E LAW - MURDOCH UNIVERSITY ELECTRONIC JOURNAL OF LAW ISSN 1321-8247 Volume 6 Number 3 (September, 1999) Copyright E Law and/or authors File: christensen63.txt ftp://cleo.murdoch.edu.au/pub/elaw/issues/v6n3/christensen63.txt http://www.murdoch.edu.au/elaw/issues/v6n3/christensen63.html ________________________________________________________________________ A Receiver And Manager's Duties On Realisation Of A Corporation's Assets Lee Christensen Contents * Introduction * The law prior to the Corporate Law Reform Act * The current law * What must a receiver do? * To whom may the receiver be liable? * General considerations for receivers exercising a power of sale * Application to the court for directions * Summary * Notes Introduction 1. A receiver and manager[1] appointed pursuant to a security document has a primary duty to realise the assets charged by that debenture with a view to liquidating the debt owing to the mortgagee.[2] A receiver's power to sell the charged assets arises from the terms of the debenture pursuant to which he is appointed together with the plenary powers set out in s 420 of the Corporations Law. 2. In exercising his power of sale a receiver has duties generally to protect the interests of the mortgagee, the mortgagor and subsequent encumbrancers,[3] as well as guarantors[4] of the debt secured by the debenture. The important question which arises is what is the nature and extent of those duties. 3. A debenture will generally provide that a receiver is the agent of the mortgagor and the mortgagor will be liable to pay the receiver's costs and remuneration and will also be liable for his acts and omissions. In the absence of such a provision in the debenture, the receiver will be the agent of the mortgagee. Although a debenture will usually provide for the receiver to be the agent of the mortgagor, he may become the agent of the mortgagee if he acts on the mortgagee's instructions or at the mortgagee's direction in exercising his powers.[5] In those circumstances, the mortgagee will become liable for the acts and omissions, costs and remuneration of the receiver. 4. Although the receiver may be the agent of the mortgagor, he is not in a strict fiduciary relationship with the mortgagor because although his office has many of the hallmarks of a fiduciary, the receiver owes duties to more than one person arising from the stewardship of the assets and those persons interests may be very different.[6] This raises a conceptual problem as discussed later. 5. Regardless of whether the receiver is found to be the agent of the mortgagor, where the mortgagor is a company, he is an officer of the mortgagor for the purposes of the statutory duties set out in s 23(2) of the Corporations Law.[7] Accordingly, he owes duties to the mortgagor in the exercise of his powers to act honestly,[8] to exercise a reasonable degree of skill and care[9] and not to use his position[10] or information derived from his position[11] for his benefit or for the detriment of the mortgagor. These statutory duties have been held, in the context of directors' duties to equate to the duties of a fiduciary, which is no surprise considering that directors are fiduciaries under general law principles.[12] However, it presents a considerable expansion of the duties of a receiver who has not been considered a fiduciary under the general law.[13] The law prior to the Corporate Law Reform Act 6. Section 420A of the Corporations Law was introduced into the Corporations Law by the Corporate Law Reform Act 1992 which also amended the statutory duty of care that "officers" owed to a company. Prior to the introduction of these amendments, a receiver's duties were governed by the general law and his duties as an officer of the mortgagor company under s 232 of the Corporations Law as it was then formulated. The previous wording of s 232(4) provided that an officer of a corporation was required to exercise a "reasonable degree of care and diligence". There had been some comment made that the duty imposed by s 232, insofar as it applied to receivers may be given a restrictive meaning "since the provision requires care in the discharge of the receiver's duties, it would appear quite open to refer to the general law to determine what those duties actually are".[14] Any such doubts were expelled by the introduction of s 420A. 7. Under the general law in Australia, a receiver in the exercise of his power of sale owed a duty of good faith and a duty to use that power only for the purpose for which the power was given[15]. The courts analysed the duty of a receiver exercising a power of sale as being akin to a mortgagee exercising a power of sale. Accordingly, a receiver was not allowed to act fraudulently, dishonestly or recklessly or disregard the interests of the mortgagor.[16] He was expected to take reasonable steps to determine the value of the property and advertise the property in such a way as to highlight its actual and potential value and bring it to the notice of prospective buyers.[17] There is no need for the receiver to act reasonably or to do the mortgagor any favours.[18] 8. The benchmark case was Expo International Pty Ltd v Chant [19] in which Needham J found that while it was advisable for a receiver to make reasonable efforts to obtain the proper price for an asset, he was under no duty to obtain the true market value of that asset upon sale. In the course of his judgment, Needham J summarised the incidents of the duty as follows: "the duty to exercise his powers in good faith (including a duty not to sacrifice the mortgagor's interests recklessly); to act strictly within, and in accordance with, the conditions of his appointment; to account to the mortgagor after the mortgagee's security has been discharged, not only for the surplus assets, but also for his conduct of the receivership." 9. Insolvency practitioners took some comfort from this decision, in assuming that they were not subject to more onerous duties in the exercise of their powers, so long as they acted in good faith. As discussed below, there has been a significant change to the nature and extent of the duties of a receiver when realising a mortgagor's property, and a receiver who relies on satisfying only the test of good faith does so at his peril. 10. The approach taken by courts in Australia under the general law has been in marked contrast to the position in England[20] and New Zealand[21] where the courts have found a receiver owes a duty to exercise reasonable care in exercising his power of sale, including a duty to obtain the best price for the charged assets. While the courts in those jurisdictions were not willing to impose on a receiver any duty of care in tort, they found that a receiver was governed by duties in equity.[22] The receiver practising in Australia found himself in a precarious position not knowing whether a court which was not bound by the decision in Expo International Pty Ltd v Chant[23] may follow the English and New Zealand decisions and find him subject to a duty to obtain the best price for assets. This uncertainty was compounded by the decision in Cape v Redarb Pty Ltd (receiver and manager appointed) [24] where Higgins J found a receiver had breached his duty because he had not obtained the best price reasonably available in selling company property. Although this could be considered a stand alone decision, so could the decision in Expo International Pty Ltd v Chant and the principles it enunciated. The current law 11. The prevailing uncertainties in the law set the background to the introduction of the Corporate Law Reform Act in 1993. The perceived need for a statutory duty to be imposed on a receiver in exercising a power of sale was recognised in the Corporate Law Reform Bill 1992 - Public Exposure Draft and Explanatory Paper[25] which states at paragraph 585: 12. "It is sometimes said of receivers that they are prepared to sell property at a price less than the best obtainable, so long as it is sufficient to cover the debt of the chargeholder who appointed them." The Corporate Law Reform Act introduced s 420A of the Corporations Law which became operative on 24 June 1993. It also amended s 232(4) so that the standard of care owed by an "officer" of a company would be an objective test, which will take into account the special expertise of the officer and the particular role of that officer.[26] The relevant sections provide as follows: 13. "232(4) In the exercise of his or her powers and the discharge of his or her duties, an officer of a corporation must exercise the degree of care and diligence that a reasonable person in a like position in a corporation would exercise in the corporation's circumstances." 14. "420A.(1) In exercising a power of sale in respect of property of a corporation, a controller must take all reasonable care to sell the property for: a. if, when it is sold, it has a market value - not less than that market value; or b. otherwise - the best price that is reasonably obtainable, having regard to the circumstances existing when the property is sold. 15. (2) Nothing in subsection (1) limits the generality of anything in section 232." 16. "S 9 ..."controller", in relation to property of a corporation, means: a. a receiver, or receiver and manager, of that property; or b. anyone else who (whether or not as agent for the corporation) is in possession, or has control, of that property for the purpose of enforcing a charge." 17. Clearly, a receiver now has a statutory duty (s 420A) to obtain market value or the best price obtainable for assets which do not have a market value. The section also preserves the duties imposed on a receiver under s 232 of the Corporations Law. It would appear that a receiver's duty under s 232(4) would encompass his duty under s 420A so that a breach of the latter section would also constitute a breach of the former. 18. There have been a number of important decisions which have considered the interpretation of the duty under s 232(4), insofar as it applies to directors. Although those cases have considered the nature of a director's duty to exercise care and diligence, the general observations to the manner in which the standard will be interpreted are relevant to any "officer" within the meaning of that term in s 232. 19. In ASC v Gallagher,[27] Pidgeon J held that although the test under s 232(2) was an objective one, a director would be expected to exercise a degree of skill that would be expected of a person in the role of director with his knowledge and experience in the circumstances. Applying the rationale in that case, a receiver would be bound to exercise a degree of skill that would be expected of a receiver with his knowledge and experience. 20. Given that all receivers are required to meet certain requirements before they are able to act as receivers (compare the position of directors who are not required to have any experience as a prerequisite to appointment), they would necessarily have a minimum degree of knowledge and experience. Therefore, all receivers would be expected to meet a high standard, and those with significant experience in acting as a receiver may be required to meet an even higher standard. 21. In the course of the judgment in Daniels v Anderson[28], the majority of the Court of Appeal (Clarke, Sheller JJA, Powell JA dissenting) found that in addition to the duties owed under the statute, a director had a duty of care in tort. It is unclear whether a receiver would be found to owe a duty of care in tort, especially given the reluctance of courts in this jurisdiction, England and New Zealand to find a receiver subject to such a duty. 22. In Downsview Nominees Ltd v First City Corp Ltd Lord Templeman found that to impose a general duty of care would be "inconsistent with the right of the mortgagee and the duties which the courts applying equitable principles have imposed on the mortgagee".[29] Templeman LJ said further: "The duties imposed by equity on a mortgagee and on a receiver and manager would be quite unnecessary if there existed a general duty in negligence to take reasonable care in the exercise of powers and to take reasonable care in dealing with the assets of the mortgagor company." 23. It is not clear whether the courts in Australia will follow the English decisions such as Downsview Nominees or will find that there is a general duty of care owed by a receiver in the conduct of his office. In practice this may add little to the nature of a receiver's duties, given the interpretation which the courts have given the statutory duties which a receiver owes under s 232. However, it is important to note that Malcolm CJ in Vrisakis v ASC[30] has said that the statutory duty imposed by s 232 reflected "the general concept of negligence at common law". It could also be said that the judgments in the AWA cases[31] in effect say the same. 24. It is interesting to note that liquidators have been found to owe a duty of care at common law akin to the duty which a professional person owes when he holds himself out as possessing expertise and provides his services for reward.[32] In reaching this conclusion, the courts have found that the duty owed by a liquidator under s 232 is equivalent to the common law duty of negligence which applies to any professional person providing services for reward, and accordingly, he may be held liable as a joint tortfeasor.[33] What must a receiver do? 25. The receiver's duty to obtain market value must require that the receiver takes steps to ascertain the market value for the charged assets and it may now be necessary for a receiver to obtain valuations of all assets which he intends to sell, whereas previously a receiver acting prudently may only have procured valuations for substantial assets. This may have the effect of increasing the costs of a receivership. 26. However, obtaining a valuation of assets which are to be sold is but one step towards discharging the receiver's duties. It is not sufficient for a receiver to accept and rely on a valuation uncritically. For example, a receiver's duty will not be discharged by delegating the function of selling property to a reputable and experienced real estate agent, he must take a real interest in the conduct of the sale and critically assess any advice given by an agent as to the mode and conduct of the sale.[34] A receiver will not discharge his duty to obtain market value simply by ensuring that the property is sold at auction.[35] It may be that a different manner of sale would realise a better price for the assets. Further, if the property is sold at auction there must be sufficient advertising of the auction to the relevant market, and the auction must be conducted to ensure that the property is sold for the best price. Where the charged assets are ones which would only be saleable to a particular specialised market, it may be significantly more difficult for a receiver to discharge his duties. In American Express International Banking Corp v Hurley[36], Mann J found that a receiver who was selling specialist sound and lighting equipment which only a limited market would be interested in buying had not obtained "true market value" on the sale of the equipment. The receiver in that case had not sought expert advice from a person with relevant knowledge of the industry and he had not taken steps to advertise the equipment in publications directed to persons in the industry. The case illustrates that the nature of the property to be sold may require a receiver to take into account different considerations. To whom may the receiver be liable? 27. Under the general law a receiver owes a general duty to subsequent chargeholders, the mortgagor and guarantors to act in good faith and use his powers for the sole purpose for which he was appointed. Where a receiver's actions cause a detriment to guarantors, and the receiver has failed to act in good faith, he may be directly liable to the guarantors for damages.[37] This liability is not removed by reason of the receiver being the agent of the mortgagor.[38] However, a breach of the receiver's duties will not relieve the guarantors from their responsibilities to the mortgagee unless the receiver is found to be acting at the direction of the mortgagee.[39] 28. Section 232(8) of the Corporations Law provided that only the mortgagor could seek compensation for a breach of the duties in s 232. This subsection has now been repealed so that there is no explicit limitation within s 232 as to who may seek damages for a breach of those duties. 29. Section 598 of the Corporations Law clearly provides for "eligible applicants" to make an application to the court to seek orders against persons concerned with a corporation who breach their duties, including an order that the person pay compensation. Although the definition of "eligible applicant" is broad, and there may potentially be a number of persons who may bring an application, the redress which the court may order is limited to remedies which compensate the mortgagor corporation. The relevant sections provide as follows: s 9 ""eligible applicant", in relation to a corporation, means: a. the Commission; or b. a liquidator or provisional liquidator of the corporation; or c. an administrator of the corporation; or d. an administrator of a deed of company arrangement executed by the corporation; or e. a person authorised in writing by the Commission to make: i. applications under the Division of Part 5.9 in which the expression occurs; or ii. such an application in relation to the corporation." 30. s 598 "(2) Subject to subsection (3), where, on application by an eligible applicant, the Court is satisfied that: a. a person is guilty of fraud, negligence, default, breach of trust or breach of duty in relation to a corporation; and b. the corporation has suffered, or is likely to suffer, loss or damage as a result of the fraud, negligence, default, breach of trust or breach of duty; the Court may make such order or orders as it thinks appropriate against or in relation to the person (including either or both of the orders specified in subsection (4)) and may so make an order against or in relation to a person even though the person may have committed an offence in respect of the matter to which the order relates. (3) The Court shall not make an order against a person under subsection (2) unless the Court has given the person the opportunity: a. to give evidence; b. to call witnesses to give evidence; c. to bring other evidence in relation to the matters to which the application relates; and d. to employ, at the person's own expense, a solicitor, or a solicitor and counsel, to put to the person, or to any other witness, such questions as the Court considers just for the purpose of enabling the person to explain or qualify any answers or evidence given by the person. (4) The orders that may be made under subsection (2) against a person include: a. an order directing the person to pay money or transfer property to the corporation; and b. an order directing the person to pay to the corporation the amount of the loss or damage. (5) Nothing in this section prevents any person from instituting any other proceedings in relation to matters in respect of which an application may be made under this section." 31. Section 420A is also silent as to the persons it is intended to protect. Although it is clear that both s 232 and s 420A are clearly for the protection of mortgagors, the question arises whether guarantors and subsequent chargeholders may also take action in respect of any breach of the sections. It is interesting to note that s 420A was modelled from an equivalent provision in the Companies Act 1955 (NZ) which reads as follows: "S 345B (1) A receiver or manager of the property of a company who sells any of that property shall exercise all reasonable care to obtain the best price reasonably obtainable for the property at the time of sale. (2) The duty of a receiver and manager under sub-section (1) of this section shall be a duty owed to the company." The legislature have not included a provision in s 420A which would limit the duty to one which is owed to the mortgagor company. 32. In Love v Ledger[40], Scott J was faced with an application for an injunction brought by directors of the mortgagor who were also guarantors. In that case, the receiver intended to sell the mortgaged property by way of a "minimum bid" process, and the applicants sought an injunction to prevent him from proceeding with such a sale on the basis that it would be in breach of his duty under s 420A. Scott J found that the plaintiff in that case had standing to bring the application as he was a "person aggrieved" within the meaning of that term in s 1324. Section 1324 provides as follows: "(1) Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute: a. a contravention of this Law; b. attempting to contravene this Law; c. aiding, abetting, counselling or procuring a person to contravene this Law; d. inducing or attempting to induce, whether by threats, promises or otherwise, a person to contravene this Law; e. being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Law; or f. conspiring with others to contravene this Law; 33. the Court may, on the application of the Commission, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing. 34. (10) Where the Court has power under this section to grant an injunction restraining a person from engaging in particular conduct, or requiring a person to do a particular act or thing, the Court may, either in addition to or in substitution for the grant of the injunction, order that person to pay damages to any other person." 35. Scott J found that the applicant had not made out his claim that the receivers had not properly exercised their powers, and said as follows at p 5 of the decision: "If as the plaintiff asserts the caravan park may be sold for an amount well below its market value then the plaintiff may possibly have an action for damages against the defendants but whether or not that is so it does not entitle the plaintiff to equitable injunctive relief." 36. The decision is important as it illustrates the application of the general provisions of the Corporations Law to the operation of s 420A. It appears that a person aggrieved by the actions of a receiver could apply under s 1324 for injunctive relief to prevent a proposed exercise of the receiver's powers and may also seek damages.[41] A similar question arises in respect of s 232. It is arguable that guarantors and other persons aggrieved may be able to use the general provisions of s 1324 to obtain relief where a receiver breaches these statutory duties. 37. If a receiver is found to be subject to a general law duty of care to exercise reasonable care and skill, the categories of persons who may seek redress for a breach of that duty could be expanded considerably. The only limitations on the persons who could seek redress against a receiver for negligence would be those who satisfy the test of proximity. Although this test would be applied according to the factual circumstances in each case, receivers would be likely to owe a duty of care to mortgagors, mortgagees, guarantors and subsequent encumbrancers at the least. These are all persons whom the receiver ought clearly consider when exercising his powers. 38. Having made these observations, it should be noted that a mortgagor or guarantor of the debenture who is concerned about the sale of the property, or the timing of that sale will have the opportunity to pay out the moneys owing under the debenture and take an assignment or obtain a discharge of the debenture.[42] 39. In addition to the receiver being liable for claims made by persons under s 1324, or claims made by the mortgagor corporation directly under s 232, a receiver may be liable for civil penalties for a breach of s 232. The court may order that the receiver pay a penalty of up to $200,000 and even impose a criminal sanction. Further, a corporation may intervene in proceedings commenced by ASIC for a civil penalty order, and a court may order the receiver to pay compensation to the corporation. 40. Generally speaking, a receiver will not be able to rely on any provision in the debenture or articles of association of the mortgagor which purports to provide him with an indemnity from the mortgagor against any liability for negligence, default, breach of duty or breach of trust owed to the mortgagor.[43] It may be, however, that such a provision may provide an effective indemnity in relation to a claim made by persons other than the mortgagor. Section 1318 of the Corporations Law empowers the court to relieve a receiver who is guilty of negligence, default, breach of duty or breach of trust provided that he has acted honestly and having regard to all the circumstances he ought fairly be excused for his improper act or omission. However, the section does not provide for a receiver to be relieved from a criminal sanction. The test which the courts have applied is to ask what would reasonably be expected of a man of affairs in similar circumstances if he was dealing with his own business and using reasonable care and prudence.[44] The court will not exercise its powers under this section unless a receiver has made out a strong case, and the court may take into account whether the receiver sought legal advice,[45] consulted with members and creditors,[46] and whether he has obtained some personal benefit.[47] 41. A receiver will not be entitled to his remuneration where he has been guilty of misconduct or gross neglect,[48] dishonesty[49] or breach of his duties.[50] If a receiver's propriety is challenged, he is wise to apply to the court for directions with respect to those proceedings, otherwise the court may not allow him to recover costs if his defence of the proceedings is unsuccessful.[51] 42. Under the general law, a receiver who negligently fails to recover the amount of moneys owing to the debenture holder who appointed him will be liable to that debenture holder.[52] There is no reason why a mortgagee may not also benefit from the general provisions of the Corporations Law to make a claim for relief against a receiver appointed by him, although he has the ability to remove the receiver whom he appointed. General considerations for receivers exercising a power of sale 43. Subject to the proper discharge of his duties, a receiver is entitled to sell charged assets at the time he chooses and is not under any duty to exercise his power at a particular time which will ensure that the liability of the mortgagor and its guarantors is extinguished.[53] Under the general law, a receiver was not required to delay a sale where there was a prospect of obtaining a better price[54], or to allow the mortgagor to redeem or pay out the debt owing.[55] Having said that, a receiver could not cause a precipitate sale at an undervalue for the purpose of ensuring that the mortgagee is paid promptly.[56] In each case it will be a question of the relevant circumstances, however, some guidance may still be derived from these cases. A receiver is not required to take instructions from a mortgagor as to which particular charged assets should be sold to discharge the debt owing to the mortgagee.[57] The receiver may sell assets in the order which he sees fit and may sell the assets collectively or individually, so long as the manner in which he does so is aimed at securing the best price for those assets. Although a receiver may not be a fiduciary in the strict sense, his obligations under the Corporations Law mirror some of the obligations which a fiduciary would owe. The receiver is in a position where he is able to obtain information about assets which is not publically available, and he is able to affect the value of assets by the manner in which he maintains them and presents them for sale. He has a specific duty under sections 232(5) and (6) not to use his position or the information he obtains through his position to obtain a benefit for himself or cause detriment to the mortgagor. Therefore, although under the general law a receiver may be able to sell assets to a party with which he is related, query whether such a sale would be a breach of duty because he has used his position to obtain a benefit for himself even if he purchases the assets for full value.[58] Under the general law a receiver would not be subject to any general duty to take steps to expend moneys on assets for the purpose of improving the price he may obtain for those assets on sale.[59] However, in Burns Philp Trustee Co Ltd v Ironside Investments Pty Ltd[60] the court found that in exercising a power of sale under s 85 of the Property Law Act (Qld) a receiver selling a property on which a licensed tavern was situated would be expected to apply for a liquor licence so that he could obtain the best price reasonably obtainable for that property. 44. S 85 of the Property Law Act (Qld) is of particular significance in interpreting the duties of a receiver in that it imposes upon a mortgagee a duty to take reasonable care to ensure that the property is sold at market value, a duty similar in content to that imposed under s 420A. Therefore, a receiver in similar circumstances to those in Burns Philp would most likely be required to take the same steps. Other circumstances may dictate a similar requirement be met by receivers prior to exercising a power of sale. Having said that, it is interesting to note that the Queensland Court of Appeal have found that s 85 of the Property Law Act (Qld) does not apply to receivers and therefore that section does not present an alternative to a claim under s 420A or s 232 of the Corporations Law.[61] 45. A receiver is not precluded from selling assets to a mortgagee, and a sale will not be impeached on that ground alone.[62] However, there has been some concern expressed at whether a receiver ought be entitled to sell a property to a mortgagee because in effect such a sale would be akin to the remedy of foreclosure, however, the liability of the mortgagor and guarantors would not be discharged as they would be if foreclosure was effected. A receiver is not precluded from selling assets to parties related to the mortgagor, however, the receiver should exercise great caution in doing so as these persons have intimate knowledge of the true value of the assets of the mortgagor. Indeed they may be the very persons who have caused the value of the assets to be depressed or recorded at less than their true value. A receiver is not obliged to reveal details of the proposed sale of charged assets to the mortgagee, its directors or shareholders unless they demonstrate a bona fide intention to redeem the debenture.[63] Application to the court for directions A receiver and manager may apply by summons to the court for directions on particular issues in relation to any matters which arise in connection with the exercise of his functions or powers.[64] A court can only give directions which affect the rights of the parties which have been before it at the hearing of the summons, and for this reason all parties likely to be affected by the directions ought be served with the summons.[65] The court's power to give directions is limited and a receiver cannot call upon the court to give directions as to matters which call for the receiver to make a commercial decision.[66] 46. The fact that a receiver has obtained directions from the court and followed those directions may not operate to relieve him from liability, especially where he has not disclosed all the material facts relevant to such application.[67] Summary 47. What is certain is that the test espoused in Expo International Pty Ltd v Chant[68] is no longer the benchmark of how a prudent receiver should act. 48. Whether or not a receiver, owes a duty at common law founded in the tort of negligence remains uncertain. However, recent decisions evidence a trend towards finding directors and liquidators who are subject to the statutory duty under s 232, to also be subject to the same general law duty of care which any professional person holding themselves out as possessing expertise and offering their services for reward is subject. There does not appear to be any cogent policy reasons why the same rationale ought not be applied to receivers. 49. The effect of sections 232(4) and 420A is to impose upon a receiver a standard of care which is higher than that traditionally assumed by insolvency practitioners to be the test of liability. In assessing the liability of a receiver, the court will consider reasonableness in the context of the expertise which a receiver must have to accept his office together with his particular experience and knowledge, and for all intents and purposes this will be akin to the test of liability in negligence. 50. Although the imposition on receivers of a common law duty of care may add little to the statutory duties in s 232, by virtue of the interpretations which courts have given those statutory duties, it may present a substantial expansion of the range of persons to whom a receiver may be liable in the exercise of his office. Notes [1] In this paper, a receiver and manager will be referred to solely as a receiver, the term debenture will be used as a reference to security documents generally, the appointor will be referred to as mortgagee and the borrower will be referred to as the mortgagor. [2] RA Price Securities Ltd v Henderson [1989] [2] NZLR 257 per Somers J at 261 [3] Downsview Nominees Ltd v First City Corporation Ltd [1993] 2 WLR 86 per Templeman LJ at p 95 [4] Australia and New Zealand Banking Group Ltd v Carnegie (unreported Vic Sup Ct 16 June 1987 per Crockett J) [5] Standard Chartered Bank Ltd v Walker [1982] 1 WLR 1410 [6] A receiver's relationship has been described as "the only genuinely non-fiduciary agency": Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 2nd edn 1984 p 669. [7] The definition of officer in s 232(1) includes a receiver and manager. [8] S 232(2) Corporations Law [9] S 232(4) Corporations Law [10] S 232(6) Corporations Law [11] S 232(5) Corporations Law [12] AWA Ltd v Daniels t/as Deloitte Haskins & Sells & Ors (1992) 7 ACSR 759; 10 ACLC 933; and on appeal to the Court of Appeal in Daniels v Anderson (1995) 16ACSR 607; 13 ACLC 614 [13] Ibid n 3. [14] ALRC General Insolvency Inquiry Report No 45 (Harmer Report 1988) Vol 1 para 233. [15] Expo International Pty Ltd v Chant [1979] 2 NSWLR 820 at 832 [16] Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 [17] Ibid n 16 [18] Canberra Advance Bank v Benny (1993) 11 ACLC 148 at 153 per the Full Court of the Federal Court [19] Ibid n 15 [20] Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949 [21] Ibid n 3 [22] Ibid n 3 [23] Ibid n 15 [24] (1992) 8 ACSR 67 at 82 [25] CCH 1992 p 414 [26] The Explanatory Memorandum to the Corporate Law Reform Bill 1992 [27] (1993) 10 ACSR 14 at 53; 11 ACLC 286 [28] (1995) 16ACSR 607; 13 ACLC 614 [29] Ibid n 3 at 98 [30] (1993) 11 ACSR 162 [31] Ibid n 12 [32] Sydlow (In Liquidation) v TG Kotselas (1996) 65 FCR 234; cited with approval by Einfeld J in Magarditch v Australia & New Zealand Banking Group Limited [1999] FCA 35 (29 January 1999). [33] Ibid n 32 [34] Commercial and General Acceptance v Nixon (1981) 56 ALJR 130 at 135 [35] Ibid n 16 [36] [1985] 3 All ER 564 [37] Ibid n 4 and n 5 [38] Clyde Industries Ltd v Dittes (unreported NSW Sup Ct 5 June 1992, per Cole J) [39] Buckeridge v Mercantile Credits Ltd (1981) 56 ALJR 28 at 34 [40] (Unreported WA Sup Ct 31 October 1994 Library No. ) [41] Gracia Pty Ltd v Q C A P T Pty Ltd (1998) 16 ACLC 1134; see also Mesenberg v Cord Industrial Recruiters (1996) 19 ACSR 483; Executor Trustee Australia Ltd & anor v Deloitte Haskins Sells & ors (1996) 22 ACSR 270; Permanent Trustee Australia Ltd & anor v Perpetual Trustee Co Ltd (1995) 13 ACLC 66 [42] China and South Sea Bank Ltd v Tan [1990] 1 AC 536 at 545 per Templeman LJ [43] S 241 of the Corporations Law invalidates such provisions; see also Thacker v Hardy (1878) 4 QBD 685 at 687 [44] Re Duomatic Ltd [1969] 2 Ch 365 [45] Re Claridge's Patent Asphalte Co [1921] 1 Ch 543 [46] Re Barry and Staines Linoleum Ltd [1934] Ch 227 at 237; Re Gilt Edge Safety Glass Ltd [1940] Ch 495 at 502 [47] Re International Vending Machines Ltd [1962] NSWLR 1408 [48] White v Lady Lincoln (1803) 32 ER 395 [49] Greenwood v Harvey (1965) 83 WN (Pt 2) (NSW) 374 [50] Ibid n 49 [51] Ibid n 15 [52] Ibid n 2 [53] Westpac Banking Corporation Ltd v Kingsland (1991) 26 NSWLR 700 at 705-6 per Cole J [54] Ibid n 16 [55] Routestone Ltd v Minorities Finance Ltd; Routestone v Bird [1997] BCC 180 [56] Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VR 309 at 313 [57] Consolidated Traders Ltd (in receivership) v Downs (1981) NZCLC 95,001 [58] Silkstone and Haigh Moor Local Co v Edey [1900] 1 Ch 167 [59] Argyle Developments Pty Ltd v Australia and New Zealand Banking Group Ltd (unreported Tas Sup Ct Zeeman J 15 October 1993 p 23) [60] (1984) 2 ACLC 332 [61] Muirhead v Commonwealth Bank of Australia (1996) 125 FLR 434; 139 ALR 5 [62] Re Vartex Petroleum Industries Pty Ltd (unreported NSW Sup Ct Hodgson J 17 August 1989 [63] Gomba Holdings UK v Homan [1986] 3 All ER 94 [64] S 424 Corporations Law [65] Re Odessa Promotions Pty Ltd; Pescod v Harrison (1979) ACLC 32,103 [66] DFCT v Best & Less (Wollongong) Pty Ltd (receiver and manager appointed) (1992) 7 ACSR 245; Re Mineral Securities Australia Ltd (in Liq) [1973] 2 NSWLR 207 [67] Re TTC (SA) Pty Ltd (in liq) (formerly Tom the Cheap (SA) Pty Ltd) (1983) 7 ACLR 784; Re Sportsman's Leisure & Hobby Warehouse Pty Ltd (in liq) (unreported Qld Sup Ct 9 November 1989 per Cooper J) [68] Ibid n 15