 4 and order 5 is that the sum of the amounts there referred to before interest represents what PSA and Mr Campbell-Smith overpaid CAT. It will be seen that the sum of the amounts in order 4 and order 5 before interest is about two-thirds of the paid amount. There has not yet been any repayment.
It will also be seen that the trial costs orders have been set aside, and the question of 'the costs of the trial' remitted to me for reconsideration in light of the reasons of the Court of Appeal. There has as yet been no hearing on the remitter. The present application is of course not the setting for a determination of the matters of costs so remitted. However, in order to determine the present issue, it is necessary I indicate what on the material presently before me appears to be the range of possible outcomes on that remitter.
One possible outcome is that a costs order in favour of PSA and Mr Campbell‑Smith, might be determined to be appropriate: see, however, Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569, 575, quoted in CAT WASC (S) [43].
However that may be, it seems to me improbable that there will not be at the least a substantial percentage reduction in the costs of the action that would otherwise be awarded to CAT, to reflect the now substantially increased areas and degrees of lack of complete success in the action that CAT has sustained. See CAT WASC (S) [47] and authorities cited there. In addition, account would need to be taken of the contribution of the now unsuccessful claim for loss of investment opportunity to a number of the determinations in CAT WASC (S) that special costs were appropriate. See for those in respect of which such a contribution was expressly referred to in the decision [167] ‑ [171] (amendment of statement of claim to plead such loss); [174] (getting up with respect to evidence of valuer related to such claim); and [199] (trial, including total recovery and cross-examination of same valuer). This is not necessarily exhaustive of that contribution.
In my view this range of outcomes would remove the first qualification on the DOCA cl 5.1.3 I described above, that it is not clear the provision for the costs of the action in DOCA cl 5.1.3 will be adequate. However, the remaining two qualifications would apply.
Further, it seems to me that, at least to this point in my description of events, CAT would have been unable to set off the anticipated amount of the costs of the trial against the amount it must repay. Such a set‑off would appear to be excluded by the DOCA cl 6.1.3, which reads as follows:
The payment of costs following the taxation of the costs of the Judgment Creditor shall subject to the outcome of the Appeal, if this is heard and determined prior to the finalization of the taxation of costs. If the Judgment Sum is reduced on Appeal, the Judgment Creditor shall forthwith repay the excess amount it has been paid (with interest that has been paid that relates to that sum) to Banning Holdings. The amount repayable by the Judgment Creditor shall be set off against any costs owing on the taxation, and must be repaid prior to the taxation if the costs have not at that time been determined. (emphasis added)
This provision, like the other provisions of the DOCA, binds CAT as one of the creditors of PSA as well as PSA and Banning Holdings, although not Mr Campbell‑Smith in his capacity as the personal representative of the late Mr Banning, as the estate is not a party to the DOCA: see Corporations Act s 444D(1). By Corporations Act s 444(5) it seems to me the provision, taking account of the emphasised words, has the effect of displacing what would otherwise be any right of set-off in the terms of s 553C. Those terms are incorporated into the DOCA as a result of Corporations Regulations 2001 (Cth) reg 5.3A.06 read with sch 8A item 8, which might apply notwithstanding that costs have not been 'determined' at the time for payment. The costs of the action, including enforcement costs, have not yet been 'determined' (which I understand to mean fixed), at least not to any significant extent.
I note that the repayment obligation under DOCA cl 6.1.3 is owed to Banning Holdings, where the obligation to pay under the appeal orders order 4 is owed to PSA and Mr Campbell‑Smith. However, it seems to me that the emphasised words mean that the obligation to repay is to be determined by reference to any right of set-off of the costs of the action, including enforcement costs, to the extent costs have been 'determined' at the time for repayment: in this case, however, as I have indicated there are no costs 'determined' as yet to any significant extent.
I return to the right of set-off in s 553C below.
However, as was put by counsel for PSA and Mr Campbell‑Smith in the submissions of 10 June 2010, there are further considerations relevant to whether the services of the receiver are likely to be required. These arise out of the further events, both from the proceedings in the appeal against the decision in CAT WASC and the application for leave to appeal against the decision in PSA [No 2] WASCA, on the one hand, and from the recently ordered winding up in insolvency of CAT, on the other.
With respect to the proceedings in the appeal and the application for leave to appeal, I note the order for 80% of the costs of the appeal plus an indemnity costs order already quoted made in favour of PSA and Mr Campbell‑Smith against CAT, costs which have not yet been assessed. Further, CAT was ordered to pay the costs of the special leave application to PSA and Mr Campbell‑Smith.
With respect to the insolvency, on 21 January 2010 I had appointed a provisional liquidator of CAT (see Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [2010] WASC 38); and on 15 February 2010 I had refused an application to terminate that appointment (see Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2010] WASC 113).

On 6 May 2010, following the decision of Sanderson M in Professional Services of Australia Pty Ltd (Administrator Appointed) v Computer Accounting and Tax Pty Ltd[No 3] [2010] WASC 93 the learned master ordered the winding up of CAT in insolvency, with the costs fixed at $48,899.40 payable to PSA and Mr Campbell‑Smith by CAT, $33,661.90 of which was also made payable by CAT and the Friggers jointly and severally. An appeal against this winding up decision is pending, although an appeal against the making of the winding up order is not now being pursued. Rather, the appeal being pursued is against the learned master's order for the payment of the amount of $33,661.90 by the Friggers jointly and severally with CAT. See Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [2010] WASCA 171 [12] (Newnes JA), (CAT (in liq) WASCA), the reasons for a judgment granting the application by the Friggers to have enforcement of the costs order appealed against suspended.
It seems clear to me that outside any insolvency of CAT the costs of the proceedings on the appeal against the trial decision and the application for leave to appeal against the decision in the appeal could be set off against any of the other costs of the proceedings in CIV 2265 of 2006, including enforcement costs, such as the costs of the receivership. See Derham, Rory, The Law of Set‑off (3^rd ed, 2003) [2.80] and authorities there cited. In my view the 'costs' referred to in DOCA cl 6.1.3 may be seen as the net resulting from this form of set-off. There are reserved costs of a number of proceedings in the action yet to be determined, including costs in the Local Court and the District Court of earlier forms of the present action which in my view are part of the costs of the action, as well as interlocutory proceedings in this court in which PSA and Mr Campbell‑Smith were successful. Considering the nature of those proceedings, it seems to me that it is likely, although by no means inevitable, there will be a balance owing by CAT to PSA and Mr Campbell‑Smith in respect of those reserved costs.
Considering all of the matters I have just referred to, including the range of possible outcomes on the remitter, it seems to me that it is likely the sum for the costs of the action including enforcement costs owing by PSA and Mr Campbell‑Smith to CAT will be significantly less than it would have been prior to the decisions on the appeal.
In addition, in the insolvency of CAT account must be taken of the set‑off provision for insolvencies under Corporations Act s 553C. That provision would prevail over a provision like DOCA cl 6.1.3 in the event of any inconsistency between them: see Derham [6.71]. In any event, it seems to me that in the event of the insolvency of CAT the effect of that provision must be taken into account because of the language in cl 6.1.3 that I emphasised and considered above.
In the insolvency of CAT it seems to me to be clear that under Corporations Act s 553C the amount payable by it under the appeal orders and any balance falling due after the insolvency for the costs of the action including appeals and enforcement costs each represents 'what is due from the one party [CAT or PSA and Mr Campbell‑Smith, as the case may be] to the other party [CAT or PSA and Mr Campbell‑Smith, as the case may be] in respect of … mutual dealings': see Derham [8.45] (damages for misrepresentation leading to entry into a contract can be employed in a set‑off).
Thus, it seems to me that in the insolvency of CAT there would be a set‑off of any balance on account of costs owing to it by PSA and Mr Campbell‑Smith against the amount which CAT is required to repay under the appeal orders. See Derham [6.70]. It seems to me to be improbable that there were will be a sum on account of costs that will exceed the amount which CAT must pay them under the appeal orders.
It follows that it is improbable the services of the receiver will be required. Indeed it may be said that as a result of the payment of the paid amount to CAT and events since then steps have been taken to 'satisfy the judgment debt'. However that may be, at the very least I do not consider the probable benefit of continuing the receivership would justify even the relatively low costs of continuing it.

Conclusion on application to discharge the receiver

For the foregoing reasons, I consider that the receivership orders should be cancelled, and I would order that cancellation effective with the date of delivery of this decision, with the effect of discharging the receiver. As I understood it this is what is sought by proposed order 1 of the September 2010 minute of PSA and Mr Campbell‑Smith. I return below to the matter of consequential orders on such cancellation. I also return below to the choice of the date of this decision for the effective date of the cancellation.
That conclusion means it is strictly unnecessary for me to address the other basis put for an order to the same effect, that of irregularity. However, in view of the argument addressed to me on it, and its bearing on the orders sought by the receiver, I will consider the application on this basis.

Discharge for irregularities

I consider I have jurisdiction to make an order for such discharge in such a circumstance under CJE Act s 105. The contrary was not pressed on me. CJE Act s 105 says this:
105. Irregular enforcement, courts' powers as to
If the court that made an order under Part 4 or 5 or section 101 is satisfied that an irregularity has occurred in connection with the making or carrying out of the order, the court may make any order needed to correct the irregularity including an order ‑
(a)that sets aside the order or an act done under the order;
(b)that requires the restitution of property or the payment of money, compensation or damages.
However, it is not evident to me that irregularities of the kind PSA and Mr Campbell‑Smith relied on would warrant setting aside the receivership orders, as opposed to varying them to replace Mr Lean with another receiver. In view of my conclusions in respect of those irregularities, I do not need to further explore this matter.
Counsel for PSA and Mr Campbell‑Smith confirmed that it was not contended in the application before me that the receiver acted negligently or in breach of any other duty. I accept that matters going to negligence and other breaches of duty have been raised in CIV 1727 of 2009, and counsel accepted that it was not appropriate, even if it were possible, for me to make findings in those respects. Thus, the present proceedings are not ones under Civil Judgment Enforcement Regulations 2005 (WA) reg 59 for the discharge of the receiver for his failure to perform any duty (see reg 59(2)(d)).
However, as will be seen, counsel for PSA and Mr Campbell‑Smith did contend that it was an irregularity for the receiver to continue acting when he had been asked to consent to his discharge by PSA and Mr Campbell‑Smith, who had made serious allegations of matters of that kind in CIV 1727 of 2009.
I also note that counsel for PSA and Mr Campbell‑Smith indicated they did not wish the receiver's discharge on any basis to work a release from claims against him in CIV 1727 of 2009. However, I consider no special order is required in that regard. See Harrison v Boydell (1833) 6 Sim 211; 58 ER 573, referred to in Kerr on the Law and Practice as to Receivers (16^th ed) 244; and see Civil Procedure in Western Australia [51.6.4] (as at 28 October 2010).
I understood from the hearing on 3 September 2009 that there was to be a hearing on 10 September 2010 on the motion of the judge managing CIV 1727 of 2009, Kenneth Martin J, to determine whether or not proceedings on the statement of claim should be permanently stayed. I understand that that hearing took place, and his Honour has reserved his decision. Assuming that any such stay order were made, and had the effect of also terminating the claims against the receiver in those proceedings, I would confirm that nothing in the present judgment reaches any claimed liability of the receiver relied upon in those proceedings. I would further confirm that I am not called upon to determine whether or not the bases of that claimed liability have been made out for any purpose, including for the purpose of disentitling the receiver to his costs of acting in the ways described by those bases. I will return to this matter below.
The irregularities on which PSA and Mr Campbell‑Smith rely are three. One is the receiver obtaining legal advice from time to time, including to write letters on his behalf without prior authorisation from the court. Another irregularity is his involvement in CIV 1727 of 2009, obtaining legal advice in that respect before making a claim on his insurer. I should add that in submissions to me nothing was made of the matter of making a claim on the receiver's insurer, and I was unable to see what significance the reference to it had and I set it aside. The third irregularity is his continuing in the role of receiver after being asked to cease acting in that role by PSA and Mr Campbell‑Smith following their making serious allegations concerning his conduct. I will deal with each irregularity separately, before dealing with them together. The submission of counsel for PSA and Mr Campbell‑Smith was that, while none of the irregularities individually might be sufficient to warrant an order for the receiver's discharge, in combination they were sufficient for that purpose.

Receiver obtaining legal advice generally

It did not appear to be in contest that the receiver obtained legal advice resulting in his solicitor writing letters on his behalf on a number of occasions. These were in or about December 2008 in relation to obtaining documents for the purpose of valuation of the share, prior to his efforts to sell it, as well as on other occasions, where the receiver sought legal advice with respect to his costs, the scope of his investigations and the meaning of 'judgment debt' in the receivership orders, order 2, and with respect to his participation as a co‑plaintiff in CIV 1727 of 2009. In his argument, counsel for PSA and Mr Campbell‑Smith drew my attention to other occasions, being the obtaining of advice in February 2009 concerning the DOCA and in March 2009 after the sale of the share. However, my attention was not drawn to any evidence as to the advice he obtained on the former occasion; at the same time I would infer such advice was obtained, from the letter dated 11 May 2009 from the solicitors for the receiver to the solicitors for PSA and Mr Campbell‑Smith in evidence before me. I was invited to infer from the obtaining of all of this advice that the receiver engaged in the practice of consulting lawyers whenever requests were made of the receiver by CAT; however, I consider the evidence insufficient in that regard.
It is also not in contest that the receiver had not been given prior authority from the Court to seek any of the legal advice referred to.
The law applicable to a receiver's resort to legal assistance is sufficiently stated for my purposes in Andrew v Vuleta (Unreported, WASC, 17 June 1987), 11 (Seaman M) as follows:
A receiver should normally make any application to the Court through the solicitors for the party having the carriage of the order, and if necessary he should apply in person for an order giving him leave to appoint his own solicitor: Kerr on Receivers, 16^th edn, pp 168, 171. That course has not been followed in this case. Although the matter of representation has been dealt with irregularly, I am satisfied that the receiver required separate representation in the circumstances of this case.
I should add that for the receiver it was contended order 4(a) of the receivership orders included taking legal advice as appropriate. Order 4(a) gave the receiver the following power:
[T]he power to do all things necessary or convenient to be done or in connection with, or as incidental to, the identification, preservation and securing of all of the property … for the benefit of the judgment creditor.
However, I do not consider that power sufficient to dispense the receiver from the requirement that would 'normally' apply to secure prior authority from the Court to seek separate legal advice.
At the same time it is evident from Andrew that it is not every failure to obtain prior authority that would represent an irregularity from which serious consequences would flow. This is made clear, in respect of advice on matters not involving an application to the court, in the passage in Kerr on the Law and Practice as to Receivers (16^th ed) pages 170 ‑ 171, to which it appears Seaman M was referring in Andrew (footnotes omitted):
It is not only in the case of a partnership, that it may become necessary for the receiver to be advised by a separate solicitor in order that he may hold an even hand between the various parties interested. But the mere fact that he consults a solicitor who is also a party, provided the advice is proper, does not necessarily invalidate a transaction with regard to which the advice is given, as against other parties. If the receiver desires to employ a separate solicitor, except in the matter of vouching his own accounts, he should obtain the leave of the court, on his own application if necessary.
In this case, while it may have been irregular for the receiver not to have applied in person to the court for leave to employ a solicitor separate from the solicitor representing the party (CAT) which procured his appointment, it seems to me that such irregularity is not one which of itself would warrant an order effecting his discharge. It is not in dispute that concerns had been expressed by the solicitors for PSA and Mr Campbell‑Smith in December 2008 that the receiver should act 'independently', and in particular he was not entitled to act as agent for, or, at the behest of the Plaintiff [CAT]. In those circumstances it seems to me that had the receiver applied to the court then, the court would have granted him authority to employ his own solicitor.
In those circumstances, it seems to me that any irregularity in not obtaining prior court authorisation for the employment of a solicitor would not of itself warrant the discharge of the receiver.

Receiver's involvement in CIV 1727 of 2009

The contention that this was an irregularity rested on the receiver having been involved in those proceedings as a co-plaintiff and having subsequently sought legal advice in that regard. It was common ground that the receiver was initially involved as a co‑plaintiff in those proceedings having agreed to be so involved subject to obtaining the advice of solicitors. However, the receiver is no longer a co‑plaintiff.
In my view the matter of the receiver's obtaining that advice ‑ which was that his involvement as co‑plaintiff was not appropriate ‑ is sufficiently addressed in the previous section of these reasons.
As to the matter of the receiver having agreed to be joined at all, I note that it was not in contest that the receiver, as registered holder of the share in Banning Holdings, was a necessary party to the proceedings in CIV 1727 of 2009 as originally instituted. That was because orders were sought on the basis of Corporations Act s 232, the 'oppression remedy', under which the receiver, but not the Friggers, had standing: see s 234. While a receiver cannot as receiver bring action in his own name, a receiver who as a result of the receivership obtains possession of property is entitled to maintain an action in respect of that property: see Wilton v Commonwealth Trading Bank of Australia [1974] 2 NSWLR 96, 98 (Hutley JA; Street CJ & Glass JA agreeing). I accept arguendo that this would not dispense with the normal requirement to seek the prior authority of the court before so proceeding. However, in view of the necessity referred to, it seems to me the court would have granted such authorisation. In any event, it appears that not long afterwards the oppression claim was dropped, and the receiver, whether then or earlier, ceased to be a co‑plaintiff.
In those circumstances, it seems to me that any irregularity in not obtaining prior court authorisation to participate in CIV 1727 of 2009 would not of itself warrant the discharge of the receiver.

Continuing in the role of receiver after request to cease so to act

It was not in contest that serious allegations of breach of duty owed to the estate of Mr Banning and Mrs Banning had been made in provisions in the defence and counterclaim in CIV 1727 of 2009. On the receiver's response in his pleadings to those provisions, I consider it is clear that issue has been joined by confession and avoidance or denial on all of those allegations.
It is also not in contest that, by letter dated 15 May 2009 to the solicitors for the receiver, the solicitors for PSA and Mr Campbell‑Smith had sought the receiver's consent to his being discharged as receiver on the basis he 'should not be purporting to continue in his role as receiver when it is subject to a legitimate challenge which has yet to be heard'. The 'challenge' referred to appears to be that in CIV 1727 of 2009.
No authority was cited to me in support of the submission that a refusal to consent to discharge in such circumstances should be treated as an irregularity for the purposes of a provision like CJE Act s 105. While the position might be otherwise if the serious allegations were not contested in some fashion, it seems to me that it is not an 'irregularity' to make such a refusal where issue has been joined on those allegations. I return shortly to the question whether or not such refusal has relevance for the purposes of the receiver's claim for his costs, charges and expenses.
I consider no irregularity has been shown here.

Whether the circumstances in combination would warrant discharge

I have considered whether, in respect of the matters which I have found to have been irregularities, in combination they would warrant the receiver's discharge.
In my view that combination would not so warrant. I have indicated that, while the receiver failed to obtain the prior authority of the court for his obtaining legal advice in the circumstances described and for being joined as co‑plaintiff in CIV 1727 of 2009, albeit not for a lengthy period, it is clear the receiver would have obtained such authority had he applied for it. On that basis I do not consider the combination of the irregularities sufficient to warrant his discharge. This is notwithstanding I accept that, unlike in Andrew, there was, in the present proceedings, what represents an 'application to the court by a party or a creditor to control the receiver's activities on the basis that there has been some erroneous approach in law or in principle' (Andrew (11)).
Accordingly, I would not discharge the receiver for the matters relied upon as irregularities by PSA and Mr Campbell‑Smith.
There is a further question in respect of matters of irregularity relied upon by the applicants. It is whether or not the court should give directions that the costs, charges and expenses incurred by the receiver in respect of those matters should be disallowed in any assessment or taxation of the receiver's accounts. PSA and Mr Campbell‑Smith as I understood their submissions sought directions in that regard. I return to that matter below.

Directions and other orders sought by the receiver

The receiver sought a number of directions and other orders from the court. They are set out in the document 'Receiver's Minute of Proposed Orders and Declarations' dated 12 October 2009 (the Receiver's Minute), proposed order 2 and following, as follows:
2.The Receiver has an equitable lien over the share in Banning Holdings Pty Ltd which is currently registered in the name of Martin Banning and the proceeds of its sale for the payment to him of his remuneration and costs as approved in accordance with the orders of the Court made 21 November 2008.
[I note in passing that the reference to the share as 'currently registered in the name of Martin Banning' is difficult to understand, as it was common ground that it had been registered in the name of the receiver.]
3.Without limiting the scope of subparagraph 4(a) of the orders made on 21 November 2008, the Receiver is entitled under that subparagraph to seek legal advice as is reasonably required for the purpose of the exercise of his powers and obligations.
4.The words 'judgment debt' in paragraph 2 of the orders made 21 November 2008 be read so as to [insert].
5.Within 14 days of completion of the Receiver's obligations under the orders made 21 November 2008 or such other date as the Court determines, the Receiver file his accounts for passing under rule 57 Civil Judgments Enforcement Regulations 2005.
6.The second defendant do provide such security as the Court in its discretion deems appropriate for its obligation under paragraph 8 of the orders made 21 November 2008.
7.Notwithstanding paragraph 8 of the orders of 21 November 2001, the judgment debtors may satisfy their obligation to pay the taxed or assessed costs of the Receivership referred to in that paragraph by payment direct to the Receiver.
8.The Receiver's costs of this application not recovered from the defendants be costs in the receivership.

I consider the court has power to give such directions and make such other orders under CJE Act s 104, which provides as follows:
104. Directions, court may give
(1)Any of the following persons may apply to a court for directions in respect of a matter arising under or in connection with the operation or carrying out of an order issued under this Act ‑
(a)the person who obtained the order;
(b)a person to whom the order is addressed;
(c)a person who is authorised to do anything under the order;
(d)a person who is affected by, or whose property is affected by, the order; or
(e)a person who in the opinion of the court has a sufficient interest in the matter.
(2)Such an application must be made ‑
(a)if the order relates to personal property, to the court that issued the order;
(b)if the order relates to real property ‑
(i)to the Supreme Court if the order was issued by the Supreme Court;
(ii)to the District Court if the order was issued by the District Court or the Magistrates Court.
(3)On such an application, the court may ‑
(a)give any directions that are just; and
(b)make any order as to the payment of the costs of the application as are just.
The receiver is of course a person within s 104(1)(c).
With respect to proposed order 4, I have already indicated my view of 'judgment debt' in the receivership orders order 2, and I would make declarations accordingly.
I turn now to the remaining orders and declarations, beginning with the matter of the lien in proposed order 2, to which substantial argument was addressed to me.

Proposed order 2: a lien

It was common ground that the general position of a receiver appointed by the court was as described in Capewell v Revenue and Customs Commissioners [2007] UKHL 2; [2007] 1 WLR 386 [21] (Lord Walker of Gestingthorpe; Lords Nicholls of Birkenhead, Hoffmann, Rodger of Earlsferry & Mance agreeing), quoting with approval Warrington J in Boehm v Goodall [1911] 1 Ch 155, 161:
It has always been a basic principle of receivership that the receiver is entitled to be indemnified in respect of his costs and expenses, and his remuneration if he is entitled to be remunerated, out of the assets in his hands as receiver. Warrington J stated the principle in a well known passage in Boehm … 161:
'Such a receiver and manager [that is, one appointed by the court] is not the agent of the parties, he is not a trustee for them, and they cannot control him. He may, as far as they are concerned, incur expenses or liabilities without their having a say in the matter. I think it is of the utmost importance that receivers and managers in this position should know that they must look for their indemnity to the assets which are under the control of the court. The court itself cannot indemnify receivers, but it can, and will, do so out of the assets, so far as they extend, for expenses properly incurred; but it cannot go further. It would be an extreme hardship in most cases to parties to an action if they were to be held personally liable for expenses incurred by receivers and managers over which they have no control.'
This passage was cited and applied by Vinelott J in Evans v Clayhope Properties Ltd. [1987] 1 WLR 225, 229-230 (upheld by the Court of Appeal [1988] 1 WLR 358, Nourse LJ, at p 363, sharing Vinelott J's doubts as to whether a receiver's remuneration could be recovered as litigation costs).
See also Re Andrews; and Civil Procedure in Western Australia [51.0.4] (as at 28 October 2010).
However, counsel for PSA and Mr Campbell‑Smith put to me that the power in CJE Act s 87(5)(b) (set out in full previously) to make 'any order needed as to the payment of the receiver's fees and expenses' should be seen to have displaced the common law. As I understand the submission there was no lien for a receiver appointed under s 86 except and to the extent the order appointing the receiver or any subsequent order varying that order provided for a lien. No such order had been made here.
The order for the receiver's costs, including his remuneration and certain specific costs, was the receivership orders order 8, which I earlier set out in full. Counsel for PSA and Mr‑Campbell‑Smith submitted that 'primarily payable' in order 8 should be read as leaving no room for a lien as security for the primary obligation. Counsel further submitted to me that order 8 should be read as providing for the party who had obtained the receivership orders, CAT, to be secondarily liable for the receiver's costs.
In my view, neither the submission as to the effect of CJE Act s 87(5)(b) nor the submission as to the construction of the receivership orders order 8 should be upheld.
The first submission fails because the character of the receiver's lien at common law is such that it should not be seen as having been taken away by statute absent clear statutory language. CJE Act s 87(5) does not represent such language. Whether s 87(5) is sufficient to authorise a court to make an order denying a receiver a lien is a matter on which I do not need to express a concluded view, as in my view it could not be contended that there is such wording in the receivership orders order 8. However, I note Civil Procedure in Western Australia [51.0.1] as at 28 October 2010 which appears to indicate the view of the learned authors that s 87(5) is not sufficient to provide such authorisation, in respect of remuneration at least.
I derive substantial support for my conclusion from Capewell. That case concerned whether the Court of Appeal exercising its discretion in place of the primary judge 'was right to order part of the receiver's remuneration to be paid, not out of assets subject to the receivership, but by Customs', which was the party which secured the receiver's appointment: see [10] (Lord Walker).
The order was made under Civil Procedure Rules 1998 (UK) r 69.7, which in material part as reproduced in Capewell [13] (Lord Walker) reads as follows:
(1)A receiver may only charge for his services if the court ‑
(a) so directs; and
(b)specifies the basis on which the receiver is to be remunerated.
(2)The court may specify ‑
(a)who is to be responsible for paying the receiver; and
(b)the fund or property from which the receiver is to recover his remuneration.
The order was made for the purposes of a restraint order appointing a management receiver of realisable assets under Criminal Justice Act 1988 (UK) (Criminal Justice Act) s 76 and s 77. Those provisions permitted an order to be made restraining a person from dealing with any realisable property where proceedings had been instituted against a person for an offence to which the relevant part of the legislation applied; the proceedings had not been concluded; and 'either a confiscation order had been made or it appears to the court that there are reasonable grounds for thinking that a confiscation order may be made in them' (s 76(1)(c)). The offence in Capewell was of conspiracy to cheat the public revenue and conspiracy to contravene the Value Added Tax Act 1994 (UK).
Of particular significance to the conclusion in Capewell that the Court of Appeal was wrong to make the order were two matters.
One matter was the House of Lords' understanding of the entitlement of the receiver to be indemnified for his costs, expenses and any remuneration as a 'basic principle of receivership': see [21] quoted above. The analysis of the Criminal Justice Act in Hughes v Customs and Excise Commissioners [2002] EWCA Civ 734; [2003] 1 WLR 177; [2002] 4 All ER 633; [2002] All ER (D) 293 (May) [45] (Simon Brown LJ) was shortly afterwards noted with approval as follows ([23], quoting Hughes [45]):
Mr Mitchell's central argument to the contrary focuses, first, on the use of the word 'receiver' to describe the person being appointed under this legislation to conserve, manage and realise assets. A receiver is a recognisable creature of the common law, an officer of the court, someone whose essential rights, powers and duties have been established down the years. It is not apparently disputed that a receiver appointed under the 1988 Act ‑ despite the statute's silence on the matter ‑ will have the right, for example, to bring an action or to sell property. Why then, unless the statute expressly so provides, should he be denied the other ordinary consequences of his receivership, including not least the right (indeed the requirement) to recover the costs of the receivership from the assets under his control?
The other matter of particular significance to the conclusion in Capewell was certain provisions in the Criminal Justice Act and the analysis of them in Hughes which the House of Lords held was correct. Those provisions and that analysis were set out in Capewell as follows ([24]):
Money payable under a 1988 Act confiscation order is treated as a fine (section 75(1) and (2)) and is to be collected by the chief executive of the appropriate justices: section 81(3). Section 81(5) (as amended by section 90(1) of and paragraph 139 of Schedule 13 to the Access to Justice Act 1999) provides: 'If the money was paid to the justices' chief executive by a receiver appointed under this Part of this Act or in pursuance of a charging order, the justices' clerk shall next pay the receiver's remuneration and expenses.' Section 88(2) provides:
'Any amount due in respect of the remuneration and expenses of a receiver so appointed shall, if no sum is available to be applied in payment of it under section 81(5) above, be paid by the prosecutor or, in a case where proceedings for an offence to which this Part of this Act applies are not instituted, by the person on whose application the receiver was appointed.'
In Hughes's case 1 WLR 177, paras 46 and 47, Simon Brown LJ explained that neither of these provisions, properly understood, assisted the respondents in the three appeals then before the Court:
'46. At first blush one of the respondents' stronger arguments is that section 81(5) really makes little sense if the receiver can in any event deduct his costs from the assets under his control. Why, they ask rhetorically, would he in those circumstances pay over to the justices' clerk a gross sum of money so as to enable the clerk then to pay his remuneration and expenses? Inevitably, he would first deduct them. There is, however, an answer to this question and it provides, perhaps, the key to a proper understanding of the remuneration provisions of the statute. The reason why it is necessary, once a confiscation order has been made, for a receiver (whether appointed initially as a management receiver or only later as an enforcement receiver) thereafter to pay over any sum to the justices' clerk gross of his remuneration and expenses is because, as provided by section 81(3), that sum operates to reduce the amount payable under the confiscation order. In the great majority of cases the amount of the confiscation order is determined not by reference to the calculated benefit of the defendant's criminality, but rather by reference to the substantially lesser value of his realisable property. Once the latter has been established and the confiscation order made, it would clearly be wrong to deplete the value of the defendant's assets by deducting the receiver's costs until such assets have been paid to the justices' clerk and thus reduced the amount payable under the order.'
'47. That is not to say, however, that before any confiscation order is made the receiver cannot in the usual way recover his remuneration and expenses from the assets, and nor is that precluded by section 88(2). Section 88(2) is simply one of two 'supplementary provisions' for receivers and its effect is merely to ensure that if in any case … the receiver has not been paid in full, he shall be paid by the prosecutor or whoever else was responsible for his appointment.'
In other words section 88(2) is simply a statutory long-stop, similar in its effect to the long-stop of a contractual indemnity from Customs which Mr Sinclair has under para 6(d) of his agreement letter.
The effect of those two matters was then summed up in the statement of the conclusion in Capewell as follows ([27]):
The Court of Appeal was in my opinion wrong to suppose that CPR 69.7 has made (or could have made) a fundamental change either in the general law of receivership, or in the position of receiverships under the 1988 Act and the other comparable statutory powers. I would allow this appeal on that ground.
In my view Capewell strongly supports the view that a provision like CJE Act s 87(5)(b) should not be construed as making a 'fundamental change in the law of receivership' of the kind counsel for which PSA and Mr Campbell‑Smith contended. While it may be that the provision should not be construed as authorising the court to deny a receiver the receiver's lien, as Capewell on my reading would also indicate, in any event the provision should not be read as requiring for such a lien that there be an order to that effect.
As to the second submission, that order 8 should rather be read as providing for the party who had obtained the receivership orders, CAT, to be secondarily liable for the receiver's costs, I do not doubt that CJE Act s 87(5) is sufficient to authorise a court to make such an order. See on the power of a court, in the absence of such a statutory power and following final judgment, so to order Re Andrews at 1243 and Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (in liq) (No 3) [2008] FCA 448; (2008) 246 ALR 580 [18] (Finkelstein J). However, in my view it is not possible to extract such an apportionment of responsibility from 'primarily payable' in order 8, and no authority was cited to me to a contrary effect. It appears to me rather that 'primarily payable' should be read as allowing for the receiver's lien to be the security for payment, that is, the secondary source.
I should not leave the present matter without addressing one of the written submissions for PSA and Mr Campbell‑Smith. It was that the court had a power, which it should exercise in this case, to deny the receiver his lien. I took the basis for the denial to be the matters of irregularity on which they relied as I have previously indicated. In my view, whether or not I have such a power, this would not be a case for its exercise. That is because of the nature of the irregularities I have found, which in my view are not sufficiently serious to deny the receiver his lien. I so conclude as they are not such as to warrant denying him his reasonable costs, charges and expenses in acting at the relevant times, as I explain below.
Accordingly I would make an order in the terms of proposed order 2 of the Receiver's Minute.
I should not leave the matter of the receiver's lien without referring to a matter addressed in the receiver's supplementary written submissions. They refer to a claim by counsel for the defendants to priority for 'his own fees' over any lien of the receiver, and direct me to an affidavit of Mr Lean 'sworn 17 September 2010'. However, there appears to be no such affidavit on the file for CIV 2265 of 2007 or CIV 1727 of 2009.
It was not completely clear from the receiver's supplementary written submissions what I was to draw from the claim referred to. To the extent it was suggested I should make an order going to the priority position of the receiver's lien in relation to other interests in the share, I consider that the lack of evidence before me as to other claims as well as the absence of any terms for any suggested order would prevent my going further into the matter. On the priority of the receiver's lien, see O'Donovan J, Company Receivers and Administrators, (as at 28 October 2010) [25.360]. However, I note that the receiver does seek orders in support of the receiver's lien under proposed order 6 of the Receiver's Minute, and I return to that matter below. It is clear from the receiver's supplementary written submissions that it was the receiver's submission the matter of any prior existing charge or lien should have been brought to the court's attention as having a 'direct bearing' on the 'position' of the receiver. However, I consider that in the absence of any evidence of such a charge or lien and of any explanation of what was meant by 'direct bearing' and 'position' I am not in a position to act on that submission.

Proposed order 3: entitlement to seek legal advice

I understand proposed order 3 of the Receiver's Minute to include the seeking of legal advice reasonably required prior to the making of these orders, including but not limited to the legal advice referred to above in relation to matters of irregularity, to the extent that was advice 'reasonably required for the purpose of the exercise of his powers and obligations'. That is, I would understand this proposed order to be one in effect to vary the receivership orders, nunc pro tunc. I consider that the court has power to make such an order under CJE Act s 104.
I consider that if the seeking of advice prior to the making of the proposed order 3 was 'reasonably required for the purpose of the exercise of his powers and obligations' then proposed order 3 would be capable of application notwithstanding that prior authority of the court had not been obtained.
As to the lack of prior authority, I have already explained why in my view it was an irregularity not to obtain the prior authority of the court to obtain legal representation both in relation to CIV 1727 of 2009 and other matters. However, I have also explained why in my view that authority, had it been applied for, would have been given. This is a case, as in Andrew, where the court can be 'satisfied that the receiver required separate representation' (11). In Andrew Seaman M went on to say (11 ‑ 12):
It is a most extreme course to adopt to refuse a receiver his costs, charges and expenses. It would need to be shown that he acted without the authority of the court or had deliberately acted in the wrong; no mere error of discretion would be sufficient: Eady v Eady … p 70.
In my view, so far as he has incurred fees and expenses in the matter, they are fees and expenses for activities reasonably undertaken incidentally to performing the function created by the consent orders. Wayland … at p 83.
In my view that conclusion in a case where the learned Master found that the receiver acted in appointing his own solicitor without the prior authority of the court provides strong support for the order the receiver seeks.
However, it is true that this case might be distinguished from Andrew, where (11):
There has been no application to the court by a party or a creditor to control the receiver's activities on the basis that there has been some erroneous approach in law or in principle: Duffy v Super Centre Development Corporation Ltd [1967] 1 NSWR 382.
At the same time, on the matters of irregularity I have determined that there was at most an error in the exercise of discretion rather than deliberate action in the wrong, while in my view the receiver's action without the authority of the court in the circumstances should not cause it to deny him his reasonable costs and expenses of so acting where such authority would have been given had it been applied for.
I should note, however, the following from the authority referred to in Duffy v Super Centre Development Corp Ltd [1967] 1 NSWR 382, 383 (Street J):
If, of course, there can be shown to be some defect in the manner in which the receiver and manager is conducting his duties ‑ a defect arising either out of some want of good faith or out of some erroneous approach in law or in principle ‑ then that is clearly a ground on which the Court would entertain an application by one of the interested parties for appropriate directions or some other form of remedial order. Where, however, the challenge made is that there has been an absence of prudence and wisdom in the receiver's decisions, a far heavier onus rests upon the party who seeks to challenge the decision in question. The Court will not concern itself with minor and ordinary decisions that he may have made: it must be shown that there is a decision of real significance in the affairs of the company and as to which there are real and substantial grounds for questioning its correctness before the Court will embark upon an investigation of what, if any, directions ought to be given.

In my view, the receiver's decision to seek legal advice without prior authority of the court was not itself a decision of 'real significance in the affairs' of the estate of Mr Banning. Such a decision is in the language of Andrew (12) and on that authority capable of being one 'reasonably undertaken incidentally to performing the function' under the receivership orders.
However, it is a separate matter whether the seeking of such legal advice was 'reasonably required for the purpose of the exercise of [the receiver's] powers and functions' in the language of proposed order 3 of the Receiver's Minute. Proposed order 3 does not seek my determination of that issue.
However, as I understood the matter by proposed order 3(a) and (b) of the September 2010 Minute of PSA and Mr Campbell‑Smith they seek my determination of that issue, against the receiver.
Proposed order 3(a) of the September 2010 Minute of PSA and Mr Campbell‑Smith would disallow as costs of the receivership, and require to be borne by the receiver personally, the 'costs, including legal fees and professional fees of the Receiver of commencing, defending or participating in proceedings CIV 1727 of 2009'. In my view, however, it is not appropriate I make such an order. I am of that view because the determination of the issue sought by proposed order 3(a) depends, in significant part, upon the resolution of the issues as to breach of duty in CIV 1727 of 2009. If those issues are resolved in the receiver's favour there is a substantially stronger case for his costs of seeking advice as costs of the receivership than if those issues are resolved against him.
Of course, the matter could always be returned to, in further proceedings after findings on those issues had been made, or if there were no such findings, when resolution of the matter was sought in suitable proceedings. For the reasons previously given these are not proceedings of either kind.
Proposed order 3(b) of the September 2010 Minute of PSA and Mr Campbell‑Smith would disallow as costs of the receivership, and require to be borne by the receiver personally, the 'costs and expenses relating to legal advice obtained by the Receiver prior to the purported sale of the one share in Banning Holdings Pty Ltd'. In my view it is not appropriate I make this order. The matter of whether or not such advice was 'reasonably undertaken incidentally to performing the function' created by the receivership orders (Andrew (12)) should in my view be determined on the facts relating to the particular advice obtained. The lack of prior authority of the court for such advice should not, on the reasons I have previously given, itself prevent such a determination in the receiver's favour. Nor, it seems to me, are these proceedings appropriate ones for such a determination. Such proceedings are properly ones that could be brought before a taxing officer, on facts and circumstances I do not have before me.
Accordingly, I would make an order in terms of proposed order 3 of the Receiver's Minute and not make an order in terms of proposed order 3(a) or proposed order 3(b) of the September 2010 Minute of PSA and Mr Campbell‑Smith.

Proposed order 5: filing of accounts

I did not understand it to be in contest that an order in the terms of order 5 of the Receiver's Minute was appropriate if the court discharged the receiver, substituting the date of discharge for the date of completion of the receiver's obligations. The question for me is rather the latter date.
I note that the order sought by proposed order 2 of the September 2010 Minute of PSA and Mr Campbell‑Smith provides for the receiver to lodge a bill of his reasonable costs and expenses to be taxed within 21 days.
In my view the date of discharge should be the date of the delivery of these reasons. Until that date, in my view, the receiver had no reason to believe he had been discharged, other than the refusal of leave to appeal against PSA [No 2] WASCA. In my view the receiver could reasonably await the determination of the effect of that refusal on his continuance in his position.
Accordingly, I would make an order in terms of proposed order 5, replacing the date from which the period runs with the date of the delivery of the present reasons, and substituting 21 days for 14.

Proposed order 6: security for costs from the estate of Mr Banning

At the hearing before me counsel for the receiver indicated, as I understood her, that she did not press for this order, at least if order 2 of the Receiver's Minute were granted, and if orders were made in support of that lien. The latter orders were not set out in the proposed orders. However, they were explained to me as being of the kind that the courts make as a matter of 'general practice' so as to 'accord to a receiver and manager appointed by it priority for his remuneration': see the reference to this general practice in Clark Equipment Credit of Australia Ltd v Como Factors Pty Ltd (1988) 14 NSWLR 552, 568 (Powell J) (source of quotations); see also Australian Securities and Investments Commission v Atlantic 3‑Financial (Aust) Pty Ltd (No 3) [2003] QSC 386; [2004] 1 Qd R 591 [19] (Mullins J). In Clark Equipment Powell J made an order (see 570) that the receiver appointed by the court not be obliged to make any payment out of the assets or proceeds of the assets in his hands if that would exceed the amount of his costs, including his remuneration, as receiver at the time when such payment was sought. In Atlantic 3 Mullins J stated she would be disposed to grant 'the injunctive relief sought by the accountants in support of an equitable lien for their fees and expenses' ([37]). That relief was (see [8]) an order to restrain the transfer by the entity conducting certain unregistered managed investment schemes of any assets the subject of the schemes until the payment of remuneration and out of pocket expenses of investigative accountants that the court had appointed to wind up some of the schemes and to supervise the entity in the winding up of the other schemes.
The receiver's case for orders of such a kind was that PSA and Mr Campbell‑Smith had denied that there was any receiver's lien, their failure to inform the court how they intended to pay the receiver's fees and costs or to make an offer or proposal to secure those fees and costs and the possibility the estate of Mr Banning will be found to be insolvent, to which CAT (in liq) WASCA [28] refers as a 'real possibility'. I leave aside the first matter, as in my view the defendants were entitled to have their submission that there was no lien tested. However, the remaining matters, to which I would add the fact that PSA is under the DOCA, in my view would warrant an order or orders of the kind sought. However, the receiver has not set out the terms of such order or orders. I will hear from the parties as to what it or they should be.

Proposed order 7: payment directly to the receiver

It may be recalled that the receivership orders order 8 provides that the costs of the receiver, including his remuneration, and the cost of obtaining his appointment, of completing his security, of the passing of accounts and of obtaining his discharge shall be 'primarily payable by [PSA and Mr Campbell‑Smith] by making payment of the taxed costs to [CAT]' (emphasis added).
It was not contested the order should not have been made in those terms, as to the person to whom payment should be made. I should note, in view of the winding up of CAT in insolvency, that in my preliminary view in any event any moneys so paid would have been received by CAT to be held in trust for the receiver. There was no objection to proposed order 7 of the Receiver's Minute and I would make it.

Proposed order 8: costs of this application

I understood the application in question to be that for the directions and declarations. I further understood 'costs of the receivership' to refer to the proper costs of the receiver as I have identified these on the authorities I set out when I quoted order 8 of the receivership orders above.
In relation to the application for discharge, the receiver took the position with respect to it that I have indicated; and it does not seem to me that there are likely to be any costs in respect of it that the receiver would be in a position to claim. In any event, I note the position as to the costs of a receiver's participation in proceedings for the receiver's discharge referred to in Kerr (16^th ed) page 251, namely, that the receiver cannot get the costs of participation in the proceedings, absent special circumstances. It is true that allegations of irregularities were made against the receiver, and it might be that in such a case a receiver who successfully defended against such allegations might be awarded the costs of so doing. However, whether or not such costs might be awarded in such a case, I do not consider that would be appropriate in this case, where the receiver took the position on the matter of discharge I have indicated. However, in this case, it seems to me it would be appropriate to allow for the extent to which the matter of irregularities bore on the directions sought, as to which there were submissions from the receiver. The costs of those submissions should be dealt with as costs of the receivership.
In respect of the matter of the directions and declarations, it seems to me that those are matters which it was reasonable for the receiver to seek by way of clarification of the receivership orders. In my view the receiver's costs of the present proceedings are ones that are capable of being assessed or taxed costs in the receivership for the purposes of the receivership orders order 8. Accordingly they should be treated as proposed order 8 of the Receiver's Minute provides.
It follows I would not make an order in the terms of proposed order 3(d) of the September 2010 Minute of PSA and Mr Campbell‑Smith, which would disallow to the receiver, and have borne by him personally, 'the costs, including legal fees and professional fees of the Receiver of participating in relation to this summons'.

Proposed order 3(c) of the September 2010 Minute of PSA and Mr Campbell‑Smith

Proposed order 3(c) of the September 2010 Minute of PSA and Mr Campbell‑Smith would disallow to the receiver, and have borne by him personally the
costs, including legal fees and professional fees of the Receiver of his involvement in the Plaintiff's chamber summons dated 27 August 2009, including, for his 3^rd, 4^th & 5^th Reports to the Court respectively, and, his attendances at the hearing of the summons.
The reference to the chambers summons of the plaintiff dated 27 August 2009 is to an application to vary freezing orders made against PSA and Mr Campbell‑Smith on 8 January 2008 and subsequently varied on a number of occasions. At a hearing on 17 September 2009 the chamber summons of 27 August 2009 was by order 1 dismissed for the reasons given then and published as CAT [No 4] WASC. By order 2 the costs of the application 'including any costs claimed by the receiver Mr Graeme Trevor Lean be reserved to the hearing of the application in the present action listed for 7 October 2009'. That hearing was the initial hearing on the present application to discharge the receiver.
In my judgment in CAT [No 4] WASC [90] ‑ [95] I reviewed the circumstances in which the receiver sought to participate in the hearing of that application. I indicated that I understood the receiver sought to appear and be heard by counsel in support of the application by CAT because of the receiver's interest in the preservation of the assets of Banning Holdings under the freezing orders as they were proposed to be varied. I declined to permit such appearance and representation as the receiver was not a party to the freezing orders nor a third party to which the orders applied. However, I confirmed with counsel for the plaintiff that he was in a position to draw on the assistance of counsel for the receiver, and I gave liberty for the matter of appearance of the receiver to be returned to if necessary. There was no application seeking such return. However, counsel for the receiver put up written submissions of which I took account in my consideration of the plaintiff's application. Counsel for the receiver did not appear at the subsequent hearings; however, she did seek clarification of the receivership orders order 2, on the meaning of 'judgment debt', in what was a precursor of the present application for declarations and directions. However, I concluded that such clarification in the earlier proceedings was not entailed in hearing and disposing of the application: compare the position in the present proceedings.
I did not have the benefit of submissions in support of proposed order 3(c) of the September 2010 Minute of PSA and Mr Campbell‑Smith other than orally in the hearing on 3 September 2010, when counsel for PSA and Mr Campbell‑Smith put up the proposed order, which he identified as one originally sought in the earlier proceedings. The oral submissions simply referred me to the findings I have just described.
The receiver's supplementary written submissions, in opposing the making of this proposed order, rely on the lack of any suggestion in CAT [No 4] WASC [90] ‑ [95] that the receiver had engaged in any wilful wrongdoing; on the inference it was submitted I should draw, from the representation of the receiver by an experienced solicitor, that the receiver did not act capriciously or improperly in seeking such representation for the purposes of the hearing; and the lack of any evidence that the receiver acted wrongfully in preparing the reports the receivership orders obliged him to prepare.
On my view of the receiver's involvement in the plaintiff's chamber summons of 27 August 2009, as I have described it in terms of the receiver's interest in those proceedings, I do not consider there has been a basis shown for the making of the proposed order 3(c) of the September 2010 Minute of PSA and Mr Campbell‑Smith. For the reasons I gave in relation to proposed order 3 of the Receiver's Minute there is no reason in my view to distinguish between the legal fees and the other costs incurred by the receiver for this purpose. And I could find no evidence the receiver acted in the preparation of the reports proposed order 3(c) refers to in a way such that he should be denied the chance to put the costs of so doing forward as costs of the receivership. Whether the receiver in a taxation or assessment of his costs succeeds in any claim for costs of any of the kinds referred to in proposed order 3(c) is of course a matter for the relevant officer, not me.

Conclusion

I will hear from the parties as to the orders I should make to give effect to these reasons, as well as any orders I should make as to the costs of the applications for discharge and for the declarations and directions. I have noted in that last respect the order for costs (proposed order 4) sought by the Minute of September 2010 of CAT and Mr Campbell‑Smith, which incorporates order 3 of the chamber summons dated 13 August 2009. That order provides that
[t]he receiver and/or the Plaintiff pay the First and Second Defendants' costs of this application on a full indemnity basis.
I particularly draw to the parties' attention the matters of the terms of suitable consequential orders to make on the cancellation of the receivership orders.