Bendigo and Adelaide Bank Limited, in the matter of Reborn Enterprises Pty Ltd (Trustee) v Reborn Enterprises Pty Ltd

Federal Court of Australia|2018-06-08|Before: White J

The Applicant in his capacity as Liquidator of Reborn Enterprises Pty Ltd (in Liquidation) (Reborn Enterprises) and as Receiver of the assets of The Reborn Enterprises Trust (Reborn Trust) is entitled to be paid from Reborn Enterprises' right of exoneration as trustee of the Reborn Trust his costs, expenses and remuneration in respect of work undertaken to render the Reborn Enterprises' right of exoneration available to meet the claims of creditors whose debts were incurred in the administration of the Reborn Trust.
The amounts which the Applicant in his capacity as Liquidator of Reborn Enterprises is entitled to from the right of indemnity are: (a) $34,305 exclusive of GST for the period from 17 February 2016 to 31 October 2017; (b) $5,475 exclusive of GST for the period from 1 November 2017 to the finalisation of the liquidation.
Pursuant to r 14.24 of the Federal Court Rules 2011, the Applicant in his capacity as Receiver of the assets of the Reborn Trust be entitled to be paid remuneration from those assets in accordance with the Order above as follows: (a) $32,217.50 exclusive of GST for the period from 23 September 2016 to 31 October 2017; (b) $7,115 exclusive of GST for the period from 1 November 2017 to the finalisation of the receivership.
The receivership is otherwise determined.
The Applicant's costs of this action be costs in the winding up. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

12 As part of the consideration for the payment by Mr Paquette of $250,000, Mr Tonks will assign the interest of Reborn Enterprises in Almond Investments Limited, an almond growing project at Swan Hill in Victoria. 13 It is also a term that Bendigo and Adelaide Bank Limited, ABL Custodian and Reborn Enterprises' external accountant will not claim in the winding up. This will have the consequence that the $20,000 to be paid to Mr Tonks as receiver and manager can be applied to payment of his outstanding costs and disbursements as liquidator and as receiver and manager. 14 Apart from formal matters, both the liquidation of Reborn Enterprises and the receivership of the property of the Reborn Trust, have now been finalised. Mr Tonks' report to creditors of 14 November 2017 indicated that there had been receipts of $91,789.71 in the liquidation and payments of $44,193.43. Accordingly, the balance is $47,596.28. Together with the amount of $20,000 to be received from the settlement, Mr Tonks will hold $67,596.28. The costs and disbursements approved by the creditors and which are the subject of the proposed orders, exceed that amount. 15 Mr Tonks seeks remuneration in his capacity as liquidator from the Trust assets on the basis that that was work associated with the administration of the Trust. 16 Mr Tonks' report to creditors indicates that Reborn Enterprises did, for a short time, engage in an advisory business on its own account. As I understand it, none of the liabilities identified in the liquidation were incurred in relation to that business. 17 Mr Tonks' appointment as receiver and manager of the assets of the Reborn Trust was made pursuant to s 57(1) of the FCA Act. Neither the FCA Act nor r 14.24 of the Federal Court Rules 2011 (Cth) indicates a basis upon which the Court should assess the remuneration of an appointed receiver. In that circumstance, counsel for Mr Tonks submitted that the Court should take account of the considerations contained in the former s 473(10) of the Corporations Act 2001 (Cth) in assessing a liquidator's remuneration. He submitted that this was appropriate in the present case given that the Court had appointed Mr Tonks as receiver over the assets of the Reborn Trust and because Mr Tonks, as receiver, had undertaken a role and duty similar to that of a liquidator. 18 Section 473 of the Corporations Act was repealed by item 144 of Sch 2 of the Insolvency Law Reform Act 2016 (Cth). That item came into operation on 1 March 2017. However, despite its repeal, s 473 continues to apply to administrators appointed before 1 March 2017 (Corporations Act, s 1581). 19 Under s 473(10), the matters to which the Court could have regard were: (a) the extent to which the work performed was necessary (s 473(10)(a)); (b) the period during which the work was performed (s 473(10)(c)); (c) the quality of the work (s 473(10)(d)); (d) the complexity of the work (s 473(10)(e)); and (e) the value and nature of any property dealt with (s 473(10)(h)). 20 Section 425(8) of the Corporations Act now provides for these matters in respect of a receiver. 21 It is for a liquidator to establish that the remuneration claimed is reasonable. The Court is to determine the appropriateness of the remuneration on a consideration of all the material brought before it. Proportionality is one factor to which the Court should have regard: see Sanderson as liquidator of Sakar Nominees Pty Ltd (in liq) v Sakar [2017] NSWCA 38; (2017) 93 NSWLR 459 at [54]. 22 In the present case, Mr Tonks has deposed in some detail to the work which he performed in his capacity as liquidator and in his capacity as receiver and manager. I am satisfied that the work to which he has deposed is of a nature ordinarily to be expected to be undertaken by a liquidator or a receiver. Further, the rates at which Mr Tonks has charged do not, on their face, appear to be unreasonable. I note that the creditors, who are two well-resourced commercial institutions, have approved the remuneration. 23 I am not able to identify a basis upon which it would be inappropriate for the Court to approve the remuneration sought. Accordingly, I will make orders as sought by Mr Tonks. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.

Corporations Act 2001(Cth)ss 425(8), 473, 1581

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