Rea v Omana Ranch Ltd

[2012] NZHC 2639

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1. Rea v Omana Ranch Ltd

1. High Court    Auckland   CIV-2011-404-8002;  [2012] NZHC 2639

   27, 28, 29 August; 11 October 2012

   Katz J

Insolvency – Receivership – Court-appointed  receivers  – Remuneration  – By

1. whom receivers’ remuneration  payable – Meaning of “remuneration”, “costs”, “expenses”  – Receiverships Act 1993, ss 30A, 30B, 30C and 30D – High Court Rules, r 7.62.

Following protracted proceedings in the Family Court requiring James Lavas to pay   the   sum   of   $756,644   to   Francesca   Ann   Taliano,   and   subsequent

1. proceedings  in the High Court, Messrs Gerald Rea and Paul Sargisson were appointed (by consent order) as receivers of Mr Lavas’ shareholdings.

   While the consent order specified the level of remuneration and stated that the receivership was to be conducted under the Receiverships Act 1993, it did not state whether their remuneration, costs and expenses were to be paid from

2. any proceeds  from the assets  in the receivership,  or whether  Ms Taliano  or

   Mr Lavas (personally) were required to meet such costs.

Held:  1 The starting point was that a court-appointed  receiver was entitled to remuneration,  costs and expenses out of the receivership assets, subject to the terms of the specific order in issue. Section 30D of the Receiverships Act 1993

1. was consistent  with the common  law position that receivers’ costs, expenses and remuneration were a preferential claim on the assets in receivership. While it  would  have  been  preferable  for  the  consent  order  specifically  to  have addressed such payments, the order as drafted was consistent with the common law principles relating to the payment of receivers. If it had been intended that

2. Ms Taliano pay the receiver, the order would have specified that (see [14], [18], [19], [20]).

   2 Rule 7.62 of the High Court Rules allowed  the court to direct that a named party paid the costs of a receivership.  On the facts, there was nothing unusual about this case to justify requiring Ms Taliano to bear those costs. As

3. this application had arisen out of a debtor/creditor  relationship, the defaulting party was to bear the costs of the receivership (see [24], [40], [41]).

   3 “Remuneration”  meant professional  fees (for the receivers  themselves and their staff). “Costs” meant litigation costs. “Expenses” referred to all other expenditure   necessarily   or   properly   incurred   by   the   receivers   in   the

4. performance of their duties (see [3]).

Result: Receivers to be paid out of assets of receivership.

Observation: Rule 7.62 of the High Court Rules refers only to “remuneration”. It remains  open to argument  as to whether  that term extends  to “costs”  and

“expenses”.  If it is to be narrowly construed,  the inherent jurisdiction  of the

Court may apply (see [21]).

Cases  mentioned in judgment

Andrews, Re [1999] 1 WLR 1236, [1999] 2 All ER 751.
Capewell  v Her  Majesty’s  Revenue &  Customs  [2007]  UKHL  2,  [2007]  2    5

All ER 370.

Evans v Robertson Orr [1923] NZLR 769 (SC).
Hopkins v Worcester & Birmingham Canal Proprietors (1868) LR 6 Eq 437.
Murtagh v…