CONSIDERATION
4 The Receivers' application is made pursuant to s 425 of the Act, which empowers the Court to fix the remuneration of a court-appointed receiver. Relevantly, s 425(8) specifies the matters to be taken into account when determining whether such an application should be granted:
(8) In exercising its powers under this section, the Court must have regard to whether the remuneration is reasonable, taking into account any or all of the following matters:
(a) the extent to which the work performed by the receiver was reasonably necessary;
(b) the extent to which the work likely to be performed by the receiver is likely to be reasonably necessary;
(c) the period during which the work was, or is likely to be, performed by the receiver;
(d) the quality of the work performed, or likely to be performed, by the receiver;
(e) the complexity (or otherwise) of the work performed, or likely to be performed, by the receiver;
(f) the extent (if any) to which the receiver was, or is likely to be, required to deal with extraordinary issues;
(g) the extent (if any) to which the receiver was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case;
(h) the value and nature of any property dealt with, or likely to be dealt with, by the receiver;
(i) whether the receiver was, or is likely to be, required to deal with:
(i) one or more other receivers; or
(ii) one or more receivers and managers; or
(iii) one or more liquidators; or
(iv) one or more administrators; or
(v) one or more administrators of deeds of company arrangement; or
(vi) one or more restructuring practitioners; or
(vii) one or more restructuring practitioners for restructuring plans;
(j) the number, attributes and behaviour, or the likely number, attributes and behaviour, of the company's creditors;
(k) if the remuneration is ascertained, in whole or in part, on a time basis:
(i) the time properly taken, or likely to be properly taken, by the receiver in performing the work; and
(ii) whether the total remuneration payable to the receiver is capped;
(l) any other relevant matters.
5 In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396, in reference to the matters in s 425(8) of the Act, Brereton J held at [6]:
…
7. Many of those factors - in particular, pars (d)-(e) and (g)-(h) - have as their unifying theme the concept of proportionality (being the relationship of the work done and the remuneration claimed to the value of the estate), which is an important consideration in determining reasonableness.
6 The alternative basis upon which relief was sought is r 14.24 of the Rules. That rule provides that:
14.24 Remuneration
A receiver may apply to the Court to have the Court fix the receiver's remuneration.
7 The power of the Court under r 14.24 of the Rules to fix the receivers' remuneration is governed by the general principle that the Court should only allow remuneration which is fair and reasonable: Australian Securities and Investments Commission v Linchpin Capital Group Ltd (No 3) [2020] FCA 44, 142 ACSR 193 at [7] (Derrington J).
8 A convenient summary of the relevant principles to be applied when fixing the remuneration of a court appointed receiver is found in Say Enterprises Pty Ltd at [6] (Brereton J):
1. A receiver is entitled to the costs, charges and expenses properly incurred in the discharge of the receiver's ordinary duties, or in the performance of extraordinary services that have been sanctioned by the Court.
2. The ultimate question is what amount of remuneration is 'reasonable', and this involves considering whether the work in respect of which remuneration is claimed was reasonably undertaken in the due course of the receivership, and whether the amount claimed for it is a fair and reasonable reward for it. The objective is to award a sum or devise a formula which will reasonably and fairly compensate the receiver for the time and trouble expended in the execution of his or her duties and the responsibility he or she has assumed.
3. The receiver bears the onus of justifying the reasonableness and prudence of the tasks undertaken for which remuneration is sought, and the reasonableness of the remuneration claimed for them.
4. Remuneration may be allowed on the basis of a fixed salary, a commission on receipts, or a quantum meruit having regard to the time, trouble and responsibility involved. It is a matter for the Court to determine what basis is appropriate in the particular case, having regard to the principle that the remuneration must be reasonable.
5. If a time-based approach is adopted, the Court is guided by professional scales of charges, with emphasis on the broad average or general rate charged by persons of the relevant status and qualifications who carry out the relevant type of work. The Court will usually act on time sheets created in the receiver's office, provided that they do significantly more than merely detail the total number of hours spent by the receiver and officers of particular grades on his or her staff.
9 In the present case, the application is supported by detailed written submissions prepared by Counsel for the Receivers, as well as four affidavits which address the relevant criteria as set out under s 425 of the Act.
10 Of the four affidavits relied on, two affidavits are sworn by the solicitor acting on behalf of the receiver, Ms Lauren Emma Danckwerts, and two affidavits are sworn by the receiver, Mr Michael John Hill, who is now a liquidator of PW Kitt Co.
11 As detailed in Ms Danckwerts' two affidavits, dated 27 January 2021 and 22 February 2021, the Receivers, in compliance with r 9.1 of the Federal Court (Corporation) Rules 2000 (Cth), notified the Australian Securities and Investments Commission (ASIC), the five largest creditors of PW Kitt Co and Mr Dawson, the sole shareholder of PW Kitt Co, of their intention to apply for the order fixing their remuneration. ASIC did not object to the amount claimed, and of the five creditors who were served, only two raised objections. The application and supporting affidavits were subsequently served on each of the objecting creditors, as required by the Federal Court (Corporation) Rules 2000 (Cth).
12 Mr Hill's affidavits are dated 18 December 2020 (First Affidavit) and 17 February 2021 (Second Affidavit). In his First Affidavit, Mr Hill summarises the work undertaken by the Receivers. Specifically, the First Affidavit details:
(1) the tasks required to be performed in each receivership and the nature of the work performed under each task;
(2) how the receiverships were staffed;
(3) the complexity of the work undertaken; and
(4) the reasonableness and necessity of the work performed.