Reported Decision : (2007) 25 ACLC 109 New South Wales Court of Appeal CITATION: Ronald John Dean-Willcocks & Anor v Nothintoohard Pty Limited (In Liquidation) & Ors [2006] NSWCA 311 HEARING DATE(S): 7 June 2006 JUDGMENT DATE: 10 November 2006 JUDGMENT OF: Spigelman CJ at 1; Beazley JA at 12; McColl JA at 118 DECISION: Appeal dismissed with costs. CATCHWORDS: EQUITY – equitable lien – out of court receivers appointed – realisation of assets – Real Property Act land – exercise of Mortgagee's power of sale – whether receiver entitled to equitable lien over fund for costs incurred in attempted realisation - EQUITY – equitable lien – priority – whether equitable lien takes priority over legal interest - EQUITY – incontrovertible benefit – whether incontrovertible benefit accepted unconscientiously - RECEIVER AND MANAGER – recovery of costs incurred in the care, preservation and realisation of assets – whether an equitable lien or charge over realisation fund where realisation effected by party other than receiver – salvage – whether costs incurred protected, preserved or enhanced the value of the property so as to provide incontrovertible benefit LEGISLATION CITED: Real Property Act 1900 (NSW) s 57(2)(b) Batten v Wedgwood Coal and Iron Company (1884) 28 Ch 317 Choudhri v Palta [1994] 1 BCLC 184; [1992] BCLC 787 Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64 Dean-Willcocks v Nothintoohard Pty Ltd [2005] NSWSC 357 Hewett v Court (1983) 149 CLR 639 Meagher, Heydon and Leeming, Meagher, Gummow & Lehane's 'Equity: Doctrines and Remedies' (2002, 4th Ed) Monks v Poynice Pty Limited (1987) 8 NSWLR 662 Moodemere Pty Limited (In liq) v Waters & Anor [1988] VR 215 Nicobar Pty Ltd v Abrokiss & Ors [2003] NSWSC 447; (2003) 48 ACSR 259 CASES CITED: O'Donovan, Company Receivers and Managers (1981) Pattison v Lockwood (unreported, FCA, 30 April 1998) Pomeroy's Equity Jurisprudence, 5th ed (Symons) (1941) Re Berkeley Applegate (Investment Consultants) Ltd; Harris v Conway [1989] Ch 32 Re Universal Distributing Co Ltd (In liq) (1933) 48 CLR 171 Shawyer v Amberday (In liq) (2001) 10 BPR 18,869; [2001] NSWSC 399 Shirlaw v Taylor (1991) 31 FCR 222 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 Weston v Carling Construction Pty Ltd (in prov liq) (2000) 175 ALR 202; [2000] NSWSC 693 Westpac Banking Corp v ITS Taxation (2004) 183 FLR 273; [2004] NSWSC 50 Young v ACN 081 162 512 (2005) ACSR 629; [2005] NSWSC 139 Ronald John Dean-Willcocks and Adam Shepard (Appellants) PARTIES: Nothintoohard Pty Limited (In Liquidation) (First Respondent) Sovereign Capital Limited (Second Respondent) Preslands Finance Pty Limited (Third Respondent) FILE NUMBER(S): CA 40392/05 COUNSEL: B Coles QC; M Stevens (Appellants) M Young (Second Respondent) SOLICITORS: Abbott Tout (Appellants) Bransgroves (Second Respondent) LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): 2182/05 LOWER COURT JUDICIAL OFFICER: Barrett J LOWER COURT DATE OF DECISION: 19 April 2005 LOWER COURT MEDIUM NEUTRAL CITATION: Dean-Willcocks v Nothintoohard Pty Ltd [2005] NSWSC 357 - 5 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40392/05 SPIGELMAN CJ BEAZLEY JA McCOLL JA 10 November 2006 RONALD JOHN DEAN-WILLCOCKS & ANOR v NOTHINTOOHARD PTY LIMITED & ORS Headnote Facts The appellants were appointed receivers and managers by the third respondent (Preslands), the mortgage debenture holder and second registered mortgagee of the first respondent's (Nothintoohard) land, over the assets and undertakings of Nothintoohard. The first registered mortgagee of the land was the second respondent (Sovereign). The receivers had been taking steps to sell the land pursuant to the Deed of Appointment, but before realisation Sovereign exercised its power of sale under the mortgage. The receivers claimed that they had an equitable lien over the land and subsequent proceeds of sale for the costs incurred in their efforts to effect realisation of the land. In the Equity Division of the Supreme Court, Barrett J held that the receivers had not established any entitlement to be paid in priority to Sovereign's legal interest. The receivers appeal against his Honour's findings. Held: On entitlement to an equitable lien (i) (Per Spigelman CJ) Where there is a conferral of a benefit or an acting upon an assumption, the issue is whether equity will intervene to prevent the legal owner from enforcing its legal right. (ii) (Per Spigelman CJ) Equity will intervene where the assertion by the legal owner of its right would be unconscientious. The result may be the extinguishment or (more frequently) some qualification of the legal right. (iii) (Per Spigelman CJ) There is no element of unconscientiousness in Sovereign asserting its legal right, and in the circumstances of this case no equitable lien arises. (iv) (Per Beazley JA) Equitable liens have been held to exist in a variety of circumstances to ensure that the costs of realisation are borne by the realised fund before any distribution to those otherwise entitled to it. Hewett v Court (1983) 149 CLR 639; Re Universal Distributing Co Ltd (In liq) (1933) 48 CLR 171; Shirlaw v Taylor (1991) 31 FCR 222; Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64; Weston v Carling Construction Pty Ltd (in prov liq) (2000) 175 ALR 202; [2000] NSWSC 693 (discussed) (v) (Per Beazley JA) Equitable liens may arise whether there is a court appointed or an out-of-court appointed person or entity to realise the assets the subject of the fund. The fact that the receivers in this case were appointed out-of-court does not deny the existence of an equitable lien. Hewett v Court (followed) (vi) (Per Beazley JA) An equitable lien arose in favour of the receivers for the costs of realisation of the land, as Sovereign had allowed the receivership to proceed when it was itself in a position to exercise its power of sale. However the lien did not constitute a charge on the fund in priority to Sovereign's legal rights where the receivers did not effect the realisation of the asset. (vii) (Per McColl JA) The conduct of the receivers did not create the fund from which they sought reimbursement, nor did the costs they incurred protect, preserve or enhance the value of the property in a way that produced incontrovertible benefit to the advantage of Sovereign. Therefore the circumstances which might give rise to an equitable lien were not present, and there is no need to consider whether an equitable lien may be asserted by a receiver appointed out of court. Dean-Willcocks and Anor v Nothintoohard Pty Ltd [2005] NSWSC 357 (followed); Nicobar Pty Ltd v Abrokiss & Ors [2003] NSWSC 447; (2003) 48 ACSR 259 (referred to) On entitlement to recovery of costs (viii) (Per Spigelman CJ) There were costs incurred by the receivers that went towards the "care and preservation" of the property and from which Sovereign received some benefit. However this case proceeded on the basis of recovering costs of "realisation" alone. (ix) (Per Beazley JA) His Honour did not err in characterising the receivers as being appointed under the charge when they were appointed under the charge and the mortgage, as the question in either case remains whether the receivers' equitable lien should take priority over Sovereign's legal interest. Westpac Banking Corp v ITS Taxation (2004) 183 FLR 273; [2004] NSWSC 50 (referred to) (x) (Per Beazley JA) A receiver may recover costs incurred in the care, preservation and realisation of the property by way of a first charge over the fund comprising the proceeds of realisation. However as there was no realisation by the receivers, and their equitable lien did not constitute a charge on the fund in priority to Sovereign's legal interest. Pattison v Lockwood (unreported, FCA, 30 April 1998); Re Universal Distributing Co; Moodemere Pty Limited (In liq) v Waters & Anor [1988] VR 215 (followed) (xi) (Per Beazley JA) There was no subsequent equity created by Sovereign by some assurance, declaration of trust or agreement such as to postpone their legal interest to the equitable interest of the receivers. Sovereign did not consent to the appointment of the receivers and thus did not cede priority. Pattison v Lockwood (distinguished) (xii) (Per Beazley JA) The principle that a receiver is entitled to be reimbursed for costs and to be paid remuneration before other persons entitled to the funds is often referred to as the principle of salvage. That term is descriptive of the result rather than an independent legal principle. Shirlaw v Taylor (discussed); Pattison v Lockwood (referred to); Re Universal Distributing Co (referred to) (xiii) (Per Beazley JA) A wider basis for recovery of costs incurred may be appropriate where an "incontrovertible benefit" has been conferred on the party that takes the benefit of the fund and where it is unconscientious for that party to keep the benefit without payment. Monks v Poynice Pty Limited (1987) 8 NSWLR 662 (followed); Young v ACN 081 162 512 (2005) ACSR 629; [2005] NSWSC 139 (xiv) (Per Beazley JA) The costs incurred by the receivers in their attempts to realise the land did not protect, preserve or enhance the value of the land such as to confer an incontrovertible benefit on Sovereign. (xv) (Per McColl JA) The conduct of the receivers did not create the fund from which they sought reimbursement, nor did the costs they incurred protect, preserve or enhance the value of the property in a way that produced incontrovertible benefit to the advantage of Sovereign. Therefore the circumstances which might give rise to the doctrine of salvage were not present. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40392/05 SPIGELMAN CJ BEAZLEY JA McCOLL JA 10 November 2006 RONALD JOHN DEAN-WILLCOCKS & ANOR v NOTHINTOOHARD PTY LIMITED & ORS Judgment 1 SPIGELMAN CJ: I gratefully adopt Beazley JA's outline of the facts and submissions. I agree with the orders proposed by her Honour. 2 Subject to one observation, I adopt her Honour's analysis of the case law. As Beazley JA suggests, when it comes to determining the basis upon which equity will intervene by way of enforcing an equitable lien, it is not helpful to talk in terms of a "principle of salvage". This is, in my opinion, more of a metaphor than a legal principle. 3 Beazley JA proceeds on the basis of determining that the receiver in the present case was entitled to an equitable lien but, in all the circumstances of the case, that lien was not entitled to priority over the legal interest of the Respondent. McColl JA finds it unnecessary to determine whether or not a receiver appointed out of court is entitled to an equitable lien. I note that the case to which McColl JA refers (Nicobar Pty Ltd v Abrokiss & Ors [2003] NSWSC 447; (2003) 48 ACSR 259) was concerned with the receiver's costs and expenses, not with costs incurred for realisation of property. 4 The same set of circumstances may be classified in equity in different ways for different purposes. It was not suggested that the Respondent in any way created the Appellant's equitable interest. There was, as Beazley JA notes, adopting the reasoning of Barrett J, no "assurance, declaration of trust or agreement". (Referring to Meagher Gummow & Lehane's Equity par 8-220.) For some purposes it would be appropriate to characterise the receiver's interests as proprietorial because it has an equitable lien over its appointor's interests, (i.e. Presland) as second mortgagee. However, an equitable interest created out of the Presland equitable interests is not entitled to priority over the interest of the Second Respondent. 5 Where, as in this case, what is involved is the conferral of a benefit or acting upon an assumption, the focus of attention is on the relationship between the receiver as such and not in any derivative capacity, and the holder of a legal interest. The issue so posed is whether equity will intervene to prevent the owner of the legal estate enforcing its legal right. 6 An equity may arise from the principle that equity intervenes when the assertion by a person of a legal right would be unconscientious. (This is a preferable term to "unconscionable conduct". See Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at [21].) Unconscientiousness could arise in this case by the combined effect of the proposition that the receiver acted upon, and incurred expenditure by reason of, an assumption in part induced by the Second Respondent, which assumption is inconsistent with the assertion of the legal right, and the proposition that benefits were conferred upon the Second Respondent. 7 Sometimes, unconscientiousness will lead to the legal right being extinguished. More frequently it leads to some qualification of the legal right, relevantly, by insisting upon compensation for the person who has incurred expenditure for the benefit of the person entitled to the right. Factual circumstances so characterised may lead to an equitable estoppel or an equitable lien or the declaration of a constructive trust or some other form of equitable relief. There is no reason why, in an appropriate case, a receiver appointed out of court is not entitled to relief of this character. 8 In the present case, the careful analysis of the facts by Beazley JA leads to the conclusion that there is no element of unconscientiousness in the Respondent insisting upon its legal right. Accordingly, in the circumstances of this case, no equitable lien arises. 9 The basic authority considered in the judgment of Beazley JA is Re Universal Distributing Company Ltd (In liq) (1933) 48 CLR 171. In that case Dixon J referred to a claim made for expenditure with respect to "the care, preservation and realisation of the property" (at p174). 10 In the present case there was expenditure capable of answering the description of "care and preservation" of the property, from which the Respondent received some benefit. I refer to the evidence that, during the period in which he was in control of the property, the receiver expended funds on changing the locks and providing security guards. However, this case proceeded upon the basis that what the Appellant was seeking was the costs of "realisation", in which all other costs had been subsumed. There was no separate claim for any amount by way of "care and preservation". 11 For these reasons, I agree with the orders of Beazley JA. 12 BEAZLEY JA: Introduction 13 On 5 July 2004 the third respondent, Preslands Finance Pty Limited (Preslands), the holder of a mortgage debenture over the assets and undertakings of the first respondent, Nothintoohard Pty Limited (Nothintoohard) appointed the appellants as receivers over those assets and undertakings pursuant to a Deed of Appointment of that date. The assets included land at Mascot. Preslands was also the second registered mortgagee of that land. Sovereign Capital Limited (Sovereign) was the first registered mortgagee of the Mascot land. Sovereign's mortgage was registered on 30 September 2003, pursuant to a Postponement Mortgage Deed of Priority, entered into with Preslands on that date. The receivers had been taking steps to sell the land by tender up until about 20 October 2004 when Sovereign exercised its power of sale under the mortgage. The land was eventually sold pursuant to the power of sale in April 2005. 14 The receivers claim that they were entitled to a lien on the Mascot land, and upon the proceeds of sale of that land, for disbursements made in the course of the receivership relating to the realisation of the Mascot land. They claim that that lien ranked, in point of security, in priority to Sovereign's first registered mortgage. 15 The receivers' claim was heard by Barrett J in the Equity Division of the Supreme Court: Dean-Willcocks v Nothintoohard Pty Ltd [2005] NSWSC 357. His Honour held that the receivers had not established any entitlement to be paid in priority, in point of security, to Sovereign's first registered mortgage. This appeal is from his Honour's Order dismissing the receivers' claim. Issues on the appeal 16 The receivers' essential point on the appeal is that, having expended money for the purposes of the realisation of the Mascot land, they became entitled to an equitable lien over the land, and subsequently over the proceeds of sale, for the costs incurred by them in the steps they took as part of their proposed realisation of the asset. It is their case that it does not matter that Sovereign exercised its power of sale and that they did not realise the land themselves. 17 The receivers contend that the existence of an equitable lien in the circumstances is established by Hewett v Court (1983) 149 CLR 639. They submit that the equitable lien constitutes a charge on the fund constituted by the proceeds of sale of the Mascot land in accordance with the principle stated by Dixon J in Re Universal Distributing Co Ltd (In liq) (1933) 48 CLR 171 at 174-175. Once in existence, the lien is not, according to the receivers, displaced by subsequently occurring events, such as the intervention of a mortgagee exercising a power of sale, as occurred here. 18 The receivers further contend that they are entitled to be paid their costs incurred whilst they had control of the sale process in accordance with the decision of Finn J in Pattison v Lockwood (unreported, FCA, 30 April 1998). They contend that Barrett J wrongly distinguished Pattison and erred in failing to find that their claim fell within the principle applied in that case. 19 The receivers also contend that although the general rule is that a legal interest (being Sovereign's registered first mortgage) will take priority over an equitable interest (the receivers' equitable lien for costs and disbursements), Sovereign's legal interest became postponed to the receivers' subsequently arising equitable interest by virtue of Sovereign's conduct (the priority issue). Alternatively, they claim that they were entitled by way of salvage to those costs (the salvage issue). 20 In the way that the argument was argued on the appeal, the receivers limited their claim to costs they incurred in relation to the proposed sale of the Mascot land. They did not claim remuneration in respect of work done as part of the attempted sale process. However, even if remuneration was in issue, the same principle would apply. 21 Sovereign submitted that for the receivers to be entitled to their claimed costs, they had to establish that any equitable lien that arose had priority, in accordance with the usual principles. Sovereign argued that the receivers' claim amounted to a contention that there was a species of equitable lien that trumped a legal interest irrespective of ordinary priority rules. It was submitted 'such' an equitable lien was unknown to the law. Sovereign submitted that Re Universal Distributing Co and Pattison v Lockwood were both applications of salvage and did not, as the receivers' submissions suggested, establish some separate and distinct basis upon which the receivers were entitled to be paid before any distribution to Sovereign pursuant to its first registered mortgage. Sovereign submitted that his Honour's findings on the priority and salvage issues were correct. Alternatively it was submitted that the receivers had to establish that such expenditure conferred an incontrovertible benefit on Sovereign such as to be 'recoverable' as salvage. 22 During the course of argument on the appeal, an issue arose as to whether, if the receivers had any claim for their costs in priority to Sovereign's legal interest, it was limited to costs incurred until 23 August 2004, when Sovereign informed the receivers that it did not accept that their claim for remuneration and expenses took priority to its secured debt. Although there was some discussion on this issue, the receivers did not fully embrace this possibility as they claim that once the lien that they assert attached it was not displaced by any subsequently occurring events. It should be said that this was effectively the basis upon which the receivers based their claim at first instance. I say 'effectively', because senior counsel for the receivers acknowledged that the claim had not been dissected so as to discriminate between costs incurred up until 23 August 2004 and those incurred afterward. Counsel for Sovereign properly informed the Court that before the trial judge the claim had been run on the basis of whether the receivers were entitled to claim their costs and, if so, questions of quantum were to be determined later. However, he submitted that no issue had been raised in the Notice of Appeal on the receivers' submissions as to an entitlement to costs up until 23 August 2004 and thus should not now be entertained. I will return to this issue later. 23 The competing contentions to which I have referred above define the issues on the appeal. Background facts 24 Preslands' solicitors, Minter Ellison, by letter dated 2 July 2004, advised Sovereign of Presland's intention to appoint receivers of Nothintoohard's assets and that it was proposed that the receivers would sell the Mascot land. Sovereign's solicitors responded on 3 July 2004 seeking confirmation once the receiver had been appointed. Confirmation was provided to Sovereign's solicitors by letter dated 5 July 2004. 25 The second appellant, in his affidavit of 30 March 2005, stated that he had been informed by Preslands' solicitors that Sovereign had consented to the receivers' appointment for the purpose of selling the Mascot land. He said that based on that assurance, the receivers had consented to their appointment. However, Sovereign's solicitor, Matthew Bransgrove, although stating that Sovereign had been aware of the appointment, denied that Sovereign's consent to the appointment had been sought, nor had it been given. 26 In my opinion, Barrett J effectively resolved this dispute in favour of Sovereign. At [18] his Honour said that, "[Sovereign] was at first generally amenable to the possibility of sale by [the receivers]". Later, at [36], he found that if there was ever any agreement to cede priority to the receivers' costs, it was an agreement that did not apply in the circumstances. Importantly, his Honour did not find that there was any consent prior to the appointment of the receivers. In my opinion, given the conflicting evidence in relation to consent to the appointment of receivers, his Honour's assessment at [18] should be taken as the extent of Sovereign's assent to the receivers acting on the sale. This assessment is consistent with the correspondence between the parties. In my opinion, the correspondence would have taken a different form if the position asserted by the receivers was correct. 27 On 8 July 2004, Sovereign's solicitors wrote to the receivers, informing them that they acted for Sovereign in relation to Sovereign's first registered mortgage over the Mascot land and advising them that Sovereign's mortgage had "expired" and that a notice pursuant to s 57(2)(b) of the Real Property Act 1900 (NSW) (the Real Property Act) had been issued. Sovereign's solicitors requested the receivers to appraise them of their "immediate intentions". On the same day, 8 July 2004, Preslands' solicitors confirmed to Sovereign's solicitors that the receivers had taken possession of the property on 5 July 2004. 28 On 12 July 2004, Preslands' solicitors advised Sovereign's solicitors they were obtaining valuations and marketing proposals with a view to the sale of the Mascot land. They also advised of Preslands' intention to discharge the first mortgage prior to the disposal of the Mascot land. Alternatively, they indicated that if Preslands decided not to discharge Sovereign's mortgage, they might seek Sovereign's consent to an assignment of the first mortgage to Preslands. 29 On 13 July 2004, the receivers informed Sovereign's solicitors that they had engaged a valuer to value the property and had requested real estate agents to prepare marketing proposals. They said that they would in due course provide a timeline in regard to the proposed sale of the property. The receivers' proposal was to sell the property by tender. 30 On 14 July 2004, Sovereign informed Preslands that it was not inclined to transfer its mortgage, and would either need to have the mortgage discharged or it would exercise its power of sale. Sovereign also indicated that it wanted a concrete timetable from the receivers to provide its investors with "comfort" that there was either security available or that the security would be enforced within an appropriate timeframe. 31 In response to Sovereign's request for a timetable, Preslands' solicitors provided a "status report" from the receivers, in which it indicated that the valuation and marketing proposals would be completed by 16 July 2004. Copies of marketing proposals were forwarded to Sovereign's solicitors by letter dated 20 July 2004. 32 By letter dated 21 July 2004, Preslands' solicitors advised Sovereign's solicitors that the costs associated with the sale of the Mascot land were anticipated to be in a sum "no less than $70,000". The solicitors further advised that Preslands was unable to meet the costs of preparing the property for sale and requested whether Sovereign would be prepared to advance funds to either Preslands or the receivers to cover the costs of preparing the property for sale, should the various professional parties, such as the valuer and property experts, not be prepared to defer their costs. Preslands' solicitors sought to encourage a favourable response to their request by pointing out that as: "(a) [Sovereign] would incur these expenses if the property was not sold by the receiver and instead [Sovereign] stepped into [Preslands'] shoes; and (b) [Sovereign] has priority over [Preslands] in any payout in this matter ", Preslands had assessed Sovereign's exposure in advancing funds as being minimal (emphasis added). 33 Sovereign was not persuaded. On 2 August 2004, its solicitors informed Preslands' solicitors that it was not in a position to advance further funds. Sovereign's solicitors advised that it was Sovereign's intention to wait for either Preslands or the receivers to sell the property. They also advised that if they were unable to do so, Sovereign would proceed to sell the property itself. 34 By letter dated 8 August 2004, Sovereign's solicitors requested whether the receivers were in a financial position to sell the property and, if so, when the marketing would commence; alternatively, if they were not in a position to sell the property, whether the receivers would yield possession. By letter dated 10 August 2004, Sovereign's solicitors pressed the receivers for a response to their previous letter, indicating that if they did not get a satisfactory response by 13 August 2004, Sovereign proposed to appoint a real estate agent and exercise its power of sale. 35 The solicitors for the receivers responded on 13 August 2004, advising that the receivers were in a financial position to sell the property and it was anticipated that a marketing campaign would shortly commence. The solicitors then added: "For the avoidance of doubt, the Receivers will in due course look to be paid their reasonable remuneration costs, fees and expenses relating to their appointment, out of the sale proceeds of the mortgaged property". 36 Sovereign's solicitors responded to that letter on 23 August 2004. They advised the receivers' solicitors of Sovereign's payout figure as at 31 August 2004 and advised them that interest was accruing at the rate of $48,750 per month. Sovereign's solicitors also indicated that Sovereign required a concrete timetable for the marketing and sale of the property and that, if that did not occur, "our client will seek possession". The letter then turned to the question of the receivers' costs, in these terms: "In relation to the receivers' costs, we note that our client is the first mortgagee and is entitled to receive all money owed under its mortgage (including the legal costs of enforcing the mortgage) out of the sale proceeds in priority to any other creditor, including the second mortgagee and its receiver." 37 Thereafter, there was correspondence in which the receivers' solicitors reassured Sovereign's solicitors that the receivers were confident that the sale could proceed expeditiously and also seeking their agreement as to the appointment of agents. Sovereign's solicitors responded on 2 September 2004, stating that Sovereign's "only concern is that its debt is recovered". 38 On 2 September 2004, Preslands' solicitors wrote to Sovereign's solicitors, enclosing a communication from CB Richard Ellis, the appointed agents on the sale of the property, which set out the proposed timeline for the sale. The letter also advised that the receivers had offered to advance funds from their overdraft facility in order to fund the disbursements relating to the sale, provided that they be reimbursed in full for those costs in addition to being paid any other remuneration to which they were entitled and reimbursed for all costs and expenses incurred during the course of the receivership. The receivers also required that they be reimbursed for any interest which accrued on the borrowing of such funds and that all remuneration and reimbursements were to be made direct from the net proceeds of sale in priority to Sovereign's interest or that of any other secured creditor. The solicitors expressed the view that they considered that the receivers were entitled to that priority as a matter of law in any event and sought confirmation that Sovereign had no objection to the proposal. 39 The next important development occurred on 23 September 2004, when Sovereign's solicitors advised Preslands' solicitors that they agreed to the marketing campaign being funded by the receiver as proposed and to the receiver being reimbursed in respect of the funds as they had requested. The letter added, however, "our client reserves its right in relation to priority of payment in the event of a shortfall on the sale of the property". 40 Thereafter, activity between the parties appears to have been pursued along separate paths. For their part, the receivers' solicitors continued to advise Sovereign's solicitors of the steps that were being undertaken by the receivers in relation to the sale and explaining the reasons for delay. There were also separate discussions directly between Sovereign and Preslands, in which Sovereign appears to have given Preslands an ultimatum in relation to the date of sale. This is apparent from a fax dated 18 October 2004 from Sovereign to Preslands in which Sovereign stated that the time that they had given Preslands to "provide us with satisfactory confirmation in respect to the agreement you have entered into for the due diligence period" had expired, with nothing having occurred and advised Preslands that it had instructed Colliers International to auction the property. On the same day, Preslands' solicitors wrote to Sovereign's solicitors, requesting that Sovereign take no further steps to sell the property until close of business on 19 October 2004. 41 On 19 October 2004, the solicitors for the receivers wrote to Sovereign's solicitors, enclosing information from the selling agents and confirming that the receivers had instructed the agents to proceed in accordance with the sale programme. The letter sought Sovereign's confirmation that it did not object to the receivers selling the property "on behalf of the first and second ranking secured creditors". Sovereign's solicitors responded by requesting copies of the valuations that had been referred to in a conversation the day before between the solicitors. 42 The next day, 20 October 2004, there was a flurry of activity amongst the solicitors. First, Sovereign's solicitors wrote to Preslands' solicitors, referring to telephone conversations of that day and advising that, as the receivers' solicitors had not forwarded the material that had been requested on 18 October 2004, and in particular, the tender documents and valuations relating to the sale of the property, Sovereign would proceed to sell the property through its agents, Colliers International. A copy of that letter was forwarded to the receivers' solicitors. 43 The receivers' solicitors responded in a lengthy letter, disputing the version of matters that had been advanced by Sovereign's solicitors. That disputation is not presently relevant. The receivers' solicitors then pointed out that it would be unhelpful and not in the interests either of Sovereign or Preslands if Sovereign took over the conduct of the property sale "at this late stage". It expressed the view that to do so would involve delay and would also raise other issues including any claim for interest that Sovereign might wish to make in respect of interest accruing on the secured debt for any period beyond which the receivers could have reasonably expected to have completed the sale. The letter also indicated that Preslands might wish to dispute any claim by Sovereign for reimbursement of the costs associated with the sale, given, presumably, that there would undoubtedly be some doubling-up of costs, should Sovereign take over the sale. The receivers' solicitors then raised the matter of central concern in these proceedings. They said: "[T]o the extent that Sovereign wishes to rely upon any of the documents prepared for and on behalf of the Receivers, we would assume that our clients will require Sovereign to firstly meet payment of all of our clients' outstanding remuneration, costs and expenses, including legal costs. Alternatively, our clients would require an appropriate irrevocable undertaking from Sovereign that it will pay to our clients all of their remuneration, costs and expenses incurred during the period of their receivership in priority to any repayment to either Sovereign or Preslands in respect of their secured debts." The letter concluded by urging that Sovereign reconsider its position and allow the receivers to proceed with the sale, noting that they expected that tenders would close on 2 December 2004. 44 There was other correspondence around the same time, in which the parties either defended their respective actions (in the case of Sovereign), or made allegations as to the inappropriateness of Sovereign's actions (in the case of Preslands) and, in particular, asserting that Sovereign's actions in taking over the sale had the effect of losing the benefit of the receivers' investigations to date. Findings of the trial judge 45 Barrett J proceeded on the basis that a receivers' reasonable remuneration costs and expenses in realising a fund out of which a secured creditor is entitled to satisfaction constitutes a charge upon a fund before it is applied in satisfaction of the secured creditor's debt. His Honour noted that such a 'charge' arose by operation of law: see Re Universal Distributing Co; Hewett v Court, and constituted an equitable lien: Hewett v Court; Shirlaw v Taylor (1991) 31 FCR 222; Weston v Carling Construction Pty Ltd (in prov liq) (2000) 175 ALR 202; [2000] NSWSC 693. Sovereign's interest was as mortgagee of a registered mortgage of land held under the Real Property Act. His Honour thus characterised the "contest" as being between Sovereign's prior legal interest and the receivers' subsequent equitable interest constituted by the lien they asserted. His Honour found against the receivers' claim and thus did not finally determine the question whether such a lien in fact arose by operation of law in the case of a receiver appointed out of court. 46 His Honour pointed out that according to established principle, the legal interest will take priority over an equitable interest unless "some special factor causes it to be postponed": see Choudhri v Palta [1994] 1 BCLC 184. Barrett J said at [15] that the legal interest will be postponed where, relevantly: "… the owner of the legal estate has himself created the subsequent equity by some assurance, declaration of trust or agreement [see Meagher, Gummow & Lehane's 'Equity: Doctrines and Remedies', (by Meagher, Heydon and Leeming), 2002, 4th Ed para 8-220]". 47 His Honour considered that the receivers' reliance upon the decision of Finn J in Pattison v Lockwood was to support their claim that Sovereign had itself created the subsequent equity by agreement or consent so as come within the above stated principle (the postponement principle), but distinguished that case on bases which I will discuss below: see [82]. As his Honour distinguished Pattison v Lockwood, he did not engage in any analysis of the principles said to emerge from that case. 48 Having distinguished Pattison v Lockwood his Honour said that it was a question of fact as to whether the receivers brought themselves within the postponement principle and concluded (at [37]) that they had failed to demonstrate that there was any factor to cause the equitable lien for their remuneration to take priority over Sovereign's first registered mortgage. 49 His Honour also rejected the receivers' claim based upon principles of "salvage". In dealing with the salvage issue, his Honour stated that there might be an alternative basis for the salvage claim based on the imposition of an equitable lien of the type referred to in Hewett v Court to ensure that a party "does not unconscientiously reap the reward of outlays" by the receivers productive of "incontrovertible benefit". His Honour found, however, at [22]-[23], that there was no incontrovertible benefit to Sovereign in the receivers' outlays. Existence of equitable lien 50 The receivers' principal claim on the appeal was that they had an equitable lien which arose in circumstances where Sovereign's preferred position, as evidenced by the correspondence, was to allow the receivers to arrange for the realisation of the Mascot land and they had done so up until 20 October. Once the lien came into existence, it was only discharged by payment of the costs incurred by the receivers in relation to the proposed sale of the Mascot land. In this sense, there was no question of competing priorities involved. The receivers' rights were 'secured' by the lien, notwithstanding the existence of a prior legal interest and notwithstanding that they had not been the effective cause of the sale. The receivers submitted that this position was established by Hewett v Court. 51 In Hewett v Court, the Court was concerned with the question whether an equitable lien arose by implication, independently of agreement, between parties in a contractual relationship. The claimed equitable lien was over an unfinished house for the purpose of securing moneys paid toward the construction of that house. 52 Gibbs CJ considered, at 645, that an equitable lien arose by operation of law "as part of a scheme of equitable adjustment of mutual rights and obligations", and was "the security for the money which is justly due". His Honour added at 646 that: "… the circumstances in which equity has considered that justice requires the recognition of the existence of a lien are not confined to one narrow category [and] the list may not be a closed one." 53 Deane J said at 664 that: "[t]he word 'lien' is used somewhat imprecisely in the phrase 'equitable lien' to describe not a negative right of retention of some legal or equitable interest but what is essentially a positive right to obtain, in certain circumstances, an order for the sale of the subject property or for actual payment from the subject fund." His Honour, noted that " an equitable lien ... arises independently of any express or implied promise to grant it ". He said at 666: "… an equitable lien is quite different in character from the equitable estate or interest which passes in anticipation of the performance of a promise for valuable consideration to make a present transfer of property by way of sale or mortgage." 54 Deane J continued his examination of the basis underlying the existence of an equitable lien. His Honour referred, at 667, to the statement in Pomeroy's Equity Jurisprudence, 5th ed (Symons) (1941), paras 166 and 1234, to the effect that: "[i]t has been said that the doctrine of equitable lien 'was introduced for the sole purpose of furnishing a ground for the specific remedies which equity confers, operating upon particular identified property, instead of the general pecuniary recoveries granted by courts of law." 55 His Honour considered that it was not possible to make a comprehensive statement of the circumstances that were either necessary or sufficient for an equitable lien to arise by implication. His Honour (at 668) then proceeded to state the circumstances that he considered sufficient for an equitable lien to arise, independently of contract, to parties in a contractual relationship. They were: "(i) that there be an actual or potential indebtedness on the part of the party who is the owner of the property to the other party arising from a payment or promise of payment either of consideration in relation to the acquisition of the property or of an expense incurred in relation to it … (ii) that that property … be specifically identified and appropriated to the performance of the contract … and (iii) that the relationship between the actual or potential indebtedness and the identified and appropriated property be such that the owner would be acting unconscientiously or unfairly if he were to dispose of the property (or, if it be appropriate, more than a particular portion thereof) to a stranger without the consent of the other party or without the actual or potential liability having been discharged …" (citations omitted) 56 In Shirlaw v Taylor the Full Court of the Federal Court at 228, referred, inter alia, to Deane J's reference in Hewett v Court to Pomeroy's Equity Jurisprudence. The Court said: "[t]he view is there expressed [in Pomeroy's Equity Jurisprudence ] (§ 1239) that, in addition to equitable liens arising from contractual dealings in property, equity may raise liens based either upon general considerations of justice or upon the principle that he who seeks the aid of equity in enforcing some claim (eg in an administration of assets) must admit the equitable rights of others directly connected with or arising out of the same subject matter … Thus, where a party has by his efforts brought into court a fund in the administration of which various parties are interested, his costs and expenses should be a first claim upon the fund … Re Universal Distributing Co Ltd (In liq) at 174-175 …" (Emphasis added) 57 I deal with Re Universal Distributing Co below. Shirlaw v Taylor, as well as Re Universal Distributing Co, were referred to by Young J (as his Honour then was) in Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64. That case involved the out-of-court appointment of an administrator and, several days later, the out-of-court appointment of receivers and managers. The administration continued for about three weeks after the appointment of the receivers and managers, at which time the administrator was appointed liquidator, pursuant to a resolution of a meeting of creditors. The administrator claimed entitlement to an indemnity at general law in respect of all reasonable expenses incurred by him in the care, preservation and realisation of the company's property, which was the subject of the bank charge. The administrator relied upon the decision of Dixon J in Re Universal Distributing Co in support of his claim. The bank accepted that the administrator had a lien in respect of debts incurred and remuneration earned prior to the appointment of the receivers and managers, but not otherwise. 58 Young J, at 70, referred to the passage of the Full Court in Shirlaw v Taylor which is set out above. His Honour then stated that "[a] good basis for the principle is provided by the decision in Re Universal Distributing Co." His Honour considered that the extent of the lien was clear and that the only difficulty was whether the potential liability to other claimants came within it. He considered that it was apparent from the authorities that it was necessary to make a distinction between the costs and expenses of realisation of the asset or fund, the general costs of the administration and the costs of the preservation of the property. His Honour continued at 71: "If something falls within the general costs of administration because its sole purpose was not to preserve the property or to realise the property, then the secured creditor takes in priority to the person whose efforts brought about the production of the fund. Thus, Dixon J said, in the Universal Distributing case, (at 175): 'I see no reason why remuneration for work done for the exclusive purpose of raising the fund should not be charged upon it'." 59 Young J concluded that, in the case before him, the administrator was entitled to an equitable lien in respect of his proper remuneration for time spent exclusively on the matter of realisation of assets. Otherwise, the administrator had no claim on the fund in dispute in this case. 60 Austin J in Weston v Carling Constructions understood the effect of Young J's decision in Commonwealth Bank v Butterell as being that in the case of an administrator, who is not a court-appointed officer, the equitable benefit would arise in circumstances where the creditors obtained an incontrovertible benefit from the administrator's work. 61 The particular circumstances referred to by Deane J in Hewett v Court, to which I have referred above, do not have any direct application to the circumstances here. As I understand the receivers' argument at this point, however, it is that there are circumstances in which an equitable lien will be imposed to ensure that as between parties entitled to the proceeds of a fund, the entitlement of one party may, as a matter of fairness or conscionablility, be secured by an equitable lien. Hewett v Court was an example of circumstances sufficient, in a given case, for an equitable lien to arise. It was said that in this case also, there were sufficient circumstances for an equitable lien to arise in favour of the receivers. 62 The authorities to which I have referred indicate that an equitable lien has been held to exist in a variety of circumstances, either to protect a person whose function it is to realise a fund for the benefit of creditors from bearing the costs of realisation, or more generally, to ensure that the costs of realisation are borne by the realised fund before any distribution to those otherwise entitled to it. 63 Thus, in Re Universal Distributing Co, the equitable lien was found to arise in favour of a liquidator over the claim of the debenture holder. In Hewett v Court, the parties were in a contractual arrangement and the court found an equitable lien in favour of the person who had paid money for an asset, over the claim made by the liquidator on behalf of the creditors. In Shirlaw v Taylor a provisional liquidator was held to have an equitable lien for expenses, that arose upon and survived the termination of the appointment. In Commonwealth Bank v Butterell, it was held that an equitable lien arose in the case of an administrator whose expenditure had resulted in an incontrovertible benefit to the company's creditors. Weston v Carling Constructions was to the same effect. 64 The authorities also indicate that the existence of an equitable lien is not confined to cases where the person appointed to realise assets is appointed by the Court. There is a considerable body of authority that an equitable lien may arise where there has been an out-of-court appointment. This is consistent with the general statement of principle found in Hewett v Court. 65 In some of these authorities, the question of the existence of the lien was very much bound up with the question whether the lien was effective to secure the payment of the costs and expenses (and sometime remuneration) that related to the realisation of the business or assets of the company concerned. I deal with that issue more fully below. It is sufficient for present purposes to indicate that, in my opinion, in circumstances where Sovereign allowed the receivership to proceed when it was itself in a position to exercise its power of sale, an equitable lien arose in favour of the receivers for the costs of realisation of the Mascot land. As I have said, however, the coming into existence of an equitable lien does not, of itself, resolve the question whether the lien thereby gave the receivers the right to the costs expended in relation to the sale of the property before the payment out of Sovereign's first registered mortgage. Lien a charge on the fund 66 The next step in the receivers' argument was that, having come into existence, the receivers' lien was a charge on the fund constituted by the proceeds of the sale of the property and that as such, it entitled the receivers to payment of the costs of realisation before the payment of any other claims on the fund. It was submitted that this was so having regard to the nature of the equitable lien that they claimed arose in this case and the principle stated by Dixon J in Re Universal Distributing Co. In particular, the receivers contended that it was established in that case that the equitable lien extended to the expenses incurred in the care, preservation and realisation of the property, although they accepted that the lien did not extend to the entire costs of the receivership. 67 In Re Universal Distributing Co, the assets of a company in compulsory liquidation were insufficient to satisfy the liability secured by the company's debentures, which charged its whole undertaking as well as its uncalled capital. The question for the Court's determination was whether the official liquidator was entitled to have his remuneration and the costs of realising the assets paid in priority to the claims of the debenture holders. Dixon J held that although the general costs and expenses of the liquidation did not take priority, such expenses as were incurred in the care, preservation and realisation of the assets subject to the security should have priority. Dixon J explained the position at 174: "If a creditor whose debt is secured over the assets of the company come in and have his rights decided in the winding up, he is entitled to be paid principal and interest out of the fund produced by the assets encumbered by his debt after the deduction of the costs, charges and expenses incidental to the realization of such assets ( In re Marine Mansions Co. (1867) L.R. 4 Eq. 601, at p. 611). The security is paramount to the general costs and expenses of the liquidation, but the expenses attendant upon the realization of the fund affected by the security must be borne by it ( In re Oriental Hotels Co.; Perry v. Oriental Hotels Co. (1871) L.R. 12 Eq. 126). The debenture-holders are creditors who have a specific right to the property for the purpose of paying their debts. But if it is realized in the winding up, a proceeding to which they are thus parties, the proceeds must bear the cost of the realization just as if they had begun a suit for its realization or had themselves realized it without suit (cf. In re Regent's Canal Ironworks Co.; Ex parte Grissell (1875) 3 Ch. D. 411, per James L.J., at p. 427; and see Batten v. Wedgwood Coal and Iron Co . (1884) 28 Ch. D. 317, per Pearson J., at p. 325)." 68 Dixon J restated the issue for the Court's determination at 174-175 in these terms: "The question in the present case is whether the liquidator can charge against the fund passing through his hands as between himself and the person to whom it is payable, so much of the remuneration fixed for work done in the winding up as is referable to the calling in and conversion of the assets producing the fund." His Honour concluded that there was no reason " why remuneration for work done for the exclusive purpose of raising the fund should not be charged upon it " (emphasis added). Although Dixon J did not use the language of 'equitable lien', it showed he accepted that the reference to 'charge' in the passage should be understood in that sense. 69 The present case is different from that which was under consideration in Re Universal Distributing Co. In Re Universal Distributing Co, the liquidator had at all times control of the sale and effected the ultimate realisation of the asset. Here, the asset the subject of the security, that is, the Mascot land, was not realised by the receivers. The question is whether the principle stated by Dixon J applies in that situation. The receivers submitted that Moodemere Pty Limited (In liq) v Waters & Anor [1988] VR 215 supported the proposition that it was not necessary for the receivers to have realised the asset themselves. 70 In Moodemere v Waters, Moodemere had executed a debenture in favour of its principal creditor. Subsequently, Moodemere was wound up and on the petition of a different creditor a liquidator was appointed by the Court. Sometime later, the debenture holder appointed receivers and managers to Moodemere. The receivers sold Moodemere's business and assets. The liquidator and the receivers were in dispute as to the proper disposition of the funds produced by the realisation of the assets. In particular, the liquidator sought to avoid the deduction of the costs and remuneration of the receivers from the realised fund. 71 Murphy J, after reviewing the authorities as to a receiver's right to payment of costs incurred in the realisation of assets, said at 221: "The emphasis in all of [the] cases is that the costs of realising assets, and creating a fund from which to satisfy a secured debt are payable out of the fund so created before the debt itself is satisfied. I think it follows that where a company charges its assets, and a default occurs so that the creditor becomes entitled in equity to the assets charged, a person, validly appointed to realise the assets so as to provide a fund to satisfy the debt, is entitled to look to the fund itself to reimburse his proper costs, charges and expenses of realisation and his just remuneration attendant on the realisation , before even the creditor is paid his secured debt out of the fund ." (Emphasis added) 72 Murphy J considered that the principle applied whether the receiver was appointed by the court or was appointed out-of-court by the debenture holders and that the entitlement to be paid was in priority to the payment of the debenture debt itself. Murphy J at 223 further pointed out that Dixon J in Re Universal Distributing Co was careful to limit the order he made as to the costs and remuneration to that "referable to the calling in and conversion of the assets producing the fund". 73 Tadgell J (with whom Kaye J agreed), in reaching the same conclusion at 229, referred to the passage in Re Universal Distributing Co set out above at [55] and concluded: "The expense properly attendant upon the realisation of the fund must be borne by it; that is to say, the portion of the proceeds of the realised fund available to the chargee can never exceed what remains after the proper expenses of its realisation have been provided for. … It follows that the chargee ranks for payment of his principal and interest after the person who is entitled to be paid out of the fund the proper expenses of its realisation. Thus, where property providing the security is realised in the winding up with the consent of the chargee , the liquidator's costs, charges and expenses of the realisation are the first charge, the encumbrances rank next and the general costs of the winding up are payable only out of the surplus, if any: Re Marine Mansions Co (1867) LR 4 Eq 601; Re Oriental Hotels Co (1871) LR 12 Eq 126; Re Regent's Canal Ironworks Co , supra, and Batten v Wedgwood Coal and Iron Co (1884) 28 Ch D 317. Where, as in this case, such property is not realised in the winding up but is realised by a receiver, the receiver is entitled, subject always to the terms of his appointment, express or implied, to resort to the proceeds of realisation of the chargeable fund for the costs and expenses of realisation, including his proper remuneration … But, whether realisation is achieved by the intervention of a liquidator or a receiver appointed out of Court or by suit or otherwise, the expense attendant on the realisation is thrown upon the fund being realised, and is ultimately extracted from the proceeds of its realisation in priority to the rights of the chargee as creditor." (Emphasis added) 74 The receivers relied on the first paragraph in this passage as being the statement of the general principle according to which they were entitled to the expenses they incurred up until Sovereign took over the realisation of the Mascot land in exercise of its power of sale. Senior counsel for the receivers also submitted that it was apparent from the emphasised portion in the second paragraph of passage set out above that the consent of the chargee was a relevant consideration in determining that the costs and expenses of the realisation constituted a first charge upon the fund. Here, it was said, Sovereign consented to the appointment of the receivers and to their taking steps to realise the Mascot property. I have already indicated, however, my view that Sovereign did not consent as such to the appointment of the receivers or with their realising the Mascot land. At the most, to use Barrett J's phrase at [18], it was "amenable to the possibility of sale by the [receivers]". The determination of the case should be approached on that basis, although, if the principle stated in Re Universal Distributing Co and Moodemere otherwise applies, such standing may by itself be sufficient. 75 Senior counsel further submitted that it was apparent from the following passage in Tadgell J's judgment that it was not necessary that the receiver bring the sale to fruition. The passage relied on was in these terms (at 229): "Both a receiver appointed by the Court and (subject to the terms of his appointment) a receiver appointed out of Court have a right to resort for their proper out-of-pocket expenses and remuneration to the proceeds of realisation of the fund that they are required to realise. In either case, it seems, the right may be characterised as a lien on the relevant fund; and it is limited by reference to the interest in the fund that is enjoyed by the beneficiary or beneficiaries for whom the realisation is made or attempted ." (Emphasis added) 76 However, Tadgell J added at 229-230, that the extent of the lien may vary depending upon whether a receiver was acting for the benefit of all those with an interest in the fund, as in the case of a court-appointed receiver, or was acting in a more limited capacity for the benefit of an individual creditor who had appointed him. His Honour explained that: "the limitation is expressed not in terms of the quantum of the individual's debt but in terms of his interest in the fund that affords the security for the debt". 77 His Honour concluded at 230: "The position is that, as between the chargee and the person realising the fund, be he liquidator or receiver, the chargee is entitled to resort only to the net proceeds of realisation." 78 Although there are some isolated statements in Tadgell J's judgment that support the receivers' claim, it is apparent from the last cited passage that his Honour's consideration was directed to the entitlement of the person realising the fund to be paid the costs and expenses of the realisation prior to the payment of debts otherwise charged upon the fund. There was no explanation by his Honour of the relevance of his comment as to attempted realisation. The comment does not appear to be relevant to any matter in issue in the proceedings. In the case under consideration here, there was no realisation by the persons claiming the lien. Accordingly, if what was said by Tadgell J in respect of an attempted realisation of assets is to be applied here, some basis in principle will have to be found for it. I will return to this below. 79 Senior counsel for the receivers accepted that, subject to the single reference in Moodemere, cases where it was held the lien attached in the case of an attempted realisation were not readily found in the authorities. He referred however to Batten v Wedgwood Coal and Iron Company (1884) 28 Ch 317, to which Dixon J had referred in Re Universal Distributing as providing some support for the proposition. 80 In Batten v Wedgwood, a receiver and manager was appointed during the course of proceedings that had been instituted by a debenture holder on behalf of himself and other debenture holders against, inter alia, a colliery company and the trustees of a deed to whom the leasehold of the collieries had been assigned to secure payment of the debentures, to enforce the debenture holders' security. The receiver and manager operated the collieries for some years at a loss. There were two attempts to sell the collieries by the receiver – the first by way of public auction under the direction of the Court and the second by way of private treaty with no success. The property was eventually sold by the plaintiff, being one of the debenture holders who had taken over the proceedings from the original debenture holder, who paid the sale proceeds into court. 81 The fund realised on sale was insufficient to pay out the debenture holders. The plaintiff claimed for the costs of realisation in priority to all other claims. Pearson J observed that the person who had realised the fund and brought the proceeds under the control of the court, had constituted the fund available for distribution to those entitled. His Honour held (at 325), therefore, that those cost must be paid in priority to all other claims including the claims of the receiver. A question then arose as to the costs of the abortive sales. It had been argued that those attempts did not produce the fund. It was said that the principle was that the person who had actually realised the fund for distribution was to have his costs of producing it. Other costs did not fall within the principle. Upon application for the inclusion of costs incurred in respect of the attempted sales, Pearson J made an ex tempore observation that: "… the abortive sale appears … to have been one step towards the realisation of the property; I cannot distinguish the costs of it from the other costs of realisation." 82 That statement was made having regard to the facts in that case. The receivers said the same applied here. They argued that the process of realisation was a continuous one, that included a series of individual steps, such as obtaining valuations, appointing agents for sale and the like, all of which were reasonable precursors to the actual sale. They submitted that the entitlement to be paid such costs taken as part of the sale process in which they were engaged should not be dependent upon whether those steps were taken by the person who actually effected the final step in the realisation process. They submitted that this was further supported by the decision in Shirlaw v Taylor, where it was held that the lien survives the termination of the lien claimant's appointment. Pattison v Lockwood 83 The receivers' argument next dealt with the decision of Finn J in Pattison v Lockwood. In their written submissions, the receivers submitted, as they had before Barrett J, that Pattison v Lockwood was relevant to what I have described above as the postponement issue – that is, that as a matter of ordinary principle a legal interest will take priority over an equitable interest, except where the owner of the legal estate has himself created the subsequent equity by some assurance or agreement. I deal with that principle separately, having regard to Sovereign's principal response to the receivers' claim. 84 Although the facts are somewhat lengthy, an appreciation of them is necessary to be able to understand whether the principles applied in that case have any application here. Mr Pattison had been appointed on 7 March 1997 as a receiver and manager of Quicknit Pty Limited (Quicknit), which had executed a debenture in favour of Sumikin charged over the assets and undertaking of Quicknit. The charge was a registered charge, but ranked in priority behind a first debenture which, as at the date of the appointment of the receiver, was held by Standby Force. The effect of Pattison's appointment was that the charge held by Standby Force became fixed, by virtue of the crystallisation provisions in the Deed of Debenture. Pattison acted as receiver and manager until 11 August 1997 when Standby Force appointed its own receiver and manager, Mr Lockwood, of Quicknit's assets and undertaking. 85 At the time of his appointment, there had been discussions between Pattison and Standby Force's principals. On 13 March 1997, the solicitors for Standby Force wrote to Pattison, advising that Standby Force would consider consenting to Pattison's proposal for the continuing conduct of Quicknit's business and would not appoint its own receiver, subject to a number of terms and conditions including that Standby Force's debt would be collected from the assets of Quicknit and paid before any distribution to Sumikin; that it be given an interim payment of $50,000; and, that Pattison's charges would be calculated "at a reasonably agreed level". 86 Pattison responded, requesting confirmation that his appointment as receiver and manager was recognised as valid, or, alternatively, any issues as to his appointment be raised. Pattison also indicated that it was expected that there should be no concern as to the costs charged on the assumption that Standby Force would receive its money in full. Standby Force replied that it accepted the validity of Pattison's appointment as receiver and manager for the purposes of entering into an agreement with Sumikin for conducting Quicknit's business. Pattison then forwarded the sum of $50,000 to Standby Force stating that, so far as he was concerned, the payment "finalised the arrangement between Standby Force and me". 87 Later, on 28 May 1997, Pattison provided Standby Force with a report of his administration in which he had provided for the payment of his costs, before payment of Standby Force's debt. The report also provided estimates of the sale of Quicknit's business as a going concern, as compared to a forced sale. On either basis, there was a projected surplus available to pay part, at least, of Sumikin's debt (after payment of Standby Force's debt in full). Pattison proposed in the report that the business be immediately advertised for sale as a going concern or, at worst, for asset value on an "in situ basis". He sought Standby Force's consent to the sale as the first charge holder. 88 By 8 July 1997, Quicknit's financial position had deteriorated and Pattison recommended a sale as a going concern. A meeting was held between the parties on 31 July 1997, in which options were canvassed to secure a resolution of the issues that had arisen as a result of Quicknit's deteriorating financial position. At that meeting, Standby Force indicated that, if a resolution was not obtained that day, it would appoint its own receiver. Negotiations continued until 11 August 1997, when Standby Force appointed Lockwood. 89 On 12 August 1997, Pattison wrote to Lockwood, advising Lockwood that he was exercising a lien over Quicknit's assets to pay the liabilities incurred by him whilst acting as receiver and manager. Pattison contended that Standby Force had accepted the validity of his appointment as receiver and manager and had also accepted his entitlement to charge his costs in accordance with the debenture charge that Quicknit had executed in favour of Sumikin. Lockwood refuted these claims. Pattison thus brought an application claiming a lien for his costs. The matter came before Finn J in the Federal Court. 90 Finn J identified the "central question" before him as being (BC 9801675 at 2): "… whether the applicant … Pattison, had, as receiver and manager of … Quicknit, a lien or charge over its assets for his remuneration, costs and expenses, that had priority over a debenture held by … Standby Force." 91 The application proceeded before his Honour on the basis that Pattison had a right to be paid by Quicknit for costs, expenses and remuneration, and that right was secured by a lien. The question was whether that lien gave Pattison a right to be paid in priority to Standby Force's right to be paid out of Quicknit's assets. Pattison claimed priority, inter alia on the basis that he had incurred expenses and fees in the care and preservation of Quicknit's property. Reliance was placed on the principles stated in Re Universal referred to above. 92 Finn J upheld Pattison's claim. He said (BC 9801675 at 15-17): "… the priority question to be answered is a narrow, and in my view relatively straight forward, one. On Mr Pattison's appointment … Standby Force could have appointed its own receiver. The effect of this appointment would have been to entitle Standby Force's appointee to exercise his powers and discharge his duties without interference from Mr Pattison … Standby Force did not make its own appointment … Standby Force questioned Mr Pattison's appointment in its letter of 13 March but its attentions were directed to the question whether it would consider consenting to Mr Pattison's "proposal for the continuing conduct of [Quicknit's] business" rather than appointing its own receiver. The letter of that date stipulated the conditions of its consent. I emphasise this. Standby Force was not in my view making what properly should be described as contractual offers. It was indicating the conditions subject to which it would, in effect, make an election - an election which would allow Mr Pattison to conduct the company's business … with the object of paying out both Standby Force … and Sumikin …, but which precluded him from selling any substantial asset without Standby Force's consent ... … What is not open to question is that from 13 March 1997 until it made its own appointment of Mr Lockwood, Standby Force consented to Mr Pattison's conduct of Quicknit's business and conduct for the purposes of achieving repayment first of Standby Force's debt and then, at least partially, of Sumikin's. Standby Force's own conduct in demanding and accepting the $50,000 payment sometime in April, its later receipt of reports, its participation in negotiations and its lack of further objection to Mr Pattison's administration where objection otherwise properly would be expected, lead inevitably to the above conclusion. Indeed the evidence suggests the inference, which I am prepared to draw, that Standby Force was prepared to consent to an administration by Mr Pattison because it was prepared to see whether, subject to the conditions it imposed, this could result in its being paid. The risk that such would not occur was Standby Force's … The critical question is the effect that should in the circumstances be given this "election". For my own part I can see no reason why the situation that then obtained is not properly to be characterised as analogous to that considered by Dixon J In re Universal Distribution Co Ltd (In Liquidation), above, where a debenture holder's right to be paid out of the assets subject to the debenture was deferred to the liquidator's right to remuneration to the extent that the liquidator expended time and service in getting in such property, the debenture holder not acting independently to realise its security but leaving it to the liquidator … While in the present case there was no fund produced from which payment was to be made - the consent given was to have the business continue to trade for the purpose of paying its debts - I do not regard this as an operative difference. I would add in passing that I reject the respondents' submission that the existence of a fund is a prerequisite for the principle of In re Universal Distributing Co coming into play. What is necessary is that there is property that properly can be subjected to the charge for remuneration, costs and expenses. The actions taken by Mr Pattison were in the first instance for Standby Force's benefit and only then for Sumikin's. Whether or not those actions proved fruitful is another matter altogether. What is important is that when they were taken Mr Pattison was, in light of the consent given, acting as a stand-in for the receiver and manager Standby Force chose not to appoint. In these circumstances his costs, expenses and remuneration for so acting should be paid out of Quicknit's assets in priority to the right to be paid out of those same assets enjoyed by Standby Force." (Emphasis added) Does Pattison v Lockwood apply here? 93 As I have already indicated, Barrett J distinguished Pattison from the present case, on two bases. The first was that this case involved a legal mortgage, whereas Pattison involved two competing charges. It was said this was not a relevant difference because statutory charges have been held to be akin to registered mortgages under the Real Property Act: see Westpac Banking Corp v ITS Taxation (2004) 183 FLR 273 at 279; [2004] NSWSC 50 at [23]. In this case, it was said that the contest was in fact between two registered mortgages. The receivers point out that they were appointed by Preslands under both a registered charge and a registered second mortgage over the Mascot property. This is correct. Clause 2.1 of the Deed provided that in exercise of the powers given to Preslands under the Real Property Act mortgage and under the charge, Preslands appointed the receivers to be receiver of the "mortgaged property and the charged property". It was said that his Honour had erred, therefore, in characterising the contest as being between receivers appointed out of court by the holder of a mortgage debenture over the assets and undertaking of Nothintoohard and the holder of the registered first mortgage of land: see judgment at [1]. 94 Whilst it appears that his Honour did overlook that the receivers were appointed under both the mortgage and the charge, the error is not one which has any relevance to the issue on the appeal. The existence or otherwise of the equitable lien is a right distinct from the interests of Preslands as the debenture holder or as a mortgagee. The question on the appeal is not whether Preslands' interest has priority over Sovereign's. Rather, it is whether, given the receivers' equitable lien for the payment of their costs, those costs should be paid before Sovereign's debt under its registered mortgage. That is the same question regardless of whether the receiver's appointment was under a second registered mortgage, a debenture charge, or both. 95 The second basis upon which Barrett J distinguished this case from Pattison was that Pattison had involved a business to be maintained, whereas in this case, there was no business, but rather, the interest was in the preservation of the Mascot land and, ultimately, its sale. The receivers contend that this difference has little relevance to the point of principle. They submitted that the fact of running a business is relevant only to the extent (by which I understand the submission to mean quantum) of the lien or possibly to some separate basis for the enlivening of the lien. In this case, it was submitted that those matters made no difference as the receivers were not making a claim for the costs of running a business which might have exposed them to third party liabilities. The receivers further contend that it was necessary to look at the matter conceptually in the sense that in the case of a company which was not trading and only had assets which were the subject matter with which the receiver had to deal, then, in effect, its 'business' or 'commercial activity' was the preservation of the asset for the purpose of its ultimate realisation. The preservation of the asset might involve physically securing the property, obtaining insurance and the like, in respect of which expenses were incurred. 96 It followed, on the receivers' submission, that this case, in substance, was no different from Pattison and that the principle stated in Pattison directly applied so as to entitle the receivers to a lien for their costs incurred relating to the realisation of the property, including costs of the preservation of the property of the type referred to above, up until 20 October 2004. 97 Interestingly, indeed, it could be said curiously, this point of differentiation was the reverse of what Finn J had found not relevant. In Pattison there was no fund – but a business. His Honour found the existence of a fund was not necessary for the principle in Re Universal Distributing Co to apply. If that is correct, then the existence of a fund or the absence of a business cannot be a relevant difference. 98 I would therefore agree with the receivers' submission that this second point of difference is not of any particular relevance. However, it must be said that the facts here are not as strong as those in Pattison, if the case is otherwise said to apply on the facts. There was no consent to the appointment of receivers; there were no terms of consent to the receivers proceeding to sell, although Sovereign did inform the receivers they proposed to wait for Preslands or the receivers to sell the Mascot land, but if they were unable to do so, Sovereign would do so itself (see letter of 2 August 2004: [22] above). However, that communication was in response to Preslands indicating to Sovereign that if Sovereign agreed to advance funds to the receivers to allow the sale to proceed, Sovereign's exposure was likely to be minimal. That must be taken as an indication from Preslands that the anticipated sale proceeds would be sufficient to cover costs of sale as well as Sovereign's mortgage debt. Thereafter, Sovereign made it clear that if the receivers or Preslands did not proceed with the sale, it would. For my part, this exchange of correspondence would not be sufficient to indicate that Sovereign had made an election in the sense discussed in Pattison. However, for reasons to which I will come, it may not matter whether or not Sovereign's conduct amounted to an election of the type found by Finn J. 99 That leads immediately to the question of what is the principle in Pattison. Sovereign submits that the receivers' argument that they are entitled to their costs by the application of the statements made in Re Universal Distributing Co and Pattison is misconceived, as these cases were simply applications of the principle of salvage. It is suitable to now turn to that doctrine, which was conveniently identified for present purposes in Shirlaw v Taylor. 100 It will be recalled that Shirlaw v Taylor involved a claim by a court-appointed provisional liquidator and the Full Court of the Federal Court examined the circumstances in which an equitable lien had been held to arise. The Court reasoned, by analogy with the equitable lien held by a court-appointed receiver, that a court-appointed provisional liquidator likewise had a lien. The Court continued at 230: "In addition to the anxiety of the court to protect the position of its officer, in particular, lest there be in the future an absence of persons willing to take such appointments, the claims of the officer under a court-appointed administration may be seen as in the nature of "salvage". The principle is that those taking the benefit of the administration should not escape bearing the burden of the proper cost of it: see In the Matter of Tharp (1852) 2 Sm & Giff 578; 65 ER 533 and Re Berkeley Applegate (Investment Consultants) Ltd (In liq) ; Harris v Conway [1989] Ch 32 at 51. In the latter decision, it was held (at 50-51) that there was: '... a general principle that where a person seeks to enforce a claim to an equitable interest in property, the court has a discretion to require as a condition of giving effect to that equitable interest that an allowance be made for costs incurred and for skill and labour expended in connection with the administration of the property. It is a discretion which will be sparingly exercised; but factors which will operate in favour of its being exercised include the fact that, if the work had not been done by the person to whom the allowance is sought to be made, it would have had to be done either by the person entitled to the equitable interest (as in Re Marine Mansions Co (1867) LR 4 Eq 601 and similar cases) or by a receiver appointed by the court whose fees would have been borne by the trust property (as in Scott v Nesbitt (1808) 14 Ves Jun 438); and the fact that the work has been of substantial benefit to the trust property and to the persons interested in it in equity (as in Phipps v Boardman [1964] 1 WLR 993; [1964] 2 All ER 187).' Similar reasoning supports what was said by Dixon J in Re Universal Distributing Co Ltd (In liq) (supra) as to the costs and expenses of one who has by his efforts brought into court a fund for administration. This must be so particularly where the administration has been conducted by an officer appointed by the court for that purpose." (Emphasis added) The Court also referred to Re Berkeley Applegate (Investment Consultants) Ltd ; Harris v Conway [1989] Ch 32 at 50-51. 101 It is apparent, in my opinion, from this discussion that the principle being discussed in Re Universal Distributing Co was the principle of salvage. In that regard, it must be recognised that 'salvage' is merely a convenient expression to describe the basis upon which a receiver is entitled to be reimbursed for costs and to be paid remuneration before other persons entitled to the funds. However, I will continue to use the term 'salvage' for ease of reference. If I am correct in this, that is that Re Universal Distributing Co was an application of salvage, then Pattison was likewise an application of that principle, either by analogy or extension of the principle. The difference or extension was that in Pattison, no fund had been realised – but there were assets to which the charge or lien could attach. Finn J held that was sufficient. 102 However, Barrett J at [21] considered that 'salvage' as discussed in the authorities arose in circumstances where equitable interests were involved. In this case, Sovereign was asserting its right as legal owner of the property. His Honour considered that the equitable principle of salvage did not apply. However, his Honour considered that a wider principle might apply to "protect" the costs of the receivers. He said at [22]: "But there may be a wider basis for the plaintiffs' 'salvage' claim, namely, that it is necessary to impose an equitable lien, as in Hewett v Court … to ensure that the second defendant, in relying upon its rights at law to sell the property as a means of obtaining satisfaction of moneys owing to others, does not unconscientiously reap the reward of outlays by the plaintiff productive of 'incontrovertible benefit' to the property and therefore to the second defendant as the holder of a legal interest in it. Such an approach – characterised as an aspect of the law of restitution – has been recognised in somewhat analogous circumstances: see, for example, Monks v Poynice Pty Ltd (1987) 11 ACLR 637; Young v ACN 081 162 512 Pty Ltd [2005] NSWSC 139. Such a 'salvage' claim, if properly available as a matter of principle, would be an example of the intervention of equity to prevent unconscientious reliance on common law rights and would operate as a qualification upon such rights." 103 In Monks v Poynice Pty Limited (1987) 8 NSWLR 662, the third defendant had purportedly been appointed as receiver and manager of a company. As it turned out, the appointment was invalid. Notwithstanding that, the third defendant sought his reasonable remuneration and reimbursement of costs and charges in acting as manager. Young J (as his Honour then was) considered that having regard to the invalidity of the appointment, the only basis upon which the claims of the third defendant could be satisfied was under the law of restitution. His Honour at 664 analysed the circumstances where, under the law of restitution, a person would be liable to pay a reasonable sum for services provided to it. Those circumstances included a class of case where the service conferred "incontrovertible benefit on [a party] and it would be unconscionable for [that] party to keep the benefit of the service without paying a reasonable sum therefore". His Honour then referred to the principle as stated in Company Receivers and Managers, Law Book Co, 1981 at 165, where Professor O'Donovan stated: "The legal basis of this principle lies not simply in the acceptance of the services … but rather in the incontrovertible benefit the company derived from the [services]." 104 Monks v Poynice was applied by Gzell J in Young v ACN 081 162 512 (2005) ACSR 629; [2005] NSWSC 139. 105 Shirlaw v Taylor was referred to by Bryson J (as his Honour then was) in Shawyer v Amberday (In liq) (2001) 10 BPR 18,869; [2001] NSWSC 399. Bryson J at [15] observed that in Shirlaw v Taylor the Full Court of the Federal Court referred to another ground upon which an officer under a court-appointed administration could be protected in the nature of salvage, on the basis that those taking the benefit of the administration should not escape bearing the burden of the proper cost of it. His Honour concluded that in the case before him, the salvage principle did not apply to the conflicting claims because although the receiver had a lien over the mortgagor's property for his remuneration and costs, the mortgage, which although created earlier in time, was unregistered and was otherwise imperfectly constituted, such that it constituted a mere equity and ranked behind the receiver's lien. In that case, the matter was determined on principles of priority alone. 106 Counsel for Sovereign relied upon Shawyer v Amberday as demonstrating that questions of priorities and salvage were closely linked – in the sense that a claim such as that made by the receivers was either governed by priority principles, including the principles that governed the displacement of a legal interest, or had to establish that salvage applied. 107 It was submitted that this was apparent, not only from Shawyer, but also Choudhri v Palta [1994] 1 BCLC 184; [1992] BCLC 787; Westpac Banking Co v ITS. In the latter case, Austin J, having stated at [23] that the priority of the respective claims to the fund by the receivers and the chargeholders was to be determined in accordance with the principle concerning priority (in that case) of equitable interests, continued at [27]: "Where, however, one of the claimants to priority is a court-appointed receiver seeking to recover remuneration and costs, there are some special factors in the equitable calculus. This is a case (unlike Shawyer : see Bryson J's observation at [15]) where the principle of salvage applies. In the words of the Full Federal Court in Shirlaw , those taking the benefit of the receiver's administration should not escape bearing the burden of the proper cost of it." 108 In my opinion, the authorities support Sovereign's submission to which I have just referred, namely that, in an appropriate case, a receiver appointed by or out of court may recover costs and, if applicable, be paid remuneration, for undertaking work and/or the management of a fund, a business or property. Such entitlement will depend upon the usual principles of priority, whether such priority will be postponed by the conduct of other claimants with a priority interest, or in circumstances where the Court will recognise a form of salvage claim, including the extended nature identified by Barrett J and recognised in cases such as Monks v Poynice. 109 Barrett J held at [23], however, and without himself coming to any firm conclusion whether such a principle was available, that it would not avail the receivers in this case because he was satisfied that none of the moneys expended by the receivers in relation to the sale of the property could: "… be said to have protected or preserved the property or enhanced its value in a way that produced incontrovertible benefit that ultimately enured to the advantage of [Sovereign] and the sale [Sovereign] effected." 110 In this regard, there was uncontroverted evidence from Steven Hindes, Sovereign's solicitor, who had had carriage of the matter since 1 November 2004 and was acquainted with all aspects of Sovereign's exercise of its power of sale over the Mascot property. Mr Hindes referred to the history of the matter including the correspondence between the parties to which I have referred in relation to the marketing of the property by the receivers. He then gave evidence that Sovereign appointed Colliers International as selling agent for the Mascot property on 26 October 2004. The property was eventually sold, post-auction, by contract of sale dated 24 December 2004, for a sale price of $4m. 111 Mr Hindes further referred to each of the steps undertaken by the receivers in relation to the proposed sale of the property by them and gave evidence that none of those steps was of any benefit in achieving the sale of the Mascot property. In particular, he gave evidence that the receivers' actions in engaging the agent and in having solicitors prepare a contract for the sale of land was of no benefit to Sovereign in its exercise of its power of sale. Sovereign's solicitors prepared a fresh contract for sale of the land and Mr Hindes also gave evidence that the agents appointed by the receivers made comments to potential buyers during the course of the marketing campaign that were liable to adversely affect the campaign. Mr Hindes acknowledged that a copy of the valuations had been provided to him on 11 November 2004, but it was said that this valuation was not given to Colliers and was provided too late in the selling process to be of any benefit. Mr Hindes' evidence concluded with the statement that, in his view, none of the work carried out by the receivers in any way assisted Sovereign in exercising its power of sale, nor did it save Sovereign any costs in the sale process. 112 Barrett J did not refer to this evidence. Rather, he referred directly to the evidence of the second appellant, in which he itemised the work that was carried out by or on behalf of the receivers in the course of undertaking the proposed sale. His Honour found that the expenditures incurred "were directed simply to putting the plaintiffs in a position where they might sell – which, of course in the long run they did not do". This finding is not challenged. More importantly however, the evidence of Mr Hindes was not challenged. In those circumstances, I am of the opinion that his Honour's conclusion was correct. This conclusion also disposes of any claim in respect of costs up until 23 August 2004: see [11] above. Was there any agreement or consent to cede priority? 113 It will be remembered that Barrett J considered (at [36]) that the only agreement that might be found in the correspondence between the parties relevant to the priority question was that contained in Preslands' solicitor's letter of 2 September 2004 and Sovereign's solicitor's reply of 23 September 2004: see [27] and [28] above. However, by its letter of 23 September 2004, Sovereign had agreed to two only of the three proposals in the receivers' letter of 2 September 2004. His Honour considered that, on one view therefore, there had been no agreement at all. However, even if there had been an agreement, his Honour considered that it was "at best, an agreement as to disposition of, and recoupment out of, the proceeds of the sale by the [receivers] that was then in contemplation". His Honour found that as the receivers had not sold the Mascot land, then, even had there been an agreement affecting the priority rights to the proceeds of sale, the agreement did not operate in the circumstances that transpired. Those circumstances were that Sovereign had itself undertaken the sale without waiting for the sale to be brought to fruition by the receivers. 114 The receivers, in their written submissions, submitted that Sovereign had made a number of assurances to the receivers in respect of the receivers' remuneration and costs. However, that argument proceeded on the basis that it was sufficient for the purposes of this principle for the holder of the legal interest to make some non-contractual statement or non-binding assurance or expression of comfort. That is clearly not the case. The principle is that the legal interest will be postponed to a later equitable interest where there is some "assurance, declaration of trust or agreement": see [35] above. 115 It is apparent that each of those expressions bears its technical meaning in law. In the case of 'assurance' what is meant is that there must be some 'conveyance' or 'assurance' – that is, some passing of an interest. Not only is that apparent from the fact that the other two concepts in the trilogy are legal terms, but the principle would not make sense otherwise. The purpose of the rule is to give effect to particular circumstances in which a legal interest will be postponed to a later equitable interest. Such a basic precept of law as is involved in a prior legal interest ceding priority to a later equitable interest could not be overcome by an indeterminate statement of comfort. In my opinion, the law requires something more. 116 The trial judge found there was no 'agreement' and that finding is not challenged. There was no assurance, in the sense that I consider the word is used for the purposes of the principle. Accordingly, this basis for the receivers' appeal also fails. In fairness to senior counsel for the receivers, it should be observed that this issue was not argued orally, the receivers relying on their written submissions only. Conclusion 117 It follows on the conclusions I have reached that the appeal fails. I would propose therefore that the appeal should be dismissed with costs. 118 McCOLL JA: I have had the advantage of reading in draft the judgment of Beazley JA in which the background is comprehensively set out. I agree with the orders her Honour proposes. 119 In my view the case can be disposed of on the basis that as no conduct by the appellants created the fund from which they sought to be reimbursed, nor could the moneys they spent: "… be said to have protected or preserved the property or enhanced its value in a way that produced incontrovertible benefit that ultimately enured to the advantage of [Sovereign] and the sale [Sovereign] effected" [Beazley JA at [109]] the circumstances which might give rise to an equitable lien (subject to what I say below) or the doctrine of salvage were not present. 120 In such circumstances there is no need to consider whether an equitable lien for remuneration, costs and expenses may be asserted by a receiver appointed out of court, a question reserved by Barrett J (Ronald John Dean-Willcocks and Anor v Nothintoohard Pty Ltd [2005] NSWSC 357 at [39]), and doubted by Young CJ in Eq in Nicobar Pty Ltd v Abrokiss & Ors [2003] NSWSC 447; (2003) 48 ACSR 259 at [58] – [64]. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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