Queensland Court cuts receiver’s fees after criticising decade-long litigation strategy

The Queensland Supreme Court has reduced the remuneration and legal costs recoverable by a court-appointed receiver after finding that a long-running partnership receivership became commercially disproportionate and should have been finalised years earlier.

The issue arose in the receiveship of the Krystyna Allan Trust and Ultimate Horizon Trust partnership, a property development partnership operated through two trust structures controlled by former business partners Krystyna Allan and Daryll Kelly. The partnership conducted land development activities, including a subdivision project at Krystyna Court in Karalee, Ipswich.

The receivership initially involved the sale of multiple Ipswich development properties owned by the partnership, with those assets substantially realised by early 2012. The remaining disputes centred on alleged debts owed to the partnership by Kelly and a related entity, White Horizon Pty Ltd.

The Court accepted that the early stages of the administration, including the sale of the properties and reconstruction of the partnership accounts, were reasonable and necessary. Justice Treston also accepted evidence from the receiver and his solicitors that detailed time recording systems and supervision processes had been used throughout the administration.

However, the judgment sharply criticised the receivership’s later years, particularly litigation pursued against White Horizon and Kelly that extended over more than a decade.

The White Horizon proceeding ultimately collapsed during trial in 2025 after the receiver conceded that no cause of action in debt existed and that any claims between the partners instead arose in equity upon dissolution of the partnership. The related Kelly proceeding, although ultimately successful, took more than 10 years to resolve despite being described by the District Court as “of the simplest kind.”

Justice Treston found that by at least mid-2018 the receiver should have recognised that the litigation strategy was no longer proportionate to the financial position of the estate. The Court noted that the partnership’s equity position had steadily deteriorated into deficit territory while legal fees, taxation costs and administration expenses continued to mount.

The judgment emphasised that insolvency practitioners must exercise commercial judgment and continuously assess whether litigation remains economically justified, particularly where proceedings threaten to consume the value of the estate itself.

The Court was critical of the receiver’s failure to seek earlier directions from the Court or bring a remuneration application sooner, observing that an earlier review may have exposed the deteriorating financial position of the receivership and prompted reconsideration of whether the litigation should continue. Justice Treston also noted that no Beddoe application had been brought before the receiver commenced the ultimately unsuccessful White Horizon proceeding.

Despite those criticisms, the Court declined to deprive the receiver of remuneration entirely, finding that the receiver had faced significant hostility between the former partners and had been encouraged by Allan to continue pursuing the litigation, including through the provision of an indemnity for adverse costs. The Court also accepted that Kelly’s conduct materially contributed to the prolonged nature of the proceedings.

Justice Treston ultimately reduced the receiver’s claimed remuneration of approximately $240,000 by 15%, approving remuneration of about $204,600. The Court also reduced certain legal fees incurred by HWL Ebsworth by 10%, while allowing most other outlays, including accounting, taxation and earlier legal expenses, in full.

Read the decision here.