Federal Court of Australia

Connelly v Ludlow St Hamilton Pty Ltd (Trustee), in the matter of The Ludlow St Trust [2026] FCA 1666

ORDERS

THE COURT NOTES THAT:

For the purposes of this Order:

A. Appointment Orders means the orders of Justice Beach made in Federal Court of Australia proceeding number VID288/2022 on 27 November 2024;

B. HHP6 Scheme has the meaning given to it in the Appointment Orders;

C. HHP6 Trust means the Hunter Hopkins Project 6 Trust ABN 81 902 024 343 established by deed of trust dated on or around 7 August 2019;

D. HHP7 Scheme has the meaning given to it in the Appointment Orders;

E. HHP7 Trust means the Hunter Hopkins Project 7 Trust ABN 51 898 623 807 established by deed of trust dated on or around 15 October 2019;

F. Ludlow Street Scheme has the meaning given to it in the Appointment Orders;

G. Ludlow Street Trust means the Ludlow St Trust ABN 95 125 394 251 established by deed of trust dated on or around 25 May 2018;

H. Schemes means each and all of:

(a) the HHP6 Scheme;

(b) the HHP7 Scheme; and

(c) the Ludlow Street Scheme; and

I. Trusts means each and all of:

(a) the HHP6 Trust;

(b) the HHP7 Trust; and

(c) the Ludlow Street Trust.

THE COURT ORDERS THAT:

Applicants’ remuneration

1. Pursuant to r 14.24 of the Federal Court Rules 2011 (Cth) and s 23 of the Federal Court Act 1976 (Cth), the Applicants’ remuneration as receivers and managers of the Ludlow Street Trust for the period from 27 November 2024 to 5 June 2026 inclusive be:

(a) fixed in the sum of $266,022.50 plus GST; and

(b) approved for payment out of the property of the Ludlow Street Trust.

Applicants’ retirement as receivers and managers

2. Upon payment of the amount in paragraph 1 (or such lesser amount, being available from the property of the Ludlow Street Trust), the Applicants be discharged from their appointment as receivers and managers of the Schemes and Trusts.

Costs

3. The Applicants’ costs of this application be paid from the Ludlow Street Trust on an indemnity basis.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1 This is an application by Mr Anthony Connelly, Mr Robert Smith and Ms Katherine Sozou for an assessment of their remuneration in acting as the receivers and managers of the Ludlow St Trust (Trust).  They claim the amount of $266,022.50 (plus GST) for work performed between 27 November 2024 and 5 June 2026.  For the reasons which follow, the receivers’ remuneration should be fixed in that amount.

Background

2 The receivers were appointed to the assets of a group of trusts, schemes and companies, relevantly including the Trust, on 27 November 2024, pursuant to orders of this Court in proceedings brought by the Australian Securities and Investments Commission (ASIC).  Those orders were made on the basis that the trusts and schemes were being operated as unregistered managed investment schemes in contravention of s 601ED(8) of the Corporations Act 2001 (Cth):  Australian Securities and Investments Commission v Hopkins [2024] FCA 1371.

3 During the course of their appointment, the receivers have identified that the trustee of the Trust, Ludlow St Hamilton Pty Ltd (Hamilton) was the registered proprietor of certain real property located at 11 Ludlow St, Hamilton, Queensland (Ludlow St Property).  They have also determined that there were no other assets to realise nor any ongoing matters requiring attention in relation to the other trusts, schemes and companies.  For that reason, the receivership has focussed upon the remediation and sale of the Ludlow St Property.

4 The evidence before the Court suggests that the Ludlow St Property was in a poor condition prior to the receivers’ appointment.  During their appointment, they have undertaken remediation works to put it in a marketable state, following which it was sold for $3.3 million.

5 After the sale, the receivers discharged a debt to a secured creditor, the Commonwealth Bank of Australia, in the amount of $2,561,963.50. However, two other creditors commenced proceedings in the Supreme Court of Queensland in relation to their respective interests in the Ludlow St Property.   The first, Maloney-Felmingham Pty Ltd (MF), has since discontinued its proceedings and has consented to the orders sought on this application.  Conversely, whilst the second proceedings, commenced by Best of Sorrento 1 Pty Ltd (Sorrento) on 1 December 2025, remain on foot, they appear to have been rendered otiose by Sorrento’s consent to the removal of its caveat over the Ludlow St Property. The circumstances in which it did so are not apparent, nor are the conditions on which its consent may have been given.  In any event, it appears that the Sorrento proceedings have not progressed in the 11 months since their commencement.  They also may have been improperly constituted by Sorrento’s failure to join Hamilton as the registered proprietor of the land in question.

6 In those circumstances, the receivers claim that the receivership and liquidations in which they are involved have come to an end, and that their stewardship is sufficiently complete.  They have assured the Court that any minor tasks which might arise can be attended to post-termination.

The present application

7 By this application, the receivers claim remuneration in the amount of $266,022.50.  They submit that this amount represents only their remuneration in respect of the Trust, and that they do not seek to recover remuneration from any of the other trusts or schemes to which they were appointed.  Whilst that might sound magnanimous, in reality, those other trusts and schemes are devoid of any available funds.  Rather, it is apparent that the amount claimed represents all of the funds that are available from any source to meet their claims.  That being so, it is also apparent that the investors in the scheme will not recover any of their investments.  Whilst the receivers made no mention of this at the hearing, it is an important factor in the assessment of whether the receivership has been successful.

8 Of course, in the circumstances of this case, the primary purpose of the receivership was not to secure a return for investors.  The receivers were appointed by the Court, at the suit of ASIC, to bring the unlawful schemes to an end.  In that regard, the receivership has achieved its aim.  Therefore, whilst the fact that third party investors will not receive a return is a relevant consideration, it is far from determinative.  Moreover, and in any event, it is apparent that the schemes were insolvent, in the sense that their debts far outweighed the value of their available assets.  That was not a matter of which the receivers could reasonably have been aware before undertaking the work for which they now claim remuneration.

Relevant principles

9 The principles in relation to the remuneration of receivers pursuant to r 14.24 of the Federal Court Rules 2011 (Cth) are well known.

10 The overarching concern of the Court is that only fair and reasonable remuneration should be awarded:  Australian Securities and Investments Commission v Linchpin Capital Group Ltd (No 3) (2020) 142 ACSR 193, 195 [7] (Linchpin).  In assessing whether remuneration is fair and reasonable, the Court is not required to “hypercritically assess the day by day activities or tasks carried out in the course of a complex administration over a lengthy period of time and with the benefit of hindsight”:  Park v Whyte (No 2) [2018] 2 Qd R 413, 452 [163], quoted in Linchpin 195 [7].  Whilst that is incontrovertibly true, the evidence in this case suggests that the receivership was neither complex nor carried out over a particularly long period.  In such cases, one might wonder how the Court is to assess whether the remuneration is fair and reasonable without considering, at least in a general way, the receivers’ day-to-day activities.

11 Nevertheless, the receivers rightly referred to Brereton J’s careful synthesis of the relevant principles in Re Say Enterprises Pty Ltd [2018] NSWSC 396 at [6] (Re Say). It is not necessary to restate those here, save to adopt his Honour’s observation that, generally, the Court’s objective is to award a sum or devise a formula which will reasonably and fairly compensate the receiver for the time and trouble expended in the execution of his or her duties, and that such an assessment often involves considerations of proportionality as between the remuneration claimed and the work done:  Re Say [6(2)], [6(7)].  On that latter point, the receivers rely upon the observations of the Full Court in Templeton v Australian Securities and Investments Commission (2015) 108 ACSR 545 at 553 – 554 [32], to the effect that proportionality as between the work done and the size of the relevant property or activity is an “important consideration in determining overall reasonableness”.

12 As an aside, it is apt to bear in mind that the businesses of receivers are hampered by the fact that they often have very little security of payment.  Whilst it may be that, in some cases, receivers have the benefit of a guarantee or indemnity from the entity which has appointed them, that is often not the case.  This uncertainty is generally taken into account in the fees charged by receivers, as this affects the overall profitability of their business.  Though not often articulated, that is a necessary underlying assumption.

13 Likewise, courts should also keep in mind that certain aspects of a receiver’s role may not directly lead to the augmentation of the funds in the receivership or to the successful recovery of assets.  Receivers are not disentitled to remuneration for work done merely because that work has not been able to bring about a return to any and all claimants.  Accordingly, courts should adopt a broad assessment of, inter alia, the work reasonably required, the complexity of the receivership, the value and nature of the assets, and the need to deal with secured creditors, rather than a “mechanical comparison” between remuneration and sale proceeds:  Re Forum Group of Companies Pty Ltd (in liq) (No 2) [2026] FCA 953 [49].

Assessment of the claimed remuneration

14 Applying the foregoing principles to the present case, there are a number of salient factors upon which the receivers rely.

15 Firstly, a large proportion of the receivers’ claimed remuneration relates to the work undertaken by them in respect of the sale of the Ludlow St Property.  No doubt that was the focus of the receivership, and it is to be kept in mind that a lot of improvement work was required to place the property in a marketable condition.  Otherwise, the receivers had to undertake the relevant statutory administrative tasks required in any receivership.

16 Second, the receivers contend that they have, at all times, had regard to the complexity of the receivership and the potential recovery.  In particular, Mr Connelly deposed that, on several occasions throughout the course of the receivership, he identified cheaper or alternate methods by which the receivers could carry out their tasks so as to avoid unnecessarily diminishing the fund.

17 Third, the receivers point out that the issues arising from the proceedings commenced by MF and Sorrento were addressed by negotiation and agreement without the need for further court intervention in relation to the sale.  This approach would have saved substantial costs and was, therefore, appropriate.

18 Fourth, in their written submissions, the receivers claim that they have engaged in some altruistic and magnanimous discounting and writing off of their fees.  However, as mentioned, given that it is apparent that no other funds are available, those claims are rather hollow.  Nevertheless, it is appropriate to take into account the fact that the receivers will not receive the full amount to which they might otherwise have been entitled if more funds were available.  It is also apparent that the remuneration is calculated by reference to the hourly rates set out in the receivers’ consent to act, which have not increased since 2024.

19 Fifth, the receivers rely on the fact that they have not incurred remuneration in relation to the preparation of this application.  Again, that lacks much substance in circumstances where no money remains in the receivership from which such remuneration could be paid.

20 Sixth, it can readily be accepted that the work done in this case was performed by staff at an appropriate level having regard to the nature of the task and the person’s skills, experience and charge out rate.

21 All of those submissions can be accepted and, therefore, albeit with some slight hesitation given the matters identified above concerning the manner in which aspects of the receivers’ case were presented, the claimed remuneration is fair and reasonable.

Discharge from duties

22 The receivers also seek orders discharging them from their duties.  In this case, the power to make such an order arises out of the Court’s inherent jurisdiction:  see Michael, in the matter of Scenic Hinterland Day Tours Pty Ltd (in liq) (2023) 170 ACSR 500, 521 – 523 [94] – [98] (Michael).  Ordinarily, the Court exercises its power if provided with an adequate explanation and consideration of the reasons for bringing the receivership to an end:  Michael 521 – 522 [94], citing Re Botar-Tatham Pty Ltd (2001) 52 NSWLR 680.  Here, it is appropriate to order that the receivers be discharged.  On the face of the material put before the Court, the receivership of the trusts and schemes is substantially complete.

Release from liability

23 The final matter is whether the Court should release the receivers from liability arising from their appointments.  The Court has the power to do so at general law when, relevantly, it is satisfied that the object of the receivers’ appointment has been achieved:  Re Say [34], citing Tewart v Lawson (1874) LR 18 Eq 490; Hoskins v Campbell [1969] WN 59.  However, as Dillon LJ observed in Inland Revenue Commissioners v Hoogstraten [1984] 3 WLR 933 at 944 (Hoogstraten), the power ought not be exercised without taking into account the potential claims of which the Court has notice:

… It has always been recognised that the court has power, by making an order for release and discharge, to protect its officer, whether a sequestrator or a receiver, from all liability for acts done in the course of his duties. As I have indicated earlier in this judgment, it would be wrong to exercise this power without first investigating or making provision for the investigation of claims of which the court has notice. But I do not see that the court is obliged to wait until the end of the limitation period before protecting the court's officer against a claim, if the claimant, having had ample opportunity to do so, neglects to prosecute the claim.

(See also Refund Property Fees Pty Ltd v Prime Project Development (Cairns) Pty Ltd [2015] FCA 613 [11]).

24 Importantly, inherent in those remarks is an obligation on the part of the receivers to draw all potential sources of liability to the Court’s attention.  In this case, mention was only made of the two proceedings in the Supreme Court of Queensland, brought by MF and Sorrento.  Whilst those are important, the receivers have not adduced any evidence to the effect that no other potential claims exist.  That leaves the Court unable to be satisfied that all potential sources of liability have been brought to its attention, consistently with the observations of Dillon LJ in Hoogstraten.  Against that, it is apparent that notice of this application and the relief sought in it was given to all creditors, including MF and Sorrento, and no party appeared to contest the application.

25 Nevertheless, the action commenced by Sorrento raises great concern because it involves a claimed equitable interest in the Ludlow St Property.  Whilst the caveat was removed by consent, it is uncertain on what terms or conditions that occurred.  It also appears that Sorrento may still pursue declarations as to its interest in the property notwithstanding the caveat’s removal.  Whilst it was suggested from the Bar table that the Sorrento proceedings constituted an abuse of process, no weight can be placed on that unsupported assertion.  Without any information as to the nature and status of those proceedings, the Court cannot be satisfied that a release of liability is appropriate.

26 Therefore, the receivers have failed to establish that it is appropriate to order that they be released from liability.

Disposition

27 In all these circumstances, it is appropriate to make the orders sought by the receivers, save for the release of liability.  The claimed remuneration of $266,022.50 is fair and reasonable, and the receivership has come to its natural conclusion, such that the receivers ought to be discharged from their obligations.  The receivers should have their costs of the application, paid out of the Trust on an indemnity basis.

Note

28 These are the amended and revised reasons for judgment given on 30 October 2026.  Whilst the reasons given above refine and develop those that were delivered ex tempore, the substance of what was said that day has not been changed nor has any other material change been made.

Associate:

Dated:    6 November 2026