Morelli (liquidator), in the matter of FW Projects Pty Limited (in liq) v White Hills Pty Limited

The case of Morelli (liquidator), in the matter of FW Projects Pty Limited (in liq) v White Hills Pty Limited involves a dispute concerning the treatment of levies issued by a strata building management committee that arose after the company went into liquidation. The plaintiffs, as liquidators and receivers, sought judicial advice on whether they were required to pay the strata levies in full and in priority to all other unsecured creditors or pari passu with other unsecured creditors. Additionally, the court was asked to determine if the contract for the sale of land entered into between the plaintiffs and the defendant gave rise to an obligation to pay the strata levies, and if the plaintiffs had adopted or accepted liability to pay the strata levies.

The court examined several legal issues, including whether the plaintiffs were required to pay the strata levies as liquidators or receivers of trust assets, whether the contract for the sale of land imposed an obligation to pay the strata levies, and if the plaintiffs had adopted or accepted liability to pay the strata levies through actions such as arranging for rectification works. The court also considered whether the Lundy Granite principle, an equitable principle, applied to the plaintiffs in their capacity as receivers. Ultimately, the court concluded that the entry into the contract of sale and subsequent lease did not give rise to an obligation to pay the strata levies. However, the court found that the Lundy Granite principle applied to the plaintiffs in their capacity as receivers, and that the plaintiffs had adopted the strata management statement, thereby accepting liability to pay the strata levies as debts incurred by the plaintiffs in their capacity as receivers.

In light of the court's findings, it was advised that the levies issued prior to the appointment of the plaintiffs as liquidators and those issued after the entry into the Deed of Compromise and Disclaimer should be treated as unsecured debts of the company and debts incurred by the plaintiffs in their capacity as receivers, respectively. The court directed the parties to provide agreed short minutes to the Associate to Justice Halley regarding any orders or declarations sought to give effect to these reasons for judgment, and set a deadline for submissions and affidavits in support.