Liquidator’s explanations on fees and costs fall short

Coming before certain judges with less than fulsome explanations as to why fees and costs are justified is a zero sum game, as certain parties found out when NSW Supreme court judge Ashley Black was asked to rule on a dispute over amounts to be deducted from the proceeds of sale of land in Sydney’s west.

“I do not accept their submission that the receivers’ remuneration, expenses and “Aidzan indemnity costs” generally were “necessarily incurred” to facilitate the sale of the Sunnyholt Property.” Justice Ashley Black.

Justice Black has more than a passing familiarity with this torturous dispute, having delivered final judgment in June in: K. & A. LAIRD (N.S.W.) Pty Ltd (In Liquidation) v AIDZAN Pty Ltd (In Liquidation) in its own capacity and in its capacity as trustee of the Peter Laird Trust, the Peter Alan Laird Property Trust (known as the PAL Property Trust) and the Aidzan Superannuation Fund [2023] NSWSC 603.

More recently he’s given his ruling in relation to $271,000 in costs said to have been incurred by Jones Partners Bruce Gleeson and Alan Topp in their capacities as liquidators of Aidzan Pty Ltd and receivers of the Peter Alan Laird Property Trust (PAL) Property Trust, both entities having been defendants in the proceedings. See: K. & A. LAIRD (N.S.W.) Pty Ltd (In Liquidation) v AIDZAN Pty Ltd (In Liquidation) in its own capacity and in its capacity as trustee of the Peter Laird Trust, the Peter Alan Laird Property Trust (known as the PAL Property Trust) and the Aidzan Superannuation Fund [2023] NSWSC 769

The defendants sought to have that amount deducted from the sale proceeds of the Sunnyholt land, which the judge had found should be paid to the plaintiff K. & A. Laird (N.S.W.) Pty Ltd (“KAL”).

While KAL proposed a deduction in respect of costs of sale in the sum of $1,030 million, Aidzan and PAL sought to deduct “direct and indirect costs of sale” in the sum of $1,302 million, the difference being the costs and expenses claimed by Topp and Gleeson as liquidators of Aidzan and receivers of PAL Property Trust.

Maybe the defendants would have succeeded if the judge who’d set the standard on fees in SAKR Nominees wasn’t overseeing this case and the plaintiff – Alan Hayes as liquidator of KAL – hadn’t had costs sensei Michelle Castle in his corner.

“The Defendants rely on affidavit evidence led by Mr Topp, the liquidator appointed to Aidzan and the receiver appointed to the PAL Property Trust, in his affidavits dated 13 October 2022 and 13 February 2023,” Justice Black said. 

“They point to expenses incurred by Messrs Topp and Gleeson as liquidators of Aidzan and receivers appointed to the assets of the PAL Property Trust, comprising legal fees and disbursements of $60,432.47; receiver’s remuneration of $57,899.05; receiver’s expenses of $39,859.06; and what they describe as the “Aidzan indemnity costs” of $134,209.30.

“It is apparent from the Defendants’ submissions that the legal costs and disbursements they seek to deduct extend beyond the amounts incurred in respect of the sale of Sunnyholt Property (which they calculate as $42,400) and include other costs incurred in respect of the appointment of Messrs Topp and Gleeson as liquidators of Aidzan and receivers of the PAL Property Trust,” Justice Black observed.

“Mr Topp led no evidence of any appropriate review by him to satisfy himself as to the extent to which the costs and expenses incurred by Ashurst were reasonable, or were properly referable to the sale of the property.

“He provides no explanation of the basis on which the so-called “Aidzan indemnity costs” should be allowed as a cost of the sale of the Sunnyholt Property.

“In his affidavit dated 13 October 2022, Mr Topp set out the steps taken by the liquidators and receivers in respect of the sale of the Sunnyholt Property (paragraphs 52–66).

“He there identified certain costs which were incurred, which he described as “Sales Costs”, but his evidence does not establish that they should properly be treated as having that character, where they include items such as receiver’s remuneration and receiver’s expenses, apparently generally.

“He referred to the “Aidzan indemnity costs”, described as the costs and expenses of the Aidzan liquidators in acting as liquidators of Aidzan, but did not explain why they should be attributable to costs of the sale of the Sunnyholt Property.

“While I accept that some part of them may have satisfied that requirement, they have not sought to identify or establish that part of them that would be allowable on that basis. 

“It seems to me that the Defendants have therefore not established that the costs claimed by Messrs Topp and Gleeson have sufficient connection with the sale of the Sunnyholt Property to be treated as a deduction from the amount held on constructive trust for KAL.”

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