Re S & D International Pty Ltd (in liq) (rec & mgr apptd)

The case involved the liquidators of S & D International Pty Ltd (in liquidation) who brought proceedings against the first registered mortgagee of trust property, a mortgagee in possession, and an agent in possession, who had sold trust property. The dispute arose over the surplus proceeds from the sale of the property, which exceeded the mortgagee's debt and expenses of sale. The court was tasked with determining the entitlements of various interest holders, including subsequent mortgagees and chargees, to the surplus proceeds. Additionally, the court examined whether the mortgagee and the agent in possession were required to account for the surplus and whether they could claim expenses incurred after the settlement of the sale as an expense against the proceeds of sale.

The primary legal issues before the court were whether the mortgagee and the agent in possession were obligated to retain the surplus and pay it to subsequent equitable interest holders according to their entitlements and priority under s 77(3) of the Transfer of Land Act 1958. The court also considered whether the mortgagee and the agent were entitled to costs incurred in determining who should receive the surplus. Furthermore, the court had to decide if the mortgagee's debt was fully satisfied upon the sale of the land and whether the mortgagee and the agent were required to account for the surplus upon the settlement of the sale. Lastly, the court examined whether the mortgagee and the agent were entitled to any expenses incurred subsequent to the settlement of the sale.

The court found that the mortgagee and the agent in possession were indeed required to retain the surplus and distribute it to subsequent interest holders in accordance with their respective entitlements and priority, as stipulated by s 77(3) of the Transfer of Land Act 1958. The court held that the reference to subsequent mortgagees and chargees in the statute includes unregistered mortgagees and chargees. Consequently, the surplus moneys were held on trust for these subsequent equitable mortgagees and chargees. The court ruled that the mortgagee and the agent were not entitled to costs incurred in determining who should receive the surplus. It was further determined that the mortgagee's debt was satisfied in full upon the sale of the land, but the mortgagee and the agent were still obliged to account for the surplus upon the settlement of the sale. The court also held that the mortgagee and the agent were not entitled to any expenses incurred subsequent to the settlement of the sale unless they were "properly and reasonably" incurred.

The final orders of the court included directions for the mortgagee and the agent in possession to account for the surplus proceeds from the sale of the land to the appropriate subsequent interest holders. Additionally, the court ordered the agent in possession to deliver up the real property in their possession to the liquidator and that the appointment of the receiver and manager was terminated. The court also considered making orders against the mortgagee, the agent in possession, and the receiver and manager under various sections of the Corporations Act 2001, but ultimately did not proceed with these orders.