Final Remuneration Claim
12 The Receivers sought approval of their remuneration for work done from 27 March 2023 up to and including also the finalisation of the receivership (Final Remuneration Claim).
13 As an officer of the court, a receiver is required to obtain court approval for the payment of remuneration to themselves. See Cape v Redarb Pty Ltd (Receiver and Manager Appointed) (1991) 32 FCR 407 at 417. Rule 14.24 of the Federal Court Rules 2011 (Cth) provides that a receiver may apply to the court to have the court fix the receiver's remuneration. Exercise of that power is governed by the general principle that the court should only allow remuneration which is fair and reasonable. See, by way of example only, Australian Securities and Investments Commission v Linchpin Capital Group Ltd (No 3) (2020) 142 ACSR 193; [2020] FCA 44 at [7]. The relevant principles were summarised by Brereton J in Re Say Enterprises Pty Ltd [2018] NSWSC 396 at [6], namely:
(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.
(6) By analogy, the task involves consideration of the matters referred to in s 425(8) of the Corporations Act 2001 (Cth) which applies to receivers appointed under an instrument, namely:
(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;
(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;
(l) the time properly taken, or likely to be properly taken, by the receiver in performing the work;
(m) whether the total remuneration payable to the receiver is capped; and
(n) any other relevant matters.
(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.
(8) In respect of disbursements, no court approval or specific order is necessary in the absence of a challenge, although receivers should scrutinise them to ensure that they are reasonable and properly payable, and the court has an inherent jurisdiction to review receivers' disbursements as they are officers of the court.
14 Mr Deppeler's evidence was that on 15 September 2023, the Receivers issued a circular to interested parties which, among other things, provided details of the Receiver's proposed remuneration from 27 March 2023 to the finalisation of the receivership. That circular was annexed to Mr Deppeler's December affidavit, and quantified the actual and estimated costs forming part of the Final Remuneration Claim at $219,452.75 (excluding GST). Annexures attached to the circular set out additional work completed by the Receivers and future work to be completed, as well as a detailed remuneration report. Mr Deppeler deposed that no objection or query has been raised by interested parties in response to the proposed final remuneration amount.
15 In this application, the Receivers sought approval of a Final Remuneration Claim of $226,952.72 (excluding GST). This amount, which exceeds the projected total in the circular of 15 September 2023 by $7,499.97, was the subject of a further remuneration report subsequently prepared by the Receivers on 17 October 2023 for the benefit of the court. The further remuneration report, which was annexed to Mr Deppeler's December affidavit, provides commentary and analysis regarding the remuneration that has been incurred (including details of the average hourly rate), the outcomes achieved from the work undertaken, the features of the receivership that serve to explain its relative complexity and an analysis of the proportionality of the remuneration to the total value of gross realisations from the sales of the Consignment Grain. Annexure A to the further remuneration report provides a breakdown of all time entries by the Receivers and their staff in the period from 27 March 2023 to 13 September 2023, itemising all work undertaken, accompanied by details of the date, staff member, time spent and associated cost.
16 The variation in the quantum of the Final Remuneration Claim and the projected total in the 15 September 2023 circular is the product of an increase in the estimated remuneration for the post-14 September 2023 period, from $42,500 to $50,000.
17 Mr Deppeler deposed that, having reviewed the time entries of the Receivers and their staff giving rise to the Final Remuneration Claim, he is satisfied that the remuneration was incurred by staff of appropriate seniority while undertaking tasks that were appropriate and necessary for the Receivers to discharge their role.
18 Counsel for the plaintiffs submitted that the evidence adduced by the Receivers, along with the lack of opposition to the Final Remuneration Claim, enabled the court to be satisfied that the sum is fair and reasonable and, accordingly, can be approved. Consistently with the principles set out above, I agree.