Sandra May Banning as administratrix of the estate of Martin Banning v Graeme Trevor Lean (in his capacity as Receiver) [No 3]

[2019] WASCA 30

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   THE COURT OF APPEAL (WA)

CITATION:   SANDRA MAY BANNING as administratrix of the estate of MARTIN BANNING -v- GRAEME TREVOR LEAN (in his capacity as Receiver) [No 3] [2019] WASCA 30

CORAM:   BUSS P

MURPHY JA

BEECH JA

HEARD:   24 OCTOBER 2018

DELIVERED          :   15 FEBRUARY 2019

FILE NO/S:   CACV 2 of 2017

BETWEEN:   SANDRA MAY BANNING as administratrix of the estate of MARTIN BANNING

First Appellant

PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD

Second Appellant

AND

GRAEME TREVOR LEAN (in his capacity as Receiver)

Respondent

ON APPEAL FROM:

Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA

Coram:   MASTER SANDERSON

Citation: COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 11] [2016] WASC 365

File Number             :   CIV 2265 of 2006

Catchwords:

Receiver - Remuneration - Court appointed receiver - Receiver appointed on application of judgment creditor - Receiver appointed to sell share in a family company held by one judgment debtor - Where receiver applied for assessment of remuneration by master - Where no sale ever eventuated - Where master found that receiver failed to investigate pre-emptive provisions in the constitution of the company governing the sale of the share - Where master also found that the receiver had acted at the behest of directors of the judgment creditor - Where master also found that the receiver was not entitled to remuneration after date of agreement to sell share - Whether master erred in finding that the receiver had established that the work for which he claimed remuneration was reasonably and prudently undertaken and, if so, to what extent - Whether master erred in failing to deal with a misfeasance claim against receiver

Corporations - Memorandum and Articles of association - Pre-emptive provisions - Whether receiver bound by pre-emptive provisions in the company's constitution

Legislation:

Civil Judgments Enforcement Act 2004 (WA), s 86

Result:

Appeal allowed

Category:    A

Representation:

Counsel:

First Appellant	:	Mr T Stephenson
Second Appellant	:	Mr T Stephenson
Respondent	:	Mr A Metaxas

Solicitors:

First Appellant	:	Eastwood Sweeney Law
Second Appellant	:	Eastwood Sweeney Law
Respondent	:	Chris Stokes & Associates

Case(s) referred to in decision(s):

13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) [1999] FCA 144; (1999) 30 ACSR 377

Attorney‑General v Schonfeld [1980] 3 All ER 1; [1980] 1 WLR 1182

Australian Securities and Investments Commission v Lawrenson Light Metal Die Casting Pty Ltd [1999] VSC 500; (1999) 158 FLR 307

Banning Holdings Pty Ltd v Holbrook [2009] WASC 178

Boehm v Goodall [1911] 1 Ch 155

Bond v McClay [1903] St R Qd 1

Burt, Boulton and Hayward v Bell [1895] 1 QB 276

Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 11] [2016] WASC 365

Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318; (2010) 246 FLR 143

Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 6] [2014] WASC 105

Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (S)

Co‑operative Farmers and Graziers Direct Meat Supply Ltd v Smart [1977] VR 386

Corporate Affairs Commission v Smithson [1984] 3 NSWLR 547

Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] 2 All ER 633; [1971] Ch 949

Dolphin v Aylward (1870) LR 4 HL 486

Donald Campbell-Smith as executor of the estate of Martin Banning v Graeme Trevor Lean (in his capacity as Receiver) [2017] WASCA 89

Duffy v Super Centre Development Corporation Ltd [1967] 1 NSWR 382

Eady v Eady (1895) 16 LR (NSW) Eq 70

Frigger v Campbell-Smith [2010] WASC 353

Harris v Sleep [1897] 2 Ch 80

Holmes v Millage [1893] 1 QB 551

Lean v Banning Holdings Pty Ltd [2017] WASC 353

Livingston v Commissioner of Stamp Duties (Qld) [1960] HCA 94; (1960) 107 CLR 411

Mariconte v Batiste [2000] NSWSC 288; (2000) 48 NSWLR 724

Mellor v Mellor [1992] 1 WLR 517

Nilant v RL & KW Nominees Pty Ltd [2007] WASC 105

Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR 306

Official Trustee in Bankruptcy v Buffier [2005] NSWSC 839; (2005) 54 ACSR 767

Pendlebury v Colonial Mutual Life Assurance Society Ltd [1912] HCA 9; (1912) 13 CLR 676

Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179

Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 3] [2010] WASC 93

Re Jackgreen (International) Pty Ltd [2010] NSWSC 817

Re Say Enterprises Pty Ltd [2018] NSWSC 396

Re Scottish Properties Pty Ltd (1977) 2 ACLR 264

Re Shephard (1889) LR 43 Ch D 131

Re Van Reesema; Ex parte Australian Growth Resources Corporation Pty Ltd (Unreported, Federal Court of Australia, 27 March 1987)

Rosanove v O'Rourke (1988) 1 Qd R 171

Royal v El Ali (No 2) [2016] FCA 1156

Saraceni v Jones [2012] WASCA 59; (2012) 42 WAR 518

Scott (Trustee) v Icicek Holdings Pty Ltd [2015] FCA 1387

Searle v Choat (1884) 25 Ch D 723

Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management [2012] WASCA 79; (2012) 42 WAR 287

Taylor v Goldana Investments Pty Ltd (No 2) [2015] FCA 947; (2015) 236 FCR 298

Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96

Westpac Banking Corporation v ITS Taxation Services [2004] NSWSC 50; (2004) 183 FLR 273

William H Parsons v Sovereign Bank of Canada [1913] AC 160

JUDGMENT OF THE COURT:

1. This is an appeal against Master Sanderson's decision in Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 11] [2016] WASC 365 (primary decision). Pursuant to that decision Master Sanderson ordered that the respondent (Mr Lean) be allowed $75,000 (plus interest) for costs and disbursements in relation to his work as a court‑appointed receiver for the sale of a share (the Banning Share) in Banning Holdings Pty Ltd (Banning Holdings). The receivership commenced on 21 November 2008 and ended in November 2010.[1]

   [1] Primary decision [1], [3], [5], [30].

2. At all material times there were two shares in Banning Holdings.  One was the Banning Share which was held by Mr Banning prior to his death, and over which Mr Lean was subsequently appointed receiver.  The other share in Banning Holdings was held by Mrs Banning.[2]

   [2] Banning Holdings Pty Ltd v Holbrook [2009] WASC 178 [9] - [11].

3. The litigious history leading to Mr Lean's appointment as the receiver over the Banning Share is outlined in Donald Campbell-Smith as executor of the estate of Martin Banning v Graeme Trevor Lean (in his capacity as Receiver).[3]  In broad terms, Mr Banning, together with his associated company Professional Services of Australia Pty Ltd (PSA) were judgment debtors in the original proceedings (CIV 2265 of 2006) brought by Computer Accounting and Tax Pty Ltd (CAT), a company controlled at that time by Mr and Mrs Frigger.  Mr Banning's assets included the Banning Share.  Mr Banning died in September 2008.  Mr Campbell-Smith was appointed the executor of Mr Banning's estate.

   [3] Donald Campbell-Smith as executor of the estate of Martin Banning v Graeme Trevor Lean (in his capacity as Receiver) [2017] WASCA 89.

4. On 21 November 2008, at a point in time when the judgment debt in favour of CAT against Mr Banning and PSA (CAT judgment debt) was not satisfied,[4] CAT obtained (on 21 November 2008) orders pursuant to s 86(1) of the Civil Judgments Enforcement Act 2004 (WA) for the appointment of Mr Lean as receiver over the Banning Share, to appropriate and realise that asset in satisfaction of the CAT judgment debt (the Receivership Orders). The Receivership Orders are set out in full in the schedule to these reasons.

   [4] There was ultimately a successful appeal by PSA and Mr Banning's estate against the amount of the judgment debt, which reduced it significantly:  Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183; (2009) 261 ALR 179. It is, however, unnecessary to go into the history and consequences of that appeal for present purposes.

5. The court ordered, by order 8 of the Receivership Orders, that the costs of (in effect) the receivership 'shall be primarily payable by the judgment debtors [PSA and Banning] by making payment of the … costs to the judgment creditor [CAT] within such time as the Master may allow on taxation or assessment or is otherwise ordered'.[5]  Although order 8 is convoluted, its effect, relevantly for present purposes, is that (1) the judgment debtors are bound personally to indemnify the receiver for his remuneration; (2) the receiver may apply to have his remuneration assessed by a master; (3) once the receiver's remuneration is assessed by the master, the assessed remuneration is payable by the judgment debtors to the judgment creditor within such time as the master may allow or is otherwise ordered by a judge; and (4) payment to the judgment creditor satisfies the personal indemnity of the judgment debtors referred to in (1). 

   [5] Order 8 of the orders of Simmonds J in CIV 2265 of 2006 on 21 November 2008 (Receivership Orders); BB 19.

6. At least three aspects of the Receivership Orders might be thought to be, at the least, unusual.  One is that, at least ordinarily, under the general law, the receiver's fees are paid out of the property the subject of receivership and not by the parties to the proceedings, on the basis that the receiver has a right of indemnity against, and a lien to that extent over, the property the subject of the Receivership Orders, but has no personal right of indemnity against the parties. [6]  The second is that the receiver, who is an officer of the court,[7] would ordinarily only be under a duty to report to the court, rather than also to the party who applied for the receiver's appointment (although that is not to say that orders might not appropriately be made in certain circumstances requiring a copy of the receiver's report to the court to be served on interested parties).  The third is that after assessment, the receivers’ remuneration under order 8 is payable to the judgment creditor and not to the receiver.  There has, however, been no challenge to the terms and scope of the Receivership Orders.[8]

   [6] See, eg, Boehm v Goodall [1911] 1 Ch 155, 161: '[i]t would be an extreme hardship in most cases to parties to an action if they were to be held personally liable for expenses incurred by receivers … over which they have no control'. See also Rosanove v O'Rourke (1988) 1 Qd R 171, 172 ‑ 175.

   [7] William H Parsons v Sovereign Bank of Canada [1913] AC 160, 167.

   [8] The requirement to pay the judgment creditor was effectively amended on 10 November 2010 - see [8] below.

7. As events transpired, the Banning Share was never transferred in satisfaction of the CAT judgment debt.  The CAT judgment debt was paid in any event following the implementation of a deed of company arrangement (DOCA) in respect of PSA.

8. Sometime after the payment of the CAT judgment debt, Mr Lean was, by order made by Simmonds J on 10 November 2010, discharged from the receivership over the Banning Share.  Simmonds J on that occasion held that Mr Lean had an equitable lien over the Banning Share in addition to the right of personal indemnity against the judgment debtors provided by order 8 of the Receivership Orders.[9]  His Honour ordered that Mr Lean 'has an equitable lien over … [the Banning Share] which is currently registered in his name, and, the proceeds of its sale for the payment to him of his remuneration and costs'.[10]  His Honour also ordered that, notwithstanding order 8 of the Receivership Orders (see [5] above), 'the judgment debtors [PSA and Banning] may satisfy their obligation to pay the … costs of the Receivership … by payment direct to the Receiver'.[11]  His Honour added a liberty to apply.  Although the orders of 10 November 2010 do not make it clear, it appears that, despite the discharge, Mr Lean may have remained the registered proprietor of the Banning Share.[12]

   [9] Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318; (2010) 246 FLR 143 [134] ‑ [150].

   [10] Order 2 of the orders of Simmonds J in CIV 2265 of 2006 on 10 November 2010; BB 22.

   [11] Order 6 of the orders of Simmonds J in CIV 2265 of 2006 on 10 November 2010; BB 22.

   [12] See also in this context [147] below.

9. Prior to his discharge as receiver, Mr Lean took steps to sell the Banning Share which included entering into an agreement for the sale of the Banning Share to Mr and Mrs Frigger on or about 10 March 2009.  As noted earlier, Mr and Mrs Frigger then controlled CAT.  The sale to Mr and Mrs Frigger was not completed prior to the termination of the receivership because, in general terms, Banning Holdings' directors refused to register the transfer of the Banning Share to Mr and Mrs Frigger, on the basis that the sale had not complied with pre‑emptive provisions in the constitution of Banning Holdings. 

10. This refusal by the directors of Banning Holdings led to the institution of other proceedings, commenced by Mr and Mrs Frigger and Mr Lean as plaintiffs in CIV 1727 of 2009.  In those proceedings, the plaintiffs sought, in effect, to compel Banning Holdings to register the transfer of the Banning Share to Mr and Mrs Frigger, and to restrain the implementation of the DOCA for PSA.[13]

    [13] Banning Holdings Pty Ltd v Holbrook [2009] WASC 178 [18].

11. Although Mr Lean was originally a plaintiff in CIV 1727 of 2009, he was later removed as a plaintiff and was joined as a fourth defendant to those proceedings.  Mr and Mrs Frigger's claim in those proceedings to enforce the sale of the Banning Share to Mr and Mrs Frigger was eventually permanently stayed on 9 February 2011.

12. Over three years later, Mr Lean, by chamber summons filed 29 October 2014 in CIV 2265 of 2006, applied for court approval of his remuneration in relation to the work done by him as a court‑appointed receiver of the Banning Share in the sum of $159,777.10.[14]  The application was resisted by Mr Campbell-Smith (who was the executor of Mr Banning's estate)[15] and PSA (the other judgment debtor of CAT in the original proceedings), who were liable for payment of his fees under the Receivership Orders.  It is that dispute which was the subject of the primary proceedings that led to the primary decision by Master Sanderson, which is now under appeal.  For the reasons that follow, we would uphold the appeal, set aside the order approving remuneration in the sum of $75,000 and substitute an order approving remuneration in the sum of $24,698.40.

    [14] BB 23 - 24.

    [15] Pursuant to a consent notice, on 24 October 2018, this court ordered that Mrs Banning, as administratrix of Mr Banning's estate, be substituted in place of Mr Campbell‑Smith as the first appellant:  appeal ts 42 ‑ 43.

Background facts

1. The following background is taken from the documents in the Green Appeal Books, unless otherwise indicated.

4 November 2008 - 15 December 2008

1. On 4 November 2008, Mr Lean executed a 'Consent to Act as Receiver and Manager' in CIV 2265 of 2006.  The 'Consent' document annexed a schedule of hourly rates, including a charge‑out rate for a partner at $344 per hour, plus GST.[16]

   [16] GB 326 - 328.

2. On 21 November 2008, Simmonds J made the Receivership Orders.[17]

   [17] BB 17 - 20.

3. On 27 November 2008, Mr Lean liaised with Mr Kim Holbrook concerning Mr Holbrook's potential appointment as administrator of PSA.[18]  Mr Holbrook was appointed as administrator of PSA on 27 November 2008.[19]

   [18] GB 686, item 4.

   [19] Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [No 3] [2010] WASC 2 (S) [13].

4. Around late November/early December 2008, Mr Campbell‑Smith (as transferor) and Mr Lean (as transferee) executed a 'Transfer of Share' document (undated) which provided for the transfer of the Banning Share by Mr Campbell‑Smith to Mr Lean 'subject to the several conditions on which [Mr Campbell‑Smith held] the same', and for Mr Lean to take the Banning Share, 'subject to Banning Holdings Pty Ltd … aforesaid'.[20] 

   [20] GB 535.

5. On 2 December 2008, Mr Eastwood (solicitor for PSA and Mr Banning's estate - the CAT judgment debtors) wrote to Mr Stokes (solicitor for CAT - the judgment creditor).[21]  Mr Eastwood referred to a meeting held on Friday 18 November 2008, to consider a proposal to lend to Mr Banning's estate a sum sufficient to pay the CAT judgment debt.  Mr Eastwood requested CAT's consent to vary the terms of certain Freezing Orders, previously made against the judgment debtors on 8 January 2008.[22]  The purpose was to allow transactions to occur to enable the CAT judgment debt to be paid.  The letter foreshadowed an application to the court to vary the Freezing Orders, if consent were not forthcoming.[23] 

6. On 8 December 2008, Mr Lean telephoned Mr Holbrook regarding Banning Holdings and PSA to 'endeavour to find a common interest in [the] Companies [sic] affairs'.[24]

7. On 15 December 2008, Mr Lean asked Ms Rosalind Dugard, the accountant for Banning Holdings, to provide him with the financial accounts of Banning Holdings prior to 2003, and raised certain questions in relation to the accounts of Banning Holdings.[25]

8. The transfer of the Banning Share, from Mr Campbell‑Smith to Mr Lean, was registered in the register of members of Banning Holdings on 16 December 2008.[26]

23 - 24 December 2008 - Mr Lean's report to the court

[21] Mr Stokes was the solicitor for CAT from 1 May 2008 to 25 August 2014 in CIV 2265 of 2006.  Mr Stokes now represents Mr Lean in this appeal.

[22] Computer Accounting & Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [180].

[23] GB 259 - 260.

[24] GB 690, item 43.

[25] GB 720 - 725.

[26] GB 665, par 11.

1. In the period up to 24 December 2008, Mr Lean undertook inquiries into (amongst other things) the assets and liabilities of Banning Holdings,[27] and obtained expert valuations of certain assets. The assets of Banning Holdings included a Vintage Car Museum and certain property.[28]  On 23 December 2008, Mr Lean met with his then solicitor, Mr Carles, to discuss the proposed report to the court prepared pursuant to the Receivership Orders.[29] 

   [27] In accordance with order 5(b) of the Receivership Orders; BB 19.

   [28] GB 483, 487.

   [29] GB 302, item 1.

2. On 24 December 2008, Mr Lean made a report to the Supreme Court (the Report).[30]  In the Report, Mr Lean assessed the 'book value' of the Banning Share at $482,356 and the 'realisable value' of the Share at $1,503,527.  Mr Lean said these valuations assumed a 'common purpose between the parties', and agreement and goodwill between (1) the purchaser and vendor of the Banning Share, and (2) the purchaser and remaining shareholder of Banning Holdings (ie, Mrs Banning).  Mr Lean then noted, in effect, that there was no such goodwill.  He observed that the 'current share sale is a forced sale', and there is 'no guarantee the [incoming shareholder] will gain admission to the Board of Company Directors', and that it 'may be necessary to gain Board representation by litigating'.  He then asked, rhetorically, '[w]ho would possibly buy [the Banning Share] with obvious conflict of interest with the existing shareholder and Board of Directors[?]'[31]  He then referred to various persons as potential purchasers including litigation funders, smaller speculators, CAT and Mrs Banning.  He said:[32]

   I value the share at $45,000 to $100,000 which is risk investment to any third party.  This is a gamble to receive a Licensed Valuers return of $1,503,521 (thirty to one return on outlay) less realisation and litigation costs.[33]

   [30] GB 481 - 489.

   [31] GB 483 - 484.

   [32] GB 484.

   [33] The reference to a 'thirty to one return on outlay' appears to assume a purchase price of $50,000, giving, on that calculation, a return of $1.5 million. 

1. Mr Lean then said that the Banning Share was worth considerably more to Mrs Banning, 'as it gives her unfettered control over [Banning Holdings'] affairs', but '[t]his return would be unsatisfactory [to CAT]'.[34] 

   [34] GB 484 - 485.

2. He also expressed the opinion that, in any event, Mrs Banning was unable to borrow funds to pay out CAT the sum of $1,760,000.  He said:[35]

   The alternative arrangement is to sell [the Banning Share] to a speculator for $50,000.  After deducting my fees … and expenses of $34,000 … a balance of $16,000 is only available to pay [CAT].

   [35] GB 485.

3. It may be interpolated here that the effect of Mr Lean's Report was that with a potential net return of $16,000, there was no real or practical prospect of the Banning Share being realised 'so as to satisfy',[36] at least in any material way, the CAT judgment debt, which was well in excess of $1 million, and according to Mr Lean, then in the order of $1.76 million.

   [36] In the language of order 2 of the Receivership Orders; BB 18.

4. Mr Lean evidently recognised the commercial futility of a sale of the Banning Share with a net return of $16,000.  He also recommended, in the Report, that he be given further and more extensive powers, beyond the powers under the Receivership Orders.  He said that 'Subject to [PSA and the estate of Mr Banning] making an acceptable recommendation to the Court, I recommend I be given the power to' deal with certain assets of Banning Holdings, namely (1) to sell 55 Benara Road, Caversham (Valencia Wines), (2) to remove the cash of $705,705 from Banning Holdings, (3) to sell the Vintage Car Museum with the assistance of consultants, and (4) to collect all outstanding debts of Banning Holdings.[37] 

   [37] GB 485; in this appeal, as noted later, the appellants contend (amongst other things) that it was not reasonable for Mr Lean to charge for work so far as it related to his recommendation to be given more extensive powers beyond those which he had been given under the Receivership Orders. See [176](f) and (h) below.

5. Mr Lean's assessment of his fees and expenses up to 24 December 2008 were $25,936.80, which included valuation disbursements in excess of $10,000.[38]

January 2009 - February 2009

[38] GB 488; see Real Estate Valuation of $5,500 and Car Valuers Fees of $5,000 in item (c).

1. On 8 January 2009, Mrs Frigger requested from Mr Lean a copy of the Report and a copy of the valuations he had received.[39]

   [39] GB 490.

2. On 9 January 2009, Mr Lean sent the Report to Mr and Mrs Frigger.[40] 

   [40] GB 491.

3. On 21 January 2009, Mr Campbell-Smith emailed Mr Lean and requested a fee estimate from Mr Lean for the receivership of the Banning Share as at 15 February 2009 (being, it appears, the then expected date upon which funds would be available to Mr Banning's estate to pay the CAT judgment debt).[41] 

   [41] GB 492, 710.

4. Mr Lean forwarded to Mrs Frigger the email from Mr Campbell‑Smith dated 21 January 2009.[42] 

   [42] GB 492.

5. On 27 January 2009, Mr Lean emailed Mr Campbell-Smith, outlining the total costs of the receivership as $30,700, and asking Mr Campbell‑Smith to 'table' evidence that he had transferred the Banning Share to Mr Lean as receiver.[43] 

   [43] GB 247 - 248, 493.

6. On 27 January 2009, Mr Lean provided Mrs Frigger with a copy of financial accounts of Banning Holdings dated 31 January 2009 [sic].[44] 

   [44] GB 494.

7. On 29 January 2009, Mrs Frigger emailed Mr Lean and referred to the Receivership Orders.  She said in effect that she understood that there was no stipulation in the Receivership Orders precluding the sale of the Banning Share to Mr and Mrs Frigger, if they offered him the best price.  She also said that Mr Lean was to report to the judgment creditor (CAT) any information in relation to the Banning Share that Mr Lean thought necessary to protect its interests as judgment creditor in respect of the CAT judgment debt.  She told Mr Lean that this meant that Mr Lean was allowed to tell Mr and Mrs Frigger about any offers Mr Lean had received for the Banning Share.[45]

   [45] GB 494.

8. On 2 February 2009, Mr Lean emailed Mr Campbell-Smith.  He requested that Mr Campbell‑Smith make, as soon as possible, any formal offer on behalf of Mrs Banning to purchase the Banning Share, or to submit any alternative commercial arrangement.[46]

   [46] GB 760.

9. On 4 February 2009, Mr Lean reviewed the value of the Banning Share with advice from Mr Carles, and requested a copy of the constitution of Banning Holdings from Ms Dugard and Mr Campbell‑Smith.[47] 

   [47] GB 695, item 85.

10. On 3 February 2009, an agreement for the sale of a business was executed which provided for the sale by Banning Holdings, to R & S Motors Pty Ltd, of 50% of the partnership business between Banning Holdings and R & S Motors Pty Ltd (R & S Motors) known as 'the Valencia Complex'.[48] 

    [48] GB 176 - 179, 189 - 200, 796 - 798.

11. Also on 4 February 2009, a Deed of Company Arrangement (DOCA) was proposed by Mr Campbell-Smith and Mrs Banning for PSA, which was in administration.[49]  PSA's administrator was Mr Kim Holbrook.  In general terms, the proposed DOCA provided that CAT would be paid, on or before 30 April 2009, the CAT judgment debt plus 6% interest from the date of judgment until settlement from the proceeds of the sale by Banning Holdings of its 50% interest in the 'Valencia Complex' partnership business.  The proposed DOCA provided that the sale proceeds and other cash would be made available by Banning Holdings, subject to receiving a 'full and proper discharge' of the Banning Share held by Mr Lean under the Receivership Orders.[50]

    [49] GB 202 - 208.

    [50] GB 202 - 203.

12. On 4 February 2009, Mr Lean emailed Mr Campbell-Smith, attaching, 'for [his] information', a document entitled 'Expression of Interest'.  The document referred to interested parties being invited 'to register their interest to acquire 50% equity (1 share) in a Western Australia Pty Ltd Company', and that interested parties would need to sign a confidentiality agreement before any particulars were provided.[51]

    [51] GB 218 - 221.

13. On 5 February 2009, Mr Lean 'sighted' the proposal for a DOCA in respect of PSA.[52]

    [52] GB 695, item 88.

14. On 5 February 2009, Mrs Frigger emailed Mr Lean and quoted what she referred to as chapter 6D of the Corporations Act 2001 (Cth). Mrs Frigger said that by that section, Mr Lean could not offer the Banning Share to Mrs Banning, unless the constitution of Banning Holdings requires that he offer the Banning Share to her. Mrs Frigger said that Mrs Banning should have already indicated whether she was interested in buying the Banning Share. Mrs Frigger said that she hoped Mr Lean had requested a copy of the constitution of Banning Holdings from Mr Campbell‑Smith.[53] 

    [53] GB 497, 551.

15. On 6 February 2009, Mr Lean 'sighted' correspondence from Mr Holbrook regarding the proposed DOCA for PSA.[54]

    [54] GB 695, item 89.

16. On 6 February 2009, Mr Lean wrote to Ms Dugard 'urgently' requesting a copy of the constitution of Banning Holdings.[55]

    [55] GB 711.

17. On 6 February 2009, Mr Stokes sent a letter to Mr Eastwood referring to the Freezing Orders, and referring to certain transactions relating to Banning Holdings for the year ending 30 June 2009.  Mr Stokes, in effect, asked Mr Eastwood to justify why those transactions did not breach the terms of the Freezing Orders.[56]

    [56] GB 235 - 236.

18. On 6 February 2009, Mr Lean received a letter from Mr Stokes in similar terms.[57]

    [57] GB 695, item 89.

19. On 9 February 2009, Mr Campbell-Smith wrote to Mr Lean saying there was 'no luck' in finding the original corporate file of Banning Holdings, and that there was no available copy of the Memorandum and Articles of Association of Banning Holdings.  Mr Campbell-Smith said he had lodged an application with ASIC to obtain those documents.  Mr Campbell-Smith also advised Mr Lean that he and Mrs Banning had lodged a DOCA with the administrator of PSA, under which the CAT judgment debt would be paid from the sale of Banning Holdings' 50% interest in the 'Valencia Complex' partnership, conditional on Mr Lean surrendering the Banning Share.[58]

    [58] GB 222 - 223, 712.

20. On 9 February 2009, Mrs Frigger emailed Mr Lean, in effect demanding Mr Lean to (1) make every endeavour to advertise the Banning Share for sale immediately, and (2) advise CAT by no later than Monday 16 February 2009 of the market value of the Banning Share resulting from the offers he had received, and from his own judgment as receiver.[59]  Mrs Frigger attached to this email a letter from Mr Stokes to Mr Lean dated 9 February 2009.

    [59] GB 498.

21. Mr Stokes' letter of 9 February 2009 to Mr Lean contained Mr Stokes' summary of the terms of the Receivership Orders.  He also requested details from Mr Lean regarding (1) the formal valuation of the Banning Share carried out by Mr Lean, (2) the steps taken to sell the Banning Share, (3) copies of any offers or details of any offers, (4) details of any other attempts at sale made, and (5) the amount of rental monies received by Banning Holdings from certain property.  Mr Stokes also acknowledged that Mr Lean had had various conferences and discussions with Mr and Mrs Frigger.[60]

    [60] GB 499 - 500.

22. Mr Lean gave an 'immediately [sic] reply' to Mr Stokes' letter.[61]

    [61] GB 696, item 91.

23. On 10 February 2009, the Expression of Interest document was published in the West Australian.[62]  On the same day, Mr and Mrs Frigger sent an email to Mr Lean, registering their interest in the purchase of the Banning Share.[63]

    [62] GB 221.

    [63] GB 552.

24. On 11 February 2009, Mr Lean received a number of public responses to the advertisement in the West Australian.[64]

    [64] GB 696, item 93.

25. On 13 February 2009, Mr Lean emailed Mrs Frigger.  Mr Lean invited her to a working session to review the financial accounts of Banning Holdings on 27 February 2009, and to inspect the company's records.  He also said that at 1.00 pm on 27 February 2009, he would brief interested parties on, amongst other things, the affairs of Banning Holdings, the valuations of its properties, and the equity in the 'Valencia Complex' partnership, and explain that his authority was to sell the Banning Share, but not the assets of Banning Holdings.[65]

    [65] GB 532 par 10, 553.

26. On 18 February 2009, Mr Holbrook, the administrator of PSA, sent a circular to creditors in respect of an adjourned meeting to be held on 27 February 2009 at 10.00 am, together with an administrator's report to creditors.  Mr Holbrook referred to the proposal for the DOCA prepared by Mr Campbell‑Smith and the proposed payment of the CAT judgment debt to CAT.  Mr Holbrook said that he believed it would be in the best interests of PSA's creditors to pass a resolution accepting a DOCA in the terms proposed, 'but preferably after certain ambiguities and the issues' to which he referred in his report had been 'clarified'.[66]

    [66] GB 209, 765 - 779, especially 776.

27. On 19 February 2009, Mr Lean reviewed Mr Holbrook's report.[67]

    [67] GB 696, item 100; GB 385.

28. On 20 February 2009, a diary note of Mr Lean indicates that he met with Mr Campbell‑Smith and Mrs Banning (and Ms Dugard).  The diary note records, amongst other things, 'invited them to participate in tender for share - no money available by Mrs Banning'.[68]

    [68] Mr Lean's affidavit of 3 March 2006, par 7.3; GB 754, 761.

29. On 21 February 2009, Mr Lean liaised with Mrs Frigger regarding the proposed DOCA for PSA.[69]

    [69] GB 697, item 103; GB 374.

30. On 21 February 2009, Mrs Frigger sent an email to Mr Lean outlining certain transactions of Banning Holdings which she said breached the Freezing Orders and Receivership Orders.  Mrs Frigger also said:[70]

    4.There has been an unnecessary delay in providing information to the people who have expressed interest in the share.  The delay continues to cause the diminution of the value of that share.

    5.We require you to forthwith contact each of the interested parties, provide whatever further information is required, and advise each party that a firm offer must be received by close of business on Wednesday 25 February 2009.

    6.We require you to provide the judgment creditor [CAT], in writing, information as to any firm offers you have received, pursuant to the [Receivership Orders] to provide information to the judgment creditor that is required and in the best interests of the judgment creditor. 

    7.On receipt of the information in para.6, the judgment creditor [CAT] will advise you in which way it wishes to proceed.

    [70] GB 501.

31. On 22 February 2009, Mr Lean prepared a 'brief' to 19 interested parties in relation to the sale of the Banning Share.[71]

    [71] GB 697, item 104.

32. On 24 February 2009, CAT by Mrs Frigger sent a letter to Mr Lean attaching two letters she had sent to the ANZ Bank and directors of Banning Holdings.[72]  Mrs Frigger said:[73]

    I have re‑read the [Receivership Orders] which state inter alia that you have the power to do all things necessary in order to preserve and secure the property of which you are receiver.  This included delivering notice of these orders to any third party, including the ANZ Bank. 

    Please advise when you gave notice to the ANZ Bank of your appointment and whether the ANZ Bank confirmed receipt of such notice.

    As you can see from the developments of the last few days, the delays in finalising your duties as receiver has had an adverse effect on the securing of the [CAT] judgment debt.

    My husband and I have already stated many times that we do not agree with the continued delays that are occurring in your function as receiver.

    Please advise what you have done in order to receive written offers from those people who have expressed interest in the share.  We require this to be completed by the end of this week.

    [72] GB 502 - 503, 242.

    [73] GB 502.

33. On 26 February 2009, Mr Lean drafted a letter to Mr Holbrook 'regarding payment of Receiver's fees'.[74] 

    [74] GB 698, item 115.

34. On 27 February 2009, Mr Lean recorded time of one and a half hours for 'Meeting [DOCA] prepare for the meeting'.[75]

    [75] GB 400.

35. On 27 February 2009, the adjourned meeting of the creditors of PSA took place.  The meeting commenced at 10.00 am and concluded at 12.30 pm.  It resolved to execute the DOCA as provided to the administrator on 27 February 2009.[76]

    [76] GB 780 - 795, especially 792 - 793. Mr Campbell-Smith, in an affidavit sworn 16 March 2009, deposed that the DOCA that was before the meeting on 27 February 2009 contained some modification to, but was substantially in the same terms as, the earlier proposed DOCA: GB 180, pars 6 - 7. Mr Lean's evidence was that he knew of the earlier proposal for the DOCA but had not, as at 27 February 2009, seen the version the subject of the resolution at the meeting on 27 February 2009: trial ts 11/03/16, ts 4494 ‑ 4497; GB 62 - 65. See also [104] below.

36. Also on 27 February 2009, commencing at 12.30 pm, Mr Lean chaired a meeting, which the minutes of the meeting described as having been convened by him as receiver of the Banning Share.  Mr Lean reported as to the accounts of Banning Holdings and took questions from the floor.  The meeting concluded on the basis that:[77]

    There being no offers forthcoming, it was resolved by those present that sealed tenders for the purchase of the [Banning Share] would be accepted at the office of [Mr Lean] until 4 pm on Friday 6 March 2009.

March 2009

[77] GB 505 - 510.

1. At 4.00 pm on 6 March 2009, Mr Lean opened the tenders.  Only four tenders had been received.[78]

   [78] GB 699, item 127.

2. On 9 March 2009, Mr Lean wrote to Mr and Mrs Frigger.  He said that their offer to purchase the Banning Share for $730,000 was accepted as the highest bid.  Mr Lean requested a cheque for $730,000 and said he would then hand the Banning Share to them.[79]

   [79] GB 554.

3. On 9 March 2009, Mr Lean also emailed the tender results to Mr Campbell‑Smith and to Mr Carles.[80]

   [80] GB 700, item 139.

4. On 10 March 2009, Mr Lean liaised with Mr Carles and Mrs Frigger on a legal challenge by Mr Eastwood in respect of the sale of the Banning Share to Mr and Mrs Frigger.[81]  Mr Lean received advice from his solicitor, Mr Carles, 'on valuation of share and recommendation to seek Court Approval'.[82]

   [81] GB 356, item 1.

   [82] GB 356, item 2.

5. On 10 March 2009, Mrs Frigger emailed Mr Lean and said:[83]

   I do not agree with Carles' opinion.  I am not spending unnecessary legal costs to protect you.  The [Receivership Orders] are plain - sell the share to satisfy the [CAT] judgment debt.  Would the Sheriff have to go back to the Court before he sells assets in satisfaction of a judgment debt?  No!  The only reason why you were appointed, rather than the sheriff, is the sheriff said he did not have skills to value the share.  Otherwise, the Sheriff would have been appointed.

   If the other side want to take action, then its [sic] up to them.  But I am not spending another cent in legal costs unnecessarily which I shall never get back.  [Mr] Stokes has told me categorically that [Mr Lean] may sell the share without the approval of the Court.  No order has been made that you require approval to sell the share.

   [83] GB 504.

6. On 10 March 2009, Mr Lean received from Mr and Mrs Frigger $20,000 as a deposit on the sale of the Banning Share.[84]

   [84] GB 261, item 2.

7. On 12 March 2009, Mr Eastwood wrote to Mr Lean, referring to Mr Lean's wish to transfer the Banning Share to Mr and Mrs Frigger.  Mr Eastwood said he was instructed to immediately re-list CAT's application for the appointment of a receiver.  Mr Eastwood attached a minute of orders sought by PSA and Mr Banning's estate.  They included an order that Mr Lean be restrained from selling the Banning Share.  Mr Eastwood referred to concerns about the relationship between Mr Lean and Mr and Mrs Frigger.  Mr Eastwood also said the sale of the Banning Share for $730,000 was grossly undervalued.  He also said that it was 'untenable' to have Mr and Mrs Frigger as equal shareholders with Mrs Banning.  Mr Eastwood put Mr Lean on notice that if he should proceed with the transfer of the Banning Share, Mr Lean would be held personally liable for any loss suffered.[85]

   [85] GB 224 - 230.

8. On 12 March 2009, Mr Carles wrote to Mr Eastwood referring to Mr Eastwood's letter dated 12 February 2009.  Mr Carles said, in effect, that the sale to Mr and Mrs Frigger was not at an undervalue.  Mr Carles noted that the offer by Mr and Mrs Frigger was well in excess of any other offer received.  He said a substantial discount was appropriate as the Banning Share offered no control of Banning Holdings.  Mr Carles attached Mr Lean's request that Mr Campbell-Smith register a transfer of the Banning Share to Mr and Mrs Frigger.[86]

   [86] GB 231 - 233.

9. On 12 March 2009, Mr Lean wrote to Mr Campbell‑Smith, copied to Mr Carles and Mrs Frigger, referring to his wish to assign the Banning Share to Mr and Mrs Frigger as soon as possible.  He said that they had offered $730,000 for the Banning Share, and that three other bidders had respectively offered $201,000, $55,000 and $10,500.[87]

   [87] GB 234.

10. On 23 March 2009, Mr Lean received a copy of the Memorandum and Articles of Association of Banning Holdings, containing the provisions referred to in [150] ‑ [151] below.[88]

    [88] GB 262, item 5.

11. On 27 March 2009, Mr Lean executed a Standard Transfer Form in respect of the Banning Share.  It had been signed by Mr and Mrs Frigger on 25 March 2009.  The form provided:[89]

    I … the registered holder … and undersigned Seller [Mr Lean] … do hereby transfer to [Mr and Mrs Frigger] the securities as specified above standing in my … name … in the books of [Banning Holdings] subject to the several conditions on which I … held the same at the time of signing hereof and … we the Buyers [Mr and Mrs Frigger] do hereby agree to accept the said Securities to the same conditions.

    [89] GB 564.

12. On 25 March 2009, Mr and Mrs Frigger paid to Mr Lean the balance of the purchase price being $710,000.[90]

    [90] GB 666, par 21.2.

13. On 27 March 2009, Mr Lean refunded the $710,000 to Mr and Mrs Frigger.[91]

Proceedings CIV 1727 of 2009 - 20 April 2009 - August 2009

[91] GB 667, par 25.

1. On 20 April 2009, a writ of summons in CIV 1727 of 2009 was issued.  Mr and Mrs Frigger were the first plaintiffs and Mr Lean was the second plaintiff.  The plaintiffs sought a declaration to the effect that there was a valid transfer of the Banning Share to Mr and Mrs Frigger, and sought injunctive relief to prevent the DOCA for PSA being entered into, and to prevent any action being taken under the DOCA.[92]

   [92] Banning Holdings Pty Ltd v Holbrook [2009] WASC 178 [18].

2. On 24 April 2009, Simmonds J made orders, by consent, restraining Mr Campbell‑Smith, Mrs Banning and Banning Holdings, until further order, from making any payment to the administrator of PSA in terms of the DOCA, and extending payment dates referred to in the DOCA.[93]

   [93] Banning Holdings Pty Ltd v Holbrook [2009] WASC 178 [19].

3. On 27 April 2009, Mr Lean instructed Mr Carles to remove him (Mr Lean) as second plaintiff in the proceedings in CIV 1729 of 2009.[94]

   [94] GB 668, par 33.

4. On 22 May 2009, Mrs Frigger sent an email to Mr Stokes, Mr Carles and Mr Lean saying that she had suggested, after court on 21 May 2009, that Mr Lean send a letter to Mrs Banning directly, inviting her to buy the Banning Share.  Mrs Frigger said that if Mrs Banning could not purchase the Banning Share, there would no longer be an issue with the registration, and that if she could purchase it, then the funds could be used for CAT's taxed costs.[95]

   [95] GB 572.

5. On 21 May 2009, Kenneth Martin J set aside the orders made by Simmonds J on 24 April 2009.[96]

   [96] Banning Holdings Pty Ltd v Holbrook [2009] WASC 178 [20].

6. On 2 July 2009, Mr Carles wrote to Mr Lean. Mr Carles said that on 1 July 2009, he had received a chamber summons from the solicitors for the first, second and third defendants (Mr Campbell-Smith, Mrs Banning and Banning Holdings)  seeking leave to bring a counterclaim against Mr Lean for damages in negligence and unconscionable conduct in relation to his sale of the Banning Share.  He said that on 2 July 2009, Kenneth Martin J granted leave for Mr Campbell-Smith, Mrs Banning and Banning Holdings to proceed with the counterclaim.  He recommended that Mr Lean notify his insurer of the matter and request the insurer take over his defence to the counterclaim.[97]  Mr Lean did so.[98]

   [97] GB 670 - 671.

   [98] GB 672 - 675.

7. On 10 August 2009, Mrs Frigger emailed Mr Lean.  She requested payment by Mr Lean of the sum of $19,500 of the monies already paid for the Banning Share.[99] 

   [99] GB 512.

8. On 12 August 2009, Mr Lean emailed Mrs Frigger in the following terms, with apparent reference to claims made or allegations raised against her in CIV 1727 of 2009:[100]

   [100] GB 469, par 10(b), 511. 

May I recommend you support your Defence with Accounting and borrowing documentation.  Ie: the attached summary of expenses as at 24th February 2009 could assist you.
I will provide to Gemma [of Mr Lean's insurer's solicitors] evidence that:  Martin Banning hasn't lodge Tax Returns for 20 years.	To establish he was a dishonest person.
Sandra Banning hasn't lodged Tax Returns for 20 years.	To establish she hasn't got a clue.
I will collate Banning Holdings Account past accounts into an orderly state.
I will collate the sale of East Perth land by Banning Holdings Pty Ltd and sale of an East Perth Unit, was banked into Baystar Holdings Pty Ltd.	To show Don Campbell‑Smith was Director of a dishonest transaction of hiding Banning Holdings Pty Ltd wealth from the Courts and you.
I will endeavour to obtain a copy of Baystar Holdings Pty Ltd Financial Accounts, showing the Cash on Hand ie: $900,000.00 belonged to Banning Holdings Pty Ltd.	Also he lodged F309 in 2003 knowing this document was false.
I will study the Financial Accounts of Banning Holdings Pty Ltd; Professional Services of Australia Pty Ltd and Baystar Holdings Pty Ltd, and ascertain how Sandra Banning acquired her loan equity in Banning Holdings Pty Ltd.	To prove creative accounting has accumulated her wealth.
You maybe able to extract some misleading information from the attached ASIC documents.  When Kim Holbrook lodges F524 we will be able to highlight the lack of Receipts and Payments in the Deed of Company Arrangement (DOCA).  Furthermore, I understand [certain counsel] was requested to assist another party in the legal affairs of Banning Holdings Pty Ltd.

1. On 13 August 2009, Mrs Frigger wrote to Mr Lean.  Amongst other things, Mrs Frigger noted the points made by Mr Lean regarding the 'financial disaster of Banning Holdings', and stated, in effect, that she would be 'making some changes to [the] Reply and Defence'.[101]

13 August 2009 - 23 January 2010

[101] GB 470 par 10(c), 513.

1. On 13 August 2009, Mr Campbell-Smith and PSA applied by chamber summons to have Mr Lean discharged from the receivership of the Banning Share.[102] 

   [102] Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318 [2].

2. On 27 August 2009, Mr Carles sent a letter to counsel who had been briefed on behalf of Mr Lean.  Mr Carles asked counsel to attend court on behalf of Mr Lean, to support an application by Mr and Mrs Frigger to vary the Freezing Orders.  Mr Carles noted that (1) the CAT judgment debt had been paid with interest, (2) Mr Lean had a lien over the Banning Share for his remuneration and expenses as receiver, and (3) Mr and Mrs Frigger had commenced separate proceedings (CIV 1727 of 2009) seeking orders that the directors of Banning Holdings register the Banning Share in favour of Mr and Mrs Frigger.[103]

   [103] GB 514 - 515.

3. On 31 August 2009, Mr Lean also wrote to counsel who had been briefed on his behalf, making observations about the financial circumstances Banning Holdings, and annexing relevant documents.[104]

   [104] GB 516 - 525.

4. On 22 September 2009, Mr Carles emailed Mr Lean.  Mr Carles said he was waiting on receiving a copy of the application to discharge Mr Lean as receiver.  He noted that the principal judgment sum owed to CAT was paid on 3 June 2009, and interest was paid on or about 8 June.  He discussed payments of costs and disbursements of the receivership.[105]

   [105] GB 676.

5. On 23 January 2010, Mr Lean emailed Mrs Frigger and told her that his professional fees to date for administering the sale of the Banning Share were $85,622, and that his disbursements were $41,275.[106]

Cancellation of the Receivership Orders

[106] GB 574.

1. Pursuant to reasons for judgment delivered on 10 November 2010, Simmonds J held that the Receivership Orders should be 'cancelled' under s 103 of the Civil Judgments Enforcement Act, and that the 'cancellation' should be effective from 10 November 2010, with 'the effect of discharging the receiver [Mr Lean]'.[107]

Permanent stay of Mr and Mrs Frigger's claims in CIV 1727 of 2009

[107] Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318 [100].

1. On 2 December 2010, Kenneth Martin J delivered reasons for judgment in CIV 1727 of 2009 in which his Honour held that there should be a permanent stay of Mr and Mrs Frigger's claims in proceedings CIV 1727 of 2009, to compel the transfer of the Banning Share to them.[108]

   [108] Frigger v Campbell-Smith [2010] WASC 353 [89] - [106].

2. On 9 February 2011, Kenneth Martin J made orders to the effect that Mr and Mrs Frigger's claims against the defendants in CIV 1727 of 2009 be permanently stayed, and that the counterclaim in that action by Mr Campbell‑Smith, Mrs Banning and Banning Holdings, against Mr Lean, be adjourned for further directions in Kenneth Martin J's CMC list.[109]

The return of the deposit to Mr and Mrs Frigger

[109] GB 347 - 349, pars 1, 10.

1. On 2 December 2010, Mr and Mrs Frigger sent a letter to Mr Lean, referring to the permanent stay of the proceedings (CIV 1727 of 2009) to have the share transfer registered.  Mr and Mrs Frigger demanded Mr Lean refund their deposit of $20,000 with interest at 6% p.a. from 10 March 2009 to 3 December 2010 and continuing to accrue until payment.[110]

   [110] GB 573.

2. On 21 January 2011, Mr Lean returned the deposit plus interest to Mr and Mrs Frigger.[111]

Defendants' counterclaim in CIV 1727 of 2009

[111] GB 669, par 37.

1. The court records indicate that on 15 June 2011, Kenneth Martin J made orders to the effect that Mr Campbell‑Smith, Mrs Banning and Banning Holdings were granted leave to discontinue the counterclaim in CIV 1727 of 2009, with no order as to costs.  CIV 1727 of 2009 was put on the Inactive Cases List on 10 September 2012.  It was removed from the Inactive Cases List on 21 March 2013, for the purpose of dealing with a bill of costs lodged by Mr Campbell‑Smith, Mrs Banning and Banning Holdings.

Mr Lean's application for approval of remuneration

1. Mr Lean filed a chamber summons in the original proceedings (CIV 2265 of 2006) on 29 October 2014, seeking approval of his remuneration in relation to the sale of the Banning Share.[112]  He also swore an affidavit in support on the same date.  In that affidavit, Mr Lean said that his 'tasks were made considerably more time‑consuming because of the involvement of Mrs Frigger'.  He gave as an example his involvement with Mrs Frigger in proceedings CIV 1727 of 2009.[113]

   [112] BB 23 - 24.

   [113] GB 254.

2. Mr Lean in his affidavit in support of 29 October 2014 said that he claimed $159,777.10 in relation to the tasks undertaken by him in the receivership, of which Mrs Frigger had 'approved' an amount totalling $47,951.[114]

   [114] GB 256, pars 21 - 23.

3. On 12 June 2015, Mr Lean swore a further affidavit in support of his application for remuneration.  In this affidavit, he said that he had 'revised the itemisation previously claimed', and produced what he referred to as the 'Revised Itemisation' as annexure 'GTL1' to that affidavit.  He said that this was a 'revised itemisation of the tasks', including disbursements incurred in the receivership up to and including the date of his discharge on 10 November 2010.[115]  Mr Lean, in the affidavit, said that the 'Revised Itemisation' totalled $75,811, a portion of which, namely $47,951, had already been 'approved' by Mrs Frigger.  He said that the amounts 'approved and not yet paid' totalled $123,762.50, and that he accordingly claimed costs in the total sum of $123,762.50.[116]  In a letter annexed to his affidavit from his solicitors, Coulson Legal, Coulson Legal advised counsel for the appellants that they were instructed by Mr Lean that he 'intends to claim a sum in the order of $50,000 in relation to his receivership costs concerning CIV 1727 of 2009'.[117]

   [115] An inspection of the document at 'GTL1' indicates that the costings cover the period from 10 March 2009, and not from 21 November 2008, when the receivership began.

   [116] GB 353 - 354, pars 10 - 13.

   [117] GB 372.

4. Mr Lean swore a further affidavit on 28 January 2016 in support of his claim for remuneration.  He referred again to Mrs Frigger having 'approved' his fees up to 9 March 2009 in the sum of $47,951, and annexed an itemisation of those costs.[118]  Mr Lean also said that an itemisation referred to at a hearing of the application before the master on 2 September 2015 was 'not the itemisation in relation to which I seek to rely'.  He referred to a letter from his solicitors enclosing a 'full itemisation of all time recorded, totalling $197,102.97'.  He referred to this as the 'Complete Itemisation'.  He said he was 'relying on the Revised Itemisation' attached to his affidavit of 12 June 2015, which he said 'contains fewer claims and totals $39,544.30 excluding GST in professional fees and $29,388.43 excluding GST in disbursements, as outlined in the tables at paragraphs 11 and 12' of his affidavit of 12 June 2015.[119]

   [118] GB 679, pars 4 - 5; GB 686 - 709.

   [119] GB 679 - 680, pars 6 - 8.

5. Mr Lean, in his affidavit of 28 January 2016, also said that he was not claiming costs after 10 November 2010, when he was discharged from the receivership.[120]  He also referred to an affidavit sworn by Mr Eastwood and said that 'I verily believe the following to be true and correct', namely that the Revised Itemisation in his affidavit of 12 June 2015 was revised to exclude costs relating to CIV 1727 of 2009, and that accordingly, it did not include such costs.[121] 

   [120] GB 680, pars 9 - 10.

   [121] GB 682, par 19.

6. It may be interpolated here that Mr Lean's statement that he 'verily believed' it to be true and correct that the costs of CIV 1727 of 2009 were not included in his Revised Itemisation was a curious way of purporting to give evidence on the topic (and strictly inadmissible - although that point was not apparently taken below or on the appeal).  Mr Lean did not positively state that he had excluded all the costs relating to CIV 1727 of 2009 in preparing the Revised Itemisation to which he had deposed in his affidavit of 12 June 2015, or even that he was informed, by some other person, and verily believed, that that other person had done so on his behalf.[122]  Nor did he attach his original itemisation, to which he had deposed on 29 October 2014, showing the costs relating to CIV 1727 of 2009 being struck through.  He was asked about his revised claim for remuneration in cross‑examination:[123]

   Your solicitors told us, and I think you have confirmed today, that it became necessary for you to review [the amount claimed] and change it, and somehow along the line you reduce the amount of your claim from over $150,000 to about 120? - Yes.

   But you didn't state expressly what it was that you took out, so … ? - I took out the insurance costs.  The case involving - the case involving Frigger and the insurer.

   All right.  But you don't say that on oath anywhere, do you? - I don't want to say it and then you find one item in here and I have been caught out.

   [122] Mr Lean's affidavit of 12 June 2015, par 10; GB 353.

   [123] Trial ts 11/03/16, ts 4544; GB 112.

7. Mr Lean swore a further affidavit on 3 March 2016 in support of his application for remuneration.[124]  In that affidavit, Mr Lean said, amongst other things, that he 'was only provided with the terms of the DOCA [of PSA] shortly after 20 March 2009 when it was finally executed'.[125]  Mr Lean did not however say whether he knew of the results of the creditors' meeting on 27 February 2009 prior to then.  Mr Lean also 'noted' certain matters in his affidavit which he evidently regarded as criticisms of the DOCA.[126]  He did not, however, state whether those matters which he 'noted' in this affidavit were matters to which he gave consideration in the course of the receivership in February/March 2009.

   [124] GB 751 - 757.

   [125] Mr Lean's affidavit of 3 March 2016, par 8.4; GB 755.

   [126] Mr Lean's affidavit of 3 March 2016, par 8.5; GB 755 - 756.

The primary decision

1. The primary decision referred to aspects of the procedural history and included, relevantly, findings to the following effect.

2. Although Mr Lean delayed (until about 2014) in bringing his remuneration claim without explanation, it did not follow that Mr Lean was disqualified from making an application in respect of his fees and disbursements.[127] 

   [127] Primary decision [6].

3. As the appointment of Mr Lean as receiver in 2008 was made pursuant to the Civil Judgments Enforcement Act, it is a fundamental proposition that Mr Lean was appointed by the court and is an officer of the court.  Accordingly, he is under a duty to act impartially and in accordance with the directions of the court in administering the property the subject of the receivership.  Furthermore, the property of which the receiver takes possession does not vest in him and it would follow that the property is not that of the receiver to deal with as he likes.  The receiver is not an agent of the parties and is not subject to their control or direction.  However, the receiver does owe duties of a fiduciary character to all persons with an interest in the property seized by him.[128]

   [128] Primary decision [7].

4. The master also said that a receiver owes a duty to use his powers of sale in good faith and not to recklessly sacrifice the asset.[129]  The master rejected the submissions of PSA and Mr Campbell‑Smith that the 'higher United Kingdom standard' of liability for negligent conduct[130] ought to apply to court‑appointed receivers.[131]

   [129] Primary decision [8].

   [130] With reference to Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] 2 All ER 633; [1971] Ch 949.

   [131] Primary decision [8].

5. The master also said that there was no doubt that a receiver appointed by the court is subject to the inherent powers and discipline of the court and that, accordingly, the court has the power, when dealing with the question of the receiver's remuneration, to prevent exorbitant demands for remuneration and to ensure that the remuneration appropriately reflects the work done.[132] 

   [132] Primary decision [9].

6. The master referred to the Full Court's decision in Venetian Nominees Pty Ltd v Conlan.[133]  He held, in effect, that the principles enunciated in that case apply to court‑appointed receivers, and that he was required to assess the costs sought by Mr Lean in accordance with those principles.[134]  The relevant principles included that (1) the receiver should be allowed his or her costs insofar as they have been incurred in activities reasonably undertaken incidentally to performing the function created by his or her appointment; (2) it is necessary for the receiver to justify the reasonableness and prudence of the tasks undertaken for which remuneration is sought, and, failure to discharge the burden of establishing that the remuneration claimed is reasonable by failure to provide adequate evidentiary material may lead to no order for remuneration being made; (3) the court's objective is to award a sum, or, devise a formula, which will reasonably compensate the receiver for the time and trouble expended in the execution of his or her duties and, to some extent, the responsibility he or she has assumed; and (4) it must follow therefore that the receiver bears the burden of establishing that the work for which a claim is made reasonably relates to the duties for which the receiver was appointed.[135] 

   [133] Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96.

   [134] Primary decision [10].

   [135] Primary decision [16].

7. The master observed that counsel for PSA and Mr Campbell‑Smith's prime submission was to the effect that Mr Lean should only be allowed his costs insofar as the activities were reasonably undertaken and incidental to performing the function created by his appointment, that is to say valuing and selling the Banning Share and reporting to the court and/or the judgment creditor from time to time.  The master said that the real difficulty was in establishing what aspects of the receiver's activities fell within the rubric of 'activities reasonably undertaken and incidental' to performing the function.[136]

   [136] Primary decision [17].

8. The master noted that Mr Lean's claim for remuneration was originally (approximately) $160,000 and that was subsequently reduced to (approximately) $124,000, and that there was some substance to the complaint that Mr Lean had not, in effect, adequately explained the difference.[137] 

   [137] Primary decision [17].

9. The master noted that up to and including the time of the sale of the Banning Share on or about 10 March 2009, and Mr Lean's report to the court lodged on 10 March 2009,[138] the total fees claimed were (approximately) $29,000 with disbursements of (approximately) $15,000, giving a total amount, inclusive of GST, of (approximately) $48,000.  The master said that counsel for PSA and Mr Campbell‑Smith had pointed out that this means that an amount of (approximately) $76,000 was said to have been incurred after the sale of the Banning Share.[139] 

   [138] While the master referred to a receiver's report lodged on 10 March 2009, there is no evidence before this court of this report; appeal ts 51, 58.

   [139] Primary decision [18].

10. The master then addressed the specific complaints made by PSA and Mr Campbell‑Smith in relation to Mr Lean's activities in relation to (1) the valuation of the Banning Share, (2) the sale of the Banning Share and (3) Mr Lean's conduct after the sale of the Banning Share.  The master treated the sale of the Banning Share as having occurred on or about 10 March 2009.[140]

The valuation of the Banning Share

[140] Primary decision [18].

1. The master referred to, and dismissed, the complaint that Mr Lean had no specialised expertise in the process of valuing the Banning Share.  The master noted that Mr Lean was an experienced liquidator and had received valuations of the underlying assets.  It was open to Mr Lean to at least put an indicative value on the Banning Share in the way that he did.[141]  The master also said that there was no substance to the claim that Mr Lean fundamentally misunderstood his obligations.  He was not obliged to take legal advice and, consistent with his duties, he was obliged to sell the Banning Share by taking reasonable steps to ensure a proper pricing without sacrificing the asset.[142]  The master also rejected a complaint that Mr Lean failed to value the 'goodwill' of a partnership business held with R & S Motors.  As to this, the master said that Mr Lean's experience told him, probably correctly, that the goodwill was either of not much value or worthless.  Any purchaser of the Banning Share would have been going into business with Mrs Banning, and Mr Lean assessed this as most unlikely to happen.  The master said that was a reasonable conclusion.[143]

   [141] Primary decision [19].

   [142] Primary decision [20].

   [143] Primary decision [21].

2. The master also noted that Mr Lean's valuation of the Banning Share at between $45,000 and $100,000 had been criticised by PSA and Mr Campbell‑Smith.  The master rejected the submission that the 'realisable' value of the Banning Share should have been the value of the assets as sold in an orderly fashion, less the costs of sale.  Whilst counsel for PSA and Mr Campbell‑Smith acknowledged the possibility that this might involve a winding up of Banning Holdings, they nevertheless criticised Mr Lean for not making any such calculation.  They submitted that had such a calculation been made, the 'realisable value' of the assets of Banning Holdings was over $1.4 million and that, accordingly, the value of the Banning Share was considerably more than that estimated by Mr Lean.[144]  As to this, the master said:[145]

   In my view there is no substance to this criticism.  The fact is the receiver was required to sell one share in Banning Holdings.  As a necessary precursor he had to work out what that share was worth.  He also had to find a willing buyer.  Any buyer of that share was taking on a myriad of problems.  The possibility of the person walking into such a minefield was surely remote.  The idea that someone might buy the share with a view to liquidating the company in a war with other shareholders seems to me to be fanciful.  Valuation of any asset is an inexact science.  Valuation of this share in Banning Holdings was particularly uncertain.  In my view the receiver approached the valuation process in an entirely reasonable manner and his actions cannot be criticised as 'a complete waste of time'.

The sale of the Banning Share

[144] Primary decision [22].

[145] Primary decision [23].

1. The master also addressed the contention that Mr Lean should have known, at the outset of the sale process, that the Memorandum and Articles of Association of Banning Holdings were likely to contain a standard 'pre‑emptive rights' clause.  The master said, in effect, that:[146]

   1.It could perhaps have been expected that a liquidator with Mr Lean's experience would have been aware at the outset of the sale process that the constitution of Banning Holdings was likely to contain such a pre‑emptive clause.

   2.Mr Lean did not investigate the existence of a memorandum and articles until after Mrs Frigger had brought the matter to his attention, and this aspect of Mr Lean's conduct was 'open to criticism'.

   3.It was difficult to see any justification for Mr Lean's conduct in proceeding to sell the Banning Share, notwithstanding his awareness of the potential existence of pre‑emptive rights.

   [146] Primary decision [24] - [25].

2. The master also summarised his conclusion on this matter when he said:[147]

   [T]here is no doubt that the sale process was flawed.  Mr Lean ignored the memorandum and articles of association without justification and the mayhem which followed was directly attributable to his not handling the sale process in a proper and appropriate fashion. 

   [147] Primary decision [28].

3. The master also observed that counsel for PSA and Mr Campbell‑Smith criticised Mr Lean's conduct on the basis that he was aware that PSA was proposing to enter into a deed of company arrangement (DOCA) with the expressed intention of paying the whole of the judgment debt and legal costs, using the same assets of Banning Holdings which formed the value of the share he was selling.  The proposal for the DOCA for PSA in 2009 was expressly subject to the Banning Share not being sold, and Mr Lean was aware that, were the DOCA to be entered into, he would have to comply with it.  The master said that it must be acknowledged that:[148]

   Mr Lean's conduct with respect to the DOCA proposal is difficult to reconcile without accepting as was submitted by [PSA and Mr Campbell‑Smith], [that Mr Lean] was acting at the behest of what counsel described as the 'Frigger parties'.

Mr Lean's conduct after the sale of the Banning Share

[148] Primary decision [26].

1. The master noted that in the period after the sale of the Banning Share '[t]here was clearly a tension between the capacity to sell as mandated by the company's constitution and the fact of the sale'.[149]  The master observed that Mr Lean issued proceedings in CIV 1727 of 2009, seeking to register the transfer of the share.  The master said there was no need for him to take that action and that Mr Lean should have approached the court for directions and that it was difficult to see why he did not do so.  The master said:[150]

   I accept that actions taken by Mr Lean after the sale of the share were not appropriate and any amount charged by him should not be the subject of an order for remuneration. 

   [149] Primary decision [27].

   [150] Primary decision [27].

2. The master said no decision needed to be made on the further contention, advanced by PSA and Mr Campbell‑Smith, that Mr Lean 'was really acting to benefit Mr and Mrs Frigger' in the proceedings in CIV 1727 of 2009.[151]

   [151] Primary decision [27].

3. The master also said there were other detailed criticisms of Mr Lean's conduct in counsel for PSA and Mr Campbell‑Smith's submissions which were 'explored in excruciating detail' during cross‑examination.  The master said, in effect, that the two most important points were that (1) the valuation process undertaken by Mr Lean was 'proper and appropriate', and (2) the sale process was flawed.  The master continued:[152]

   Assessing costs is one of the dark arts.  In this court it is generally undertaken by registrars and the fact that there are so few appeals from the decisions of registrars indicates the expertise they have in this area.  The approach to assessing costs was set out by Registrar S Boyle in Jan De Tastes v Carr & Co (Unpublished, WASC, 18 May 2015).  The decision had to do with a review of an assessment conducted by the registrar.  During the course of her reasons the registrar said:

   'It is my view that to assess requires me to apply overall to the bills rendered the criteria set out in the Act and estimate or evaluate the reasonableness of the charges.  This does not mean that the taxing officer necessarily undertakes a line by line examination of the bill and allows and disallows specific items.  That can occur but it does not have to occur.  In fact when assessing pursuant to the terms of a costs agreement, which the Act also requires that I apply (section 302), a line by line assessment is not a fair or reasonable way of making the assessment.  In any bill there might be a small error that a minute examination may reveal.  That does not equate with the concept of overall unreasonableness of the work done, the way it was carried out or necessarily the costs charged.'

   Of course as I have been at pains to explain above the regime mandated by Venetian Nominees is the regime which is to be applied in this case.  Nonetheless it is true that a line by line assessment of the costs charged by Mr Lean is not appropriate.  That being so I have come to the conclusion Mr Lean's costs should be allowed in an amount of $75,000.  In broad terms I accept that up until the sale of the shares the amount claimed of $47,951.50 is reasonable.  It may also be the case that Mr Lean was required thereafter to undertake some further work consequent upon the sale of the share.  I am not satisfied it would be appropriate to allow him the full amount he claimed because the work undertaken after the sale of the share does not seem to have been strictly necessary.  I am satisfied on balance an award of $75,000 would in all the circumstances be reasonable. 

   [152] Primary decision [29] - [30].

The master's orders

1. The master, on 8 December 2016, made orders to the following effect:[153]

   1.Mr Lean's costs and disbursements be and hereby [sic] allowed in the sum of $75,000 together with interest at $12.32 per day accruing from 5 January 2017.

   2.PSA and Mr Campbell‑Smith (as executor of Mr Banning's estate) pay Mr Lean's costs of the application, including reserved costs, fixed in the sum of $30,000. 

   3.Payment pursuant to orders 1 and 2 above be stayed until 5 January 2017. 

   [153] Orders of Master Sanderson in CIV 2265 of 2006 on 8 December 2016.

The appeal

1. The appellants' grounds of appeal are to the effect that the master erred as follows.

Error in failing to find that Mr Lean had a duty to exercise reasonable care

1.The master erred in law in holding that Mr Lean's duty was confined to acting in good faith and not recklessly sacrificing the Banning Share, when his Honour should have (a) found that Mr Lean was under a duty to exercise reasonable care and that he was negligent in the sale of the Banning Share; (b) held that Mr Lean was liable for the losses caused by such negligent conduct to PSA, Mr Banning's estate and to 'any person having an interest in the [Banning] Share'; and (c) found that Mr Lean was not entitled to remuneration for any negligent conduct, and that any losses 'occasioned thereby should be assessed and set‑off against [his] remuneration'.

Error in failing to find that Mr Lean had sacrificed the interests of Mr Banning's estate and Mrs Banning

2.Alternatively to ground 1, the master erred in holding that Mr Lean's fees and expenses up to the time of the sale of the Banning Share on or about 10 March 2009 were reasonable when the master should have held that Mr Lean both sacrificed the interests of Mr Banning's estate and Mrs Banning (who was the sole residuary beneficiary under the will) and sold the Banning Share without good faith, in that Mr Lean:

(a)(1) failed to obtain a proper valuation of the Banning Share; (2) failed to set a reserve price and, instead, intended to sell the Banning Share irrespective of its value; (3) failed to invite Mrs Banning to bid; (4) failed to tell bidders that the DOCA for PSA had been entered into; and (5) gave Mr and Mrs Frigger an unfair advantage by providing them with financial and other information which had not been made available to other bidders; and

(b)(1) failed to conduct the sale in accordance with the pre‑emptive provisions in the constitution of Banning Holdings; and (2) undertook the sale at the behest of Mr and Mrs Frigger when it was plainly imprudent to do so given the existence of the DOCA.

Errors in holding that Mr Lean's fees up to the time of the sale of the Banning Share were reasonable

3.The master erred in finding that Mr Lean's fees and expenses of $47,951.50 accrued up to the sale of the Banning Share were reasonable in that the valuation report prepared by Mr Lean was worthless, and/or unreliable as a means of in ensuring that the Banning Share was sold for its true market value and/or at a price in accordance with the pre‑emptive provisions of the constitution of Banning Holdings.

4.The master erred in finding that the fees and expenses up to the sale of the Banning Share were reasonable when substantial amounts of work outlined in the time sheets were not incidental to work reasonably required for Mr Lean to value and sell the Banning Share.

5.The master erred in finding that the fees and expenses up to the time of the sale of the Banning Share were reasonable in that the fees exceeded the IPAA[154] Guide, which provided a reasonable formula for compensation.

[154] Insolvency Practitioners' Association of Australia.

6.The master erred in finding that the fees and expenses were reasonable up to the time of the sale of the Banning Share in that Mr Lean breached his fiduciary duty to Mr Campbell‑Smith as executor of the estate of Mr Banning, and to Mrs Banning as beneficial owner of the Banning Share and as the other shareholder, by not selling the Banning Share in accordance with the constitution of Banning Holdings. 

7.The master erred in finding that the fees and expenses were reasonable up to the sale of the Banning Share in that Mr Lean acted at the behest of Mr and Mrs Frigger in selling the Banning Share, and acted imprudently having regard to the fact that the DOCA of PSA provided for the payment of the CAT judgment debt.

Errors in relation to fees after sale of the Banning Share

8.The master erred in allowing the sum of $27,048.50 for remuneration for the period after the sale of the Banning Share on the basis of his findings that 'it may have been the case' that further work was required.  Alternatively, the master gave no adequate reasons for his decision in that regard.

9.The master erred in allowing the sum of $27,048.50 for remuneration for the period after the sale of the Banning Share when he should have held that Mr Lean failed to:

(a)establish any work reasonably undertaken to justify the remuneration; and

(b)adduce sufficient evidence to justify a claim for such remuneration.

The parties' submissions on the appeal

1. It is unnecessary and impractical to attempt to set out the appellants' written submissions, which were labyrinthine and prolix.  The key points upon which the appellants succeed (on some grounds) and fail (on others) are dealt with in the disposition section of these reasons.  Nor is it helpful to attempt to summarise all of the respondents' written submissions, which, to a large extent, were responsive to various matters of detail in the appellants' submissions which, themselves, have no ultimate bearing on the proper disposition of the appeal.  Other, more material, aspects of Mr Lean's submissions are set out below.

2. Mr Lean, in his written submissions,[155] referred to and relied on a decision of Owen CJ in Eq in Eady v Eady,[156] which had been referred to by Simmonds J in his decision to 'cancel' the Receivership Orders.[157]  In Eady, a testator under his will had appointed four trustees of his estate.  Two of the trustees were, themselves, partners in a business, who were largely indebted to the testator's estate.  The court, in an administration suit in the estate in its equitable jurisdiction, appointed a receiver both of the estate and the partnership business.  After entering into possession of the assets of the estate and the partnership business, the receiver found that the partners had given a bill of sale to secure their indebtedness to the estate.  He then gave notice that he was also in possession of assets under the bill of sale.  The partners entered into bankruptcy the next day.  The official assignee of the partners' estate in bankruptcy applied to the court in its equitable jurisdiction for leave to bring proceedings against the receiver to set aside the bill of sale.  The court granted leave and, at the same time, granted the receiver liberty to defend any such proceedings.[158]  The official assignee then commenced the relevant proceedings to set aside the bill of sale in the bankruptcy court, and succeeded against the receiver.  There was subsequently an issue as to whether the receiver was entitled to commission on the goods that he had realised as receiver of the partnership assets until he had notice of an available act of bankruptcy.  It was held that he did.[159]  There was also an issue as to whether the receiver was entitled to receive his costs of the bankruptcy proceedings out of the testator's estate (ie, out of the assets over which he was the court‑appointed receiver).[160]  Owen CJ in Eq said:[161]

   I am clearly of opinion that the receiver is entitled to his costs, charges and expenses incurred in this matter.  It appears from the affidavits that the whole matter was before the Judge at the time the receiver was given leave to defend, and I must take it that before leave to defend was given the Judge was satisfied that the case was a proper one for the receiver to defend. … The finding that the receiver had notice [of the act of bankruptcy] may have been a decision upon a mixed question of law and fact, but at any rate on the information then before the Court, consisting among other things of the allegation of this act of bankruptcy, the Court was satisfied that it was for the interest of the estate that the official assignee's claim should be contested, and the receiver was given leave to defend.  That being so, the receiver being merely the officer of this Court without one tittle of interest in the subject matter of this litigation, and having merely acted in obedience to the leave which was given him, is entitled to be recouped the expenses he has incurred thereby.

   It is a most extreme course to adopt to refuse a receiver his costs, charges and expenses, and this Court would never make such an order unless it was shewn that the receiver had acted without the authority of the Court or had deliberately acted in the wrong; no mere error of discretion would be sufficient.  I see nothing of that nature in the present case, and I am therefore satisfied that the receiver is entitled to be recouped the costs, charges and expenses he has incurred in defending these bankruptcy proceedings.

   [155] Respondents' written submissions, par 17; WB 43 - 44.

   [156] Eady v Eady (1895) 16 LR (NSW) Eq 70.

   [157] Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318 [48].

   [158] Eady (71), (75), (79).

   [159] Eady (76).

   [160] Eady (76).

   [161] Eady (78 - 79).

3. Mr Lean also referred to passages in O'Donovan, Company Receivers and Administrators[162] to the effect that a court‑appointed receiver, who is not an agent of the parties, will not automatically forfeit remuneration if they are guilty of a breach of duty, and may be compensated for their 'efforts' even where they have acted irregularly, particularly where their actions have benefited the property or business over which they have been appointed receiver.[163]  Reference in that regard was made to Harris v Sleep.[164]  In that case, one of two partners, on the dissolution of the firm, was appointed receiver and manager of the partnership business.  In the course of the period of his appointment, he also carried out work for the business as a skilled mechanic.  Although he had not, at the time of his appointment, sought an order to the effect that he be paid wages for any work done by him as a worker for the business, he subsequently claimed wages in that regard.  Kekewich J rejected the claim on the basis that he was a fiduciary, and could not employ himself in the business.  He appealed.[165]  The Court of Appeal allowed the appeal.  Lindley LJ said:[166]

   The partnership has been dissolved by the Court.  The appellant was appointed receiver and manager without salary, and on his appointment nothing was said about his receiving workman's wages for anything he might do as a workman.  He was a practical man skilled in vicework and forgework.  He has acted as receiver and manager, for which he gets nothing, and in addition to this he has throughout worked with his own hands at forgework and vicework, which he was accustomed to do during the continuance of the partnership; and for this extra work, which it was no part of his duty as receiver and manager to perform, he now asks to be paid.  He has carried on the business successfully, and, though it was in an unsound state at the time of the order for dissolution, it has sold for a sum more than sufficient to pay all the creditors in full, and it is now contended that he ought not to be paid for his services as a workman:  for that it is against rule that a receiver and manager be allowed any remuneration for services rendered by him unless he asks for it at the time of his appointment.  If he does not ask for it then, he runs a great risk of not getting it:  but the Court, when the circumstances are before it, will see that what is right is done.  The objection is a shabby one.

   [162] Thomson Reuters, Company Receivers and Administrators, vol 3 (at update 216) [25.410].

   [163] Respondent's written submissions, pars 20 - 21; WB 45.

   [164] Harris v Sleep [1897] 2 Ch 80.

   [165] The appellant's counsel in argument said:  '[i]t was no part of his duty as a receiver or manager to take off his coat and work like a common workman, and he ought to be paid for it':  Harris (83).

   [166] Harris (84 - 85).

The IPAA fee guide

[225] Compare Eady (79).

1. Ground 5, which relates to the reasonableness of the scale of fees used by Mr Lean, should be dismissed.  The complaint is, in effect, that Mr Lean should not have charged for GST in addition to the published hourly rate in the IPAA guide.  The IPAA guide[226] in question was published on 18 June 1999, prior to the commencement of the GST legislation.  Mr Lean attached a schedule of charge‑out rates to his consent to act, reflecting the IPAA rates plus GST.[227]  It has not been shown that it was unreasonable for Mr Lean to charge, in 2008/2009, at the 18 June 1999 published rate, plus GST.  Ground 5 should be dismissed.

Time records for work not reasonably undertaken

[226] GB 329 - 330.

[227] GB 328, noting that Mr Lean acknowledged that his appointment by the court did not constitute approval of his rates - GB 326 - 327.

1. Given the conclusion reached at [168] above, the only potential, residual, application for ground 4 is in relation to the period up to 24 December 2008. The appellant's submissions in this regard attack Mr Lean's costs for the following work recorded in his time costings:

   (a)liaising with Mr Holbrook, the administrator of PSA;[228]

   (b)investigating Mr Banning and any properties owed in his name;[229]

   (c)investigating other companies in which Mr Banning may have been involved;[230]

   (d)carrying out physical inspections of the properties owned by Banning Holdings when he had already engaged valuers;[231]

   (e)searching debtor companies of Banning Holdings;[232]

   (f)seeking legal advice on matters outside the scope of his appointment, namely (relevantly) the prospect of directing rental income and other funds into his trust account, appointing himself a director of Banning Holdings, and challenging drawings made by the company;[233]

   (g)organising his files;[234] and

   (h)considering whether he might be appointed to do more than sell the Banning Share, such as selling individual assets of Banning Holdings, and making a recommendation to that effect to the court.[235]

   [228] Appellants' written submissions, par 73(1); WB 22.  See GB 686, item 4; GB 690, item 43.

   [229] Appellants' written submissions, par 73(2); WB 22.  See GB 687, item 11.

   [230] Appellants' written submissions, par 73(3); WB 22.  See GB 687, item 12.

   [231] Appellants' written submissions, par 73(4); WB 22.  See GB 687, items 14 and 15.

   [232] Appellant's written submissions, par 73(5); WB 22. See GB 287 - 288.

   [233] Appellants' written submissions, par 73(7); GB 690, item 41 (2.5 hours); GB 691, item 48 (0.1 hours); GB 698, item 113; it should be noted that the third of these related to the period after 24 December 2008.

   [234] Appellants' written submissions, par 73(8).  See GB 691, item 56 (1.0 hours).

   [235] Appellants' written submissions, par 73(9); Report GB 485.

2. The matters referred to in pars (a) - (e) of the preceding paragraph, some of which involved less than 30 minutes of Mr Lean's time, have not been established as being outside the scope of one or more of orders 4(a), 5(a), 5(b), 5(c) and 5(d) of the Receivership Orders.  On the other hand, the claim for costs for organising his files, referred to in par (g) of the preceding paragraph, cannot, at least in respect of this limited period (21 November 2008 to 24 December 2008) and in these circumstances, be regarded as work reasonably undertaken for the proper discharge of the Receivership Orders. 

3. As to the complaint with respect to par (f) in [176] above, it appears that Mr Lean spent time and incurred expense consulting a solicitor in relation to matters outside the scope of his appointment.  Even if it were assumed that Mr Lean could properly have taken legal advice on matters within the scope of his appointment without first obtaining the leave of the court,[236] there was no proper or reasonable basis for him to take advice in relation to and charge for matters plainly outside the scope of his appointment, at least without the leave of the court.  Had Mr Lean sought leave before obtaining such legal advice, it is inevitable that leave would not have been granted.  CAT, as judgment creditor of Mr Banning, could only have recourse to Mr Banning's assets.  CAT could not have recourse to the assets of Banning Holdings.  It may be added here, parenthetically, that had CAT bankrupted Mr Banning instead, his trustee in bankruptcy, upon becoming the registered holder of the Banning Share, would have had standing to apply for the winding up of Banning Holdings, in order to seek access to its surplus assets for the benefit of creditors.[237]

   [236] Compare Re Say Enterprises [20].

   [237] Taylor v Goldana Investments Pty Ltd (No 2) [2015] FCA 947; (2015) 236 FCR 298 [10]; Official Trustee in Bankruptcy v Buffier [2005] NSWSC 839; (2005) 54 ACSR 767 [1] ‑ [4], [65]; Nilant v RL & KW Nominees Pty Ltd [2007] WASC 105 [114] - [121], [223], [225]. See also Royal v El Ali (No 2) [2016] FCA 1156 [14] ‑ [16]; Scott (Trustee) v Icicek Holdings Pty Ltd [2015] FCA 1387 [15].

4. In relation to par (h) of [176] above, Mr Lean's recommendation that he be given additional powers to recover and realise individual assets within Banning Holdings was, effectively, a recognition that in his opinion, the Receivership Orders were unsuited to achieve their principal objective, namely to satisfy the CAT judgment debt.  He had already, permissibly, identified the assets in question and their value.  Making recommendations concerning additional powers was not reasonably incidental to the discharge of Mr Lean's duties as receiver.  However, it cannot be inferred that the making of this particular recommendation materially added to the cost of his report, or to his costs generally. 

5. Mr Lean submits that the broad‑brush approach adopted by the appellant in the primary proceedings did not invite close attention to whether particular aspects of the work done should properly be remunerated.  As a consequence, the submission continued, the appellant should not be permitted, on appeal, to complain of error in connection with particular aspects of Mr Lean's conduct.[238]  We do not accept this submission.  In the primary proceedings, the appellant's minute of orders, dated 25 August 2015, included an order for disallowance of Mr Lean's remuneration and legal costs in connection with seven specified species of conduct.[239]  While those species do not precisely encompass all of the matters summarised in [176] above, there is substantial overlap.  In all the circumstances, there is no injustice in the approach taken in ground 4.

   [238] Appeal ts 113 - 115.

   [239] BB 27 - 28.

6. Accordingly, ground 4 should be upheld, only in relation to the matters referred to in (f) and (g) of [176] above.

Valuation work

1. In relation to ground 3, the appellants' argument appeared to be, in substance,[240] that Mr Lean should have estimated the legal costs which any incoming purchaser of the Banning Share might incur in seeking to wind up the company and/or in procuring a position on the board of directors of Banning Holdings.  The argument appeared to be that Mr Lean, having assessed the net assets of Banning Holdings, should have divided that figure by two (to reflect the 50% shareholding associated with the Banning Share), and then deducted from that amount his assessment of such litigation costs, in order to arrive at a true value of the Banning Share. 

   [240] Appeal ts 54 - 69.

2. This ground should be dismissed, effectively for the reasons given by the master (see [115] above).  Mr Lean was appointed to sell the Banning Share.  He was entitled to take the view that the market for such a share (a 50% interest in, effectively, a family company) was extremely limited, and that realistically, in the circumstances of this case, it would only be of interest to a speculator who had the commercial appetite and resources to wage litigation with a view to eventually extracting some value from the share by forcing the company into liquidation or by negotiating commercial terms of surrender from the other shareholder.  It should be noted that the appellant's complaint concerns only the valuation approach undertaken by Mr Lean in estimating the realisable value of the share.  It was not contended that within that overall approach, the discount factor applied by Mr Lean (a factor of 30) was unreasonably high.  Ground 3 should be dismissed.

Grounds 1 and 2 - alleged duty to act with reasonable care/willing sacrifice of asset/good faith and misfeasance

1. All parties to the appeal accepted that Mr Lean owed a duty of a fiduciary character to all persons having an interest in the Banning Share.[241]  Indeed, no party challenged the master's statement of principle at [7] of the primary decision, referred to in [107] above.

   [241] Appellants' written submissions, par 31; WB 15; respondents' written submissions, par 29; WB 47.

2. On this basis, it may be accepted for present purposes that Mr Lean owed a fiduciary duty to, at least, Mr Banning's estate.  However, if (as appears to be the case) the estate was unadministered at the relevant time, the Banning Share would not have been held on trust for Mrs Banning; rather, her right would be against the executor to have the estate duly administered.[242]  Even if Mr Lean owed a fiduciary duty to Mrs Banning in that context, any duty owed to her would not exceed the scope of the duty owed to Mr Banning's estate. 

   [242] Livingston v Commissioner of Stamp Duties (Qld) [1960] HCA 94; (1960) 107 CLR 411, 422 - 423, 435; Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR 306, 312.

3. In relation to ground 2, the reference to Mr Lean 'wilfully sacrificing the interests' of (relevantly) Mr Banning's estate is evidently a reference to the well‑known principles in Pendlebury v Colonial Mutual Life Assurance Society Ltd.[243]  Ground 2 also alleges the sale of the Banning Share was made without good faith.  Ground 2 however, unlike ground 1, is expressed in terms to the effect that the master erred in finding that the fees up to the time of the sale of the Banning Share (10 March 2009) were reasonable.  In this regard, ground 2 ultimately adds nothing to the proper disposition of the appeal, for the reasons given in the next two paragraphs.

   [243] Pendlebury v Colonial Mutual Life Assurance Society Ltd [1912] HCA 9; (1912) 13 CLR 676, 680, 700.

4. The factual matters relied upon in support of ground 2 (see [124.2(a) and (b)] above) are, in substance, that Mr Lean (1) failed to obtain a proper valuation of the Banning Share; (2) failed to set a reserve price and, instead, intended to sell the Banning Share irrespective of its value; (3) failed to invite Mrs Banning to bid; (4) failed to tell bidders that the DOCA for PSA had been entered into; (5) gave Mr and Mrs Frigger an unfair advantage by providing them with financial and other information unavailable to other bidders; (6) failed to conduct the sale in accordance with the pre‑emptive provisions in the constitution of Banning Holdings; and (7) undertook the sale at the behest of Mr and Mrs Frigger, when it was plainly imprudent to do so given the existence of a DOCA. 

5. In relation to the first of those matters, the point cannot succeed for the reasons given in [183] above.  As to the second of those matters, counsel for the appellants accepted that if the complaint about the valuation of the Banning Share failed, this complaint also failed.[244] As to the third, fourth and fifth matters, those complaints assume a sale process outside of the operation of the pre‑emptive provisions. They are effectively overtaken by the conclusion at [171] above, that Mr Lean should have investigated and addressed the issues arising from the pre‑emptive provisions in the constitution of Banning Holdings, and unreasonably failed to do so. Also, the sixth and seventh matters have, in effect, been dealt with earlier (at [171] and [174] above respectively).

   [244] Appeal ts 72.

6. In relation to ground 1, the matters in support of that ground appear to be, in substance, the same as those relied on in relation to ground 2.[245]  To this extent, for the reasons given in relation to ground 2 (see [188] above), those points do not materially add to the proper disposition of the appeal. 

   [245] See appellants' written submissions, pars 36 - 67; WB 15 - 21.

7. Ground 1 also includes, however, the allegation that the master should have held that any losses suffered by PSA, Mr Banning's estate and Mrs Banning were to be set off against Mr Lean's remuneration.[246]  The appellants, in this context, referred to a minute of proposed orders that had been filed on 25 August 2015 by the solicitors for Mr Campbell‑Smith and PSA in CIV 2265 of 2006.[247]  That minute included a proposed order that Mr Lean 'do pay to [Mr Campbell‑Smith] and/or Banning Holdings … and/or [Mrs] Banning the sum of $47,294.69 as losses caused by the conduct of [Mr Lean] in relation to the failed sale of the [Banning Share], or, alternatively the losses to be assessed by this Honourable Court on a date to be fixed'.[248]  In support of that matter, Mr Eastwood swore an affidavit on 27 August 2015 to the effect that (1) he had had the conduct of the proceedings in CIV 1727 of 2009 on behalf of Mr Campbell‑Smith, Mrs Banning and Banning Holdings, (2) that his clients had incurred costs in the proceedings of CIV 1727 of 2009 in the sum of $116,040.37, (3) that his clients had been awarded costs in CIV 1727 of 2009 against Mr and Mrs Frigger, and those costs had been taxed, and (4) that if Mr and Mrs Frigger paid those taxed costs, his clients would be out of pocket in respect of the proceedings in CIV 1727 of 2009 in the sum of $47,294.69.[249] 

   [246] See ground 1(c) referred to in [124.1] above.

   [247] See the last two sentences of par 35 of the appellants' written submissions, WB 15; and the last sentence in the appellants' written submissions, par 43, WB 17; see also appeal ts 45 - 46.

   [248] BB 28, order 7.

   [249] Mr Eastwood's affidavit of 27 August 2015, pars 14 - 15; GB 479 - 480.

8. If the master was properly seized of a misfeasance claim by way of set‑off in respect of the losses described in Mr Eastwood's affidavit (see [190] above), and failed to deal with that issue, the omission is, at least prima facie, an error of law.[250]   However, any error in that regard would be in not dealing with the issue at all.  It would not be an error of the kind with which much of ground 1 and the appellants' submissions in support deal, namely whether Mr Lean owed, and breached, a duty to take reasonable care to obtain a proper price.[251]  It would not be appropriate for this court to rule on the correct legal test that is to be applied to an unpleaded misfeasance claim not the subject of consideration and determination by the master in the primary proceedings.  Further, the relevance of a complaint about whether Mr Lean breached a duty to take reasonable care to obtain a proper price, as opposed to whether he recklessly sacrificed the Banning Share, is unclear, to say the least, when there has been no effective sale of the Banning Share and the share remains an asset of Mr Banning's estate.

   [250] Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management [2012] WASCA 79; (2012) 42 WAR 287 [324].

   [251] In reliance on Cuckmere.

1. Insofar as the appellants contend, in effect, that the master should have dealt with the claims in the minute filed 25 August 2015 and set them off against Mr Lean's claim for remuneration, the following points may be made:

   1.It has not been shown that either Mrs Banning or Banning Holdings, applied to become, or was made a party to, the primary proceedings before the master (CIV 2265 of 2006).

   2.The alleged error in this appeal is (relevantly at this point in relation to ground 1) the master's alleged failure to deal with, and set‑off, losses claimed by Mr Banning's estate, PSA and 'any person having an interest in the [Banning] Share who sustained a loss as a consequence of [Mr Lean's] negligence'. 

   3.As to Banning Holdings, it had no interest in the Banning Share.  Any failure by the master to deal with any losses claimed by Banning Holdings is outside the scope of ground 1.

   4.Further, as to Mrs Banning and Banning Holdings, even if it were assumed that they were a party to the primary proceedings and that each had an interest in the Banning Share,[252] neither is liable for the payment of Mr Lean's remuneration.  Accordingly, no set‑off could properly have been effected by either of them. 

   5.As to PSA, Mr Eastwood's evidence (see [190] above) did not refer to any loss suffered by PSA.  The alleged failure by the master to deal with PSA's alleged losses has no merit, and could have no material bearing on the outcome of the appeal.

   [252] PSA and Mr Banning's estate were liable to pay Mr Lean's remuneration as the judgment debtors pursuant to order 8 of the Receivership Orders; BB 19.

2. For these reasons, insofar as ground 1 alleges that the master erred in failing to deal with a set‑off in respect of losses claimed by PSA, Mrs Banning and Banning Holdings, the ground should be dismissed.

3. That leaves for consideration the alleged failure by the master to deal with a misfeasance claim by Mr Banning's estate (through Mr Campbell‑Smith) by way of set‑off against Mr Lean's claim for remuneration. 

4. In light of our upholding of ground 6, any proper claim for set‑off would apply, at most,[253] to Mr Lean's claim for remuneration and expenses up to 24 December 2008 which, according to his Report, were $25,936.87.

   [253] Subject to allowance of ground 4 of the appeal to the extent indicated earlier.

5. The appellants contend, in effect, that any claim for losses to be set off against Mr Lean's claim for remuneration was required to be made in the proceedings in which the Receivership Orders were made (CIV 2265 of 2006) and not in independent proceedings.[254]  The appellants rely, for this proposition, on Searle v Choat.[255]  In that case, Mr Choat (as plaintiff) sued Mr Davies (as defendant) in the Queen's Bench Division for a debt.  Mr Choat obtained judgment for £211.  Mr Choat then obtained an order in that action that a receiver be appointed to receive the rents and profits of certain leasehold houses in which Mr Davies had an interest.  The receiver (Mr Alabaster) was appointed for that purpose.  The appointment was made without prejudice to the rights of any prior encumbrancers.  Mr Davies (the defendant) had previously mortgaged certain houses the subject of the receivership orders to a mortgagee, Mr Searle.  Each of Mr Searle (as mortgagee) and Mr Alabaster (as the receiver appointed in the Queen's Bench action) served notice on the tenants requiring them to pay the rent to him.  Mr Searle then commenced proceedings in the Chancery Division to restrain Mr Choat and Mr Alabaster from receiving or intermeddling with the rents of the houses.[256]  Bacon VC dismissed Mr Searle's claim, effectively on the basis that the application should have been made in the Queen's Bench Division.  On appeal, Cotton LJ and Lindley LJ agreed, in substance, with Bacon VC.  Cotton LJ said, in effect, that in the present case 'as there was a pending action in the Queen's Bench Division the proper course for [Mr Searle] would have been to make his application in that action'.  Lindley LJ said, in effect, that at least without the prior leave of the Queen's Bench Division, it was improper to bring a fresh action against the receiver in Chancery.[257]

   [254] Appellants' written submissions, par 35; WB 15.

   [255] Searle v Choat (1884) 25 Ch D 723.

   [256] Searle (723 - 724).

   [257] Searle (727 - 728).  See also Re Van Reesema; Ex parte Australian Growth Resources Corporation Pty Ltd (Unreported, Federal Court of Australia, 27 March 1987) [38] ‑ [40].

6. The Receivership Orders and the orders discharging the receivership on 10 November 2010 were interlocutory orders in CIV 2265 of 2006. It may be accepted that, had Mr Campbell‑Smith wished to bring a misfeasance claim against Mr Lean, ordinarily the proper course would have been to make the claim in CIV 2265 of 2006 or at least to have sought leave of a judge in CIV 2265 of 2006 to bring a fresh action against Mr Lean. The proper course would have been to apply to a judge in CIV 2265 of 2006 for directions concerning his proposed misfeasance claim by way of equitable set‑off against Mr Lean's claim for remuneration. Given the serious nature of the allegations, it is inevitable that a judge would have directed any misfeasance claim to be the subject of pleadings, either as points of claim within CIV 2265 of 2006, or in any separate proceedings brought by Mr Campbell‑Smith with the leave of the judge in CIV 2265 of 2006. Other case‑management orders may also have been necessary or desirable to manage Mr Lean's claim for an assessment of his remuneration in the context of Mr Campbell-Smith's asserted right to an equitable set‑off. However, more importantly for present purposes, any misfeasance claim against the receiver should have been dealt with by a judge. The master had no jurisdiction to hear and determine a misfeasance claim without the consent of the parties,[258] and there is no suggestion that any consent had been obtained. Accordingly, no error has been shown in the master's failure to deal with any misfeasance claim by Mr Campbell‑Smith as executor of Mr Banning's estate.

   [258] Order 60 r 1(4) of the Rules of the Supreme Court 1971 (WA).

1. For these reasons, the appellants have not established any error by the master in failing to deal with any misfeasance claim by Mr Banning's estate by way of set‑off against Mr Lean's claim for remuneration.  In this regard also, ground 1 should be dismissed.[259]

   [259] Nothing in these reasons should be taken as finding that it would not be open, still, to Mr Banning's estate to bring misfeasance proceedings against Mr Lean.  Whether or not such proceedings might yet be taken is not an issue for resolution in the proper disposition of the appeal.

Conclusion

1. The notice of contention is dismissed.  Ground 4 of the grounds of appeal is upheld in that certain work done by Mr Lean, between 21 November 2008 and 24 December 2008, could not reasonably have been undertaken for the proper discharge of the Receivership Orders, with that work being (1) seeking legal advice on matters outside the scope of Mr Lean's appointment; and (2) organising his files.[260]  Ground 6 is upheld to the extent that no further work after 24 December 2008 could reasonably or prudently have been undertaken by Mr Lean, until he had ascertained and considered the pre‑emptive provisions in the Articles of Association of Banning Holdings.[261]  Ground 7 is upheld to the extent that work undertaken by Mr Lean from 27 February 2009 was not reasonably and prudently undertaken, as Mr Lean failed to bring an independent mind to the sale of the Banning Share from that time.[262]  Grounds 8 and 9 are upheld to the extent that work done after the sale of the Banning Share on 10 March 2009 was not proven by Mr Lean to be reasonably and prudently undertaken.[263]

   [260] See [176] - [181] above.

   [261] See [168] above.

   [262] See [174] above.

   [263] See [162] above.

2. The upshot is:

   1.Mr Lean is entitled to be remunerated in respect of his work up to 24 December 2008, save for the work in respect of which ground 4 was upheld.  The work the subject of [176] (f) and (g), on which ground 4 succeeded, occupied a total of 3.6 hours of Mr Lean's time.[264]  At Mr Lean's hourly rate, that translates to $1,238.40.  When that sum is deducted from $25,936.80, the amount of remuneration that should be approved is $24,698.40.

   2.No remuneration is payable for work done after 24 December 2008.

   [264] See footnotes 233 and 234 above.

3. The orders sought by the appellants in the appeal are, in effect:[265]

   1.The appeal is allowed.

   2.The orders of Master Sanderson made on 8 December 2016 in CIV 2265 of 2006 be set aside.

   3.The assessment of Mr Lean's remuneration and of the costs of the respondent's chamber summons filed 29 October 2014 in CIV 2265 of 2006 be remitted to Master Sanderson for reconsideration in accordance with these reasons.

   [265] Appellants' 'Orders Wanted', WB 30.

4. In light of the conclusions we have reached, while orders 1 and 2 should be made, there is no need for, or utility in, remitting the matter for reconsideration.  Rather, the court should order that the respondent's costs and disbursements be approved in the sum of $24,698.40.  We would hear from the parties as to any question of interest and as to costs.

   I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

   AW
   Research Associate to the Honourable Justice Murphy and the Honourable Justice Mazza

   15 FEBRUARY 2019

Schedule

1.Until further order Graeme Trevor Lean, is appointed as the Receiver of the property pursuant to section 86(1)(b) alternatively section 86(1)(e) of the Civil Judgments Enforcement Act 2004.

2.For the purposes of this Order the Receiver is appointed in this action to appropriate and realise the property so as to satisfy the judgment debt.

3.For the purposes of this Order the property is that described and referred to in the schedule hereto. [the Banning Share]

4.The Receiver shall have the following powers in respect of the property:

(a)the power to do all things necessary or convenient to be done or in connection with, or as incidental to, the identification, preservation and securing of all of the property as defined in paragraph 3 above, for the benefit of the judgment creditor.

(b)the power to give to the relevant authorities that control, record and regulate the ownership of real property; ownership of motor vehicles; ownership of maritime vessels and crafts any bank which the First Defendant, Second Defendant and/or Banning Holdings Pty Ltd operates; any other person or entity holding or controlling the property and any third party whatsoever notice of these orders by delivering copy of these orders to a person apparently in the employ of that entity or person.

(c)the power to register the shares comprising the property in the name of the receiver and to sell those shares in satisfaction of the judgment debt.

5.The Receiver shall report in writing to the judgment creditor [CAT] and to the court from time to time and no [more] than one month after the issue of these orders regarding:

(a)the nature and details of the property identified [the Banning Share] including any interest in any trust (including as a beneficiary of a discretionary trust, whether named or not, and a power or appointment of the trustee of any trust or power of direction);

(b)the assets and liabilities of the judgment debtors [PSA and Mr Banning] and Banning Holdings Pty Ltd;

(c)the costs of his appointment, the future costs thereof and the cost that may be incurred by him in the future;

(d)any other information in relation to the property [the Banning Share] that the Receiver thinks necessary to protect the interests of the judgment creditor [CAT], in respect of the [CAT] judgment debt.

6.The judgment debtors shall authorise the Receiver to and the Receiver shall be entitled to obtain information regarding the trust from the trustees of such trusts, including the terms of such trust, the classes of its beneficiaries and distribution history and the judgment debtors and/or Banning Holdings Pty Ltd shall sign all such documents and do all such things necessary to give effect to the granting of such authority.

7.The first judgment debtor by itself its servants, agents or employees and each of the second judgment debtor by their servants, agents or employees must:

(a)permit the Receiver ongoing access to the books and records which relate to the property;

(b)use their best endeavours to assist the Receiver in the performance of his function.

8.The costs of the Receiver including his remuneration, the cost of obtaining his appointment, of completing his security, of passing of accounts and of obtaining his discharge shall be taxed unless assessed by the master and shall be primarily payable by the judgment debtors by making payment of the taxed costs to the judgment creditor within such time as the Master may allow on taxation or assessment or is otherwise ordered by this Honourable Court.

9.Any of the parties be at liberty to apply to the Master in Chambers as there may be occasion.

10.The costs of this application be reserved.

SCHEDULE OF PROPERTY

(i)property held by the second judgment debtor in his name, being

(4)one share (50% shareholding) in Banning Holdings Pty Ltd [the Banning Share]. (emphasis added)