SIMPSON AND DOWNES AS RECEIVERS OF CAPITAL + MERCHANT INVESTMENTS LIMITED (IN RECEIVERSHIP) V COMMISSIONER OF INLAND REVENUE COA CA361/2011

SIMPSON AND DOWNES AS RECEIVERS OF CAPITAL + MERCHANT INVESTMENTS LIMITED (IN RECEIVERSHIP) V COMMISSIONER OF INLAND REVENUE COA CA361/2011 [30 March 2012]IN THE COURT OF APPEAL OF NEW ZEALANDCA361/2011[2012] NZCA 126BETWEEN RICHARD GRANT SIMPSON ANDTIMOTHY WILSON DOWNES ASRECEIVERS OF CAPITAL +MERCHANT INVESTMENTS LIMITED(IN RECEIVERSHIP)AppellantsAND COMMISSIONER OF INLANDREVENUERespondentHearing: 2 February 2012Court: Arnold, Ellen France and White JJCounsel: G J Toebes for AppellantsH W Ebersohn and P W O'Regan for RespondentJudgment: 30 March 2012 at 3 pmJUDGMENT OF THE COURTA The appeal is allowed.B The direction given by the High Court is set aside.C Messrs Simpson and Downes are directed that they are obliged as receivers of CMI to pay the GST received on the five mortgagee sales to the Commissioner.D There is no order for costs.___________________________________________________________________REASONS(Given by White J)Table of ContentsPara NoIntroduction [1]Factual background [4]Agreed issue [15]Agreed disposition [17]Relevant legislation [19]High Court judgment [20]Submissions for parties [27]Does CMI's receivership mean Fortress is entitled to the GST? [31]The "personal liability" of the receivers [57]The answer to the agreed issue [64]Result [70]Schedule of relevant legislationIntroduction[1] Richard Simpson and Timothy Downes, the receivers of Capital + Merchant Investments Ltd (in receivership) (CMI), appeal against the High Court judgment ofDobson J giving a direction that the receivers were ―personally liable to theCommissioner of Inland Revenue (the Commissioner) for the payment of GST totalling $1,215,201.39 on five mortgagee sales by CMI.1[2] The receivers accept that CMI itself is liable for the payment of the GST, but argue that, because CMI is in receivership and unable to meet its debts, the Commissioner is an unsecured creditor and, as receivers, there is in thecircumstances of this case no basis for ―personal liability on their part under therelevant provisions of the Goods and Services Tax Act 1985 (the GST Act). On this basis the receivers contend that they must account to the secured creditor for the amounts received as GST.1 Simpson and Downes v Commissioner of Inland Revenue [2011] 3 NZLR 533 (HC).[3] The receivers' case has reached the Courts by way of an originatingapplication under s 34 of the Receiverships Act 1993 for directions, a statement of agreed facts, an agreed issue and, depending on the answer to the agreed issue, an agreed arrangement for the disposition of the GST, which in the meantime has been paid by the receivers to the Commissioner to hold pending the outcome of the case.Factual background[4] CMI was a finance company which was not registered for GST because it provided GST exempt supplies as a provider of financial services.[5] In order to finance the acquisition of another company, CMI borrowed funds from Fortress Credit Corporation (Australia) II Pty Ltd (Fortress). The borrowings were secured by a General Security Agreement (GSA) dated 18 December 2006 over all the assets of CMI, which included loans to five other companies secured by mortgages over their properties. Fortress also registered caveats against the interests of CMI as mortgagee under each of the mortgages.[6] Clause 12.1 of the GSA provided under the heading ―Application of Proceeds:Order: Subject to the repayment of any claims having priority to any claim of the Secured Party in respect of any Security Interest created by this Agreement and to any statute that overrides this clause 12.1, the net profits (if any) of carrying on the business of the Debtor and the net proceeds of any sale or realisation of the Secured Property on enforcement received by any Receiver or the Secured Party will be paid or applied:First in satisfaction of all costs and expenses of whatever nature of andincidental to the exercise of all or any of the Secured Party's rightsunder this Agreement (including the exercise of any such rights of any Receiver and the remuneration of the Receiver);Secondly in payment of any preferential claims that are by law given priority to any Security Interest created by this agreement ...[7] The receivers, both of whom are chartered accountants and partners in the well-known professional services firm, Grant Thornton New Zealand Ltd (GrantThornton), were appointed on 23 November 2007 after CMI defaulted on its obligations to Fortress.[8] The five companies with mortgages over their properties to CMI then defaulted under their mortgages. This led to the service of Property Law Act notices on the mortgagors by the receivers for CMI as mortgagee and, when the defaults were not remedied, mortgagee sales of the properties owned by the five companies.[9] GST was incurred in respect of each mortgagee sale. Each agreement for saleand purchase required the purchaser to pay ―any GST and each settlement statementfor each sale issued by Buddle Findlay, the solicitors for CMI, showed GST as a separate item in the calculation of the balance required for the purchaser of the properties to settle the transactions. In accordance with the settlement statements, the purchasers paid the balance required to settle, including the GST, to Buddle Findlay who accounted to Grant Thornton which held the funds in its CMI trust account.[10] CMI filed GST returns with the Commissioner in respect of each of the mortgagee sales, but no GST was paid with the returns.[11] CMI's indebtedness to Fortress exceeded the value of the gross proceeds of realisation of CMI's assets, including the proceeds from the mortgagee sales.[12] Fortress, as CMI's secured creditor, required payment to it of all moneysavailable from the mortgagee sales, including the amounts paid by the purchasers as GST, before it would withdraw its caveats. The Commissioner, however, claimed he was entitled to the GST.[13] Pending the Court's determination of the agreed issue, the GST on the fivemortgagee sales was paid by the receivers from the Grant Thornton CMI trust account to the Commissioner.[14] To enable the caveats to be withdrawn and the transfer of the properties sold by mortgagee sale to be registered, it was agreed that the GST and interest, lesscosts, would be paid to Fortress in the event that the Court determined the agreed issue in favour of the receivers.Agreed issue[15] The issue agreed between the parties raised in the originating application for directions brought by the receivers under s 34 of the Receiverships Act is:Do Messrs Simpson and Downes as receivers of Capital + Merchant Investments Ltd (In Receivership) (―CMI) have personal liability for payment to the Commissioner of Inland Revenue (―The Commissioner) of the Goods and Services Tax (―GST) payable by CMI, but not paid, inrelation to five specified mortgagee sales undertaken by CMI?[16] The parties and the High Court have proceeded on the basis that the referencein the issue to the ―personal liability of the receivers is to be distinguished fromtheir obligation, if any, in their capacity as receivers of CMI to pay the GST to the Commissioner. This approach to the issue led the Commissioner to submit to us thatthe ―wrong question had been asked. The receivers maintained that the Court wasrequired to answer the issue in the form agreed by the parties. We shall return to the question of the interpretation of the agreed issue and the power of the Court when considering the direction to be given under s 34 of the Receiverships Act.Agreed disposition[17] The parties also reached agreement that, following the Court's determinationof the agreed issue, the case would be disposed of on the following basis:(a) If it is determined in relation to the mortgagee sales that the receivers do not have personal liability for any GST payable by CMI, then the GST and the interest already paid will be refunded within seven days of the final decision of the relevant Court;(b) If in relation to the mortgagee sales it is found that the receivers do have personal liability then the GST and interest already paid to the Commissioner will be retained absolutely by the Commissioner;(c) In each case the refund or retaining of the payment, in accordance with the final determination of the Court, shall be in full satisfaction of the obligations of the receivers to the Commissioner or by the Commissioner to the receivers whether for GST, interest, use ofmoney interest, shortfall penalties or otherwise payable in respect of the mortgagee sales;(d) In relation to these proceedings it is agreed that each party is to bear its own costs and not seek costs against the other; and(e) The Commissioner reserves all its rights in relation to the liability of CMI in relation to the GST for the mortgagee sales.[18] For reasons which will emerge later in this judgment, it is significant that, notwithstanding the agreement recorded in subparas (a)–(c), the Commissioner has reserved his rights in relation to the liability of CMI.Relevant legislation[19] The relevant provisions of the GST Act, the Property Law Act 2007 and the Receiverships Act are set out in the schedule to this judgment.High Court judgment[20] Dobson J found that the receivers were ―personally liable to pay the GST to the Commissioner. He upheld the Commissioner's case on a number of grounds. The principal ground was that the receivers should be treated as ―specified agents under s 58 of the GST Act and that their status as specified agents meant they were personally liable for GST incurred by CMI on the mortgagee sale.[21] Dobson J rejected the submission for the receivers that s 58 was inapplicable because CMI, which was not a registered person, fell outside the definition of―incapacitated person and did not carry on ―a taxable activity within the meaningof s 58(1A). Dobson J explained:[32] Mr Toebes's attempt to exclude CMI overlooks the structure ofs 5(2) of the GST Act. When sales occur in satisfaction of debts, the GST Act deems it not to be the activity of the second person (mortgagee), but rather that of a supply in the furtherance of the taxable activity carried on by the first person (each of the mortgagors, who were all registered persons). Consistently with that, on the terms of s 17, persons involved in supplies that are caught by s 5(2) are obliged to furnish a return whether or not that person is registered. Section 17 also imposes the obligation on that person, whether registered or not, to pay the amount of tax charged on that supply.[33] The structure of these provisions, and in particular s 58, would befrustrated unless the reference to ―a registered person in the definition of ―incapacitated person were interpreted to include persons who would otherwise be liable to file a return under s 17, whether or not they were registered. That interpretation achieves consistency, when there can be no suggestion that s 58 was intended to create an anomaly for those situations where the obligations of being registered apply, irrespective of whether the person is actually registered.[34] I do not consider that the drafting is inadequate to effect this outcome, which I treat as consistent with the purpose of the GST Act, and the particular provisions that are relevant to it. The contrary outcome contended for by Mr Toebes could certainly not credibly be attributed to Parliament as an intentional outcome of the drafting of this revenue statute. Nor is the inter-relationship between the various provisions and the interpretation I have settled on for each of them so forced as to do any form of violence to the words used in each of those sections.[36] The effect of s 58(1A) is to substitute the receivers for a company in receivership in relation to taxable activity of the company in receivership. The effect of ss 5(2) and 17 is to attribute to the mortgagee responsibility for taxable activity that is treated as if it was the activity of the mortgagor. It is nonetheless conducted by the mortgagee, except where the mortgagee'sincapacity means that that activity is carried out by a receiver in themortgagee's name. In that chain of involvement, the receiver becomes the second person contemplated in s 5(2) and the person ―selling the goods" for the purposes of s 17.[22] Dobson J considered that s 51B provided further support for his wide interpretation of the definition of ―incapacitated person in s 58 because s 51B,which sets out the persons treated as registered persons, illustrated that ―the structureof the GST Act is intended to operate by imposing liability for taxable supplies onthose responsible for effecting the transaction.2[23] Dobson J also held that had it been necessary he would have held that under s 5(2) of the GST Act the phrase ―the second person should be interpreted widely soas to include a receiver of a mortgagee who is in control of the supply in commercial and practical terms and who has the consideration for the supply (including the payment of GST) passing through his or her hands. Dobson J's reasons forinterpreting s 5(2) in this way were:2 At [38].[22] Because the purpose of the provision is to catch and re-categorise transactions involving supply, arguably the critical element is not the identity of the person empowered to sell, but the identity of the person practically responsible for that power being exercised. The relevant elements of the identity of the ―second person as that expression is used in the sub-section is that the second person be the person who has sold, under a power exercisable by a person other than the owner, for the purposes of satisfying a debt owed by the owner. The section does not specify that the second person has to be the person to whom the debt was owed. Given those criteria, on the wording of the section the ―second person could conceivably be a mortgagee, or where the mortgagee is in receivership, the receiver of the mortgagee, where that person effects the transaction that is to be deemed a supply by the ―first person, i.e the owner/mortgagor.[25] The status of receivers as agents of the company acting without the prospect of personal liability is not entirely sacrosanct. Were it necessary to do so in order to make the provisions work, I would be prepared to consider adopting the wider interpretation of s 5(2) so that in circumstances such asthe present, receivers would have standing as ―the second person" where they exercised commercial and practical control over the transaction involving a taxable supply. It is artificial to treat the sales as being conducted by the mortgagee when the power to do so has been taken out of its hands, and may have occurred contrary to its wishes. I accept that to attribute separate status to the receivers would be inconsistent with the general structure of the law in relation to the conduct of receiverships. However, had it been necessary, that would at least arguably have been justified on the purposive and contextual approach to interpretation adopted in Ben Nevis, when supported by public policy concerns to promote the effective working of the GST provisions in accordance with their evident purpose.[26] The focus on the person actually effecting the taxable supply is supported by the terms of s 17 of the GST Act. Section 17(1) imposes theobligation to file a special return on ―the person selling the goods", and the obligation is imposed on that person whether or not he, she or it is a registered person for the purposes of the GST Act. The details required to be furnished to the Commissioner require relatively detailed knowledge of the circumstances of the supply, consistent with the person completing the return having had actual involvement in it. Section 17(1)(b) imposes the obligation on the person completing the return to pay the Commissioner the amount of tax charged on the supply. It is a fair assumption that Parliament has imposed this obligation in those terms because of an expectation that the person completing the return and effecting the sale will be the person who received the consideration for the supply, including the charge for GST. Read together, ss 5(2) and 17 reflect the purpose of the GST Act to impose the obligations to account for GST, where someone other than an owner makes taxable supplies, on the person with practical control of that supply.[24] The receivers had also submitted that an interpretation of the GST Act that imposed personal liability on the receivers was inconsistent with the terms of the agreement by which Fortress released its caveats. Dobson J rejected this submissionon the grounds that the demands of Fortress could not influence the proper interpretation of the provisions of the GST Act and, if the receivers were liable under the Act to pay the GST to the Commissioner, it was no answer to refer to their contractual obligation to Fortress.3[25] Although, given his conclusions on the interpretation of the GST Act, it wasunnecessary to do so, Dobson J then considered the Commissioner's alternativeargument that the receivers were personally liable for the GST in tort or under the equitable doctrine of the duty to account.4 The Commissioner had argued that s 185 of the Property Law Act gave the Commissioner priority over secured creditors with respect to the GST and that a failure to respect that priority would render the receivers liable in tort for a breach of statutory duty or would render the receivers liable to make an account for breach of equitable duties.[26] Dobson J noted that the receivers had not been prepared to revisit the terms of the agreement between the parties formulating the issue for determination by the Court to focus more on whether the Commissioner or Fortress could claim priority to the amount held by the receivers on account of the GST output tax received by them.5 After referring to the competing submissions for the parties on this furtherissue, Dobson J considered that it was ―entirely tenable that the receivers in a situation such as this might be liable in tort, either for knowingly procuring a breach of their principal's obligation to apply the proceeds of the mortgagee sales in accordance with s 185, or as parties to the mortgagee's breach of statutory duty.6 In the absence of full evidence and argument that might influence the existence and scope of any such tortious obligation, however, the Judge declined to make any definitive ruling on this aspect of the case.7Submissions for parties3 At [45]–[50].4 At [57]–[74].5 At [65].6 At [74].7 At [71].[27] In their written submissions on appeal the parties essentially repeated the arguments in the High Court referred to in the judgment of Dobson J. The Commissioner also gave notice that he sought to support the judgment under appeal―on other grounds. These grounds reflected the Commissioner's arguments in theHigh Court, which were not definitively determined by Dobson J. The groundsincluded in particular the Commissioner's reliance on the terms of the GSA, s 185 of the Property Law Act and the decision of the English Court of Appeal in Sargent v Customs and Excise Commissioners.8 The Commissioner submitted that the receivers would be in breach of their statutory duty not to make payment of the GSTand that they were also ―personally liable in equity to account to the Commissionerfor the GST.[28] In the course of argument before us, however, the focus of the case shifted from the submissions addressed in the High Court judgment to the question whether the receivership of CMI meant that the Commissioner became an unsecured creditor for the GST with Fortress, as the secured creditor, entitled to receive the GST in priority.[29] In responding to this question, Mr Toebes for the receivers, made it clear that, as far as the receivers were concerned, the Court was limited to determining theagreed issue relating to the ―personal liability of the receivers to pay the GST. Asalready noted, Mr Toebes did not dispute that CMI, as mortgagee, was itself liable for the GST under s 185 of the Property Law Act and that, if CMI had not been in receivership, the GST was payable to the Commissioner ahead of Fortress as the secured creditor. Mr Toebes submitted that the receivership of CMI made all the difference because:(a) The obligation to pay the GST rested solely on CMI and not on the receivers who were therefore entitled to treat the GST as an unsecured debt. In support of this view, Mr Toebes relied on the decision of the Privy Council in Commissioner of Inland8 Sargent v Customs and Excise Commissioners [1994] 1 WLR 235 (HC) and [1995] 1 WLR 821 (CA).Revenue v Edgewater Motel Ltd.9(b) The ―golden rule enacted by s 312 and cls 1(5)(a) and 2 of sch 7 of the Companies Act 1993, that on a company liquidation the Commissioner was an unsecured creditor in respect of GST, which would be met pari passu, meant that in this case the Commissioner was an unsecured creditor ranking behind Fortress as the secured creditor. The view that Fortress had priority over the Commissioner was supported by the decisions in Rob Mitchell Builder Ltd (in liq) v National Bank of New Zealand Ltd,10 AMP General Insurance Ltd v Macalister Todd Phillips11 and the High Court decision in Stiassny and Graham v Commissioner of Inland Revenue.12(c) As mere agents of CMI under s 6(3) of the Receiverships Act,the receivers could have no personal liability for CMI's taxdebts. The present case was analogous to Deputy Commissioner of Taxation v PM Developments Pty Ltd,13 where it was held in the Federal Court of Australia that a liquidator who conducted a post-liquidation sale on behalf of the company was not personally liable to pay GST and the Commissioner therefore ranked as an unsecured creditor.[30] In view of the shift in focus of the case before us, it is convenient to address the issues in the following order:9 Commissioner of Inland Revenue v Edgewater Motel Ltd [2004] UKPC 44, (2004) 21 NZTC 18,644 at [10].10 Rob Mitchell Builder Ltd (in liq) v National Bank of New Zealand Ltd (2004) 21 NZTC 18,397 (CA).11 AMP General Insurance Ltd v Macalister Todd Phillips [2006] NZSC 105, [2007] 1 NZLR 485 at [2], where the Supreme Court approved Rob Mitchell Builder Ltd.12 Stiassny and Graham v Commissioner of Inland Revenue (2011) 25 NZTC 20-003 (HC).13 Deputy Commissioner of Taxation v PM Developments Pty Ltd [2008] FCA 1886, (2008) 173 FCR 247.(a) Did the receivership of CMI mean that the Commissioner became an unsecured creditor for the GST with Fortress, as the secured creditor, entitled to receive the GST in priority?(b) Were the receivers ―personally liable to pay the GST to the Commissioner as Dobson J held?(c) What answer should be given to the agreed issue in the context of an application for directions under s 34 of the Receiverships Act?Does CMI's receivership mean Fortress is entitled to the GST?[31] The receivers accepted that CMI was liable itself for the GST but contended that because CMI was in receivership the Commissioner was an unsecured creditorand Fortress took priority. The starting point in analysing the receivers' submissionis to note that for the following reasons the receivers' concession as to CMI'sliability for the GST is clearly correct.[32] First, the fact that CMI, as a finance company, was not registered for GST did not mean that GST was not payable by the purchasers of the five properties sold by CMI by way of mortgagee sale or that CMI was not required to pay the GST received on the sales to the Commissioner. Under s 5(2) of the GST Act, GST was clearly payable on the mortgagee sales because the sale by CMI (the second person) under its power of sale was deemed to be a taxable activity of the mortgagor (the first person). Under s 17(2) CMI as the person selling the goods was required to filea GST return and to pay the GST to the Commissioner ―whether or not [it was] a registered person.[33] Second, under ss 185(1)(a) and 185(2)(d) of the Property Law Act, the proceeds arising from the sales by CMI as mortgagee of the mortgaged propertiesmust first be applied to the payment of all amounts reasonably paid by CMI ―with aview to the realisation of the security. As Mr Toebes for the receivers accepted in his written submissions, the GST payable by CMI was included within the ―costs of sale which were covered by s 185(2)(d). The GST on the mortgagee sales waspayable for the purpose of (―with a view to) the realisation of the securities over the mortgagor's properties.[34] Third, the view that GST paid to a mortgagee on a mortgagee sale must bepaid by the mortgagee to the Commissioner and does not go into the mortgagee'sgeneral funds is confirmed by the decisions in Commissioner of Inland Revenue v Edgewater Motel Ltd14 and Rob Mitchell Builder Ltd (in liq) v The National Bank of New Zealand Ltd. Edgewater concerned the inter-relationship between s 17 of the GST Act and s 104 of the Land Transfer Act 1952, the predecessor to s 185 of the Property Law Act.[35] Under s 17(2) of the GST Act any tax charged under the section is deemed―to be tax payable and shall be recoverable as a debt due to the Crown. Nothing issaid in s 17(2) about the priority of the debt.[36] The relevant part of s 104 of the Land Transfer Act provided:104 Application of purchase money(1) The purchase money to arise from the sale by the mortgagee of any mortgaged land, estate, or interest shall be applied—(a) firstly, in payment of the expenses occasioned by the sale:(b) secondly, in payment of the moneys then due or owing to the mortgagee:The receivers accepted that the differences between this provision and s 185 of the Property Law Act were immaterial for the purposes of this case. We agree.[37] In Edgewater a first mortgagee, Belman, had sold land under a power of sale in the mortgage. Belman paid the GST to the Commissioner and then reimbursed itself for the GST out of the proceeds of sale. The second mortgagee, Edgewater, did not receive enough from the sale proceeds to recover the debt owed to it. Edgewater then sued Belman and the Commissioner, claiming that Belman ought not to havepaid the GST to the Commissioner until Edgewater's debt had been satisfied.14 Commissioner of Inland Revenue v Edgewater Motel Ltd [2003] 1 NZLR 425 (CA); and [2004] UKPC 44, (2004) 21 NZTC 18,644 .[38] In the High Court Baragwanath J held that s 104 conferred priority on mortgagees over the Commissioner.15 He did not see GST as an expense of the sale.16 Baragwanath J held that in order to conform with the priority for secured mortgagees in s 104 of the Land Transfer Act, it was necessary to give s 17 a―strained construction.17 Additionally, a strained construction of s 17 would be consistent with the position in liquidations and receiverships where secured mortgagees have priority over the Commissioner.18 Baragwanath J held that s 17 only imposed liability upon the mortgagee to the extent that the sale realised more than was necessary to discharge the mortgages.19[39] This Court did not accept Baragwanath J's approach. The Court held that it was ―plain and Edgewater conceded that: 20if the mortgagee is obliged by s 17 to pay the whole of the GSTcharged in relation to the sale that payment constitutes an expense‗occasioned by the sale' and, as such, is payable in priority to themortgage moneys under s 104.GST was an expense occasioned by the sale because:21GST is a tax on supplies, constituted in this case by the sale of land. It is a tax on the particular sale. We can see no reason why a tax payable on a supply made pursuant to a sale — that is, because a sale took place —should not be regarded as an expense ―occasioned by the sale. The seller, be it a GST registered owner or a mortgagee, cannot effect the sale withoutoutput tax becoming payable in respect of the supply of the ―goods.[40] This Court held that once it was accepted that GST was an expenseoccasioned by the sale, Baragwanath J's justifications for his ―strained constructionlost force.22 The Court rejected Edgewater's submission that there was a policy in15 Edgewater Motel Ltd v Commissioner of Inland Revenue (2002) 20 NZTC 17,713 (HC) at [37]. This was because s 104(1)(b) gave priority to secured creditors over unsecured creditors.16 Baragwanath J does not expressly mention this interpretation of s 104. As this Court pointed out in its judgment, however, it is clear that the High Court judgment rests on the assumption that GST is not an expense occasioned by the sale. See Commissioner of Inland Revenue v Edgewater Motel Ltd [2003] 1 NZLR 425 (CA) at [9] and [13].17 At [35], [53]–[54].18 At [38]–[39].19 At [53].20 At [5].21 At [13].22 At [13].the GST Act or in s 104 of the Land Transfer Act that gave priority to secured mortgagees.23 Accordingly, read together, ss 5 and 17 of the GST Act meant:24A sale of land of a mortgagor under a power exercisable by a mortgagee is deemed to be a supply in the course of a taxable activity carried on by the mortgagor (which is deemed a registered person) unless either of the situations in s 5(2)(a) or (b) applies The mortgagee is obliged:(i) to furnish a return covering the matters specified in s 17(1)(a);(ii) to pay to the Commissioner the whole of the tax charged on the supply;(iii) to furnish the mortgagor with the information in the return;The tax is to be excluded from any other GST return of either party; andThe tax is recoverable as a debt due to the Commissioner from the party which is obliged to pay it, namely the mortgagee.[41] The Court concluded that:[18] ... Priority of a tax will depend upon what is dictated by the taxing statute. Section 104 is a general provision which gives priority to expenses occasioned by the sale. In this case the GST Act, by imposing a tax on the sale transaction, creates an expense of sale which ranks under s 104 ahead of the mortgage debt. That it might not do so where the tax is imposed under a different section of the GST Act is beside the point when s 17 is so clearly worded.[19] ... the selling mortgagee is obliged to pay the GST charged on the supply of the land in priority to any payment in respect of secured debts. Such payment is an expense occasioned by the sale and must ultimately be borne by the mortgagor by way of deduction from the purchase price under para (a) of s 104 of the Land Transfer Act.[42] In the Privy Council Edgewater contended first that GST was not an expensewithin the meaning of s 104(1)(a), but rather a ―tax levied on the supplier.25Second, Edgewater submitted that unless s 17(1)(b) was read as meaning that GST23 At [14]–[18].24 At [4].25 Edgewater Motel Ltd v Commissioner of Inland Revenue (2004) 21 NZTC 18,664 at [9].was only payable after secured creditors had been paid, s 17 would conflict with s 104, which gave secured creditors priority over unsecured creditors.26[43] The Privy Council rejected both arguments, holding that the GST obligationwas ―plainly an expense occasioned by the sale.27 The Privy Council saw no conflict between ss 17 and 104:28There is no conflict between section 17 and section 104 of the 1952 Act because section 17 does not purport to interfere with the order of priorities laid down by section 104. It does not say that the mortgagee must pay the GST out of the proceeds of sale or out of any particular fund. It simply says that he must pay the GST. As section 17(2) says, it creates a debt. The Crown has no concern with how the payment of this debt affects the distribution of the proceeds of sale. In claiming payment of the GST, the Crown is not seeking to assert a priority in the distribution of the assets of the mortgagor, any more than an estate agent instructed by the mortgagee and claiming commission on the sale. The claim lies directly against the mortgagee.[44] It is clear from the decisions of the Court of Appeal and Privy Council inEdgewater that the selling mortgagee is obliged to pay the GST charged on the supply of land in priority to any payment in respect of secured debts. That is the combined effect of s 17 of the GST Act and s 104 of the Land Transfer Act (now s 185 of the Property Law Act).[45] The same view was expressed in Rob Mitchell Builder Ltd (in liq) v National Bank of New Zealand Ltd which involved a pre-liquidation sale of land by a mortgagor company. Delivering the judgment of this Court in that case, Blanchard J emphasised the primacy of the taxing statute in matters of priority:29In Edgewater Motel it was not the fact that GST could be regarded as an expense under s 104 which led to the conclusion that the mortgagee must pay GST. On the contrary, as the Court made clear in para [18] of the judgment, priority of a tax depends upon what is dictated by the taxing statute. In that case the GST Act required the mortgagee to pay the tax in priority to the mortgage debt. The GST was therefore an expense deductible by the mortgagee when it accounted under s 104.26 At [8].27 At [12].28 At [10].29 At [24].[46] The application of ss 5(2) and 17 of the GST Act and s 185 of the Property Law Act in accordance with the appellate decisions in Edgewater is not altered by the appointment of receivers. Contrary to the submissions for the receivers, those provisions and decisions make it clear that the payment of GST to the Commissioner on mortgagee sales takes priority over any payment in respect of the secured debts. For the following reasons the appointment of receivers does not alter the position.[47] First, the passage in the judgment of the Privy Council in Edgewater,30 relied on by Mr Toebes, does not affect the position. The passage is focussed on s 17. All the Privy Council was saying was that s 17 should be interpreted according to its plain words, contrary to the submission for the appellant in that case. The Privy Council went on to hold that in terms of s 104 of the Land Transfer Act, GST was an―expense occasioned by the sale and was therefore to be paid by the mortgagee inpriority to the secured creditors' debts. Although this may mean that the receiversare not personally liable for the GST, it does not mean that they are entitled, as receivers, to retain the GST for the secured creditor.[48] Indeed, the decisions in Edgewater make it plain that there is no policy in the GSTAct of protecting secured creditors and, far from being an unsecured creditor, theCommissioner is in a better position than secured creditors with respect to GST. Thestatutory provisions that create CMI's liability, as interpreted in Edgewater, give noindication that the Commissioner's entitlement to GST should be affected by theappointment of a receiver.[49] Second, under the terms of cl 12.1 of the GSA between Fortress and CMI, Fortress was entitled to receive:the net proceeds of any sale or realisation of the Secured Property on enforcement received by any Receiver ...As Mr Toebes for the receivers accepted in the course of argument before us, theexpression ―the net proceeds excluded the GST and the other payments to thirdparties required on the sales of the five properties, including the apportionment of30 At [10].rates instalments. Fortress therefore had no contractual entitlement under the GSA to receive the GST payments on the mortgagee sales.[50] The GST payment must be made to the Commissioner as a cost of the mortgagee sales and simply does not reach the general funds of the mortgagee. Thisconclusion is reinforced in this case by cl 12.1 of the GSA. The ―golden ruleenacted by s 312 and cls 1(5)(a) and 2 of sch 7 of the Companies Act therefore has no application here.[51] Third, the decision in Stiassny and Graham v Commissioner of Inland Revenue, does not assist the receivers. The receivers relied on the High Court judgment, which at the time of the hearing was subject to an appeal to this Court. Since the hearing, this Court has allowed the appeal on a point that is not relevant to this appeal.31 The parts of the judgment that the receivers relied on were upheld by this Court. Stiassny and Graham, however, involved a significantly different factual context and did not involve a mortgagee sale or the application of s 185 of the Property Law Act. The question of personal liability in Stiassny and Graham turned on whether receivers appointed to members of a partnership should be treated as specified agents of the partnership under s 58 of the GST Act; or whether the receivers should be treated as members of the partnership that incurred the GST liability under s 57. The priority afforded to the Commissioner turned on s 95 of the Personal Property Securities Act 1999 and the finding that an in personam remedy for mistake of law was not available against the Commissioner. The decision inStiassny and Graham is therefore distinguishable from, and has no application to, the present case.[52] Fourth, while the receivers are correct that they have no personal liability forCMI's debts, that does not mean that they are entitled to keep the GST and pass it on to the secured creditor. The corollary of the receivers having no liability for CMI'sdebts is that as agents they cannot have a greater claim to the proceeds of sale than CMI itself.32 The effect of s 185 of the Property Law Act Act is that the GST never31 Commissioner of Inland Revenue v Stiassny and Graham [2012] NZCA 93.32 As agents, the receivers' authority to deal with the proceeds cannot exceed CMI's ownpowers. See GE Dal Pont Law of Agency (2nd ed, LexisNexis Butterworths, Chatswoodenters the general funds of the company available for secured creditors. As an expense of sale it is to be paid to the Commissioner before secured creditors are paid. As receivers, Messrs Simpson and Downes are not entitled to frustrate thefulfilment of the company's obligation.[53] The decision of the Federal Court of Australia in Deputy Commissioner of Taxation v PM Developments Pty Ltd is distinguishable because in that case there was no provision equivalent to s 185 of the Property Law Act. The statute governing priorities in that case provided that GST was to be treated as an unsecured debt.33That is not the case here.[54] The view that as a matter of principle a receiver of a company is obliged to account to the Commissioner for GST received from a purchaser on a mortgagee sale is also consistent with the decision of the English Court of Appeal in Sargent v Customs and Excise Commissioners. In that case the receiver had received VAT on rents paid by tenants to the company in receivership. In the context of a somewhat different statutory provision, the Court held that as a matter of public policy it would defeat the expectations of the tenants if the receiver did not account to the Commissioners for the VAT and the receiver also owed a duty to the company to protect it from the potentially serious consequences of failing to account to the Commissioners. There is force in the view expressed by Peter Blanchard and Michael Gedye in Private Receivers of Companies in New Zealand that, on the basis of the Sargent decision, the receiver may in fact be obliged to take this course even if no personal liability is imposed.34[55] For these reasons we are therefore satisfied that the GST received by the receivers of CMI on the five mortgagee sales was payable to the Commissionerunder ss 5(2) and 17 of the GST Act and not to Fortress as CMI's secured creditor.The receivers were obliged to pay the GST to the Commissioner.(NSW), 2008) at [13.23]; and Peter Watts and FMB Reynolds Bowstead & Reynolds on Agency (19th ed, Sweet and Maxwell, London, 2010) at 276–278 and the cases cited in those texts.33 At [59].34 Peter Blanchard and Michael Gedye Private Receivers of Companies in New Zealand(LexisNexis, Wellington, 2008) at [11.14].[56] We agree with Dobson J that the terms of the agreement by which Fortress released its caveats could not influence the application of the statutory provisions.The "personal liability" of the receivers[57] As a result of the way the focus of the case before us shifted and our conclusion that the receivership of CMI made no difference to the obligation on the receivers to pay the GST to the Commissioner, it was in our view not necessary for the High Court to adopt a wide interpretation of the statutory provisions in the GSTAct in order to impose ―personal liability on the receivers in the circumstances ofthis case. On the basis of the interpretation of the agreed issue adopted by the parties and the High Court, however, we do not consider that at this stage the receivers are―personally liable for the payment of the GST. Our reasons may be stated briefly.[58] First, while receivers do have direct personal liability for the payment of GST in relation to taxable supplies made by a company during its receivership by virtue of s 58(1A) of the GST Act,35 which has the effect that for the duration of the receivership a receiver is deemed to be a registered person carrying on the taxable activity of the company, that provision has no application to a mortgagee sale by a company not carrying on a taxable activity.[59] Second, Dobson J erred in finding that ss 5(2) and 17 imposed ―personal liability on the receivers. That finding was contrary to the clear wording of s 5(2). The critical part of s 5(2) in this respect states:where any goods acquired ... or produced by a person (that person being referred to hereafter in this subsection as the first person) are sold, under a power exercisable by another person (that person being referred to hereafter in this subsection as the second person) ...In our view there is only one interpretation of that passage that is properly open: the―second person is the person by whom the power to sell can be exercised. In thiscase that was CMI as the mortgagee. The receivers may have been in actual control of the sale, but they could only conduct the sales by exercising the powers of CMI on35 See Blanchard and Gedye at [8.08].its behalf, as its agents. Thus they could not be the ―second person referred to ins 5(2).[60] Third, a similar approach is necessary in respect of s 17, which imposes anobligation to file a return and pay the GST on ―the person selling the goods. Thereceivers may have controlled the sales, but they could only do so as agents for CMI. It was CMI who had an equitable interest in the properties and a right as mortgagee to sell them if the mortgagor defaulted. CMI was named as the vendor on the agreements for sale and purchase. Unless the receivers were acting on behalf of CMI, they had no ability to effect the sales. Therefore the ―person selling the goods for the purposes of s 17 must be CMI. The section does not impose ―personal liability on the receivers.[61] Fourth, it is clear that the Commissioner is correct that s 51B applies to pts 3 and 6 of the GST Act. That is plain from the manner in which the opening sentence of the section is worded and structured (―For the purposes of Parts 3 and 6, and ofPart 9 of the Tax Administration Act 1994). But that does not assist the Commissioner. Only s 17 is contained in one of the relevant parts, that is, pt 3, and s 17 states that it applies whether or not the person who sells the goods is registered. So the fact that CMI might be deemed to be registered for the purpose of s 17 is irrelevant. It does not mean, as the Commissioner submitted, that CMI is also deemed to be a registered person for the purpose of s 58. Section 51B does not apply to s 58.[62] Fifth, as the receivers submitted, CMI was never registered or required to be registered for GST, and never conducted any taxable activities in its own right. Weagree with the receivers' submission that a mortgagee sale is deemed under s 5(2) tobe a taxable activity of the mortgagor. That is evident from the words ―those goods shall be deemed to be supplied in the course or furtherance of a taxable activitycarried on by the first person. We do not consider that the position is altered by theCommissioner's submission that the taxable activity, despite being deemed to be thatof the mortgagor, is still carried out by the mortgagee. Section 58 refers to the ―the taxable activity of the incapacitated person. If s 5(2) deems a supply to be thetaxable activity of the mortgagor, it cannot also be the taxable activity of the incapacitated person. Accordingly, s 58 does not apply in this case.[63] Finally, in view of the conclusion which we have reached as to the obligation of the receivers of CMI to pay the GST to the Commissioner on the basis of ss 5(2) and 17 of the GST Act and s 185 of the Property Law Act, it is unnecessary to adoptDobson J's purposive approach to the interpretation of the provisions to find ―personal liability on the part of the receivers. It is clear from the purpose andscheme of the GST Act that the obligation to make returns and pay GST is placed on persons who are carefully and specifically identified, namely those who are required to be registered and those who are deemed to be liable in certain situations.36 The presence of the express provisions in the GST Act means that it is unlikely that Parliament intended liability under the Act to be implied.The answer to the agreed issue[64] On the basis of the interpretation of the agreed issue adopted by the parties and the High Court, the answer to the issue is that Messrs Simpson and Downes, asreceivers of CMI, do not at this stage have ―personal liability for payment to theCommissioner of the GST payable by CMI in relation to the five specified mortgagee sales undertaken by CMI. We do not agree with the judgment of Dobson J to the contrary. For the following reasons, however, that is not the end of the matter.[65] First, we are not all sure that, in the context of this case and the agreed issue as formulated, the interpretation adopted by the parties and the High Court was correct. There is no dispute that GST was paid by the purchasers of the five properties to the receivers in their capacity as receivers of CMI, the vendor of the properties under the mortgagee sales. The receivers received the GST in their capacity as receivers and were in fact able to make payment of the GST to the36 Glenharrow Holdings Ltd v Commissioner of Inland Revenue [2008] NZSC 116, [2009] 2 NZLR359 at [16] and [19]; and Mark Jefferies ―Receivers and GST (1991) New Zealand TaxPlanning Reports 17 at 19.Commissioner. The agreed issue refers to the ―personal liability of the receivers in their capacity ―as receivers to account for the GST. In our view, in the context ofthis case, the issue is simply whether the receivers ―as receivers are obliged to so account. The answer is a straightforward ―yes. No question of the receivers beingrequired to put their hands into their own pockets arises because, for the reasons we have given, the receivers are obliged to account to the Commissioner for the GST that was in fact received from the purchasers of the five properties. No question of priority in favour of Fortress, as secured creditor, arises.[66] Second, the agreed issue has reached the Court by way of an application for directions under s 34 of the Receiverships Act. In our view s 34(1)(a) gives the Court wide power to give directions in relation to any matter arising in connection with the performance of the functions of the receiver. The purpose of the provision is to facilitate the conduct of receiverships by enabling receivers to seek as much guidance as possible from the Court to allow the receivership to continueexpeditiously. The width of the Court's power is reinforced by s 34(4) which provides that the powers under ss 34(1) and 34(2) are in addition to any other powers the Court may exercise under the Receiverships Act, any other Act, or in its inherent jurisdiction.[67] In Australia it has been said that a provision of this nature is to be widely interpreted: Re Odessa Promotions Pty Ltd (in liq) and Deputy Commissioner of Taxation v Best & Less (Wollongong) Pty Ltd.37 While there are also limits on theCourt's power under s 34, which are not applicable here, we agree with the view ofBlanchard and Gedye38 that there is no reason to think that a New Zealand Court would take a different view in relation to the interpretation of s 34.[68] On this basis we consider that in giving a direction under s 34 to guide the receivers in the conduct of the receivership of CMI the Court should ensure that the correct issue is identified and answered. The Court should approach the issue as a matter of substance rather than form and should not be inhibited by the form of the37 Re Odessa Promotions Pty Ltd (in liq) (1979) CLC 40-523 (VSC) at 32,106; and Deputy Commissioner of Taxation v Best & Less (Wollongong) Pty Ltd (1992) 7 ACSR 245 (FC) at 247.38 At [10.27].issue or the interpretation of it adopted by the parties. When that is done in the present case we are satisfied that the answer the Court should give is a direction that Messrs Simpson and Downes as receivers of CMI are obliged to pay the GST received on the five mortgagee sales to the Commissioner.[69] Bearing in mind the protection provided to the receivers by s 34(6), it is open to them to accept the answer which we have given. In view of the terms of the agreement between the parties, however, we do not at this stage express any furtherview as to the potential ―personal liability of the receivers in the event that they were to decide not to follow the Court's direction. While questions relating to thevalidity and enforceability of the agreement between the parties were not raised or argued before us, we note that it would be open to the receivers to seek further directions from the High Court if necessary. We also note that in the agreement between the parties as to the disposition of the case the Commissioner reserved his rights in relation to the liability of CMI.Result[70] As the answer to the agreed issue given in the High Court was incorrect, the appeal is allowed and the direction given by Dobson J is set aside.[71] In exercising the Court's power under s 34 of the Receiverships Act, we answer the correct issue and direct that Messrs Simpson and Downes are obliged as receivers of CMI to pay the GST received on the five mortgagee sales to the Commissioner.[72] In accordance with the agreement of the parties that costs should lie where they fall there will be no order for costs.Solicitors:J T Law, Wellington for AppellantsCrown Law Office, Wellington for RespondentSchedule of Relevant LegislationGoods and Services Tax Act 19855 Meaning of term supply(1) For the purposes of this Act, the term supply includes all forms of supply.(2) For the purposes of this Act, where any goods acquired (whether in terms of a hire purchase agreement or otherwise) or produced by a person (that person being referred to hereafter in this subsection as the first person) are sold, under a power exercisable by another person (that person being referred to hereafter in this subsection as the second person), in or towards the satisfaction of a debt owed by the first person, those goods shall be deemed to be supplied in the course or furtherance of a taxable activity carried on by the first person (being deemed a registered person), unless—...17 Special returns(1) Where goods are deemed to be supplied by a person pursuant tosection 5(2), the person selling the goods, whether or not that person is a registered person, shall—(a) Furnish to the Commissioner in the prescribed form a return showing—(i) That person's name and address and, if registered, registration number; and(ii) The name, address, and, if registered, registration number of the person whose goods were sold; and(iii) The date of the sale; and(iv) The description and quantity of the goods sold; and(v) The amount for which they were sold and the amount of tax charged on that supply; and(vi) Such other particulars as may be prescribed; and(b) Pay to the Commissioner the amount of tax charged on that supply; and(c) Furnish to the person whose goods were sold, details of the information shown on the return referred to in paragraph (a),—and the person selling the goods and the person whose goods were sold shall exclude from any return, other than a return required pursuant to this subsection, which either or both may be required to furnish under this Act, the tax charged on that supply of goods.51B Persons treated as registered(1) For the purposes of Parts 3 and 6, and of Part 9 of the Tax Administration Act 1994, the following are treated as registered persons:(a) a person who is not otherwise a registered person but who supplies goods or services, representing that tax is charged on the supply:(b) if goods are treated by section 5(2) as being supplied by a person—(i) the person selling the goods, if subparagraph (ii) does not apply; or(ii) the person whose goods are sold, if the person supplies a written statement under section 5(2)(a) to the person selling the goods and the Commissioner considers that the written statement is incorrect:(c) a person whose registration has been cancelled under section 52(5) with effect from the original date of registration.(2) If a person referred to in subsection (1) represents that tax is being charged on a supply that they make in a taxable period, the person is liable to pay the amount of the tax.(3) If a person is treated by subsection (1)(c) as being a registered person, the person is treated as being registered from the original date of registration to the date when the Commissioner cancels the registration.(4) For the purposes of this Act, in relation to a supply to which section 11(1)(mb) applies, a recipient who is treated as a supplier undersection 5(23)—(a) is treated as registered from the date of the supply under section 5(23); and(b) must apply under section 51(2) to the Commissioner for registration.(5) A person who is treated as registered under subsection (4)(b) may ask the Commissioner to cancel their registration under section 52(2)once they have accounted for output tax as required under section 5(23).(6) For the purposes of subsection (5), section 5(3) does not apply if—(a) the person seeks cancellation of their registration by the end of the taxable period in which they have accounted for the output tax under section 5(23); or(b) the Commissioner so determines, on application by the person.58 Personal representative, liquidator, receiver, etc(1) In this section and sections 46 and 55—agency period means the period beginning on the date on which a person becomes entitled to act as a specified agent carrying on a taxable activity in relation to an incapacitated person and ending on the earlier of—(a) the date on which some person other than the incapacitated person or the specified agent is registered in respect of the taxable activity; or(b) the date on which there is no longer a person acting as a specified agent in relation to the incapacitated personincapacitated person means a registered person who dies, or goes into liquidation or receivership, or becomes bankrupt or incapacitatedspecified agent means a person carrying on any taxable activity in a capacity as personal representative, liquidator, or receiver of an incapacitated person, or otherwise as agent for or on behalf of or in the stead of an incapacitated person.(1A) Despite sections 5(2) and 60, a person who becomes a specified agent is treated as being a registered person carrying on the taxable activity of the incapacitated person during the agency period, and the incapacitated person is not treated as carrying on the taxable activity during the period....Property Law Act 2007185 Application of proceeds of sale of mortgaged property(1) The proceeds arising from the sale by a mortgagee of mortgaged property must be applied—(a) first, to the payment of all amounts (if any) referred to in subsection (2), together with interest on those amounts at the agreed rate (if any) at which interest is payable on the principal amount secured by the mortgage:(b) secondly, to the payment of amounts secured by any other mortgage, encumbrance, or security interest over the property tothe extent that it has priority over the mortgagee's mortgage:(c) thirdly, to the repayment of all amounts (if any) paid or advanced by the mortgagee for the purpose referred to in paragraph (b), together with interest on those amounts at the agreed rate (if any) at which interest is payable on the principal amount secured by the mortgage:(d) fourthly, to the payment of amounts secured by the mortgage (to the extent that those amounts have not been paid under paragraphs (a) to (c)):(e) fifthly, to the payment of amounts secured by any subsequent mortgage, subsequent encumbrance, or subsequent security interest over the property if—(i) the subsequent mortgage, subsequent encumbrance, or subsequent security interest is registered; or(ii) the subsequent mortgage, subsequent encumbrance, or subsequent security interest is unregistered, but the mortgagee has actual notice of it:(f) sixthly, to the payment of any surplus to the current mortgagor.(2) The amounts are amounts reasonably paid or advanced at any time by the mortgagee—(a) for the protection, insurance, maintenance, preservation, or repair of the mortgaged property; or(b) for the payment of rates or other outgoings; or(c) to meet the expenses of the mortgagee in entering into possession, or in doing anything that a mortgagee in possession is required or entitled to do; or(d) with a view to the realisation of the security (including any additional amount referred to in section 120(2) or 129(2)).(3) For the purposes of—(a) subsection (1)(b), if there is more than 1 mortgage, encumbrance, or security interest referred to in that paragraph, payment must be made under that paragraph of amounts secured by each in the order of its priority:(b) subsection (1)(e), if there is more than 1 mortgage, encumbrance, or security interest referred to in that paragraph, payment must be made under that paragraph of amounts secured by each in the order of its priority.(4) Despite subsection (1), subsection (1)(b) does not apply in relation to another mortgage, encumbrance, or security interest over the propertythat has priority over the mortgagee's mortgage if—(a) the person who purchases the property from the mortgagee agrees to accept the transfer or assignment of the property subject to the prior mortgage, encumbrance, or security interest; and(b) the arrangement referred to in paragraph (a) is consented to in writing by the mortgagee under the prior mortgage, the holder of the prior encumbrance, or the secured party under the prior security interest.(5) Subsection (1) is subject to section 153.(6) This section and section 153—(a) apply to proceeds arising from a sale by a mortgagee of mortgaged property that are applied on or after 1 January 2008; but(b) do not apply if section 104PPA of the Property Law Act 1952 continues to apply under section 154.Receiverships Act 19936 Appointment of receivers under deeds and agreements...(3) A receiver appointed by, or under a power conferred by, a deed or agreement is the agent of the grantor unless it is expressly provided otherwise in the deed or agreement or the instrument by or under which the receiver was appointed....18 General duties of receivers(1) A receiver must exercise his or her powers in good faith andfor a proper purpose.(2) A receiver must exercise his or her powers in a manner he orshe believes on reasonable grounds to be in the best interestsof the person in whose interests he or she was appointed.(3) To the extent consistent with subsections (1) and (2) of thissection, a receiver must exercise his or her powers withreasonable regard to the interests of—(a) The grantor; and(b) Persons claiming, through the grantor, interests in theproperty in receivership; and(c) Unsecured creditors of the grantor; and(d) Sureties who may be called upon to fulfil obligations of the grantor.34 Court supervision of receivers(1) The Court may, on the application of a receiver,—(a) Give directions in relation to any matter arising in connection with the performance of the functions of thereceiver:(b) Revoke or vary any such directions.(2) The Court may, on the application of a person referred to in subsection (3) of this section,—(a) In respect of any period, review or fix the remuneration of areceiver at a level which is reasonable in the circumstances:(b) To the extent that an amount retained by a receiver as remuneration is found by the Court to be unreasonable in the circumstances, order the receiver to refund the amount:(c) Declare whether or not a receiver was validly appointed in respect of any property or validly entered into possession or assumed control of any property.(3) Any of the following persons may apply to the Court under subsection (2) of this section:(a) The receiver:(b) The grantor:(c) A creditor of the grantor:(d) A person claiming, through the grantor, an interest in theproperty in receivership:(e) The board of directors of the grantor or, in the case of agrantor that is in liquidation, the board of the grantor at the time the liquidator was appointed:(f) If the grantor is a company, a liquidator:(g) If the grantor is a person who has been adjudged bankrupt, the Official Assignee of the estate of the grantor.(4) The powers given by subsections (1) and (2) of this section—(a) Are in addition to any other powers the Court may exercise under this Act, any other Act, or in its inherent jurisdiction; and(b) May be exercised in relation to a matter occurring either before or after the commencement of this Act and whether or not the receiver has ceased to act as receiver when the application is made.(5) The Court may, on the application of a person referred to in subsection (3) of this section, revoke or vary an order made under subsection (2) of this section.(6) Subject to subsection (7) of this section, it is a defence to a claim against a receiver in relation to any act or omission by the receiverthat he or she acted or omitted to act in accordance with a direction given under subsection (1) of this section.(7) The Court may, on the application of a person referred to in subsection (3) of this section, order that, by reason of the circumstances in which a direction was obtained under subsection (1) of this section, a receiver is not entitled to the protection given by subsection (6) of this section.