Glazier Holdings Pty Ltd (in Liq) v Australian Men's Health Pty Ltd (in Liq) & 4 Ors

[2009] NSWSC 447

CITATION:	Glazier Holdings Pty Ltd (in Liq) v Australian Men's Health Pty Ltd (in Liq) & 4 Ors [2009] NSWSC 447
HEARING DATE(S):	21 May 2009
JURISDICTION:	Equity
JUDGMENT OF:	Debelle AJ
EX TEMPORE JUDGMENT DATE:	21 May 2009
DECISION:	(1) The amount of $171,675.83 paid into court in this action, together with any interest accrued thereon, be paid to Nicholas Craig Malanos as liquidator of Australian Men's Health Pty Limited (in liquidation); (2) The oral application of Mr Bard on behalf of the second defendant is dismissed.
CATCHWORDS:	CORPORATIONS – Winding up – Liquidators – Remuneration – Receiver of unit trust had paid moneys into court – Company in liquidation former trustee of unit trust – prior order that liquidator entitled to remuneration and expenses relating to administration of trust – Held that liquidator entitled to whole of the money paid into court – Application by second defendant for reimbursement of expenses incurred in providing an account dismissed
CATEGORY:	Principal judgment
PARTIES:	Glazier Holdings Pty Limited (in Liq) (Plaintiff) Australian Men's Health Pty Limited (in Liq) (First Defendant) Graham Meehan (Second Defendant) Anthony Murphy (Third Defendant) Arthur Kevin Brain (Fourth Defendant) Treykell Pty Limited (Fifth Defendant)
FILE NUMBER(S):	SC 4905/1997
COUNSEL:	A Fernon (First Defendant) P Bard ( Second Defendant)
SOLICITORS:	Toomey Pegg Drevikovsky Lawyers (First Defendant) Paul Bard Lawyers (Second Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ACTING JUSTICE DEBELLE

THURSDAY, 21 MAY 2009

4905/97 GLAZIER HOLDINGS PTY LIMITED v AUSTRALIAN MEN’S HEALTH PTY LIMITED & ORS

JUDGMENT (Ex tempore)

1 HIS HONOUR: This is an application for an order directing the distribution of moneys paid into court by Mr Madden, the trustee and receiver of Australian Men’s Health Unit Trust (“the Trust”). The applicants are the first defendant, Australian Men’s Health Pty Limited (in liquidation) (“the company”), and its liquidator, Mr Malanos.

2 The application was first heard by White J on 25 September 2006. On 8 December 2006, White J published reasons for judgment and adjourned the application. In January 2008 an oral application was made on notice to all parties to vary the terms of the reasons published on 8 December 2006. White J dismissed the application.

3 In his reasons published on 8 December 2006, White J recited the long history leading to the application and determined what entitlement the liquidator and other claimants had against the assets of the Trust as well as determining other claims against the moneys paid into court. He held that the liquidator had first claim to the fund and that any balance remaining was payable to creditors of the trust. He adjourned the application so as to give the liquidator an opportunity to provide evidence in support of his claim. I will not repeat the reasons of White J. I adopt them for the purposes of finally determining this application. It is necessary to note only the conclusions reached by White J.

4 The company was formerly the trustee of the Australian Men’s Health Unit Trust. The beneficiaries of the Trust are Glazier Holdings Pty Limited (in liquidation) (“Glazier”) and Treykell Pty Limited. The company carried on no business except as trustee of the Trust. In 1997 on the application of Glazier, Young CJ in Eq, as he then was, made an order removing the company as trustee and appointing Mr Madden in its place. Young CJ also ordered that an account be taken of the dealings and transactions of the company as trustee.

5 After those orders had been made, the company ceased to carry on business. One week after the orders had been made, Mr Madden sought advice pursuant to s 63 of the Trustee Act 1925 whether he would be justified in ceasing to operate the business of the Trust. On 25 March 1998 Cohen J appointed Mr Madden as receiver of the assets of the Trust and ordered him to pay into court the proceeds of the realisation of the assets of the Trust.

6 A number of issues arose. Mr Madden sought judicial advice. It is sufficient to note that on 3 February 2006 orders were made by consent that Mr Madden

“terminate the Trust and pay the funds held by him as trustee and receiver of the Trust, after deduction of his remuneration and costs as trustee and receiver, into court in fulfilment of his obligations as trustee on termination of the Trust”.

Pursuant to that order, Mr Madden paid the sum of $171,765.83 into court. It was also ordered that Mr Madden be removed as receiver of the Trust and that he take no further steps as trustee after paying the funds into court in accordance with the order.

7 In the meantime, the directors of the company had appointed an administrator of the company. There was litigation between Glazier and the company. On 2 March 1999 the creditors of the company resolved that they would not fund the administration of the company. They resolved that the company should go into liquidation. Mr Star was appointed liquidator. Further litigation ensued. On 22 May 2002 a meeting of the creditors of the company resolved to accept the resignation of Mr Star as liquidator and to appoint Mr Malanos as liquidator in his stead. On 22 July 2006 Mr Star assigned to Mr Malanos the rights of Mr Star to be paid fees and disbursements. He also assigned to Mr Malanos such rights and interests he might have in the moneys paid into court.

8 In his reasons, White J set out the claims to the money paid into court by Mr Madden. It is unnecessary to repeat what his Honour said. I refer to and adopt paras 30, 31, 32 and 33 of his reasons. It is to be noted that no claim was made by the second defendant, Mr Meehan.

9 White J then examined the liquidator’s claims and held that the only claim of the liquidator for which the company is liable and against which the company is entitled to be exonerated from the funds paid into court is for the remuneration and expenses in connection with the administration of the Trust. I refer to the reasons of White J at [44] to [54].

10 White J also observed (at [50]):

“The liquidator has compromised his claim with the beneficiaries. To the extent that the liquidator is entitled to recover from the assets of the company it is a matter for him whether or not he has compromised his claim. However, no such compromise can operate to the prejudice of the creditors who will be entitled to any balance of the funds in court in priority to the beneficiaries”.

He then held that there was no basis for beneficiaries being entitled to any of the moneys paid into court and that Treykell was not entitled to claim. It is to be noted also that at [51] White J noted a potential claim by Mr Meehan.

11 In [53] of his reasons White J held that the liquidator would be entitled to costs of the present application as a first claim on the fund. He would be entitled to the balance of the fund to the extent to which he can demonstrate that his remuneration and expenses related to the administration of the trust in the way indicated earlier in his reasons. To that extent the liquidator will be entitled to the remuneration at the rates claimed and to the reimbursement of expenses.

12 His Honour held (at [50]) that the balance of the fund, if any, after allowing for these charges and remuneration will be payable to the creditors of the Trust pari passu pursuant to their right to be subrogated to the company’s right of exoneration. He held that it be appropriate for the liquidator to be authorised to effect any such distribution and the liquidator will be entitled to his proper remuneration and expenses in doing so.

13 It is apparent from the above that in his reasons for judgment White J was determining the persons entitled to claim against the moneys paid into court. As his Honour noted at the beginning of [53] of his reasons, “I accept the present application is a necessary one for determining who is entitled to the moneys paid into court”. He then ruled who was entitled to claim.

14 The liquidator has sworn an affidavit deposing to the costs incurred which he says are recoverable pursuant to the reasons of White J. The liquidator says that those costs total $328,993.01. The liquidator has identified seven categories of work that he contends can be claimed. They are set out in a table in par 10 of the liquidator’s affidavit.

15 An affidavit has also been sworn by Mr Chapman, a solicitor employed by the solicitors for the liquidator. Mr Chapman deposed that the total amount of costs and disbursements (including counsel’s fees) incurred by the liquidator total $116,608.44.

16 It is readily apparent that the amount claimed by the liquidator substantially exceeds the amount paid into court. I have serious misgivings whether all of the costs claimed by the liquidator fall within the classes of claims that White J has identified as being properly chargeable against the Trust assets. In addition, some of the costs seem excessive for the tasks involved. In the absence of any other evidence, it is not possible to determine these issues. A difficulty with this kind of proceeding is the absence of a contradictor. However, I am satisfied that the liquidator is entitled to the moneys claimed. In the result there will be no surplus available to meet the claims of the creditors of the Trust. The liquidator is, therefore, entitled to recover that portion of his costs which might be discharged by the moneys paid into court.

17 An eleventh hour application was made on behalf of the second defendant, Mr Meehan. Mr Bard, the solicitor for Mr Meehan, sought to file a Notice of Motion seeking an order that Mr Meehan be reimbursed from the moneys paid into court for costs and expenses incurred by him in providing an account of the dealings and transactions of the plaintiff to Mr Madden as receiver. The Notice of Motion sought a further order that any entitlement of Mr Meehan be paid pari passu with the entitlement of the liquidator. Mr Bard also added, in the course of his argument in support of the application, that the second defendant did not oppose the liquidator’s application for reimbursement of his costs.

18 The costs and expenses incurred by Mr Meehan were incurred in consequence of par 4 of an order made by Young CJ on 18 March 1998. Paragraph 4 of that order was in these terms:

“An account be taken of the dealings and transactions of the first defendant as trustee and that the defendants be ordered to pay to the new trustee the amount found to be due on the taking of such accounts together with interest”.

That order was made in the course of Mr Madden’s receivership of the Trust.

19 Further orders were made by Registrar Berecry on 9 April 2002. The Registrar ordered that Mr Meehan and the third defendant, Mr Murphy, prepare, file and serve on the plaintiff a detailed account of all the dealings and transactions of the company as trustee and to verify those accounts by affidavit. Mr Meehan also appeared and was examined on an examination before the Registrar.

20 I assume for the purpose of this application, and without deciding the question, that Mr Meehan did, in fact, incur cost and expense. Any claim that Mr Meehan might have for his costs and expenses is a claim that ought to have been made against Mr Madden as receiver of the Trust. No claim was made against Mr Madden as receiver. Mr Meehan had notice that the receiver had applied on 18 November 2005 for orders entitling him to terminate the Trust and pay the balance of the funds held by him into court. No claim was made. Mr Meehan was also aware of the orders made on 3 February 2006 ordering Mr Madden to terminate the Trust and pay moneys into court. Mr Meehan did not appeal against the order or make any application to set aside or vary that order. Mr Meehan also had notice of the liquidator’s application made on 7 August 2006 which is the subject of these proceedings.

21 It is clear from the reasons of White J that notice was given of those proceedings for the purpose of claims being made by all those who sought to be paid from the fund in court. Notwithstanding that he had notice of the proceedings, Mr Meehan made no claim against the moneys paid into court nor did he present any argument to White J seeking any share of the moneys paid into court.

22 Since 8 December 2006 Mr Meehan has been aware of the reasons of White J. As is apparent from the above, White J made rulings as to those who would be entitled to make claims against the moneys paid into court. White J determined that the only persons entitled to the moneys paid into court were the liquidator and any balance was to be paid to the creditors of the Trust. Those creditors do not include Mr Meehan. As already mentioned, on 30 January 2008 an application was made to vary the orders of Justice White. Mr Meehan had notice of that application and was present on the argument of the application. He did not then present any argument seeking any reimbursement for his costs and expenses.

23 In short, for more than two years Mr Meehan has been aware of the reasons of White J but has not made any application to set aside or vary the findings of White J as to the persons entitled to be paid from the fund paid into court. Notwithstanding that he had notice that the hearing of the liquidator’s application before White J was the occasion to make a claim for his own costs and expenses, he made no claim. He has, effectively, sat on his hands for that period of two years. It is now too late to bring this application. I dismiss his application to file the notice of motion.

24 I will therefore make an order that the liquidator is entitled to be paid the whole of the amount of $171,765.83, paid into court by Mr Madden, together with any interest accrued on that sum.

25 Orders as follows:

(1) That the amount of $171,675.83 paid into court in this action, together with any interest accrued thereon, be paid to Nicholas Craig Malanos as liquidator of Australian Men’s Health Pty Limited (in liquidation);

(2) Dismiss the oral application of Mr Bard on behalf of the second defendant.
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