Andrew Sallway and Duncan Clubb as provisional liquidators of Crown North Pty Ltd, Skye Suites Infinity Pty Ltd & Crown Property Agency Pty Ltd v Sathio Investments Pty Ltd atf Sathio Investments Trust and others (No 2) [2026] NSWSC 1143 — Receivers — Barrister AI
Andrew Sallway and Duncan Clubb as provisional liquidators of Crown North Pty Ltd, Skye Suites Infinity Pty Ltd & Crown Property Agency Pty Ltd v Sathio Investments Pty Ltd atf Sathio Investments Trust and others (No 2)
RECEIVERS — application to vary orders regarding distribution of proceeds of sale of assets — where receivership entities operated unincorporated joint venture for property development — where receivership entities borrowed moneys secured by mortgage over development properties — where related parties made payments into bank account from which interest and loan fees were paid — where receivers have formed view that payments gave rise to right by way of subrogation — where dispute has arisen regarding existence and extent of any such right — whether Court should amend orders to permit Receivers to pay any amounts they determine to be owing to related parties and secured by development properties prior to payment of surplus proceeds into Court
Quick Take
1Where there is a live dispute as to whether payments by related entities to service a secured loan give rise to rights of subrogation over mortgaged property, a court should not vary a receivership distribution order to permit receivers to unilaterally determine and pay out such disputed secured claims in priority to unsecured creditors before the dispute is judicially resolved.
2The recording of intercompany transfers as unsecured loans in group company books, combined with evidence of indiscriminate bidirectional fund flows, may displace the presumption that payments into a mortgage account were made for the purpose of servicing the secured debt so as to found subrogation.
3The appropriate course where subrogation is contested is to maintain the existing distribution order requiring surplus proceeds to be paid into court, deferring the priority question until reconciliation of intercompany balances is complete and the factual matrix for each payment can be properly examined.
