Receivers must dip into $600k pot for levies and costs

Jirsch Sutherland duo Bradd Morelli and Trent Devine have added another page to the colourful catalogue of litigation chronicling their time as liquidators and receivers of FW Projects Pty Limited after the Federal Court last month ordered them to relinquish sums from a fund of $600,000 in “retention monies”.

The court’s decision in Morelli (liquidator), in the matter of FW Projects Pty Limited (in liq) v White Hills Pty Limited (No 2) [2024] FCA 955 follows an earlier application by the Jirsch pair for judicial advice as to the appropriate treatment of levies issued by a strata building management committee (BMC).

The levies were issued after FW Projects went into liquidation, after Morelli and Devine were appointed as receivers and after they entered into various agreements, deeds of comprise and contracts in respect of “The Freshwater” – the mixed residential and commercial development in Albert Street Freshwater on Sydney’s northern beaches that FW Projects set out to build.

Morelli and Devine received the court’s advice on July 19, 2024 when in Morelli (liquidator), in the matter of FW Projects Pty Limited (in liq) v White Hills Pty Limited [2024] FCA 789 Federal Court judge John Halley ruled that the levies in question constituted either unsecured debts of the company or debts incurred by them as receivers.

While his honour’s rulings gave Morelli and Devine clarity in respect of how to proceed in regards to the levies, it also triggered a new dispute in respect of costs given the Jirsch pair’s application had involved both a defendant and an intervener and given that the they had in the judge’s words: “advanced contentions in an adversarial manner that emphasised matters that might have led the Court to conclude that the Strata Levies should not be afforded any priority over other unsecured creditors of the Company. Those contentions were not accepted”.

In deciding on the dispute Justice Halley ordered Morelli and Devine to pay both the defendant’s and the intervener’s costs, though they were entitled to do so in such a way as to avoid prejudicing their right of indemnity.