FEDERAL COURT OF AUSTRALIA
Weston (Trustee) v Sanna (No 6) [2021] FCA 1487
File number: NSD 276 of 2016 Judgment of: MARKOVIC J Date of judgment: 23 November 2021 Catchwords: BANKRUPTCY AND INSOLVENCY – application by trustee in bankruptcy for orders referring quantification of remuneration, costs and expenses to a referee – where orders made for trustee to realise two properties forming part of the estate – whether trustee entitled to be paid his remuneration, costs and expenses from the proceeds of sale of those properties – whether remuneration, costs and expenses arise in connection with realisation of those properties – application allowed in part Legislation: Federal Court of Australia Act 1976 (Cth) s 54A Cases cited: Commonwealth Bank of Australia v Butterell [1994] 35 NSWLR 64
Deputy Commissioner of Taxation v Government Insurance Office of New South Wales [1992] 109 ALR 159
Re application of Central Commodity Services Pty Ltd [1984] 1 NSWLR 24; Shirlaw v Taylor [1991] 31 FCR 222
Re Berkeley Applegate (Investment Consultants) Ltd (in liq) [1982] Ch 32; [1988] 3 All ER 71
Re S & D International Pty Ltd (in liquidation) (receiver and manager appointed) [2009] VSC 225
Re Universal Distributing Co Ltd (in liquidation) (1933) 48 CLR 171
Stewart and Atco Controls Pty Ltd (in liquidation) (2014) 252 CLR 307
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 32 Date of hearing: 23 November 2021 Counsel for the Applicant: Mr A Spencer Solicitor for the Applicant: Dentons Australia Counsel for the First Respondent: The First Respondent appeared in person Counsel for the Second Respondent: The Second Respondent filed a submitting notice save as to costs Counsel for the Fifth Respondent: The Fifth Respondent filed a submitting notice save as to costs Counsel for the Seventh Respondent: The Seventh Respondent appeared in person with a McKenzie friend, Ms M Gattellari Solicitor for the Ninth Respondent: K&L Gates Solicitor for the Tenth Respondent: Mr G Adelstein of Adelstein Solicitors Solicitor for the Eleventh Respondent: Mr A Hack of Matthews Folbigg Lawyers Counsel for the Twelfth Respondent: The Twelfth Respondent filed a submitting notice save as to costs
ORDERS
NSD 276 of 2016 BETWEEN: MR PAUL GERARD WESTON AS TRUSTEE OF THE BANKRUPT ESTATE OF LEPA SANNA
Applicant
AND: CORRADO SANNA
First Respondent
BORAL CONSTRUCTION MATERIALS GROUP LTD
Second Respondent
E & B PASTORAL PTY LTD (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
MARKOVIC J
DATE OF ORDER:
23 NOVEMBER 2021
THE COURT ORDERS THAT:
1.Pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth), there be referred to a registrar of the Court (Referee) the following questions for inquiry and report:
(a)the quantification of the amounts to which Mr Weston is entitled:
(i)for his remuneration with respect to the sale and disbursement of the proceeds of sale of the Copacabana Property;
(ii)for his legal expenses in connection with transferring the Copacabana Property…
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- Case
- [2021] FCA 1487
- Decision Date
CaseChat Overview and Summary
The court had to consider the basis upon which the trustee could claim his remuneration, costs, and expenses. The trustee argued that his entitlement to remuneration, costs, and expenses was supported by the principles established in previous cases, such as Re Berkeley Applegate (Investment Consultants) Ltd (in liq). The trustee's solicitor provided affidavits detailing the work undertaken in relation to the sale of the properties and the various applications and proceedings that had occurred over the past 18 months. The respondents, including Mr Sanna, opposed the trustee's claim, arguing that he should not receive any payment of his remuneration, costs, or expenses. However, the court rejected this assertion and determined that the trustee was entitled to his reasonable remuneration and costs and expenses based on the established principles.
The court ruled in favor of the trustee, allowing the application in part and directing that specific questions regarding the quantification of the trustee's entitlement to remuneration, costs, and expenses be referred to a registrar of the Court (Referee) for inquiry and report. The court ordered that the referee should prepare a written report setting out the opinion and reasons for the opinion, and the first, seventh, and tenth respondents were directed to pay the applicant's costs of the application. The court also noted that the trustee would communicate with the respondents to determine whether they wish to file a points of claim before or after the referee's report.
Orders
Orders of the court
1. Pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth), there be referred to a registrar of the Court (Referee) the following questions for inquiry and report:
(a) the quantification of the amounts to which Mr Weston is entitled:
(i) for his remuneration with respect to the sale and disbursement of the proceeds of sale of the Copacabana Property;
(ii) for his legal expenses in connection with transferring the Copacabana Property to the purchaser;
(iii) for his legal expenses of the interlocutory application filed on 6 March 2020;
(iv) for commission payable to the agent on the sale of the Copacabana Property; and
(v) (whether included in the above amounts or otherwise) for his costs, expenses and remuneration (including GST), on an indemnity basis, reasonably and properly incurred in taking steps in the course of executing the Orders made on 15 June 2020, in gaining possession of and caring for the Copacabana Property, in resisting the various applications made to amend, delay or prevent the process of selling the Copacabana Property in accordance with those orders and in recovering his costs, expenses and remuneration (including GST and disbursements) of so doing, including (for the avoidance of doubt) any such costs, expenses or remuneration incurred in the following proceedings:
A. proceedings NSD 276 of 2016, NSD 619 of 2016 and NSD1135 of 2019 in this Court save for the costs, expenses and remuneration incurred in connection with event number 4, being FCA Application 2 as described in the affidavit of Justin Gibb Bates sworn 19 July 2021;
B. proceeding PAC2399/2018 in the Federal Circuit Court (Family Law) and the Family Court of Australia;
C. proceeding 2020/241992 in the Supreme Court of New South Wales; and
D. proceeding 2021/215136 in the Supreme Court of New South Wales;
(b) the quantification of the amounts to which Mr Weston and Mr Nith are entitled:
(i) for their remuneration with respect to the sale and disbursement of the proceeds of sale of the Green Valley Property;
(ii) for their legal expenses in connection with transferring the Green Valley Property to the purchaser;
(iii) for Mr Weston’s legal expenses of the interlocutory application filed on 6 March 2020;
(iv) for commission payable to the agent on the sale of the Green Valley Property; and
(v) (whether included in the above amounts or otherwise) for his costs, expenses and remuneration (including GST), on an indemnity basis, reasonably and properly incurred in taking steps in the course of executing the orders made on 15 June 2020, in gaining possession of and caring for the Green Valley Property, resisting the various applications made to amend, delay or prevent the process of selling the Green Valley Property in accordance with those orders and recovering his costs, expenses and remuneration (including GST and disbursements) of so doing, including (for the avoidance of doubt) any such costs, expenses or remuneration incurred in the following proceedings:
A. proceedings NSD 276 of 2016, NSD 619 of 2016 and NSD1135 of 2019 in this Court save for the costs, expenses and remuneration incurred in connection with event number 4 being FCA Application 2 as described in the affidavit of Justin Gibb Bates sworn 19 July 2021;
B. proceeding PAC2399/2018 in the Federal Circuit Court (Family Law) and the Family Court of Australia;
C. proceeding 2020/241992 in the Supreme Court of New South Wales; and
D. proceeding 2021/215136 in the Supreme Court of New South Wales.
2. The Referee is to give to the Court a written report that:
(a) has attached to it the statements given by the parties under r 28.65(7) of the Federal Court Rules 2011 (Cth);
(b) sets out the Referee’s opinion on the matter; and
(c) sets out the Referee’s reasons for the opinion.
3. The first, seventh and tenth respondents are to pay the applicant’s costs of this application.
4. Liberty to apply on seven days’ notice.
THE COURT NOTES THAT:
5. The applicant will communicate with each of the respondents to this proceeding in order to ascertain which of those respondents wish to file and serve a points of claim setting out the basis upon which they make a claim on the fund that has been realised following the sale of the Copacabana Property and the Green Valley Property and whether they wish to do so prior to or after the Referee has reported to the Court, and to communicate with the Court on the outcome of that inquiry.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
There is an alternative basis upon which a person who gets in assets with the authority of the Court may claim a lien for his costs and expenses of doing so, which relies on the more general basis of salvage: see, for example, Re Berkeley Applegate (Investment Consultants) Ltd (in liq) [1982] Ch 32; [1988] 3 All ER 71.CONSIDERATION The Trustee relies on a number of affidavits, but in particular the affidavits of his solicitor, Justin Gibb Bates, sworn on 19 July 2021 and 18 October 2021 in which Mr Bates sets out in some detail the nature of the work undertaken by the Trustee in relation to the sale of the Copacabana Property and the Green Valley Property by reference to certain events and the applications and other proceedings which have been brought over the past 18 months which the Trustee says concerned or touched upon the realisation of either or both of those properties, such that his remuneration, costs and expenses associated with those events and defending those applications or proceedings should be borne by the trust property or the fund which has been created in accordance with the principles set out in Universal Distributing. As I have already observed, Ms Sanna, Mr Sanna and Defined each made submissions in response to the application opposing it in varying degrees. In summary, Mr Sanna said that the Trustee should not receive any payment of his remuneration, costs or expenses. In support of that submission he relied on a letter he received from Dentons, the lawyers for the Trustee, and his reply to that letter. The assertion that the Trustee should receive no remuneration, costs or expenses incurred in realisation of the properties is rejected. The Trustee is entitled to his reasonable remuneration and costs and expenses based on the principles set out above. There is no proper basis upon which it could be concluded that he is entitled to nothing. The correspondence relied on by Mr Sanna does not assist him and, on my review, does not raise any particular objection to the categories of remuneration, costs and expenses that are sought. It is notable that in their letter Dentons sought payment from Mr Sanna of amounts that were owing by him for unpaid council rates and utility bills in relation to the Copacabana Property and the quantified costs of an adjournment application that he had made in this proceeding which had not been paid. The response to that demand by Mr Sanna can only be described as non-responsive in that he directed the Trustee to pursue those matters “through the legal system”, noting that the Trustee “apparently has chosen not to do so yet”. Ms Sanna provided detailed submissions raising both general issues as to the Trustee’s conduct and more particular responses to the categories of remuneration, costs and expenses claimed by the Trustee by reference to the various proceedings in which the Trustee was involved. Defined also made submissions in relation to particular categories of remuneration, costs and expenses sought by the Trustee.