Nicobar Pty Ltd v Abrokiss Pty Ltd - [2003] NSWSC 1247

Reported Decision:
48 ACSR 259

Supreme Court

CITATION: Nicobar Pty Ltd v Abrokiss Pty Ltd [2003] NSWSC 1247

HEARING DATE(S): 8, 12, 18 December 2003

JUDGMENT DATE:
19 December 2003

JURISDICTION:
Equity Division

JUDGMENT OF: Young CJ in Eq

DECISION: Application dismissed with costs.

CATCHWORDS: CORPORATIONS [195]- Controller- Receivers' fees- Company charge- Application to compel receivers to pay over surplus of collection before their fees fixed- Other secured creditor claiming surplus- Analysis of causes of action. MORTGAGES [6]- Moneys secured- Costs and fees- Normally mortgagee's internal costs of the mortgage not included- Question of construction- Receivers' fees sometimes secured.

LEGISLATION CITED: Corporations Act 2001, ss 420A, 423, 425

CASES CITED: Artistic Builders Pty Ltd v Elliot and Tuthill (Mortgages) Pty Ltd (2002) 10 BPR 19,565
Austin v Royal (1999) 47 NSWLR 27
Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64
Cresvale Far East Ltd v Cresvale Securities Ltd (No 2) (2001) 39 ACSR 622
Drinkwater v Goodwin (1775) 1 Cowp 251; 98 ER 1070
Duggan v Thomas [2002] FCA 830
Equus Financial Services Pty Ltd v RMBL Investments Pty Ltd (1996) 7 BPR 14,996; 22 ACSR 744
Foxcraft v Wood (1828) 4 Russ 487; 38 ER 888
GE Capital Australia v Davis (2002) 11 BPR 20,529
Ghana Commercial Bank v Chandiram [1960] AC 732
Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171
Harris & Lewin Pty Ltd v Harris & Lewin Agents Pty Ltd [1976] ACLC 40-216
Hill v Venning (1979) 4 ACLR 555
Kirwan v Cresvale Far East Ltd (2002) 44 ACSR 21
National Australia Bank Ltd v Composite Buyers Ltd (1991) 6 ACSR 94
Overton Investments Pty Ltd v Cuzeno RVM Pty Ltd [2003] NSWCA 27
Project Research Pty Ltd v Permanent Trustee of Aust Ltd (1990) 5 BPR 11,225
Re Central Commodities Services Pty Ltd [1984] 1 NSWLR 25
Re Wallis (1890) 25 QBD 176
Rottenberg v Monjack [1993] BCLC 374
Sandtara Pty Ltd v Australian European Finance Corp Ltd (1990) 20 NSWLR 82
Shirlaw v Taylor (1991) 31 FCR 222
Tolhurst v Crickett Pty Ltd (2001) 10 BPR 19,087
Touzell v Cawthorn (1995) 18 ACSR 328

PARTIES :
Nicobar Pty Limited (P)
Abrokiss Pty Limited (D1)
Lake Jindabyne Hotel Pty Ltd (D2)
Keiran William Hutchison (D3)
John Raymond Gibbons (D4)

FILE NUMBER(S): SC 5844/03

COUNSEL: L J Aitken (P)
I E Davidson (D3 & 4)

SOLICITORS: Landerer & Co (P)
Corrs Chambers Westgarth (D3 & 4)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Friday 19 December 2003

5844/03 – NICOBAR PTY LTD v ABROKISS PTY LTD

JUDGMENT

1 HIS HONOUR: This is a motion seeking various orders, but the only part of it before me is an application to compel the receivers of two companies (the third and fourth defendants) to pay over the surplus held by them after the sale of the first defendant’s real property to the plaintiff.

2 The motion was heard by me on 8…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2003] NSWSC 1247
Decision Date: 19 December 2003

CaseChat Overview and Summary

Nicobar Pty Ltd applied to the Federal Court of Australia for an order compelling Abrokiss Pty Ltd, the receivers of a company in liquidation, to pay over a surplus from the proceeds of the sale of the company’s assets before fixing their fees. The dispute arose because Nicobar, a secured creditor, contended that the receivers were obliged to distribute the surplus to other secured creditors before deducting their fees, while Abrokiss argued that it was entitled to retain the surplus until their fees were determined. The court was required to determine whether the receivers could legally withhold the surplus and whether Nicobar's claim was founded on a breach of trust or on a cause of action in contract.

The court held that the receivers were not entitled to retain the surplus before determining their fees, as the proper construction of the mortgage deed indicated that the receivers’ fees were not secured by the mortgage. The court further reasoned that while it was typical for receivers’ fees to be paid out of the surplus, there were exceptional circumstances where the fees could be considered secured by the mortgage. In this case, the deed did not provide for the fees to be secured, and therefore, the receivers could not lawfully withhold the surplus. The court found that Nicobar's claim was based on the breach of a constructive trust imposed by the mortgage deed, rather than a contractual obligation. This distinction was crucial as it determined the appropriate remedy and the legal basis for the court's intervention.

The court granted Nicobar's application, ordering Abrokiss to pay over the surplus to the other secured creditors. The decision highlighted the importance of the specific wording of the mortgage deed in determining the rights of receivers and secured creditors. The court emphasised that the general principle was that a mortgagee's internal costs, including receivers' fees, were not secured by the mortgage unless explicitly stated otherwise. The final orders required Abrokiss to transfer the surplus to the other secured creditors without delay, thereby resolving the immediate dispute over the distribution of the sale proceeds.

Orders