Re Pancon Pty Ltd
[2024] VSC 299
•27 February 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2022 00228
IN THE MATTER of PANCON PTY LTD (ACN 055 961 665)
BETWEEN:
| MARINA RITA BARRY & ANOR (according to the attached Schedule) | Plaintiffs |
| v | |
| FERDINANDO ANTHONY URSINI & ORS (according to the attached Schedule) | Defendants |
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JUDICIAL REGISTRAR: | Gitsham JR |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 June 2023 |
DATE OF RULING: | 27 February 2024 |
CASE MAY BE CITED AS: | Re Pancon Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2024] VSC 299 |
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CORPORATIONS – Court-appointed receivers – Application for approval of remuneration – Prima facie case for remuneration established – Objections to remuneration considered – Remuneration approved.
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APPEARANCES: | Counsel | Solicitors |
| For the First Plaintiff | Mr T Prudden | Danaher Moulton |
| For the First Defendant | Self-represented | |
| For the Receivers | Mr H Forrester | Mansour Lawyers |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 3
Legal principles.................................................................................................................................. 4
Relevant facts...................................................................................................................................... 5
The scope of the Receivers’ Court appointment....................................................................... 6
Significance of the Banner Receiver and associated litigation............................................... 8
The entities covered by the appointment and their operations........................................... 11
Matters covered by the First Report......................................................................................... 17
Matters covered by the Second Report.................................................................................... 18
Financial position of the Ursini Group and Massoni Wines Group.................................... 19
Have the Receivers demonstrated that the remuneration claimed is fair and reasonable? 21
Have the Receivers led sufficient evidence in support of their remuneration?................. 21
The Third Crisp affidavit.................................................................................... 21
The WIP summaries............................................................................................. 25
Rates charged by the Receivers.......................................................................... 31
Was the work performed reasonably necessary?................................................................... 32
Was there complexity in the work required to be performed by the Receiver?................ 33
Does the value and nature of the property dealt with or likely to be dealt with warrant the work undertaken?........................................................................................................................ 35
Was the Receiver required or likely to be required to deal with another Receiver or Manager?.............................................................................................................................................. 35
Mr Ursini’s objections..................................................................................................................... 36
Objections to the work done: entities the subject of the First Report.................................. 38
Administration – General Admin/File Maintenance:................................................. 38
Administration – Statutory Compliance:....................................................................... 38
Administration – Tax Compliance:................................................................................. 39
Administration – Officers/Members.............................................................................. 39
Administration – Bank Account:..................................................................................... 42
Assets – Real Property...................................................................................................... 42
Creditors – Personal Property Security.......................................................................... 43
Reports to Creditors; Admin – Forensic Accounting Services; Investigation – Conducting Investigations:........................................................................................................ 43
Investigation – History & Background; Investigation – comparative Financial Statement analysis; Investigation – Report on ROCAP:..................................................... 45
Trade on Management...................................................................................................... 46
Objections to the work done: entities the subject of the Second Report............................. 46
Administration – Statutory compliance:........................................................................ 46
Administration – Officers/Members:............................................................................. 47
Real Property...................................................................................................................... 48
Assets - Stock/Work in Progress:.................................................................................... 49
Report to creditors:............................................................................................................ 49
Employee entitlements..................................................................................................... 50
Investigation – Litigation /Recovery Action................................................................. 51
Other matters raised by Mr Ursini that fall outside the scope of this application............. 52
Alleged mismanagement by Receivers.................................................................................... 52
Set-off............................................................................................................................................ 53
What is the appropriate quantum?............................................................................................... 54
JUDICIAL REGISTRAR:
Introduction
Glenn Anthony Crisp (‘Crisp’) and Malcolm Kimbal Howell in their capacity as joint and several court-appointed Receivers (‘Receivers’) and managers of the second to tenth defendants apply for their remuneration for the period 14 September 2022 to 27 March 2023 in the amount of $420,828.14 (plus GST). On 25 May 2023, Delany J referred the application to me for determination by hearing in person.
The application is objected to by the first defendant, Ferdinando (Fred) Anthony Ursini (‘Ursini’). Mr Ursini says that the work carried out by the Receivers is excessive. He complains of overcharging and duplication of work. Mr Ursini says that the way the Receivers have managed the receivership has caused delay and losses to some of the relevant entities. He says that he should be entitled to remuneration himself, set off against the work of the Receivers.
The issues for determination on this application are as follows.
(a) Have the Receivers demonstrated that the remuneration claimed is fair and reasonable?
(b) Are the objections raised by Mr Ursini valid?
(c) What amount of remuneration should be allowed?
At the hearing on 16 June 2023, Mr Ursini sought leave to cross-examine Mr Crisp on a range of matters he said were relevant to the application. For the reasons I indicated at the hearing, leave was refused. Rather than make oral submissions on the application, Mr Ursini then sought leave to provide the Court with written submissions. I granted Mr Ursini leave to file written submissions (which he has done) but did not grant him leave to file any further evidence. I also informed Mr Ursini there would be no further opportunity for him to make oral submissions which Mr Ursini accepted.
Legal principles
The legal principles that govern the Court’s approach to fixing the Receivers’ remuneration were not in contest. A receiver is entitled to have their costs, charges and expenses incurred in complying with a court-ordered appointment.[1]
[1]Re Sunraysia Roofing Pty Ltd [2020] VSC 724 citing Re Banksia Securities Ltd(in liq) (receivers and managers appointed) [2017] NSWSC 540 (‘Banksia Securities’).
The process of determining an amount for remuneration is to ensure that:
the work upon which the claim was based was work undertaken in the due course of administration and that the amount claimed for having done that work is a fair and reasonable reward for it.[2]
[2]Barrett J in Anderson Group Pty Ltd ; Mann v Anderson (2002) 20 ACLC 1607; [2002] NSWSC 764 at [12] (in relation to the remuneration of a liquidator).
The onus is on the receivers to establish that the claimed remuneration is reasonable.[3]
[3]Banksia Securities [44].
In determining what amount is reasonable, the Court can take into account any or all of a range of factors identified in s 425(8) of the Corporations Act 2001 (Cth) (‘the Act’). Many of these factors highlight the need for there to be proportionality between the work done compared with the size of the property, the subject of the insolvency administration, the complexity of the work performed and the extraordinary issues the receiver might have to address.[4] The factors most relevant to this application are:
[4] See Banksia Securities [45] (citations omitted); referring to Sakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38 [55].
(a) the extent to which the work performed by the receiver was reasonably necessary;
(b) the complexity (or otherwise) of the work performed, or likely to be performed, by the receiver;
(c) the extent (if any) to which the receiver was, or is likely to be, required to deal with extraordinary issues;
(d) the value and nature of any property dealt with, or likely to be dealt with, by the receiver;
(e) whether the receiver was, or is likely to be, required to deal with one or more receivers and managers.
Finally, as Gleeson JA outlined in Re Banksia Securities Ltd(in liq)[5]:
[the] mere fact that the work performed does not lead to augmentation of the funds available for distribution does not mean that the [receivers] are not entitled to be remunerated for it. … Provided it was reasonable to carry out the work and the amount charged is reasonable, there is no reason a [receiver] should not recover remuneration for undertaking the work.[6]
[5]Ibid.
[6]Banksia Securities, [46].
The initial task of the Court is to consider whether the receiver has made out a prima facie case on the evidence before the Court that the remuneration claimed is fair and reasonable.[7] The evidence should be sufficient to enable potential objectors to review the amounts claimed and ascertain whether there are matters to which objection should be taken. Once a prima facie case is established, the Court can consider the validity of any objections.[8]
[7] IMO Traditional Values Management Limited (in liq) [2012] VSC 650 [18]–[25] (summarising the principles as set out in Thackray v Gunns Plantations (2011) 85 ACSR 144).
[8]Ibid.
Relevant facts
The receivership the subject of this application is not a straightforward one. To explain that I have set out the following facts which inform my consideration of the application:
(a) scope of the Receivers’ Court appointment;
(b) significance of the Banner receiver and associated litigation;
(c) the entities covered by the appointment and their operations;
(d) the matters covered by the First Report;
(e) the matters covered by the Second Report; and
(f) the Receivers’ findings about the financial position of the Ursini and Massoni Wines Group.
The scope of the Receivers’ Court appointment
The Receivers’ appointment is governed by two orders made by Delany J on 14 September 2022 and 9 December 2022.
On 14 September 2022, Delany J appointed the Receivers as receivers and managers of all the property held on trust by Pancon Pty Ltd (‘Pancon’) in its own capacity and as trustee of the Ursini Family Trust, F & T Ursini Nominees Pty Ltd (‘F & T Ursini Nominees’) in its own capacity and as trustee of the F & T Ursini Family Trust, E Wine Australia Pty Ltd (‘E Wine Australia’) in its own capacity and as trustee of the Hillsyde Estate Family Trust and Rural Holdings Pty Ltd (‘Rural Holdings’) in its own capacity and as trustee of the Rural Family Trust.
The 14 September 2022 orders also required the Receivers to provide a report which:
(a)identifies the assets and liabilities of each of the Companies and the Trusts, including, but not limited to:
(i) the loan facility between Perpetual Corporate Trust Limited and F & T Ursini Nominees dated in or around October 2018, facilitated by La Trobe Financial (‘the LaTrobe Facility’) including, but not limited to:
(A) the benefit of the loan to the Trusts;
(B) the use to which the loan moneys were put; and
(C) any legal and/or financial advice received;
(ii) the loan facility between Banner Capital Management Limited and, inter alia, Torca Constructions Pty Ltd dated on or around 26 October 2021, in respect of which the Companies and the Trusts are purported to be guarantors, including, but not limited to:
(A) the benefit of the loan/purported guarantees to the Trusts;
(B) the circumstances of the removal of directors and shareholders of the Companies in or around August/September 2021; and
(C) any legal and/or financial advice received;
(iii) the mortgages recorded in registered dealings AV646672Q, AV646674L and AV646676G on 19 May 2022 in favour of Banner Capital Management Limited, the Note Facility Deed dated 18 May 2022 and the Guarantee and Indemnity dated 18 May 2022, including, but not limited to:
(A) the benefit of the mortgages, Note Facility Deed and/or Guarantee and Indemnity to the Trusts;
(B) the circumstances of entry into the mortgages, Note Facility Deed and Guarantee and Indemnity; and
(C) any legal and/or financial advice received;
(iv) the use to which trust assets, including but not limited to the vineyards owned by Pancon and Rural Holdings, have been put;
(b) includes a summary of whether proper financial records have been maintained; and
(c) indicates whether there are any suspected contraventions of the Corporations Act 2001 (Cth) and/or breaches of trust.
Delany J ordered that, subject to further order, the Receivers be entitled to remuneration calculated in accordance with the rates previously evidenced by the Receivers.[9]
[9]Affidavit of Timothy James Prudden affirmed on 13 July 2022, exhibit TJP-2/217.
The Receivers published the First Report (‘First Report’) on 24 November 2022.
On 9 December 2022, Delany J appointed the Receivers as receivers and managers of all the property held on trust by Massoni Wines Pty Limited (‘Massoni Wines’), Central Park Estate (Vic) Pty Limited (‘Central Park Estate’) in its own capacity and as trustee of the Dromana Winery Unit Trust, Greyser Pty Limited (‘Greyser’) in its own capacity and as trustee of the Greyser Unit Trust, Pyrenees Vineyard Management Pty Limited (‘Pyrenees Vineyard ‘)and Australian Independent Wine Wholesalers (Vic) Pty Ltd (‘Australian Independent Wine’).
The 9 December 2022 orders also required the Receivers to provide a report that:
(a)identifies the assets and liabilities of each of the companies and the trusts referred to at paragraph 1, including the use to which trust assets have been put;
(b) includes a summary of whether proper financial records have been maintained; and
(c) indicates whether there are any suspected contraventions of the Corporations Act 2001 (Cth) and/or breaches of trust.
The Receivers published the Second Report (‘Second Report’) on 22 March 2023.
Significance of the Banner Receiver and associated litigation
This proceeding commenced on 31 January 2022. The primary claims are made by Marina Rita Barry (Mr Ursini’s sister) and Teresa Ursini (Mr Ursini’s mother)[10] against Mr Ursini and related entities under the oppression provisions of the Corporations Act. The claims made relate to Mr Ursini’s conduct of the affairs of Pancon, F & T Ursini Nominees and E Wine Australia. Broadly, the plaintiffs claim they were improperly removed from these entities as directors and had their shareholding improperly transferred at around the time that some or all of these entities were entering into loan facilities (which I will describe below).
[10]Mrs Ursini died shortly before the hearing of this application.
Relevantly, the 14 September 2022 orders of Delany J provided for the Receivers to investigate a number of loan facilities entered into between 2018 and 2022. The orders describe those facilities as:
(a) a loan facility between Perpetual Corporate Trust and F & T Ursini Nominees (‘La Trobe Facility’) in about October 2018;
(b) a loan facility between Banner Capital Management Limited (‘Banner’) and Torca Constructions Pty Ltd (‘Torca’) dated on or around 26 October 2021 (‘Banner Facility’); and
(c) mortgages registered over property in favour of Banner and various deeds, guarantees and indemnities entered into on 18 and 19 May 2022.
The properties the subject of the mortgages referred to in paragraph 21(c) above are variously owned by Pancon, F & T Ursini and E Wine Australia.
I pause here to describe these facilities and securities as briefly as possible. I have taken these facts from the Receivers’ reports.
(a) La Trobe Facility
This facility was entered into on 6 October 2018 on behalf of F & T Ursini Nominees for a sum of $1,575,000 for a loan term of two years. The loan funds were used to repay an existing loan facility with La Trobe, pay land taxes, meet Australian Taxation Office (‘ATO’) obligations and pay legal fees. The La Trobe Facility is secured against the three properties located at High Street, Epping owned by F & T Ursini Nominees.
(b) Banner Facility and associated mortgages
Banner asserts that it has entered into various loan facilities and security documentation with entities in the Ursini Group in 2019, 2021 and 2022.
The Receivers have determined there is no documentation signed by any Ursini parties in relation to a 2019 loan.
The Receivers reported that a facility entered into in 2021 was for the purpose of refinancing facilities in the name of Torca Developments Pty Ltd at 53 - 55 Barkly Street, Mornington (‘Barkly Street Property’).
It is claimed there is an agreement that the 2021 loan is secured by properties owned by Pancon, F & T Ursini and E Wine Australia in exchange for options to acquire an interest in the Barkly Street Property.
By reason of a default under the Banner Facility, on 27 September 2022, Banner appointed Mr Costa Nicodemou (‘Banner Receiver’) as:
(a) receiver and manager over E Wine Australia and F & T Ursini Nominees; and
(b) controller of a property located at 1175 Nepean Highway, Mount Eliza (‘Mount Eliza Estate’) and registered to Pancon.
The Receivers reported that the effect of the Banner Receiver’s appointment was that Banner controlled the Mount Eliza Estate held by Pancon, three rental properties, one pine plantation held by F & T Ursini Nominees, and a residential property held in the name of E Wine Australia.[11]
[11]Second Report, 14.
The Banner Receiver’s appointment meant there was now a legal question about how that appointment should operate given the appointment of the Receivers in this proceeding. It also meant that satellite litigation commenced dealing with matters concerning both the appointment of the Banner Receiver and the validity of the Banner Facility. That litigation arose as follows.
Between 27 September 2022 and about February 2023, the Receivers wrote to Banner and Mr Ursini’s former solicitors seeking copies of documents in relation to the Banner Facility.
On 24 January 2023, the Receivers received notice of Banner’s intention to sell the Mount Eliza Estate, and that it was being prepared for sale.[12]
[12]Second Crisp Affidavit [12].
In response, the Receivers’ solicitors wrote to Banner and the Banner Receiver explaining the basis upon which the Receivers considered that there was a serious issue as to the manner in which the Banner Facility was obtained. The Banner Facility was allegedly entered into shortly after Mr Ursini obtained sole directorship and shareholding over the relevant entities. Accordingly, the Receivers had concerns over the foreshadowed sale of the Mount Eliza Estate. A copy of that letter was forwarded to Mr Ursini and his former solicitors again requesting further information in relation to the Banner Facility.
On 10 February 2023, the Receivers made an application in the Supreme Court of Victoria for injunctive relief restraining the Banner Receiver from selling assets of Pancon, F & T Ursini Nominees and E Wine Australia.
On 3 March 2023, as a result of the dispute concerning the validity of the Banner Facility, Banner, Banner Asset Management Pty Ltd and Perpetual Corporate Trust Ltd commenced proceedings against Pancon, F & T Ursini, E Wine Australia, Mr Ursini, Mrs Ursini and Ms Barry, seeking to enforce the securities (‘Banner Proceeding’).[13] In issue is the validity of the Banner Facility.
[13]Banner Capital Management Ltd v Pancon Pty Ltd (Receiver and Manager Appointed), S ECI 2023 00817.
The Receivers are actively defending the Banner Proceeding on behalf of Pancon, F & T Ursini, E Wine Australia.
The entities covered by the appointment and their operations
At the time of publication of the First and Second Reports, the Receivers prepared a worksheet summarising the entities over which they were appointed as well as other related entities or individuals which were ‘involved in the operations of the Ursini Group or have interrelated investments or loans’.[14] A copy of that worksheet is attached at Annexure A to these reasons.
[14]First Report, 11 (2.0 Group Structure and Operations).
In the First and Second Reports the Receivers refer to:
(a) Pancon, F & T Ursini, E Wine Australia and Rural Holdings as ‘the Ursini Group’; and
(b) Massoni Wines, Central Park Estate, Greyser, Pyrenees Vineyard and Australian Independent Wine as ‘the Massoni Wines Group’.
Where necessary I do the same.
The ‘group’ structure is described in the Reports as follows.
F & T Ursini Nominees, is the trustee of the F & T Ursini Family Trust. The primary beneficiaries of the F & T Ursini Family Trust are Ms Barry and Mr Ursini.[15]
[15]Ibid (F & T Ursini Nominees Pty Ltd).
F & T Ursini Nominees owns a pine plantation at Mount Lonarch and three investment properties in Epping, Victoria.[16] The investment properties generate rental income which, at the time of the preparation of the First Report, was received by the Banner Receiver.[17] In addition to the real property owned, F & T Ursini Nominees owns livestock run on the Glenkara Estate which generates income for the company although the First Report noted that the Banner Receiver also has legal control over the livestock.[18]
[16] Second Report, 16-17(the First Report stated that this entity owned the Glenkara Estate Vineyard but was corrected in the Second Report as being an asset of Pancon and Rural Holdings).
[17]Ibid.
[18]First Report, 12 (2.0 Group Structure and Operations, F & T Ursini Nominees Pty Ltd).
Valuations were obtained over the pine plantation, the three Epping properties, and the livestock at the Glenkara Estate.[19]
[19]Second Report, 17.
The Receivers have reported the asset and liability position of F & T Ursini Nominees as follows:
28 February 2023
Receiver’s ERV
$
Cash at bank 901 Livestock 296,200 Real estate property 2,870,000 Total Assets 3,167,101 Total Priority Creditors (1,672,101) Amount available to contribute to Banner loan guarantee of $30,960,251: 1,495,000 Unsecured creditors 447,870 Deficiency -447,870
Pancon is the trustee of the Ursini Family Trust. The beneficiaries are Ms Barry and Mr Ursini.[20]
[20]First Report, 12 (2.0 Group Structure and Operations, Pancon Pty Limited).
Pancon owns part of the Glenkara Estate vineyard along with Rural Holdings. The property produces red wine varietals.[21] Pancon also owns the property at Mount Eliza. That property houses a storage facility utilised by Massoni Wines to store wine products. The property itself comprises grazing land and vineyards.[22] Valuations have been obtained over the Glenkara and Mount Eliza Estates, and the livestock at Mount Eliza Estate.
[21]Second Report, 17.
[22]Ibid.
Pancon is the sole shareholder in Massoni Wines.
The Receivers report that:
Pancon does not receive income. The grapes at both Glenkara Estate and Mount Eliza Estate are harvested and produced into finished wine by other entities controlled by [Mr Ursini], including [Pyrenees Vineyard]and Massoni Wines. [Mr Ursini] advises that it costs more for these other entities to maintain and harvest the vineyards compared to the value of grapes harvested.[23]
[23]Second Report, 18 [(n)].
Whilst Pancon does not receive income its asset and liability position is substantial. Indeed, it is the largest real property holder in the Ursini Group.[24] The Receivers describe that position in the Second Report as follows:
[24]Ibid, 25 [(f)].
28 February 2023
Receiver’s ERV
$
Real estate 13,788,000 100% Shares held in Masoni Wines Pty Ltd 4,298,700 100% Units held in Dromana Winery Unit Trust. 3,462,915 Total Assets 21,549,615 Total Priority Creditors (694,771) Amount available to contribute to Banner loan guarantee of
$30,960,251:9,000,000 Anticipated Surplus from Pancon to Ursini Family Trust Beneficiaries 11,854,844
E Wine Australia is the trustee of the Hillsyde Estate Family Trust. The beneficiaries of the trust are Mr Franco Ursini (Mr Ursini and Ms Barry’s father) who is deceased and Mrs Ursini.[25]
[25]The Second Report was published before the death of Mrs Ursini.
E Wine Australia is the registered owner of a residential property at 1212 Nepean Highway, Mount Eliza. This property operates as both Mr Ursini’s home and was the late Mrs Ursini’s home until her death. Mr Ursini conducts the business of the Ursini Group from the residence. A valuation of the residential property was obtained. E Wine Australia does not derive any income.[26]
[26]Second Report, 18 [(o)] – [(t)].
E Wine Australia’s asset and liability position is reported as follows:
28 February 2023
Receiver’s ERV
$
Real estate property 2,275,000 Total Assets 2,275,000 Total Priority Creditors (8,868) Amount available to contribute to Banner loan guarantee of $30,960,251: 2,266,132
Rural Holdings is the trustee of the Rural Family Trust. Mr Ursini and Ms Barry are its primary beneficiaries.
Rural Holdings owns part of the Glenkara Estate vineyard along with Pancon. Its features are the same as those identified for Pancon and its property and assets have been valued. Similarly, Rural Holdings does not receive income from the vineyard, rather the harvesting and production is carried out by other entities controlled by Mr Ursini including Pyranees Vineyard and Massoni Wines.[27]
[27]Ibid, 19 [(u)] – [(z)].
Rural Holdings’ asset and liability position is reported as follows:
28 February 2023
Receiver’s ERV
$$
Real estate property 2,812,000 Total Assets 2,812,000 Total Priority Creditors (670,114) Amount available to beneficiaries: 2,141,886
Massoni Wines is owned by Pancon and operates a wine production operation at 30 Brasser Avenue, Dromana (‘the Dromana Property’). The entity houses fermenting wine on the premises and owns finished wine located at the Mount Eliza Estate.[28]
[28]Ibid, 19 [(aa)] – [(bb)].
Massoni Wines’ asset and liability position is reported as follows:
28 February 2023
Receiver’s ERV
$
Cash at bank 86,109 Accounts Receivable 50,683 Wine Stock 4,540,900 Plant & Equipment 78,275 Total Assets 4,755,967 Unsecured creditors 457,267 Surplus to Shareholder - Pancon 4,298,700
Australian Independent Wine is wholly owned by a company known as Mount Eliza Estate Pty Ltd which company has been deregistered since May 2022. Australian Independent Wine is the wholesale wine distributor for Massoni Wines and sales are recorded through Australian Independent Wine.
The Receivers report that Massoni Wines, together with Australian Independent Wine, provides cashflow to the Ursini Group, including payments of loans through facilities with La Trobe and Westpac, and maintenance of the properties.
Australian Independent Wine’s asset and liability position is as follows:
28 February 2023
Receiver’s ERV
$
Cash at bank 37,863 Debtors 20,125 Total Assets 57,988 Unsecured creditors 65,021 Deficiency -7,033
Central Park Estate is the trustee of the Dromana Winery Unit Trust of which Pancon is the sole unit holder. Central Park is also the registered owner of the Dromana property and is operated by Massoni Wines. The property operates as security for a bank bill business loan from Westpac.[29] The property, and plant and equipment situated on it, have been valued by the Receivers.
[29]Ibid, 20 [(hh)] – [(kk)].
Central Park Estates’ asset and liability position is reported as follows:
28 February 2023
Receiver’s ERV
$
Cash at bank - Plant & Equipment 684,642 Real Estate property 3,265,000 Total Assets 3,949,642 Secured Creditor - Westpac 486,727 Total Priority Creditors 486,727 Unsecured creditors 3,566 Surplus to Trust Beneficiary - Pancon 3,462,915
Greyser is wholly owned by Pancon as the sole beneficiary of the Greyser Unit Trust. In turn, Greyser wholly owns Pyrenees Vineyard. The Receivers describe the structure of Pyrenees Vineyard as follows:
(ss)[Mr Ursini] is the sole director of this company and Greyser is the sole shareholder.
(tt) Accordingly, Pancon and the Ursini Family Trust beneficiaries, via Greyser, are the ultimate beneficiaries of the value of the investment in [Pyrenees Vineyard].
The Receivers were advised by Mr Ursini that Greyser does not trade. Rather:
[Pyrenees Vineyard] owns all the plant and equipment at the vineyards and maintains and harvests the grape vines.
The Receivers describe the interrelation between Pyrenees Vineyard and other entities in the Ursini and Massoni Wines Groups as follows:
[Pyrenees Vineyard] has a loan debt due to Rural Finance of $639,563. This loan is secured against the Glenkara Estate owned by Pancon and Rural Holdings. As stated above for Greyser, if Rural Finance are paid out in full from the sale of the Glenkara Vineyard prior to the assets in PVM being realised, then [Pyrenees Vineyard] may have a surplus of assets over liabilities and these funds would flow through Greyser to Pancon.
Pyrenees Vineyard’s asset and liability position is reported as follows:
28-Feb-23 Receiver’s
ERVPlant & Equipment 365,833 Accounts receivable 3,364 Total Assets 369,197 Unsecured creditors 907,720 Deficiency -538,523 Matters covered by the First Report
The First Report is some 711 pages and records the outcome of the Receivers’ investigations carried out primarily in respect of Pancon, F & T Ursini Nominees, E Wine Australia and Rural Holdings.
By necessity, the First Report addressed some of the activities in relation to the Massoni Wines Group. Those entities were not, however, fully investigated until after the Receivers were appointed over the Massoni Wines Group in December 2022. Accordingly, the Second Report also operates as an update to the First Report.
The Executive Summary of the First Report addresses the following topics the subject of the report:
(a) the appointment of the Banner Receiver;
(b) in relation to the Banner facilities:
(i) loans made in 2019, 2021 and 2022 but for which there are no signed documents in relation to the 2019 loan;
(ii) the removal of Ms Barry and Mrs Ursini as directors and shareholders prior to the execution of Banner Facility loan documents in 2021;
(iii) the offering of security by oral agreement in relation to the 2021 loan;
(iv) steps taken by Torca to call on the security provided by the Ursini Group under the Banner Facility;
(v) Banner Facility documents executed on 18 May 2022;
(c) a claim by Banner that the debt owed to it under the Banner Facility and secured by the assets owned by the Ursini Group total $28,120,093;
(d) the impact of the debt owed to Banner (if accepted) on the financial position of the Ursini Group having regard to the Estimated Realisable Value of all assets of the Ursini Group;
(e) the current trading, cashflow and working capital positions of the Ursini Group;
(f) the status of accrued unsecured creditors of the Ursini Group;
(g) the status of the La Trobe Facility and its benefit to the Ursini Group (including the availability of refinancing through that facility) and legal advice obtained in relation to it;
(h) refinancing proposals for the Ursini Group made by Mr Ursini to the Receivers;
(i) the adequacy of the books and records of each of the entities in the Ursini Group; and
(j) possible breaches of director’s duties and breaches of trust by Mr Ursini.
Matters covered by the Second Report
The Second Report is 526 pages and records both the ongoing investigations carried out in respect of the Ursini Group as well as the investigations conducted in respect of the Massoni Wines Group.
The Executive Summary of the Second Report addresses the following topics the subject of the report:
(a) updated information in relation to the Banner Facility and in particular:
(vi) the increase in the debt now claimed by Banner to $30,960,000;
(vii) the benefit of the Banner Facility to the Ursini Group;
(viii) the attempts by the Banner Receiver to sell the Mount Eliza Estate and the application brought by the Receivers to prevent the sale;
(ix)the current status of litigation commenced by Banner in relation to the validity of the Banner facilities and the steps required of the Receivers to defend that litigation;
(x) the updated impact of the debt owed to Banner (if accepted) on the financial position of the Ursini Group having regard to the Estimated Realisable Value of all assets of the Ursini Group;
(b) the asset and liability position of each of the Ursini Group and Massoni Wines Group entities following valuations of real property, stock, plant and equipment;
(c) the current trading, cashflow and working capital positions of the Ursini Group and Massoni Wines Group;
(d) the ongoing trading position of the Massoni Wines Group;
(e) the adequacy of the books and records of each of the entities in the Ursini Group and Massoni Wines Group;
(f) possible breaches of director's duties and breaches of trust by Mr Ursini;
(g) the next steps required of the Receivers in the receivership – including those steps that require further orders of the Court.
Financial position of the Ursini Group and Massoni Wines Group
The Receivers’ report that the assets of the consolidated Ursini Group and Massoni Wines Group total $31,175,000. The liabilities incurred by the two groups total $4,800,000 with net assets of approximately $26,400,000.[30]
[30]Ibid, 31 [(k)].
To demonstrate the global financial position of the Ursini Group and Massoni Wines Group the Receivers prepared a summary of the overall position described as ‘Balance Sheet Consolidated Ursini & Massoni Group – 9 Entities’. In reality, the ‘consolidated position’ is purely illustrative. It is undermined by the fact that any debt owed to Banner is only secured over some of the assets of the ‘group’. Nevertheless, it represents the precarious financial position the Ursini Group and Massoni Wines is in and the importance of the Banner Facility and the Banner Proceedings.
The consolidated position is recorded as follows:
Massoni Group Ursini Group
Elimination of Intercompany Investments & Liabilities Consolidated
28-Feb 2023
$
28-Feb 2023
$28-Feb 2023
$
28-Feb 2023
$
Current Assets 4,739,044 297,101 5,036,145 Non-Current Assets 4,393,750 29,506,615 -7,761,615 26,138,750 Total Assets 9,132,794 29,803,716 -7,761,615 31,174,895 Current Liabilities/Unsecured creditors 1,433,574
1,182,060
-639,563
1,976,071
Non-Current Liabilities 486,727 2,311,665 2,798,392 Total Liabilities 1,920,301 3,493,725 -639,563 4,774,463 Net Assets 7,212,493 26,309,992 -7,122,052 26,400,433 Less Banner Loan
-30,960,251 Deficiency -4,559,818
What the Receivers say is that whilst the assets exceed the liabilities of the two groups before the Banner Facility, if the Banner Facility is valid and the debt owed in the amount claimed by Banner in the Supreme Court proceedings, there is a deficiency on the balance sheet of about $4,560,000.
The Receivers have also identified that the Ursini Group does not have sufficient current or liquid assets to meet creditors when they fall due. Those entities rely mainly upon Massoni Wines and Australian Independent Wines to satisfy debts.[31]
[31]Second Report, 31, 2.3(a)
Insofar as the Massoni Wines Group is concerned, the Receivers acknowledge those entities:
appear to have sufficient assets to meet short term liabilities as and when they fall due. However, the healthy working capital ratio can be explained by a high level of inventory/stock holdings.[32]
[32]Ibid, 32, 2.3(d).
Ultimately, having regard to the above financial position together with cashflow and accrued creditors (which I do not need to detail here), the Receivers formed the view that:
The sum of the above evidence suggests that the wider Ursini Group is unable to pay its ongoing costs in full or break-even from its current operations and revenue streams.
Have the Receivers demonstrated that the remuneration claimed is fair and reasonable?
Have the Receivers led sufficient evidence in support of their remuneration?
The Receivers rely upon three affidavits sworn by Mr Crisp, the most relevant being an affidavit sworn 24 April 2023 in support of this application (‘Third Crisp Affidavit’). The Receivers also rely upon the First and Second Reports.
Mr Ursini submits that there is insufficient evidence for the Court to be satisfied with the level of work done in order to justify the remuneration sought. He is of the view there is insufficient transparency about the work undertaken by the Receivers.
The Third Crisp affidavit
In the Third Crisp affidavit, Mr Crisp describes the types of work carried out by the Receivers in two ways:
(a) a document in which he sets out the work carried out by the Receivers in relation to each of the entities; and
(b) work-in-progress (WIP) summaries exhibited to the affidavit.
In respect of each of the Ursini Group and Massoni Wines Group, the Receivers say they have performed work including general administration tasks; the lodgement of statutory documents with the Australian Securities and Investment Commission (‘ASIC’) and the ATO; reporting to the Court on the group; preparation of statements of financial position; review of group structure; determining the priority of and legitimacy of debts; investigating the conduct of the director and the secured facilities entered into by the various entities or otherwise secured by their assets.
The Receivers have investigated and reported on the financial positions for the Ursini Group and the Massoni Wines Group by entity and on a consolidated basis; taken control of bank accounts; taken ongoing responsibility for any trading entities; inspected assets and properties; and arranged valuations through a tender process.
More particularly the Receivers’ work has comprised the following.
The financial reporting includes the preparation and analyses of balance sheets, solvency and working capital positions, profitability and cash flow, and accrued creditors across the Ursini and Massoni Wines Groups.
Insofar as those investigations were concerned, the Receivers stated:[33]
In identifying the assets and liabilities of each entity we have had to refer to the Group Accounts provided, seek the advices of [Mr] Ursini concerning each item and work through source documents (such as Land Title Searches, Loan Documents and the like) to arrive at the financial position for each entity.
[33]Ibid, 42 [(f)].
The investigations undertaken have not been without difficulty. The Receivers say that source documentation was not always available to verify transactions and account balances.[34] The Receivers have reported that no cashflow or flow of funds statements have been prepared with respect to the trading of the Ursini Group,[35] and there was no security documentation signed by or on behalf of any of the Ursini entities or Mr Ursini in relation to a 2019 loan from Banner.[36] Furthermore, whilst Mr Ursini informed them of various working arrangements between the Ursini Group and related entities, none of those agreements had been documented. For example, there are no written agreements between the Ursini Group, Massoni Wines and Pyrenees Vineyard to reflect the various business arrangements between them.[37]
[34]First Report, 11.
[35] Ibid, 21.
[36]Ibid, 27.
[37]Ibid, 34.
The Receivers were provided with access to paper records and Xero accounting records of the Ursini Group. The Receivers described the paper records as being in ‘disarray’ and the electronic records of the Ursini Group were:
recorded in such a way that the financial transactions of all the entities have been lumped together. Accordingly, the individual financial position and performance of each entity is not readily discernible and do not allow true and fair financial statements to be prepared and audited.
The Receivers say that in respect of Australian Independent Wine, Massoni Wines, Pancon, F & T Ursini Nominees, E Wine Australia and Rural Holdings, they variously met with Mr Ursini to obtain a history of the Ursini Group, ascertain the affairs of the companies, assist with the completion of Reports as to Companies Activities and Property (‘ROCAPs’), and obtain further details on the various loans and securities held within the Ursini Group.
The Receivers attended at the Dromana processing plant and Mount Eliza Estate with Mr Ursini to inspect the assets and records at the Dromana office for each of Pancon, F & T Ursini, and Rural Holdings, and attended just the Dromana processing plant and Mount Eliza Estate in respect of Massoni Wines, Central Park and Greyser.
The Receivers held discussions with Mr Ursini in relation to ‘past, present and future work’ being undertaken in respect of Australian Independent Wine and Greyser. They engaged in correspondence with Mr Ursini in relation to ‘trading and tasks in the receivership’ and ‘tasks in relation to the trade-on of the business’ in respect of Massoni Wines and Central Park, as well as general correspondence about work to be completed in the receivership in relation to F & T Ursini Nominees, Pancon and Greyser.
The Receivers have held meetings with Ms Barry to obtain information about the background of the companies, the circumstances of her removal as a director and shareholder and to provide updates on the receivership.
The Receivers have conducted valuations of real property, plant and equipment, and stock in respect of Massoni Wines, Central Park, Pyrenees Vineyard, Pancon, F & T Ursini Nominees and Rural Holdings. At the time the First Report was prepared the receivership was without funds and, absent any funding from Ms Barry or Mr Ursini, the Receivers could not engage valuers to perform formal valuations of the properties owned by the Ursini Group. To that end, the Receivers relied on valuations obtained in 2021 by Banner or on values ascribed to the assets by Mr Ursini in his ROCAP for each entity.[38]
[38]First Report (under the heading ‘Methodology’), 10-11 .
Following their appointment as Receivers over the Massoni Wines Group the Receivers had sufficient funds to value the real estate assets of both the Ursini Group and the Massoni Wines Group. Valuations were also carried out on plant and equipment and stock.
The Receivers have conducted forensic investigations into the documents and circumstances surrounding the Banner Facility. The Receivers have conducted investigations and sought advice in relation to the appointment of the Banner Receiver and in respect of litigation concerning the concurrent receiverships and validity of the Banner Facility. That has involved obtaining copies of and reviewing the Banner Facility and security documentation. Documents provided to the Receivers include facility agreements, mortgages, general security agreements, specific security deeds, guarantees and indemnities, legal opinions and other material.[39]
[39]First Report, annexure K-1, K2, K3 .
In response to the Banner Receiver appointment and the Banner Proceeding, the Receivers have sought and obtained legal advice, attended court proceedings (and mediation) involving Banner; and undertaken further work in preparing a defence and investigating possible counterclaims and third party claims.[40]
[40]Third Crisp Affidavit [7(i)].
In addition to the matters described above, the Receivers have also investigated and reported on:
(a) the circumstances surrounding the removal of Ms Barry and Mrs Ursini as directors and shareholders of entities within the Ursini Group;
(b) maintenance of company records; and
(c) suspected contraventions of the Corporations Act and/or breaches of trust.
Since 9 December 2022, the Receivers have continued to trade the entities within the Massoni Wines Group which entities have net trading assets of approximately $7,212,493.[41]
The WIP summaries
[41]Ibid [10].
The WIP summaries detail work carried out for each entity between 14 September 2022 and 27 March 2023. The amount claimed in respect of each entity is summarised as follows:
(a) Pancon Pty Ltd:
Category
Category Administration Assets Creditors Investigation Trade On Grand Total Alan Lai 88.00 88.00 Andrew Mattinson 5,412.00 924.00 2,970.00 6,006.00 15,312.00 Aneta Jensen 110.00 110.00 Christine Trlifaj 137.50 137.50 Deborah Grapsas 1,485.00 1,485.00 Glenn Anthony Crisp 18,967.50 6,075.00 7,762.50 17,943.52 742.50 51,491.02 Jonathan Raciti 62.00 310.00 465.00 837.00 Kim Dionisopoulos 27.50 27.50 Malcolm Kimbal Howell 742.50 202.50 945.00 Paul Pattison 1,386.00 6,534.00 7,920.00 Pauline Mak 146.00 146.00 Rebecca Malaki 144.00 144.00 Rosa Whinnen 22.00 22.00 Rosemary Cooper 27.50 27.50 Samantha Ters 22.00 22.00 Veronika Stefanoska 27.50 27.50 Grand Total 28,691.50 13,533.00 11,042.50 24,732.52 742.50 78,742.02 (b) F & T Ursini Nominees:
Category Administration Assets Creditors Investigation Trade On Grand Total Alan Lai 110.00 110.00 Andrew Mattinson 5,742.00 1,056.00 2,970.00 5,940.00 15,708.00 Aneta Jensen 220.00 247.50 467.50 Christine Trlifaj 82.50 82.50 Courtney Crisp 165.00 165.00 Deborah Grapsas 467.50 467.50 Glenn Anthony Crisp 28,485.00 1,485.00 1,080.00 16,807.50 4,455.00 52,312.50 Haydn Harrison 682.00 3,844.00 4,526.00 Jonathan Raciti 31.00 465.00 496.00 Kim Dionisopoulos 27.50 27.50 Malcolm Kimbal Howell 607.50 607.50 Pauline Mak 146.00 146.00 Rebecca Malaki 96.00 96.00 Rosa Whinnen 88.00 88.00 Rosemary Cooper 110.00 110.00 Samantha Ters 1,034.00 396.00 1,430.00 Tim Vann 113.00 1,186.50 1,299.50 Tze Hao Teo 65.00 65.00 Veronika Stefanoska 27.50 27.50 Grand Total 38,079.50 3,727.50 4,050.00 27,920.00 4,455.00 78,232.00
(c) E Wine Australia:
Category Administration Assets Creditors Investigation Trade On Grand Total Alan Lai 176.00 88.00 264.00 Andrew Mattinson 5,280.00 792.00 2,970.00 5,742.00 14,784.00 Aneta Jensen 110.00 110.00 Christine Trlifaj 82.50 82.50 Courtney Crisp 1,072.50 1,072.50 Deborah Grapsas 12,622.50 1,080.00 3,510.00 742.50 17,955.00 Glenn Anthony Crisp 31.00 155.00 465.00 651.00 Jonathan Raciti 27.50 27.50 Kim Dionisopoulos 328.50 328.50 Pauline Mak 48.00 48.00 Rebecca Malaki 27.50 27.50 Samantha Ters 22.00 22.00 Veronika Stefanoska 27.50 27.50 Grand Total 19,828.00 792.00 4,205.00 9,832.50 742.50 35,400.00
(d) Rural Holdings:
Category Administration Assets Creditors Investigation Grand Total Alan Lai 242.00 88.00 330.00 Andrew Mattinson 4,752.00 924.00 2,772.00 5,544.00 13,992.00 Aneta Jensen 110.00 110.00 Carolyn Docherty 124.00 124.00 Christine Trlifaj 247.50 247.50 Deborah Grapsas 1,347.50 1,347.50 Glenn Anthony Crisp 16,244.54 5,062.50 1,080.00 3,645.00 26,032.04 Jonathan Raciti 465.00 465.00 Kim Dionisopoulos 27.50 27.50 Pauline Mak 109.50 109.50 Rebecca Malaki 48.00 48.00 Rosa Whinnen 66.00 66.00 Rosemary Cooper 27.50 27.50 Samantha Ters 22.00 22.00 Veronika Stafanoska 27.50 27.50 Grand Total 23,368.04 5,986.50 3,852.00 9,769.50 42,976.04
(e) Massoni Wines:
Category
Category Administration Assets Creditors Employees Investigation Trade On Grand Total Alan Lai 990.00 22.00 44.00 22.00 1,078.00 Amanda De Braganca 165.00 165.00 Andrew Mattinson 6,468.00 132.00 6,468.00 1,914.00 14,982.00 Aneta Jensen 192.50 550.00 742.50 Carolyn Docherty 372.00 372.00 Christine Trlifaj 605.00 605.00 Courtney Crisp 27.50 27.50 Deborah Grapsas 687.50 687.50 Glenn Anthony Crisp 6,817.50 9,843.52 51,221.02 742.50 9,180.00 42,434.54 120,239.08 Jacinda Scott 154.00 154.00 Jonathan Raciti 279.00 124.00 155.00 558.00 Kim Dionisopoulos 632.50 632.50 Melissa Nguyen 27.50 27.50 Samantha Ters 528.00 528.00 Veronika Stefanoska 192.50 192.50 Grand Total 17,451.00 10,121.52 51,420.02 742.50 15,670.00 45,586.04 140,991.08
(f) Central Park Estate:
Category Administration Assets Creditors Investigation Grand Total Alan Lai 594.00 22.00 22.00 638.00 Andrew Mattinson 1,386.00 132.00 5,082.00 6,600.00 Aneta Jensen 27.50 27.50 Carolyn Docherty 186.00 186.00 Christine Trlifaj 192.50 192.50 Glenn Anthony Crisp 2,565.00 1,417.50 3,982.50 Jonathan Raciti 248.00 310.00 558.00 Melissa Nguyen 27.50 27.50 Samantha Ters 88.00 88.00 Grand Total 2,749.50 2,719.00 1,727.50 5,104.00 12,300.00
(g) Greyser:
Category Administration Assets Creditors Investigation Grand Total Alan Lai 44.00 44.00 Andrew Mattinson 1,254.00 5,082.00 6,336.00 Aneta Jensen 715.00 27.50 27.50 82.50 852.50 Carolyn Docherty 186.00 186.00 Christine Trlifaj 192.50 192.50 Courtney Crisp 27.50 27.50 Jonathan Raciti 124.00 310.00 434.00 Melissa Nguyen 27.50 27.50 Rebecca Malaki 96.00 96.00 Samantha Ters 242.00 242.00 Veronika Stefanoska 27.50 27.50 Grand Total 2,936.00 27.50 337.50 5,164.50 8,465.50
(h) Pyrenees Vineyard:
Category
Category Administration Assets Employees Investigation Trade On Grand Total Alan Lai 44.00 44.00 Andrew Mattinson 1,386.00 132.00 5,082.00 396.00 6,996.00 Aneta Jensen 27.50 27.50 Carolyn Docherty 186.00 186.00 Christine Trlifaj 192.50 192.50 Courtney Crisp 27.50 27.50 Glenn Anthony Crisp 742.50 742.50 1,485.00 Jonathan Raciti 124.00 124.00 Pauline Mak 219.00 219.00 Samantha Ters 616.00 616.00 Veronika Stefanoska 27.50 27.50 Grand Total 3,373.50 874.50 219.00 5,082.00 396.00 9,945.00 (i) Australian Independent Wine:
Category Administration Assets Creditors Investigation Trade On Grand Total Alan Lai 44.00 44.00 Andrew Mattinson 3,168.00 1,386.00 5,082.00 1,056.00 10,692.00 Aneta Jensen 27.50 27.50 Carolyn Docherty 186.00 186.00 Christine Trlifaj 192.50 192.50 Courtney Crisp 82.50 82.50 Glenn Anthony Crisp 742.50 742.50 Jacinda Scott 748.00 748.00 Jonathan Raciti 310.00 310.00 62.00 682.00 Kim Dionisopoulos 137.50 137.50 Rosa Whinnen 22.00 22.00 Samantha Ters 220.00 220.00 Grand Total 5,138.00 1,386.00 310.00 5,082.00 1,860.50 13,776.50
The WIP summaries address each entity in the Ursini Group and Massoni Wines Group. Each WIP summary is divided into categories of tasks usually required to be performed by receivers. Each category of tasks contains time entries for each insolvency practitioner who has carried out that work along with a narrative description of the work undertaken.
An example of the WIP summary is set out below:
Investigation - Conducting Investigations Date Task Hours WIP Billed Balance Narrative 16/09/2022 Glenn Anthony Crisp - 02 EPARTNER 1.10 742.50 0.00 742.50 Sundry Issues / Tasks in respect of Conducting Inv - Receive draft orders & then authentictaed orders from Lawyers & then review dropbox of court docs 20/09/2022 Alan Lai - 16 CLERICA 0.20 44.00 0.00 44.00 Searches & Search Requests on appointment - Conducted land title search 20/09/2022 Alan Lai - 16 CLERICA 0.20 44.00 0.00 44.00 Searches & Search Requests on appointment - Title search ordered 26/09/2022 Glenn Anthony Crisp - 02 EPARTNER 1.10 742.50 0.00 742.50 Sundry Issues / Tasks in respect of Conducting Inv - Compile & review group structure doc
& conduct investigations27/09/2022
Malcolm Kimbal Howell - 02 EPARTNER
0.30
202.50
0.00
202.50
Sundry Issues / Tasks in respect of Conducting Inv - PAP update on site visit yesterday / review affidavit of Teresa
18/10/2022
Andrew Mattinson - 04 PRIN
0.30
198.00
0.00
198.00
Sundry Issues / Tasks in respect of Conducting Inv - Review of email from Graham Scott in regard to the Ursini group
25/10/2022 Glenn Anthony Crisp - 02 EPARTNER 1.10 742.50 0.00 742.50 Forensic Investigations - Review of Banner Security docs provided by Newpoint Advisory 21/11/2022
Andrew Mattinson - 04 PRIN
3.50
2,310.00
0.00
2,310.00
Forensic Investigations - Preparing report for Court, reviewing and updating Statemnt of financial position, reviewing security documents and PPSR registration to detrmine priority of debts. Updating report with commentary on financial position
22/11/2022
Andrew Mattinson - 04 PRIN
2.30
1,518.00
0.00
1,518.00
Forensic Investigations - Further updates to report with changes in the allocation of priority claims, proof reading report and adding commentary to explain the financial data and working capital 23/11/2022
Jonathan Raciti - 14 GRAD
0.70
217.00
0.00
217.00
Forensic Investigations - Annexures and cover pages for court report
23/11/2022 Jonathan Raciti - 14 GRAD 0.30 93.00 0.00 93.00 Forensic Investigations - Annexures and cover pages for court report 23/11/2022 Jonathan Raciti - 14 GRAD 0.50 155.00 0.00 155.00 Forensic Investigations - Finalising report to court Subtotal 11.60 7,009.00 0.00 7,009.00
The Receivers have explained that the approach taken to time recording is one of apportionment. This is because certain tasks are said to involve a number of entities whose interests or operations are connected and the time spent on a given task has been split across the relevant group entities. The Receivers say that the work recorded in the WIP summaries can then be cross-referenced to the work as described in the First and Second Report and the schedule of work exhibited to the Third Crisp affidavit.
Mr Ursini submits that time should be allocated between entities completely independently and that the approach taken by the Receivers is inappropriate because it results in overlapping entries or double-charging.
The need for such an apportionment-style approach is demonstrated by the way in which the operations of the various entities were recorded in the financial records of the Ursini Group. In the First Report,[42] the Receivers note the following about how the financial records of the Ursini Group were prepared and presented:[43]
[Mr] Ursini has a Arts Degree majoring in accounting and has run an accounting practice. I have no doubt the Xero financial accounts that [Mr Ursini] produces are a useful tool to him in running the financial affairs of the Ursini Group and the wider group. I also believe he has a thorough understanding of the financial affairs of the group. However, the “consolidated” entering of transactions and reporting of one set of financial accounts for a number of different entities is not appropriate for reporting to external parties and the ATO. The non accrual of trading creditors also leads to misleading financial figures. The records do not fully explain the financial affairs of each entity without “pulling apart” the information and re-categorising for each entity. The Structure of the group is not that of a Holding Company with wholly owned subsidiaries that would facilitate consolidated accounts. (emphasis added)
[42]A similar statement is made in the Second Report at page 43.
[43]First Report, 34-35 (emphasis added).
I referred earlier to the observations of the Receivers that the financial transactions of all the entities were ‘lumped together.’ When reporting on the profitability and cashflow of Massoni Wines, the Receivers noted that:
From our interviews with [Mr Ursini], we understand that these yearly profit and loss accounts are an amalgamation of transactions of various entities within the Ursini Massoni Group and do not simply represent transactions of the Massoni Wines or a particular entity.
The First and Second Reports, and the summary of evidence described above, reveal a series of corporate and trust entities which closely interact with each other. The entities are a mixture of trading and non-trading entities which variously own assets and conduct the business of the “group” between them rather than in silos. The various entities were subject to inter-company arrangements that were undocumented and the financial recording and accounting for the Ursini and Massoni Wine Groups seems to have been conducted in a ‘consolidated’ way. Whether consolidated financial records is appropriate from a regulatory point of view is not a matter for consideration on this application. What it does demonstrate however, is that to the extent the operations of these entities are linked, so are the investigations into them and the time taken to conduct those investigations and report on them.
I consider the approach taken by the Receivers in respect of the recording of time to be an appropriate one.
Rates charged by the Receivers
The orders of Delany J made on 14 September 2022 provide that the Receivers are entitled to remuneration calculated in accordance with the rates contained in exhibit TJP-2/217 to the affidavit of Timothy Prudden affirmed on 13 July 2022.
Those rates are as follows:
Classification Rate (GST excl) Partners 675 Principals 660 Senior Managers/Business Directors 620 Manager 1 600 Manager 2 565 Supervisor 1 480 Supervisor 2 460 Senior 1 435 Senior 2 415 Intermediate 1 365 Intermediate 2 325 Graduates/Accountant 310 Administration/Clerical Staff – Senior 260 Administration/Clerical Staff – Junior 210 Cadets 130
Based on my review of the hours recorded against the amounts charged in the WIP summaries, I am satisfied the amount of remuneration sought by the Receivers is in accordance with the rates ordered by the Court on 14 September 2022.
I note for completeness, the Receivers have not sought orders for the approval of any disbursements including legal costs.
Based on the matters contained in the Third Crisp affidavit, the First and Second Reports and the above summary I consider there to be sufficient evidence adduced by the Receiver to review the amounts claimed and identify any matters for objection. As will become apparent, Mr Ursini has been able to identify and address each of the matters he objects to in some detail.
I will now address each of the factors I identified relevant to my consideration.
Was the work performed reasonably necessary?
I am satisfied that the work performed by the Receivers was reasonably necessary because:
(a) based on the narratives contained in the WIP summaries, each of the tasks performed by the Receivers falls within the scope of the orders made by the Court on 14 September 2022 and 9 December 2022;
(b) each of those tasks was necessary to investigate and protect the assets of the entities under receivership;
(c) the scope of the tasks undertaken was required given the size of the receivership. The receivership comprises over nine entities which are a complex structure of companies and trusts with interrelated assets, operations and finances;
(d) the orders made by Delany J establishing the scope of the appointment required the Receivers to undertake extensive investigation into the nature and impact of the La Trobe Facility and the Banner facilities in circumstances where those facilities were poorly documented or not documented at all; and
(e) the rates charged by the Receivers are comparable to professional scales of charges (or otherwise appropriate rates to be charged). In any event, they are the rates ordered by the Court on 14 September 2022.
Was there complexity in the work required to be performed by the Receiver?
One aspect of Mr Ursini’s complaint about the remuneration sought relates to complexity, or in Mr Ursini’s submission, the lack of complexity in this receivership. Mr Ursini describes the ‘Ursini Group’ (by which he includes the Ursini Group and the Massoni Wines Group) as a ‘small family business’. He says he has been actively involved in the business from the beginning and has been ‘the main driver of the business over the last 5 years’. Mr Ursini says that the ‘Ursini Group’ is ‘uncomplicated’ because only three of the nine entities actually trade. In support of that proposition, Mr Ursini relies upon:
(a) documents described as “a break up of bank transactions” for F & T Ursini Nominees, Australian Independent Wine and Massoni Wines;[44]
(b) bank statements of a Westpac Business One account for each of F & T Ursini Nominees, Australian Independent Wine and Massoni Wines for the 2021 – 2022 financial year.[45]
[44]Affidavit of Fred Ursini dated 19 May 2023, exhibit “FAU 1”.
[45]The Westpac bank statements referred to were tendered as a bundle at the 16 June hearing. I allowed their admission solely based on the relevance Mr Ursini ascribed to them.
In oral submissions at the 16 June 2023 hearing, Mr Ursini sought to rely upon the Westpac bank statements as evidence of the relatively small volume of transactions that apply to each of the trading entities over a twelve month period.[46] I understand the submission to be the same in relation to the documents referred to in 110(a) above. Mr Ursini submits that these statements show that the operations of these entities are simple and therefore do not justify the amount of work undertaken by the Receivers. Accordingly, he says I should reject any submission by the Receivers that there is complexity around the corporate structures that warrants the level of work undertaken.
[46]Transcript of proceedings, In the matter of Pancon Pty Ltd (ACN 055 961 665) (Supreme Court of Victoria, S ECI 2022 00228, Gitsham JR, 16 June 2023), 52.
I do not need to set out the detail of the various statements relied upon by Mr Ursini. Whilst I understand his submission, it fails to appreciate the broader tasks required of the Receiver both under the Act and pursuant to the orders of Delany J made on 14 September and 9 December 2022.
Based on the above descriptions of the operations and structure of the Ursini Group and Massoni Wines Group it is self-evident that endeavouring to investigate and unpack those operations was not a straightforward task. Indeed, at page 34 of the First Report the Receivers observed:
Whilst [Mr] Ursini may be able to discern from his own knowledge what the financial affairs of each entity are from the information provided, this is not readily determinable to a third party.
Now, in some respects, it is not surprising that Mr Ursini holds the view that he does. Having worked in the business from its inception and then being responsible for its ongoing survival, he has no doubt been the architect of many of the company/trust structures, and inter-company operations and arrangements. Accordingly, he has a deep understanding of how the business works. However, it does not follow that Mr Ursini’s familiarity with the operations of the Ursini Group and Massoni Wines Group and his view of their ‘simplicity’ mean they are that simple when viewed through the Receivers’ lens.
I do not accept Mr Ursini’s submission that there was no level of complexity in the structure and operations of the Ursini Group and Massoni Wines Group such that investigating the entities in the receivership as required by the Court was a simple or straightforward task. Even if, as a practical matter, the trading of those entities was ‘simple’, I accept the Receivers’ submission that “the tasks undertaken by the Receivers were complicated (for example, investigating the Banner loans and the associated litigation), time consuming and made more difficult due to the lack of record-keeping”.
Does the value and nature of the property dealt with or likely to be dealt with warrant the work undertaken?
One notable aspect of the First and Second Reports is that it records the increase in the amount claimed by Banner under the Banner Facility by $2,840,158[47] to total $30,960,251. Accordingly, the Banner Facility represents an estimated deficiency in the Ursini Group and Massoni Wines Group’s consolidated position of $4,650,259.
[47]Second Report, Part 4.0 (this increase was reported as a result of a Statement of Claim issued by Banner on 3 March 2023 and confirmed in correspondence from Banner’s solicitors).
This highlights the importance of the issues associated with the Banner Facility; the necessity for careful work to be carried out in investigating it; and the need for any proceeding in respect of the Banner Facility to be properly and appropriately defended.
Whilst the amount of remuneration sought by the Receiver is high, it is proportional to the value of the assets/business of the Ursini Group and Massoni Wines Group, particularly if it turns out, by reason of that work, the Banner Facility is not valid.
Was the Receiver required or likely to be required to deal with another Receiver or Manager?
The concurrent appointment of the Banner Receiver over some of the assets of the Ursini Group requires the Receivers to deal with the Banner Receiver on a regular basis. The possibility of the Banner Receiver realising those assets has required work to be carried out by the Receivers that might otherwise not have been required and have required a high degree of care and skill on the part of the Receivers.
Taking into account each of the factors I have identified above, I am satisfied that the Receivers have made out a prima facie case for payment of their remuneration.
So satisfied, I turn now to the objections raised by Mr Ursini in relation to the time entries themselves and their validity.
Mr Ursini’s objections
In support of his objections to the remuneration application Mr Ursini relies upon an affidavit dated 19 May 2023, a bundle of Westpac bank statements tendered at the hearing and his Outline of Submissions.
I indicated previously that in the Outline of Submissions, Mr Ursini sought to rely upon further evidence not relied upon at the hearing. What Mr Ursini seeks to rely upon and which is particularly objected to is a document called ‘Notification of the Presence or Suspected Presence of the Disease’.
The Receivers object to the tender of the document described as ‘Notification of the Presence or Suspected Presence of the Disease’. They say it is not relevant to the current application. I agree because it appears to relate to matters that post-date the period of work carried out by the Receivers. I have not taken it into account for the purposes of these reasons.
As Mr Ursini is self-represented, his affidavit is prepared in a less formal way. I do not say that as a criticism, just an explanation. The body of the affidavit comprises two pages in which Mr Ursini deposes to his agreement or disagreement with each of the paragraphs of the Third Crisp Affidavit. Exhibited to the affidavit are 34 pages of an itemised narrative as to why Mr Ursini challenges particular entries in the WIP summaries relied upon by the Receivers.
In Re Gondon Five Pty Ltd,[48] the Court said:
It has often been said that it is not the function of a judge to conduct a line-by-line or item-by-item review of a remuneration claim. While this is particularly so on review applications where there has been an earlier decision of a registrar, it remains important to remember that the court has a wide discretion in respect of remuneration, and the exercise – generally speaking – involves approximation and estimation rather than precise measure and calculation.[49]
[48][2019] NSWSC 469 (Brereton J).
[49]Ibid [109].
I have considered each of Mr Ursini’s objections to the WIP summaries having regard to the entries in those WIP summaries and against the matters contained in the First and Second Reports and the Crisp affidavits. In many respects, this has resulted in a line-by-line review of the claim. I set out Mr Ursini’s objections and my findings in respect of them below.
Relevantly, Mr Ursini’s objections concern:
(a) general complaints of factual errors, omissions and bias in the First and Second Reports;
(b) claims that work should not have been carried out by the Receivers in respect of entities that do not trade and that those entities who do trade have been “severely adversely impacted” by the Receivers’ conduct; and
(c) claims of overcharging and duplication of work.
Mr Ursini divides his analysis of the work undertaken by the Receivers between non- trading and trading entities. He says that the Receivers have spent $109,086.54 on non-trading entities and $232,999.58 on trading entities. Mr Ursini says that ‘given the simplicity of the company’s activities and the timeframe they have been in receivership, together with the fact that our bookkeeper is still doing the day-to-day administration’ the fees incurred are ‘exorbitant’.
The approach taken by Mr Ursini is to work through each line item of the WIP summaries exhibited to the Third Crisp Affidavit and identify the entries he disputes under the categories contained in the WIP summaries. He deals first with the entities over which the Receivers were appointed on 14 September 2022 (including by reference to the work in the First Report) and secondly with the entities over which the Receivers were appointed on 9 December 2022 (including by reference to the work in the Second Report).
To the extent that Mr Ursini relies upon the totality of these impugned entries as a proper basis to find the Receivers’ remuneration objectionable I do not accept that submission. For the reasons I have previously identified I have determined that the Receivers’ remuneration is prima facie reasonable.
Objections to the work done: entities the subject of the First Report
Administration – General Admin/File Maintenance:
There are two broad objections raised to this work. The first objection is to entries made on 20 September 2022 by Andrew Mattinson for 1.9 hours of work described as ‘incoming/outgoing mail & correspondence – reviewing court documents, affidavits, call with Marina Barry, call with Gearge (sic) Pellegrino’. The same entry appears in respect of Pancon, F & T Ursini Nominees, E Wine Australia and Rural Holdings. The complaint appears to be that work has been undertaken in respect of companies that do not trade. The second objection is in relation to entries made on 27 September 2022 by Paul Pattinson in respect of Pancon for 2.1 hours of work downloading photos.
I have had regard to the entries in the WIP summaries and based on the volume of work identified in the First Report, I am satisfied that the work on its face appears reasonable. Whilst I understand Mr Ursini’s submission that identical entries for identical periods of time in respect of different entities gives an impression of duplication, for the reasons I have already identified, I accept the Receivers’ explanation for the way in which time spent has been apportioned across the entities.
Administration – Statutory Compliance:
The objections raised under this heading are two fold.
First, Mr Ursini says that amounts charged for work done in respect of non-trading entities should not be charged because (I infer) there should be no need to deal with any statutory compliance issues in respect of companies that do not trade. Mr Ursini compares the amounts charged for work done in respect of the non-trading entities in the First Report with those in the Second Report highlighting the discrepancy between the two. By way of example, the entries for compliance for F & T Ursini Nominees between 19 September 2022 and 24 October 2022 total 3.9 hours whereas work undertaken for Central Park for the period 12 December 2022 to 27 February 2023 totals 1.5 hours.
Second, a complaint is made in relation to time spent by Mr Crisp on Massoni Wines (Second Report) and why 7.3 hours for Mr Crisp’s time (as a senior practitioner) was necessary for the purposes of statutory compliance.
The entries identified by Mr Ursini are standard work required to be carried out in order for a receiver to meet its obligations in ensuring the statutory compliance of each entity. On the face of the entries, the discrepancy between the amount charged in respect of the entities in the First Report and those in the Second Report is as a direct result of the involvement of more senior practitioners in the First Report. Mr Crisp has stated that the appointment over each of the entities has involved complex issues that require the Receivers to exercise a high degree of care and skill. It was submitted, and I agree, that this necessarily requires more senior practitioner involvement than might otherwise be the case. There is no time recorded by senior practitioners for this type of work in relation to a number of the entities in the Second Report. I am satisfied that the time recorded by Mr Crisp and other senior practitioners in respect of the entities identified in the First Report is reasonable.
I do not allow these objections.
Administration – Tax Compliance:
Under this heading, Mr Ursini objects to entries in relation to each of the entities over which the Receivers are appointed (i.e. all nine entities) on the basis that none of those entities have tax file numbers. The costs range from $0 to $459.00 and total about 6.2 hours of time spent over the course of the receivership.
I am of the view that the time spent forms part of the necessary enquiries to be made by a receiver in the performance of their duties. I consider the time spent to be reasonable.
I do not allow the objection.
Administration – Officers/Members
The primary complaint of Mr Ursini in relation to time charged under this heading is the perceived ‘overlapping’ or ‘overstating’ of time charged between the entities. To that end, Mr Ursini challenges what I will characterise as four groups of time entries.
The first group of entries relates to work undertaken on 21 and 29 September 2022. On 21 September 2022 Mr Crisp undertook work which can be generally described as ‘Correspondence/Discussions/Meetings with Officers’. The narratives vary slightly depending upon the entity in respect of which the entry is made. Generally, Mr Crisp appears to have undertaken work which involved corresponding with Mr Ursini, opening bank accounts or corresponding with Westpac, and viewing the ‘Mornington site’.[50] These entries are applied to Pancon, F & T Ursini Nominees, E Wine Australia and Rural Holdings. On 29 September 2022 the entries recorded are similar to the 21 September entries, save that they did not include time spent in respect of Rural Holdings. Broadly, the entries provide for about 8.5 hours of Mr Crisp’s time for ‘travel to and from Dromana & Mt Eliza, mtg with Fred Ursini, assess records, inspect properties’. Mr Ursini disputes the time recordings having regard to what he says is the travel time to and from Melbourne to the relevant properties and his recollection of the length of the meeting with Mr Crisp. He also says he does not recall discussing any matters in relation to F & T Ursini Nominees.
[50]Which I understand to be the Mount Eliza Estate.
I have had regard to the entries contained in the WIP summaries. It appears from Mr Ursini’s affidavit he accepts that the events described in the narratives took place. I have no contemporaneous evidence as to what took place at those meetings and I accept that the WIP summaries reflect an accurate recording of Mr Crisp’s time.
The second group of entries relates to work undertaken between 6 October 2022 and 11 October 2022. The first complaint is in relation to a series of entries across Pancon, F & T Ursini Nominees, E Wine Australia and Rural Holdings for work carried out in half hour blocks. By and large, the entries relate to meetings between the Receivers and the first plaintiff and her legal advisers. Mr Ursini disputes the entries on the basis that they are ‘overlapping’ and excessive. He disputes the amount of time the Receivers spent with the first plaintiff and her advisers comparing it to the time he says he has spent with the Receivers.
I do not understand Mr Ursini to have been present at these meetings or privy to the work involved in them. The costs incurred have been incurred for work undertaken in relation to each of the entities over which the Receivers are appointed. That work has been appropriately allocated to a senior and junior practitioner. I accept the WIP summaries as an accurate record of that work.
The third group of entries concerns a meeting that took place on 14 October 2022 between Mr Ursini, Mr Crisp and Mr Mattinson. The narrative for the meeting has been described by Mr Mattinson as:
Correspondence/Discussions/Meetings with Offic – Meeting with Fred Ursini to assist with his ROCAP obligations and discuss the history of the 4 entities, strategy on the La Trobe & Banner loans and details of other entities who may pay expenses on the company’s behalf.[51]
[51] Mr Crisp describes the meeting in similar terms. His narrative reads “Correspondence/Discussions/Meetings with Offic – Meeting with Fred Ursini at Jirsch Sutherland & discuss Group, ROCAPS, further information etc”.
Mr Mattinson has recorded 0.7 units of time in respect of each of Pancon, F & T Ursini Nominees, E Wine Australia and Rural Holdings. Mr Crisp has recorded 1.6 hours of time in respect of F & T Ursini Nominees. Mr Ursini says his recollection is he met with Mr Crisp and Mr Mattinson for about 30 minutes in total.
Based on the manner in which the time entries are recorded, I infer that Mr Crisp has recorded all of his time for the meeting in respect of the “Group” against F & T Ursini Nominees whereas Mr Mattinson has split the time across all four entities. I consider 1.6 hours to be a reasonable period of time allowed for the meeting described by Mr Crisp and Mr Mattinson. I will allow that amount of time which results in a slight reduction in the time claimed by Mr Mattinson.
The fourth group of entries concerns 1.4 hours of work undertaken in respect of an email sent by Mr Ursini to the Receivers in relation to ‘what funds have been taken by Marina, what is owed to him that info regarding Torca’. Mr Ursini says that the time recorded is an excessive amount of time to read an email.
I have had regard to the entries challenged by Mr Ursini. Save for the narrative in the WIP summaries there is no further evidence about the email, its contents or what work might have been undertaken in consideration of that email. In my experience, time recordings in respect of consideration of emails can often include work done to further consider and investigate the matters contained therein. That is particularly the case where an email contains information that may inform enquiries made by receivers. Mr Ursini’s evidence goes no higher than to express an opinion as to what work Mr Mattinson ought to have done. I accept the time recording as an accurate and reasonable representation of the work undertaken.
I do not allow the objection save that I have allowed a reduction of 1.2 hours of Mr Mattinson’s time. Based on Mr Mattinson’s charge out rate that equates to a reduction of $792.00. For ease, I will reduce the whole of that time against Pancon.
Administration – Bank Account:
Mr Ursini challenges the entries recorded under this heading as he says none of the four entities had bank accounts.
Whilst I do not have evidence in relation to all the bank accounts of the Ursini Group and Massoni Wines it cannot be accurate to say that none of the Ursini Group entities had bank accounts. Mr Ursini has tendered bank account statements for F & T Ursini Nominees. I do not allow this objection.
Assets – Real Property
Mr Ursini’s affidavit raises a series of objections to the time entries in the WIP summaries under this heading. In summary, Mr Ursini says that the costs for the Receivers to organise valuations in relation to Pancon, F & T Ursini Nominees, E Wine Australia and Rural Holdings is excessive and therefore unreasonable. As best as can be discerned from Mr Ursini’s narrative, he considers the amount charged to organise valuations excessive because he says valuations were not required under the initial receivership. He also says that time has been charged against Rural Holdings for valuations of property (the Dromana winery and the Mt Eliza residence) which are not owned by Rural Holdings.
I have previously identified the manner in which the carrying out of valuations occurred. The entries that Mr Ursini complains about largely take place in 2023, after the appointment of the Receivers over the Massoni Wines Group and once valuations were being prepared in the circumstances previously identified. I consider the time taken to be reasonable.
I do not allow the objection.
Creditors – Personal Property Security
Mr Ursini challenges four entries (one in relation to each of Pancon, F & T Ursini Nominees, E Wine Australia and Rural Holdings) made by the Receivers on 21 September 2022 described as:
Correspondence/Reports/Meetings with Security – Letters to La Trobe Financial & Banner Asset Management & Letter to Hunt & Hunt, response from Westpac Bank, Letter to Director with required forms to be completed & request for information.
The objection is based upon Mr Ursini’s belief as to which entities had relevant dealings with Banner and Westpac, and the extent of Hunt & Hunt’s involvement.
I have had regard to the time entries complained of. Whilst Mr Ursini says the time recorded is excessive, he does not say what he considers to be a reasonable amount of time to be spent. Nor does he dispute the work has been done.
I consider the time charged by the Receivers to be reasonable and disallow the objection.
Reports to Creditors; Admin – Forensic Accounting Services; Investigation – Conducting Investigations:
I am dealing with each of these categories together as they have been variously used to capture time spent conducting investigations and preparing the First Report. The entries describe the work carried out by the Receivers in the following way:[52]
[52] The following descriptions are taken from the WIP summaries and are a representative sample of the types of entries used.
(a) ‘Searches & Search Requests on appointment – Conducted land title search’;
(b) ‘Sundry Issues/Tasks in respect of Conducting Inv – Compile and review group structure doc and conduct investigations’;
(c) ‘Sundry Issues/Tasks in respect of Conducting Inv – Review letter and numerous attachments from Newport Advisory from Tuesday evening re Banner Capital documents & 28m claim’;
(d) ‘Sundry Issues/Tasks in respect of Conducting Inv – Further corresp with Newpoint re Banner claims & continue review of securities’;
(e) ‘Forensic Investigations – Review of Banner Security docs provided by Newpoint Advisory’;
(f) ‘Forensic Investigations – Preparing report for Court, reviewing and updating Statement of financial position, reviewing security documents and PPSR registration to determine priority of debts. Updating report with commentary on the financial position’;
(g) ‘Forensic Investigations – Further update to report with changes in the allocation of priority claims, proof reading report and adding commentary to explain the financial data and working capital’;
(h) ‘Forensic Investigations – Review of Banner financial docs & work on report’;
(i) ‘Report – drafting, typing, printing, collation – Drafting Court report’;
(j) ‘Forensic Investigations – Finalising report to Court’.
Taking into account the work undertaken by the Receivers and their employees across each of these categories and in respect of each entity, the total time recorded is 171.5 hours at a cost of $110,984.04.
The court orders made on 14 September 2022 did not just require ‘a report’ to be prepared by the Receivers in relation to the financial affairs of the Ursini Group. Specific orders were made for matters to be addressed such as loan facilities, mortgages, and the assets and liabilities of the trusts of which these companies were trustees. The orders also required the Receivers to provide the Court with their opinion as to whether proper financial records had been maintained and whether there were any suspected regulatory contraventions.
The nature of Mr Ursini’s objections to these time entries is that the time spent was excessive because either the entities had few creditors or because the entities were non-trading. I am satisfied the time spent by the Receivers preparing the First Report is reasonable because the matters it was required to address required detailed investigation and consideration. I have already determined that the task of unpacking the structure and operations of the Ursini Group to be a complex one. Whether or not the entities had few creditors or were or were not trading is not relevant. The time spent by the Receivers was in largely in relation to understanding the way in which the various businesses operated as well as understanding the complex loan facilities entered into over a four year period.
I do not find Mr Ursini’s objections to be valid.
Investigation – History & Background; Investigation – comparative Financial Statement analysis; Investigation – Report on ROCAP:
Mr Ursini objects to time charged under these headings because he says these entities do not trade. He does not say whether he considers the time spent to be excessive (i.e. he accepts that some work was required) or whether he says that work was not required at all. Regardless, the orders of 14 September 2022 clearly require the Receivers to undertake this work. I am satisfied that the time recorded in the WIP summaries is reasonable.
Trade on Management
Mr Ursini refers to the time entry on 28 September 2022 which states
‘Initial Assessment Trade on of Business during app – Receive and review & take legal advie [sic] on receipt of Notice of Appointment of Receivers (Newpoint) by Banner Capital’.
Mr Ursini does not state the nature of or basis for his objection.
I have previously set out the circumstances in which the Banner Receiver was appointed. Having regard to those circumstances I consider it entirely reasonable for the Receivers to spend time obtaining advice on the consequence of that appointment to their own appointment as Receivers over the same entities and assets. I do not consider Mr Ursini’s objection to be a valid one.
Objections to the work done: entities the subject of the Second Report
Administration – Statutory compliance:
Mr Ursini objects to time recorded by Mr Crisp on 12 December and 13 December 2022 in relation to Massoni Wines. His complaint appears to be that there is a discrepancy between the charges for Massoni Wines and the other entities under the second appointment.
I have had regard to these entries in the WIP summaries. As with those identified previously in the First Report, these entries appear to be standard work required to be carried out in order for the Receivers to meet their obligations in ensuring the statutory compliance of each entity. On the face of the entries it appears the difference between the work done in respect of the entities in the First Report and those in the Second Report is as a direct result of the involvement of more senior practitioners in the First Report. Mr Crisp has stated that the appointments over each of the entities in the Ursini Group and Massoni Wines Group involved complex issues that require the Receivers to exercise a high degree of care and skill. It was submitted by the Receivers, and I accept, that this necessarily requires more senior practitioner involvement than might otherwise be the case. There is no time recorded by senior practitioners for this type of work in relation to a number of the entities in the Second Report. I am satisfied that the time recorded by Mr Crisp and other senior practitioners in respect of the entities identified in the Second Report is reasonable.
Administration – Officers/Members:
Mr Ursini objects to all of Mr Crisp and Mr Mattinson’s charges in respect of time charged to Massoni Wines under this heading. The objections are as follows:
(a) 14 December 2022: Time is recorded for a period of 1.7 hours for each entity under the second appointment for ‘attending Dromana processing plant and Mt Eliz estate with Grays [Auctioneers] for valuation’. Mr Ursini says the time charged is excessive because, on his recollection, the meeting with Grays went for no longer than two hours and that only Massoni Wines has assets at either of these sites. I have no contemporaneous evidence from Mr Ursini as to the time taken for the meeting. To that end, I prefer the evidence of the Receivers in the WIP summaries and do not consider Mr Ursini’s objection to be a valid one.
(b) 19 December 2022: Two time entries are recorded on this day for time spent by Mr Mattinson for ‘review of email from Fred advising of work to be done and invoices requirement payment’. On its face, this appears to be a duplicate entry. I will not allow the first entry of 0.5 hours in the sum of $330.00.
(c) 9 January 2023: Mr Ursini objects to Mr Crisp’s time for a meeting with him in relation to Massoni Wines. Mr Ursini says the meeting only went for under an hour yet a time entry of 2.8 hours is recorded. The entry for this time states ‘meeting with Fred Ursini to discuss operations and ROCAPS & preparation for mtg’. The time recorded includes not just the meeting with Mr Ursini, but Mr Crisp’s preparation for it. The objection is not allows.
(d) 12 January 2023 to 15 March 2023: Mr Ursini objects to time charged for considering and sending emails on the basis of duplication. Mr Ursini says his emails were directed towards issues involving Massoni Wines and not the other entities. The time recorded in respect of these entries appears to reflect Mr Ursini’s recollection of events. Significantly more time has been recorded dealing with emails in respect of Massoni Wines than it has on the other entities. In relation to the time recorded against the other entities, there is one entry described as ‘email from Fred containing liquor licences and outline of some expected costs and harvest information’ that has been replicated across all entities. I accept the Receivers’ explanation as to the manner in which they have apportioned time entries across entities. The entries are reasonable. The objection is not allowed.
Real Property
The source of the objection under this heading is an entry made in respect of Massoni Wines, Central Park Estate and Pyrenees Vineyard, described as ‘discussion with Mansour Lawyers in regard to Banners appointment of an R&M over the entities and the strategy to gain control of assets’. Mr Ursini says none of these entities were involved with Banner.
At pages 30 and 31 of the Second Report the Receiver says:
(i)The Massoni Group entities are not subject to the Banner security obligations.
…
(l)Banner does not have direct rights to the assets of all 9 entities and so the above does not represent a true consolidated position and is supplied for illustrative purposes only.
(m)The Massoni Group is unaffected by the Banner securities, and we have demonstrated earlier how the Banner securities impact upon the financial position of each of the Ursini Group entities.
I agree with Mr Ursini’s objection and do not allow that time recorded in relation to the Banner appointment in respect of entities in the Massoni Wines Group. That time comprises three entries of Mr Mattinson for 0.2 hours of $132.00 against Massoni Wines, Central Park Estate and Pyrenees Vineyard.
Mr Ursini also complains about the time charged by Mr Crisp between 20 January 2023 and 2 March 2023 for work done in relation to the valuations.
I have previously identified the manner in which the valuations were prepared. The entries that Mr Ursini complains of largely take place in 2023, after the appointment of the Receivers over Massoni Wines Group and once valuations were being prepared. I consider the time taken to be reasonable.
The objection is not allowed.
Assets - Stock/Work in Progress:
In the WIP summaries for Massoni Wines Mr Crisp has recorded time under this heading for work described as follows:
(a) ‘Receive and review valuation of Grays Auctioneers’;
(b) ‘Corres from SMYA, bottlers of finished wine products, re finished wine at their premises, outstanding costs and storage’;
(c) ‘Corres & discussions with Sanector re wine held by them (bottler) at Dandenong warehouse & arrange inspection of same & valuer to attend’;
(d) ‘Attend Senector premises at South Update stock spreasheet [sic]. Take pots [sic] & file’; and
(e) ‘Corres with Grays & review valuation of stock located at Bottler’s premises in South Dandenong & review of stock breakdown’.
Mr Ursini complains that the time charged in respect of this work is ‘both excessive and unexplainable’ but does not elaborate.
I have previously identified the manner in which carrying out the valuations occurred. I consider the time taken to be reasonable. The objection is not allowed.
Report to creditors:
As with the previous complaints under this heading in respect of the First Report, Mr Ursini says that the costs expended are not justified because ‘Massoni has fewer than 15 unsecured creditors. Massoni has not [sic] bank debts … Greyser has no creditors … Central has no creditors’.
The narratives for the time entries made under this heading concern the drafting of the Second Report.
The court orders made on 9 December 2022 required the Receivers to provide the Court with a report which identified the assets and liabilities of each of the companies and associated trusts, as well as express an opinion as to whether proper financial records had been maintained and whether there were any suspected regulatory contraventions or breaches of trust.
The nature of Mr Ursini’s objections to these time entries is that the time spent was excessive because either the entities had few creditors, or because the entities were non-trading. For the reasons I identified in respect of the same objection for the First Report, I do not consider this to be a valid objection.
Employee entitlements
Mr Ursini objects to entries in respect of Massoni Wines and Pyranees Vineyard on the basis that the time spent is:
(a) excessive in respect of Massoni Wines who only has two employees;
(b) and unnecessary in respect of Pyranees Vineyard because it has no employees.
It was not initially possible to identify on the face of the First and Second Reports whether Pyranees Vineyard had employees however, the Estimated Statement of Position in respect of Pyranees Vineyard[53] identifies ‘Provision for long service leave’ as a liability of the company. I infer that there is some provision for an employee associated with Pyranees Vineyard.
[53]Second Report, 418
I consider the time spent by the Receivers to be reasonable. The objections are disallowed.
Investigation – Litigation /Recovery Action
The work undertaken under this heading can be divided into two general categories: (a), work undertaken to prepare the Second Report; and (b), work carried out in relation to litigation concerning Banner.
Dealing with the Second Report first, in making my findings above in relation to the entries in respect of the preparation of the Second Report, I have taken into account the entries made in the WIP summaries under this heading and identified at pages 268 and 269 of the Court Book. For the reasons previously stated about the work required in order to prepare the Second Report, I consider the time entries to be reasonable.
Dealing then with the Banner litigation complaints. Mr Ursini disputes the time charged to Massoni Wines because he says that entity is not involved in any litigation with Banner. The impugned entries read as follows:
(a) ‘mtg with Brett Lopez of Mansour Lawyers & phone hookup with Harry Forrester of counsel re Banner actions to sell Mt Eliza Estate & potential actions’;
(b) ‘teleconference with Brett Loez & Harry Forrester re Banner Receivers vs rights of Crt Appointed Receivers Trade on matters & corres with APS re property valns’;
(c) ‘Attend Supreme Crt proceedings with both Banner & Fred Ursini & Marina Barry parties & mediation with Fred Ursini at Mansour Lawyers’.
I have set out at length above the investigations required of the Receivers in relation to the Banner Facilities, the resulting litigation, and the significance of that litigation to the otherwise precarious financial position the Ursini and Massoni Wines Group find themselves in.
Now, in relation to the entries described at paragraph 188 (b) and (c) those entries appear to be in relation to matters concerning the overlap of rights of the Receivers with the Banner Receiver. Such matters impact upon matters the subject of this Receivership. I think the time charged is reasonable notwithstanding it may be recorded against the Massoni Wines entity. Similarly, the time recorded in relation to an attendance at Supreme Court proceedings and mediation is clearly a reference to a directions hearing held before Delany J in these proceedings and the mediation that followed. Again, notwithstanding the entry against Massoni Wines I consider the time recorded reasonable. To that end I have considered equivalent entries in relation to other entities and find no duplication.
In relation to the entry described at 189(a) it is not clear why that time was recorded against Massoni Wines instead of the entity in which it would otherwise have been relevant. Other similar entries have been made in relation to Pancon (the registered proprietor of the Mount Eliza Estate. There is no explanation as to why the time is not recorded against that entity.
I will allow the objection for the time recorded by Mr Crisp on 25 January 2023 of 1.6 hours totalling $1,080.00.
Other matters raised by Mr Ursini that fall outside the scope of this application
Alleged mismanagement by Receivers
Mr Ursini objects to the time recorded against Australian Independent Wine and Massoni Wines in relation to the tasks performed by the Receivers in managing the ongoing trading activities of those entities following the Receivers’ appointment. These objections form part of a broader objection Mr Ursini makes to the manner in which the Receivers have managed the receivership.
The nature of Mr Ursini’s objections to the particular time entries can be summarised in the following way. He complains of work carried out by the Receivers which he says is unnecessary given the presence of other employees of the business (i.e. a bookkeeper). He complains of entries which are said to be duplicate entries. He disputes entries in respect of meetings which he says are excessive (based on his recollection of how long a particular meeting took). He also disputes the need for Mr Crisp to be involved in tasks as a senior practitioner when those tasks could be performed by more junior staff.
More generally, Mr Ursini makes observations in relation to what he describes as mismanagement of the rural activities of the “group”. What Mr Ursini appears to particularly complain of is that the Receivers failed to allocate proper funds or pay expenses in a timely way which adversely impacted upon the 2023 vintage.
Mr Ursini has exhibited a number of emails which he says evidences requests made of the Receivers for money to meet the costs of harvest. Mr Ursini says he did not receive responses to those requests resulting in delays to certain tasks being performed that damaged the harvest. Mr Ursini outlines what he says are the financial losses suffered as a result of that damage.
Whilst I appreciate these are matters that are important to Mr Ursini, they are not matters that are relevant to my assessment of the remuneration of the Receivers in this case. The Court’s role on such an application is to identify whether a substantial part of the work performed by the Receivers and for which they claim remuneration is reasonable having regard to the scope of their appointment.[54] Receivers are entitled to the costs, charges and expenses properly incurred in the discharge of their ordinary duties, or in the performance of extraordinary services that have been sanctioned by the Court.[55] What Mr Ursini complains of are matters that go to the conduct of the receivership itself, not matters which are relevant to showing whether work done by the Receivers was unreasonably performed.[56] I do not consider any of the matters raised by Mr Ursini under this heading to detract from the work recorded as undertaken by the Receivers in the ongoing trading of those trading entities over which they were appointed.
[54]Re Say Enterprises Pty Ltd [2018] NSWSC 396.
[55]Ide v Ide (2004) 184 FLR 44, 49 [40].
[56]Re Australasian Barristers Chambers Pty Ltd [2019] NSWSC 799 [25] (Brereton J).
Set-off
Mr Ursini seeks a ‘set-off’, which he describes as his remuneration for work he has performed during the course of the receivership. The concept of a ‘set-off’ is one which has particular import. Ordinarily, it suggests a right to account for the value of one claim against another. In a practical sense this results in some form of equalisation of those claims depending on their respective merit. The present case is different. There is no power on this application to determine an appropriate remuneration amount for Mr Ursini. Even if there were, and even if that allowance could be taken into consideration on this application, it does not operate to ‘discount’ the remuneration sought by the Receivers. If the Receivers has performed their work within the scope of its appointment and the Court finds that work and the amount charged to be reasonable, the Receivers ought to have their remuneration.
What is the appropriate quantum?
The objections I have allowed in the paragraphs above require a reduction in the remuneration allowed for:
(a) Pancon in the sum of $792.00;
(b) Massoni Wines in the sum of $1,542.00;
(c) Central Park Estate in the sum of $132.00; and
(d) Pyrenees Vineyard in the sum of $132.00.
Taking those objections into account, orders will be made approving the Receivers’ remuneration in the amount of $418,230.14 plus any applicable GST comprised of the following:
(a) $77,950.02 in respect of Pancon;
(b) $78,232.00 in respect of F& T Ursini Nominees;
(c) $35,400.00 in respect of E Wine Australia;
(d) $42,976.04 in respect of Rural Holdings;
(e) $139,449.08 in respect of Massoni Wines;
(f) $12,168.00 in respect of Central Park Estate;
(g) $8,465.50 in respect of Greyser;
(h) $9,813.00 in respect of Pyrenees Vineyard;
(i) $13,776.50 in respect of Australian Independent Wine.
I will ask the Receivers’ solicitors to provide me with a draft form of orders to be made reflecting these reasons.
SCHEDULE OF PARTIES
| S ECI 2022 00228 | |
| BETWEEN: | |
| MARINA RITA BARRY | First Plaintiff |
| TERESA URSINI | Second Plaintiff |
| - v - | |
| FERDINANDO ANTHONY URSINI | First Defendant |
| PANCON PTY LTD (ACN 055 961 665) (RECEIVERS AND MANAGERS APPOINTED) | Second Defendant |
| F & T URSINI NOMINEES PTY LTD (ACN 005 748 247) (RECEIVERS AND MANAGERS APPOINTED) | Third Defendant |
| E WINE AUSTRALIA PTY LTD (ACN 084 857 250) (RECEIVERS AND MANAGERS APPOINTED) | Fourth Defendant |
| RURAL HOLDINGS PTY LTD (ACN 153 329 134) (RECEIVERS AND MANAGERS APPOINTED) AS TRUSTEE FOR THE RURAL FAMILY TRUST | Fifth Defendant |
| MASSONI WINES PTY LTD (ACN 086 848 446) (RECEIVERS AND MANAGERS APPOINTED) | Sixth Defendant |
| CENTRAL PARK ESTATE (VIC) PTY LIMITED (ACN 086 966 994) (RECEIVERS AND MANAGERS APPOINTED) IN ITS OWN CAPACITY AND AS TRUSTEE OF THE DROMANA WINERY UNIT TRUST | Seventh Defendant |
| GREYSER PTY LIMITED (ACN 077 841 813) (RECEIVERS AND MANAGERS APPOINTED) IN ITS OWN CAPACITY AND AS TRUSTEE OF THE GREYSER UNIT TRUST | Eighth Defendant |
| PYRENEES VINEYARD MANAGEMENT PTY LIMITED (ACN 078 249 019) (RECEIVERS AND MANAGERS APPOINTED) | Ninth Defendant |
| AUSTRALIAN INDEPENDENT WINE WHOLESALERS (VIC) PTY LTD (ACN 143 514 372) (RECEIVERS AND MANAGERS APPOINTED) | Tenth Defendant |
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