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Ross v Gippsreal

Ross v Gippsreal

Case [2016] VSC 753 7 December 2016

Receivership

Implied Terms

Unconscionable Conduct

Equitable Estoppel

Corporate Law & Governance

Property Law

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IN THE SUPREME COURT OF VICTORIA	Not Restricted
AT MELBOURNE
COMMERCIAL COURT

S CI 2015 00665

DAVID ANTHONY ROSS & RICHARD ALBARRAN	Plaintiffs
v
GIPPSREAL LIMITED (ACN 005 443 292)	Defendant

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JUDGE:	CAMERON J
WHERE HELD:	Melbourne
DATE OF HEARING:	7, 8 June and 27 July 2016
DATE OF JUDGMENT:	7 December 2016
CASE MAY BE CITED AS:	Ross v Gippsreal
MEDIUM NEUTRAL CITATION:	[2016] VSC 753

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COMPANIES – Receivership – Contract – Construction of deeds – Is there a cap limiting the amount of remuneration that the Receivers can incur – Waiver – Whether by conduct of the appointor, it would be unconscionable for the appointor to rely on the cap – Adverse inference drawn for not calling key witness – Jones v Dunkel.

EQUITY – Receivers’ lien – Whether Receivers entitled to an equitable lien in priority to the secured creditor over the proceeds of sale of the underlying property – Whether fees incurred for steps leading up to the realisation of the underlying property are subject to a lien.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A Kirby	Evans Ellis Lawyers
For the Defendant	Mr J Evans (now SC)	Oakleys Legal Practitioners

HER HONOUR:

What is the case about?

The plaintiffs in this case are Mr Ross and Mr Albarran (the ‘Receivers’). They were appointed as receivers and managers of Action Cycles Pty Ltd (‘Action Cycles’), by the defendant, Gippsreal Limited (‘Gippsreal’) pursuant to a standard charge document dated 15 April 2010 (the ‘Charge’).[1] The Receivers retired on or about 28 February 2012.[2]
[1]Exhibit P2.
[2]Transcript, 8 June 2016, 140.

The Receivers claim payment from Gippsreal for their professional costs and expenses in connection with the receivership. Their claim is based on an indemnity given by Gippsreal to them and, in the alternative, under an equitable lien. The Receivers’ claim is in the order of $200,000.

Gippsreal says that the Receivers’ fees are capped at $15,000 plus GST (the ‘cap’). So, Gippsreal argues, it has no obligation to pay the Receivers any fees to the Receivers above that amount. Gippsreal has paid the Receivers $16,500 ($15,000 plus GST).

Gippsreal also says that the Receivers are required under agreement to exhaust all their rights in respect of their outstanding fees against third parties first (which Gippsreal says the Receivers have not done), and only then, can they seek to claim their fees against Gippsreal. One of the avenues Gippsreal contends that the Receivers failed to pursue was in relation to the bicycle assets.

Gippsreal argues that the bicycles became the Receivers’ to deal with after their retirement and they failed to pursue their rights in relation to the bicycles. A second avenue available to the Receivers that the Receivers failed to pursue, so says Gippsreal, is the cost orders against Action Cycles and the Gellies (Mr Darren Lionel Clifford Gellie and Mrs Lorelle Leigh Gellie, Director and Secretary of Action Cycles/ joint owners of Action Cycles) in a previous proceeding in this court.[3]
[3]Orders…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Ross v Gippsreal

Details

AGLC: Ross v Gippsreal [2016] VSC 753
Case: [2016] VSC 753
Decision Date: 7 December 2016

CaseChat Overview and Summary

In the case of Ross v Gippsreal, the respondent appointed the appellants as receivers and managers of the company. The appellants were entitled to remuneration and expenses from the company, subject to a cap of $2 million. The company went into liquidation, and the liquidator sold the underlying property. The appellants sought a lien over the proceeds of sale and claimed additional fees incurred before the sale. The primary issue was whether there was a cap on the remuneration and whether the appellants were entitled to a lien over the sale proceeds.

The court examined the deeds to determine if there was a cap on the remuneration. The court found that the cap applied to the remuneration, but the deeds did not specify if it applied to the fees incurred before the sale. The court held that the cap did not apply to fees incurred before the sale, and the appellants were entitled to a lien over the sale proceeds. The court also found that the conduct of the respondent in not calling a key witness led to an adverse inference, and it would be unconscionable for the respondent to rely on the cap.

The court found in favour of the appellants and granted them a lien over the proceeds of sale and additional fees incurred before the sale. The court held that the conduct of the respondent in not calling a key witness led to an adverse inference, and it would be unconscionable for the respondent to rely on the cap. The court also held that the fees incurred before the sale were subject to a lien. The final orders were that the appellants were entitled to a lien over the proceeds of sale and additional fees incurred before the sale.

Orders