CORPORATIONS - External administration - Application by former liquidator for approval of remuneration - Voluntary winding up - Insolvency Practice Schedule (Schedule 2 to the Corporations Act (2001) (Cth)) applies - Remuneration approved - IMO Traditional Values Management Limited (in liq) [2012] VSC 650 - In the matter of Sakr Nominees Pty Limited [2017] NSWSC 668 - Sanderson, as liquidator of Sakr Nominees Pty Ltd (in liquidation) v Sakr

1 The plaintiff, David Ross, was appointed as joint and several liquidator of Digital Dialogue Media Pty Ltd (in liquidation) ('Company') on 26 September 2019, along with Guarav Mishra.

2 On the same date, Mr Ross and Mr Mishra were appointed as joint and several voluntary administrators of Digital Dialogue Holdings Pty Ltd ('DDH'), which was the sole shareholder/member of the Company. On 1 November 2019, Mr Ross and Mr Mishra were appointed joint and several liquidators of DDH. Mr Ross and Mr Mishra were members of the accounting/insolvency firm Hall Chadwick.

3 Mr Mishra resigned as liquidator of the Company and of DDH on 30 June 2020.

4 By orders made by the Federal Court on 2 September 2020, Mr Ross was removed as liquidator of the Company and DDH and Kristen Jennifer Beadle of Hall Chadwick was appointed as liquidator of both companies in his place.

5 By originating process issued 17 August 2020, Mr Ross applies, under s 60-10 of the Insolvency Practice Schedule (Corporations) (Schedule 2 of the Act) ('Practice Schedule'), alternatively s 90-15 of the Practice Schedule, for the approval of his remuneration in relation to his role as liquidator of the Company.[1] The following orders are sought:

(a) a determination that the further remuneration the liquidators are entitled to receive for necessary work properly performed in the conduct of the liquidation of the Company be fixed in the sum of $93,049.50 (plus GST); and

(b) the costs of this proceeding be costs in the liquidation of the Company.

(a) the affidavit of David Ross dated 13 August 2020 and filed 17 August 2020 ('Ross Affidavit');

(b) the "work in progress" report for the period ending 31 July 2020 ('WIP Report'), being the underlying remuneration matrix and summary of description of work from which the remuneration report contained at exhibit DR-7 to the Ross Affidavit was prepared;[2] and

(c) the affidavit of Ms Beadle dated 10 September 2020 ('Beadle Affidavit').

7 The liquidators also rely on written submissions dated 21 August 2020 filed by their solicitors, Piper Alderman Lawyers ('Written Submissions').

8 Mr Ross deposes that as he is also the liquidator of the sole member of the Company, being DDH, being the entity which could otherwise approve remuneration, it would be inappropriate for him to exercise that power for his own benefit. Therefore, he seeks the Court's determination of his remuneration.[3]

9 Before making an application of this type, r 9.2 of the Supreme Court (Corporations) Rules 2013 ('Rules') requires the liquidator to serve certain persons with a copy of the principal affidavit in support of the application and a notice in accordance with Form 16 of the Rules stating that it is the liquidator's intention to apply to the Court for an order determining their remuneration. The persons required to be served are:

(a) each creditor who was present, in person or by proxy, at any meeting of creditors;

(b) each member of any committee of inspection;

(c) if there is no committee of inspection and no meeting of creditors has been convened and held - each of the five largest (measured by amount of debt) creditors of the company; and

(d) each member of the company whose shareholding represents at least 10% of the issued capital of the company.

10 There is no committee of creditors. A first and final dividend has been paid to all creditors, at 100 cents in the dollar.[4] Accordingly, there are no creditors to be served pursuant to r 9.2(1), (2) or (3).

11 As Mr Ross was at the relevant time also the liquidator of DDH, the sole member of the Company,[5] no member has been served pursuant to r 9.2(4).

12 In the circumstances as outlined above, I do not consider it necessary for the originating process to be served on any other person.

13 The application was listed for hearing on 24 August 2020 before me. Prior to the hearing, I informed Piper Alderman Lawyers that I would deal with the application on the papers and that it was not necessary to attend a hearing.

14 Subsequent to that but before I had decided the application, the Court was informed of the replacement of Mr Ross as liquidator of the Company and DDH by Ms Beadle, as referred to in paragraph [6] above.6

15 Ms Beadle deposes that she supports the application filed by Mr Ross and that if necessary she is willing to be substituted as plaintiff in this proceeding.[7]

16 Former liquidators are able to apply to the Court for approval of their remuneration, so it is not readily apparent to me as to whether Ms Beadle needs to be substituted as plaintiff for Mr Ross. Rather, it may be more appropriate for Ms Beadle to be added as a plaintiff, particularly in circumstances where the remuneration the subject of this application includes some future remuneration.

17 For convenience, throughout these reasons I will refer to the application as being made by the liquidators and to the work done by the liquidators (rather than to individuals), since it covers work done by whoever was liquidator from time to time.

18 The Practice Schedule is relatively new, having been introduced with numerous amendments made to the provisions of the Corporations Act 2001 (Cth) ('the Act') relating to external administrators by the Insolvency Law Reform Act 2016 (Cth) ('ILRA'). Amongst other things, the ILRA repealed s 473 of the Act (which had provided for the determination of liquidators' remuneration) and introduced the Practice Schedule.

19 For the purposes of the Practice Schedule, an external administrator is defined as an administrator, an administrator under a deed of company arrangement, a liquidator, or a provisional liquidator, of the company.[8] A company is taken to be under external administration for the purposes of the Practice Schedule on the occurrence of certain events, being under administration, a deed of company arrangement has been entered into, a liquidator has been appointed, or a provisional liquidator has been appointed.[9]

20 Section 90-15 of the Practice Schedule relevantly provides as follows:

Court may make orders

(1) The Court may make such orders as it thinks fit in relation to the external administration of a company.

Orders on own initiative or on application

(2) The Court may exercise the power under subsection (1):

(a) on its own initiative, during proceedings before the Court; or

(b) on application under section 90-20.

Examples of orders that may be made

(3) Without limiting subsection (1), those orders may include any one or more of the following:

(a) an order determining any question arising in the external administration of the company;

(d) an order in relation to the costs of an action (including court action) taken by the external administrator of the company or another person in relation to the external administration of the company;

(f) an order in relation remuneration, including an order requiring a person to repay to a company or the creditors of a company, remuneration paid to the person as external administrator of the company.

Matters that may be taken into account

(4) Without limiting the matters which the Court may take into account when making orders, the Court may take into account:

(a) whether the liquidator has faithfully performed, or is faithfully performing, the liquidator's duties; and

(b) whether an action or failure to act by the liquidator is in compliance with this Act and the Insolvency Practice Rules; and

(c) whether an action or failure to act by the liquidator is in compliance with an order of the Court; and

(d) whether the company or any other person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the liquidator; and

(e) the seriousness of the consequences of any action or failure to act by the liquidator, including the effect of that action or failure to act on public confidence in registered liquidators as a group.

Costs orders

(5) Without limiting subsection (1), an order mentioned in paragraph 3(d) in relation to the costs of an action may include an order that:

(a) the external administrator or another person is personally liable for some or all of those costs; and

(b) the external administrator or another person is not entitled to be reimbursed by the company or its creditors in relation to some or all of those costs.

21 Section 90-20 of the Practice Schedule relevantly provides that a person with a financial interest in the external administration of the Company or an officer of the Company may apply for an order under s 60-15 of the Practice Schedule.

Sections 60-10 and 60-12 of the Practice Schedule

22 Section 60-10 of the Practice Schedule applies to this application, and it relevantly provides as follows:

(2) [External administrator in a members' voluntary winding up] A determination, specifying remuneration that an external administrator of a company in a members' voluntary winding up is entitled to receive for necessary work properly performed by the external administrator in relation to the external administration, may be made:

(a) by resolution of the company at a general meeting; or

(b) if a determination is not made under paragraph (a) - by the Court.

...

(3) [Amount of remuneration] A determination under this section may specify remuneration that the external administrator is entitled to receive in either or both of the following ways:

(a) by specifying an amount of remuneration;

(b) by specifying a method for working out an amount of remuneration.

23 In exercising the power to determine the Liquidator's remuneration, s 60-12 of the Practice Schedule states that 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 by the external administrator was necessary and properly performed;

(b) the extent to which the work likely to be performed by the external administrator is likely to be necessary and properly performed;

(c) the period during which the work was, or is likely to be, performed by the external administrator;

(d) the quality of the work performed, or likely to be performed, by the external administrator;

(e) the complexity (or otherwise) of the work performed, or likely to be performed, by the external administrator;

(f) the extent (if any) to which the external administrator was, or is likely to be, required to deal with extraordinary issues;

(g) the extent (if any) to which the external administrator 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 external administrator;

(i) the number, attributes and conduct, or the likely number, attributes and conduct, of the creditors;

(j) if the remuneration is worked out wholly or partly on a time-cost basis - the time properly taken, or likely to be properly taken, by the external administrator in performing the work;

(k) whether the external administrator was, or is likely to be, required to deal with one or more controllers, or one or more managing controllers;

(l) if:

(i) a review has been carried out under Subdivision C of Division 90 (review by another registered liquidator) into a matter that relates to the external administration; and

(ii) the matter is, or includes, remuneration of the external administrator;

the contents of the report on the review that relate to that matter;

24 While the criteria in s 60-12 of the Practice Schedule direct the Court to the factors that are to be taken into account, the ultimate question is whether the remuneration claimed by the Liquidator is reasonable.

The Court's approach when considering applications for approval of an external administrator's remuneration

25 The principles concerning applications for approval of the remuneration incurred by insolvency practitioners are well established and have been referred to in many decisions of this Court. These principles were developed when the previous statutory provisions applied, as I have set out above.

26 The factors contained in s 60-12 of the Practice Schedule are materially the same as the factors which were set out in s 473(10) of the Act.[10]

27 As the relevant provisions are relatively new, and as the factors to be taken into account are materially the same, the earlier authorities remain pertinent.

28 Gardiner AsJ summarised the relevant principles in IMO Traditional Values Management Limited (in liq)[11] ('Traditional Values') at paragraphs [18] to [25].

29 For convenience I adopt his Honour's summary, which referred to the principles identified by Davies J in Thackray v Gunns Plantations:[12]

At [60], her Honour summarised the principles to be applied by reference to the decision of the Full Court of the West Australian Supreme Court in Venetian Nominees v Conlan as follows:

(a) A summary procedure was involved, not unlike that applicable to the taxation of solicitor's costs, which is not necessarily subject to all the rules that would apply in an action.

(b) The initial task of the Court is to consider whether the liquidator has made out a prima facie case on the evidence before the Court that the remuneration claimed is fair and reasonable. The Court must make that assessment 'bringing an independent mind to bear on the relevant issues' even though at that point there is no objector.

(c) There is no absolute rule regarding the amount of detail required to support a remuneration claim. But the evidence relied on should be sufficient to enable potential objectors to review the amounts claimed and to ascertain whether there are matters to which objection should be taken. If there is inadequate evidence supporting the claim, no order should be made.

(d) If the liquidator establishes a prima facie case, the Court should allow for an objection procedure to enable objections to be made.

(e) If there are objectors to the claim or any part, the Court should then establish the validity of those objections.

At [63] and [64] of Thackray, her Honour stated:

.... the receivers accepted that the principles set out Venetian Nominees Pty Ltd v Conlan are persuasive and that they should put sufficient evidence before the Court to enable the Court to determine that the amounts claimed are fair and reasonable. That involved providing sufficient detail of the work that was done and the expenses claimed for the Court to assess the reasonableness of the remuneration claimed for that work and the reasonableness of the expenses incurred by the receivers. The reasonableness of remuneration may be adduced by evidence for example of an appropriate benchmark, such as the Insolvency Practitioners Association of Australia rates, for comparative work by persons with the relevant status and qualifications for that kind of work and justification of the hours spent. That amount can then be adjusted up or down to reflect other factors including:

(a) complexity above the norm for the kind of work involved;

(b) novelty and difficulty of the issues faced;

(c) the ultimate outcome obtained by the claimant.

The Court is looking for evidence of overcharging. Excessive charging may be indicated if there is a lack of proportionality between the cost of the work done relative to the value of the services provided. But there is no universal approach applicable in all circumstances by which the "reasonableness" of remuneration claimed or expenses incurred should be measured. The size, importance and complexity of the tasks performed are all factors to be taken into account. What is needed is sufficient information for the Court and any objector to have a clear view about what was done so that an assessment can be made about the reasonableness of the claim.[13]

30 Black J of the New South Wales Supreme Court also summarised the applicable principles in In the matter of Sakr Nominees Pty Limited.[14] In addition to the matters referred to above, his Honour stated the following propositions:

[T]he Court will generally need to be provided with an account in itemised form, setting out at least the details of the work done; the persons who did the work; the time taken to perform the work; the remuneration claimed; and, to the extent relevant, the expenses incurred.[15]

Proportionality is an important matter in considering the question of whether remuneration is reasonable, and the 'value' of a liquidator's work can include the benefit of resolving the position of creditors and beneficiaries; the benefit to the community of not permitting assets to remain unproductively in the hands of a defunct company for a long period; and can include work that was required to be done, although it did not result in a return to creditors.[16]

31 His Honour also canvassed a number of authorities regarding the method for calculating the remuneration, such as time costing or remuneration based on a percentage of realisations, concluding that:[17]

Most decisions ... have applied time costing as at least the starting point for a calculation of remuneration, although those decisions also emphasise the need for proportionality between the costs of the work done and the value of the services provided.

32 On this point, his Honour concluded by referring to the New South Wales Court of Appeal decision in Sanderson, as liquidator of Sakr Nominees Pty Ltd (in liquidation) v Sakr[18] which he said did not prefer any particular approach over another. Black J then stated:

Whether time-based remuneration or a percentage of recoveries is appropriate in a particular case will depend, in part, on the basis on which the liquidator puts his or her application for remuneration; and, in part, the view taken by the Court.[19]

33 The Company previously conducted two businesses. Its primary business was the management of a modern corporate environment co-working/shared office/event space located in Port Melbourne under the business name Blix Spaces ('Blix Spaces Business').[20]

34 The sole director of the Company and of DDH is Anthony Loxton. The Company's sole shareholder is DDH. DDH is ultimately controlled by two companies, Ricoleven Pty Ltd which is controlled by Mr Loxton and Tabart Pty Ltd which is controlled by interests associated with Sam Tabart.[21]

35 As noted above, Mr Ross and Mr Mishra were appointed as liquidators of the Company by resolution of its sole shareholder, DDH. On the same day, they were also appointed as voluntary administrators of DDH, and became liquidators of DDH on 1 November 2019.

36 In 2018, Tabart Pty Ltd and Mr Tabart commenced proceedings in this Court (proceeding no. S ECI 2018 00486) ('Proceeding'), seeking relief against various parties including Mr Loxton, the Company and DDH, including for the winding up of the Company and DDH on the just and equitable ground. Mr Ross deposes that Mr Loxton informed him that since the appointment of liquidators to both the Company and DDH, the Proceeding has been resolved and no claim has been made against the Company arising from such Proceeding. Mr Ross also deposes that he has not sought to make any claim, including as to costs, in the Proceeding. Mr Ross says that Mr Loxton informed him that the Proceeding was the primary consideration which led to the Company being placed into liquidation.[22]

Remuneration approved and paid to the liquidators

37 Mr Ross deposes that prior to the liquidators' appointment, Mr Loxton informed him that it was his intention that the Company would have either ceased trading or would immediately cease trading upon the appointment. He says that he was also told that the Company's accounts were all up to date and complete. Mr Ross deposes that as a consequence, he assumed the liquidation would be reasonably straightforward, primarily involving the getting in of some debtors. For these reasons, he estimated the liquidators' remuneration would be up to $25,000. Therefore, at the time of resolving to appoint the liquidators to the Company, it was resolved by DDH that the liquidators' remuneration be approved in the sum of $25,000 plus GST ('Approved Remuneration').[23]

38 Mr Ross deposes that the Approved Remuneration has been drawn in full.[24]

Reasons for increase in liquidators' remuneration/work performed by liquidators

39 Mr Ross deposes to 6 matters which he had not anticipated at the time of estimating the Approved Remuneration and which required substantial additional work to be performed and a consequent increase in the liquidators' remuneration.

41 The Company had not ceased trading the Blix Spaces Business at the time the liquidators were appointed. Mr Ross deposes that upon reviewing the lease for the Port Melbourne premises from which the Blix Spaces Business was conducted ('Premises'), he identified that it was due to expire on 31 January 2020. The landlord of the Premises held a bank guarantee from ANZ Bank for the sum of $71,500 against which the ANZ Bank held a cash deposit of the Company in that amount as security. Mr Ross says that he was concerned that any early termination of the lease would result in a forfeiture of the security due to the bank guarantee being called upon. In consultation with and at the request of Mr Loxton, it was decided that the liquidators would continue to trade the Blix Spaces Business until the term of the lease expired. This occurred, and Mr Ross says that he was able to recover in full the security held by ANZ Bank upon the return to it of its guarantee.[25]

42 Mr Ross had not anticipated having to trade the Blix Spaces Business for any period of time, noting the oversight and controls required whenever a business is traded whilst under an insolvency administration, and he had not anticipated the need to deal with the bank guarantee and security deposit.[26]

43 Mr Ross deposes that from the date of appointment to 31 January 2020, in respect of the Blix Spaces Business, the liquidators:[27]

(a) continued to collect the Company's debtors and raise invoices to its current tenants;

(b) monitored and oversaw the trading position;

(c) attended to queries from customers;

(d) reviewed invoices and ascertained GST liabilities; and

(e) negotiated the return of the bank guarantee by the landlord to ANZ Bank and the consequential return of the security deposit.

44 Mr Ross deposes that contrary to the information he had been given prior to the appointment, the Company's accounts were not up to date and had not been completed for the year ending 30 June 2019. He could not make any distribution to shareholders until he obtained a clearance from the Australian Taxation Office ('ATO') that there were no outstanding taxes due, so it was necessary to ensure that the books and records of the Company were all brought up to date.[28]

45 The absence of up to date accounts required the following tasks to be performed by the liquidators:[29]

(a) reviewing the Company's income tax returns for the financial year ending 30 June 2019 and for the period 1 July 2019 to 25 September 2019 for the purpose of calculating the Company's income tax liability and tax clearance;

(b) reviewing the Company's GST returns for relevant periods for the purpose of calculating the Company's GST liability and tax clearance;

(c) preparing income tax returns and financial statements related to both the pre- and post-appointment periods, including numerous discussions with the Company's external accountants;

(d) procuring the preparation of BAS lodgements for both the pre- and post-appointment periods;

(e) attending to the lodgement of income tax returns and GST returns; and

(f) making numerous requests to the Company's external accountants following up on the progress of the tax returns, financial statements and BAS lodgements, noting that as at the date of his affidavit, the financial statements and income tax returns for the post-appointment period remain outstanding.

46 Mr Ross had not budgeted for these costs in providing the estimate for the Approved Remuneration, and he says that the preparation of the 2020 accounts spanning a pre- and post-appointment date was particularly time consuming involving reconciliation of debtor recoveries.[30]

Extensive liaison with the Company's director

47 Mr Ross deposes that he utilised the services of Mr Loxton to assist with the ongoing trading of the Blix Spaces Business and for discussions and negotiations with the landlord and ANZ Bank. He says that this is not unusual in a members' voluntary liquidation.[31]

48 Mr Ross says that although the trading of the business and dealings with the landlord were relatively uncomplicated, the additional time required to engage with Mr Loxton in this regard, as well as in respect of getting the Company accounts up to date, resulted in significant additional costs being incurred.[32]

Dealing with the Proceeding/loan account with Tabart Pty Ltd

49 Mr Ross deposes that in providing the estimate for the Approved Remuneration, he had not considered dealing with the Proceeding to any extent. He had been aware of it but it was stayed as against the Company and DDH upon the appointment of the liquidators. The liquidators were required to instruct the solicitors on the record for the Company and DDH to appear and inform the Court of the appointment, although Mr Ross notes that this did not result in any significant costs beyond his original estimate.[33]

50 However, following their appointment, Mr Ross says that they identified a material fact in issue in the Proceeding that they needed to deal with and which resulted in the incurring of material additional unanticipated costs. In or about 2016 a loan account had been established in the Company's accounts recording a debt owing by Tabart Pty Ltd to the Company in the sum of $570,118 on account of unpaid dividends and the purchase of a motor vehicle. Mr Tabart denied this indebtedness.

51 This required the liquidators to:[34]

(a) investigate the matter, including reviewing the documents filed in the Proceeding and a draft witness statement for Mr Tabart;

(b) reviewing the books and records of the Company; and

(c) reviewing information provided by Mr Loxton.

Dealing with the proof of debt lodged by the director

52 At the time of providing the estimate for the Approved Remuneration, Mr Ross did not anticipate the costs of addressing the proof of debt lodged on behalf of Mr Loxton in his own right for unpaid commissions and redundancy in excess of $356,0000 ('Proof of Debt').[35]

53 Mr Ross deposes that given the tensions between Mr Loxton and Mr Tabart, the liquidators were particularly interested in ensuring that in dealing with this claim it did not result in challenges from either party which would have resulted in further costs and delay.[36]

54 In dealing with the Proof of Debt, the liquidators performed the following work:[37]

(a) conducting a thorough review of the claim;

(b) arriving at and communicating a decision.

55 The final unanticipated matter when providing the estimate for the Approved Remuneration is considering the effect on any distribution by proceedings in the family law jurisdiction of the Federal Circuit Court between Mr Tabart and his spouse, including the effect of orders made in that proceeding concerning the distribution of funds to Mr Tabart or Tabart Pty Ltd.[38]

56 Exhibited to the Ross Affidavit are several reports by the liquidators: the initial remuneration report dated 25 September 2019 ('IRR'); reports to creditors dated 6 December 2019 and 17 April 2020; and a remuneration report: summary of additional remuneration for the period 26 September 2019 to 31 July 2020 ('Remuneration Report').

58 It is apparent from those materials that the remuneration of the liquidators and their staff has been calculated on a time-cost basis. The IRR sets this out and states that the hourly rates will be those used by Hall Chadwick, which are also set out in the IRR.[39]

59 The Remuneration Report consists of a table recording, for each Hall Chadwick employee who worked on the liquidation of the Company, their hourly rate and position, their total time spent and corresponding amount billed per category of work, and their overall total time spent and amount billed. The categories of work are: administration; creditor; trade on; investigations; employee; assets; dividend; and litigation (each, a 'Work Category').[40]

60 The WIP Report, from which the Remuneration Report is derived, sets out similar information but in more detail. In respect of each Hall Chadwick employee who worked on the liquidation of the Company, the following is recorded (grouped according to each Work Category):

(a) a narration or explanation in respect of each task performed;

(b) the name of the person who performed each task, their hourly rate, and the role performed by that person;

(c) the date on which each task was performed; and

(d) the amount of time spent on each task and the associated fees incurred.

The work performed by the liquidators and their staff

61 Much of the work performed by the liquidators and their staff has been described above when discussing the evidence in respect of the reasons why the remuneration exceeded the Approved Remuneration.

62 The Remuneration Report describes, in detail, tasks performed in relation to each of the Work Categories. The WIP Report then sets this out in further detail, based on individual narrations by each Hall Chadwick employee. I note that some of the Additional Remuneration includes work performed by Hall Chadwick in respect of this application.

Amount of remuneration for which approval is sought for the period from 26 September 2019

63 As noted above, the members' resolution appointing the liquidators approved their remuneration up to $25,000 plus GST. I have referred to this as the Approved Remuneration.

64 As at 31 July 2020, the liquidators have incurred total time in the amount of $83,049.50 plus GST ('Additional Remuneration') in the conduct of the liquidation, over and above the Approved Remuneration.[41] In this application, the liquidators seek approval for the Additional Remuneration.

65 Ms Beadle deposes that she has reviewed the Ross Affidavit, the creditors' reports, the Remuneration Report and the WIP Report. She says that there is a difference in the total between the WIP Report ($83,893.00) and the Remuneration Report ($83,049.50) of $843.50. Ms Beadle says that this due to an hourly rates error which was rectified in the Remuneration Report and she confirms that the amount of $843.50 will be written off.[42]

66 Mr Ross deposes that he estimates that further fees of up to $10,000 plus GST ('Future Remuneration') is likely to be incurred, for which the liquidators seek the Court's approval, in relation to the following tasks ('Future Tasks'):[43]

(a) lodgement of forms with ASIC, and preparation and lodgement of finalisation documents;

(b) preparation and lodgement of GST returns for the post-appointment period;

(c) preparation and distribution of further reports to creditors;

(d) obtaining tax clearance from the ATO;

(e) performing the final distribution to creditors and members in the Company's winding up, including any requisite reviews of further proofs of debt; and

(f) performing tasks generally required for the finalisation of the Company's liquidation.

67 Ms Beadle deposes that she has reviewed paragraph 28 of the Ross Affidavit regarding the Future Tasks and she has discussed the file with Mr Mishra, who remains involved in the file. She deposes that the estimate given by Mr Ross for the Future Remuneration may be exceeded due to the requirement to finalise the taxation matters of the Company and to finalise some outstanding elements relating to the intercompany loans. She says that barring any unforeseen events, the Future Remuneration will be capped at $10,000 plus GST and she confirms that she does not seek any further allowance in that respect.[44]

68 Mr Ross deposes that in preparing the Remuneration Report, he reviewed the WIP Report and is satisfied that all work undertaken was reasonably necessary to be undertaken in the conduct of the liquidation of the Company. He says that he is satisfied that it has been undertaken by an individual of appropriate rank and responsibility required for that task. He also says that the liquidators and other staff members have attended to various tasks at differing fee rates reflecting the level of task being undertaken.[45]

69 Based on all of the evidence provided, I am satisfied that the liquidators have made out a prima facie case for payment of their remuneration, within the meaning referred to in paragraph 29 above. That is, the liquidators have made out a prima facie case that the remuneration claimed is fair and reasonable, and there is sufficient information to enable potential objectors to review the amounts claimed and to ascertain whether there are matters to which objection should be taken.

70 From my experience in matters associated with insolvency administrations, I know the hourly rates specified by the liquidators to be commensurate with the hourly rates typically charged by insolvency practitioners.[46]

71 Although a prima facie case has been made out, the Court is still required to review the claimed remuneration, taking the matters identified in s 60-12 of the Practice Schedule into account.

72 As noted above, the liquidators seek approval for their remuneration in the amount of $83,049.50 (plus GST) as Additional Remuneration and $10,000 (plus GST) for Future Remuneration.

73 In terms of the matters identified in s60-12 of the Practice Schedule, I am satisfied that:

(a) the work performed by the liquidators was necessary and properly performed;

(b) as set out above, some of the work required of the liquidators was complex;

(c) other than in trading on the Blix Spaces Business, the liquidators were not required to accept a higher level of risk or responsibility than was usually the case or to deal with extraordinary issues; and

(d) the remuneration was calculated on a time basis, and the time taken for each task and the level of employee performing that task is set out in sufficient detail, by reference to the WIP Report and the Remuneration Report.

74 I am satisfied with the explanation given by Mr Ross as to why the remuneration incurred for work performed by the liquidators during their appointment exceeded the Approved Remuneration. I am also satisfied that it was proper and necessary for the liquidators to perform the work which resulted in the incurring of the Additional Remuneration.

75 The liquidators are entitled to their reasonable remuneration incurred in the preparation and conduct of this application. In Deputy Commissioner of Taxation v Starpicket Pty Ltd (No 2) Gordon J (as her Honour then was) stated that:[47]

The Liquidator is entitled to reasonable remuneration for work performed after the winding up was set aside, to the extent that such work was performed in accordance with his duties and the law. This entitlement encompasses not only the filing of the requisite forms with the Australian Securities and Investments Commission (ASIC), but also those acts required of the Liquidator to transfer control of Starpicket back to its directors. It also includes preparation of the Liquidator's application for remuneration currently before the Court. As stated by Zeeman J in Re Reiter Brothers Exploratory Drilling Pty Ltd [1994] TASSC 42; (1994) 12 ACLC 430 at 441:

[T]he applicant is entitled to be remunerated for work necessarily done by him by way of complying with the law subsequent to the termination of his appointment. ...

In my view, work properly done by the applicant by way of preparing his claim for remuneration falls to be dealt with as part of his remuneration.

76 The liquidators' reticence in relying on a members' resolution for approval of the Additional and Future Remuneration in this case is understandable. The liquidator control the only member of the Company, and relying on a members' resolution would effectively mean that they are approving their own remuneration. It is proper that the liquidators make application to the Court for approval of their remuneration in connection with the liquidation of the Company. As I see it, the liquidators had no viable option for getting their remuneration approved other than an application to the Court. In such circumstances, it is clear that the remuneration incurred in making this application should be included in the approved remuneration.

77 I have reviewed the Remuneration Report and the WIP Report, along with the description of work performed given in the Ross Affidavit. These contain sufficient detail for me to be satisfied as to the amounts claimed. In particular, I am satisfied that:

(a) there was an appropriate degree of delegation of the work to be performed, in that the matters which were of a more routine nature were performed by more junior employees and charged at lower hourly rates;

(b) the tasks described are reasonable and necessary to have been performed, and the time taken to perform them (and therefore the amounts charged for them) were reasonable; and

(c) there is no evidence of duplication, or unnecessary duplication, of work.

78 For the above reasons, I will approve the liquidators' remuneration in the amount of $93,049.50 plus GST.

79 Accordingly, orders will be made in accordance with the above, along with orders for the substitution or addition of Ms Beadle as plaintiff and that the liquidators' costs of this proceeding be costs in the liquidation of the Company.

80 The proceeding will be listed for final orders to be made, once the liquidators and their solicitors have had an opportunity to consider these reasons. The issue of whether the order in respect of Ms Beadle should be for her to substituted or added as plaintiff can be addressed at that time.

[1] By orders made on the Court's own motion, the proceeding has been referred to me pursuant to r 84.04 of the Supreme Court (General Civil Procedure) Rules 2015 for hearing and determination.

[2] This document was requested by me through my Associate, as it was referred to in the Ross Affidavit where it was said to be available to the Court on request. It was supplied by Piper Alderman Lawyers by email to my Associate on 24 August 2020.

[10] There are some minor changes to the language used: for example, s 60-12 of the Practice Schedule refers to the extent to which the work was 'necessary and properly performed', whereas s 473(10) of the Act referred to the extent to which the work performed was 'reasonably necessary'.

[11] [2012] VSC 650 (14 December 2012).

[12] [2011] VSC 380; (2011) 85 ACSR 144 ('Thackray').

[13] Traditional Values [60], citing Thackray [2011] VSC 380; (2011) 85 ACSR 144, [63]-[64] (citations omitted).

[14] [2017] NSWSC 668 ('Sakr').

[18] [2017] NSWCA 38 ('Sanderson').

[39] Exhibit DR-5 to the Ross Affidavit.

[40] Exhibit DR-7 to the Ross Affidavit.

[46] The hourly rates for Hall Chadwick are contained in exhibit DR-5 to the Ross Affidavit.

[47] [2013] FCA 699, [54]. This reasoning was followed in ACN 104 635 369 Pty Ltd (in liq) (formerly Total Plant Services Pty Ltd) v Hamilton (2015) FCA 1219 (13 November 2015) [53].