Griffiths (Receiver and manager, and liquidator) of Samandac Pty Ltd (in liq) v Trustee for Chrisamanda Trust

Assets and liabilities 6 The evidence included a copy of the receipts and payments in relation to the receivership of the trust for the period 30 August 2017 to 17 August 2018, showing that the only remaining asset was $98,011.75 cash in bank. 7 At a meeting of creditors of the company on 5 October 2017, the remuneration of Mr Griffiths as administrator of the company from the commencement of the voluntary administration to 17 September 2017 was approved in the sum of $13,125.03 plus GST. 8 The company's creditors also resolved to approve Mr Griffiths' future remuneration as administrator for the period 18 September 2017 to 5 October 2017 up to a capped amount of $25,000 (exclusive of GST). 9 The company's creditors also resolved to approve Mr Griffiths' future remuneration as liquidator for the period from 5 October 2017 to finalisation of the liquidation up to a capped amount of $25,000.

Remuneration 10 Mr Griffiths claimed remuneration in respect of his role as receiver and manager in the sum of $87,728.59. 11 Generally, a liquidator of a company whose sole function was to act as trustee, appointed receiver and manager of the trust assets, is entitled to recover the costs of the receivership and the general costs of the liquidation from the trust assets: Re Stansfield DIY Wealth Pty Ltd (in liq) [2014] NSWSC 1484 at [45]. There is no reason why this should not extend to the costs of an administration prior to liquidation, approved by the company's creditors. 12 Mr Griffiths' evidence set out the steps taken by him as receiver and manager of the trust, namely: (1) reviewing the books and records of the company and trust including financial statements, management accounts, bank statements and other records of the company and trust; (2) assuming control of the trust's business and assets and all tasks associated with continuing to trade while a sale of business campaign was undertaken; (3) operating the accountant's trust account to facilitate the management of funds paid to the trust's business on behalf of clients; (4) successfully undertaking a sale of business campaign and all tasks associated with negotiating a sale resulting in a sale of the business for $65,000; (5) transitioning the business to the purchaser and finalising the trading of the trust's business; (6) holding discussions with major customers and creditors regarding payment of their debts and support of the business; (7) preparing and lodging a report with ASIC pursuant to s 438D of the Corporations Act 2001 (Cth), in addition to various other statutory lodgements including activity statements, income tax and other ASIC documents; (8) enquiring into the affairs of the trust, the business and the company; (9) initial investigations in relation to real property, motor vehicles, and ASIC searches in respect of the assets of the company and the trust; (10) sending correspondence to creditors of the company and the trust; (11) liaising with debtors of the trust's business and the company; (12) obtaining legal advice including in relation to the winding up application commenced by the Australian Taxation Office, the company's right of indemnity out of the trust's assets, and his appointment as administrator, receiver and manager, and as liquidator; (13) reviewing and preparing correspondence to and from the legal representatives of the ATO; (14) instructing solicitors to act on his behalf in relation to the application for his appointment as receiver and manager, the winding up application commenced by the ATO and this application; (15) preparing affidavit evidence in support of the appointment as receiver and manager and the winding up proceeding; (16) preparing affidavit evidence in relation to this application; and (17) all other tasks associated with the efficient and effective administration and liquidation of the company and receivership of the trust. 13 Rule 14.24 of the Federal Court Rules 2011 provides that a receiver may apply to the Court to have the Court fix the receiver's remuneration. In In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396 at [6], in reference to the equivalent r 26.4 of the Uniform Civil Procedure Rules 2005 (NSW), Brereton J at set out the following principles to be applied when fixing the remuneration of a court appointed receiver: (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 Corporations Act, s 425(8), 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: (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. (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) It will rarely be appropriate for a Judge to review a decision of a Registrar on remuneration on an item-by-item basis. (9) 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. However, a receiver may seek a direction that he would be justified in paying certain disbursements in order to obtain prior protection in respect of such a disbursement. [Citations omitted] 14 Mr Griffiths' evidence included a detailed timesheet that provides a detailed narration of the work undertaken and the time taken to perform that task. Mr Griffiths deposed that the work undertaken was delegated to a member of staff of appropriate seniority; each of the tasks were reasonably necessary; and the rates charged were commensurate with the standard rates charged in other insolvencies of similar size and complexity to the present. Orally, Mr Elliott, counsel for Mr Griffiths, emphasised that the trust business was a going concern, and Mr Griffiths was required to run the business to facilitate its eventual sale, with wages and salaries for the period 30 August 2017 to 17 August 2018 amounting to just over $86,000. Mr Elliott also noted that Mr Griffiths had collected debts of approximately $44,637. Mr Elliott submitted that the mere fact that the work performed did not lead to an augmentation of the funds available for distribution did not mean that Mr Griffiths was not entitled to be remunerated for it, citing Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liquidation) v Sakr [2017] NSWCA 38 at [57]. 15 In In the matter of Mecfab Holdings Pty Ltd [2015] NSWSC 2053, Brereton J stated relevantly at [6]: In circumstances where the unit holders have had an opportunity to object if they wish, and where the majority of them have consented, it seems to me that I should not quibble with the amount claimed. And in circumstances where the unitholders have had an opportunity to raise issues about the statement of receipts and expenditure and have not done so, again it seems to me that it would only incur further costs for little benefit to require any further accounting. 16 In this case, having regard to the lack of any objection to Mr Griffiths' claimed remuneration by the beneficiaries of the trust and Mr Griffiths' evidence, I was satisfied that it was appropriate to approve the reasonable remuneration sought by Mr Griffiths of $87,728.59 in respect of his role as receiver and manager of the trust. 17 Where the sum of this remuneration and the remuneration approved by the company's creditors is $150,853.62 plus GST, which exceeds substantially the amount of cash at bank, being the only asset of the trust, I was satisfied that it was appropriate to make orders: (1) that Mr Griffiths' costs, expenses and remuneration of Mr Griffiths in acting as receiver and manager of the trust and as liquidator and administrator of the company, including the costs of this proceeding, be paid from the assets of the trust; and (2) that his remuneration be allowed in the sum of $98,011.75.

Notice to trust beneficiaries 18 The following persons or entities are beneficiaries of the trust: (1) Christopher Byrne; (2) Amanda Jane Byrne; (3) Samuel Joseph Byrne (Mr Byrne's son); (4) Nicholas Byrne (Mr Byrne's brother); (5) a company in circumstances where the director or a natural person who beneficially owns a share carrying a right to vote at a general meeting is a beneficiary of the trust; (6) a trustee of another trust where inter alia a beneficiary or discretionary object of that trust is a beneficiary of the trust; and (7) an additional beneficiary appointed by the trustee. 19 The evidence established that: (1) Mr Byrne, Mrs Byrne, Samuel Byrne and Nicholas Byrne did not object to the trust fund being distributed in order to pay Mr Griffith's claimed remuneration in respect of his role as receiver and manager in the sum of $87,728.59; (2) none of them is a director of a company, beneficially own a share carrying a right to vote at a general meeting of a company, or are the trustee or beneficiary of another trust; and (3) no further beneficiaries were appointed.

Requirement for final accounts 20 Courts have dispensed with the requirement of passing final accounts in cases where the cost of complying with the formal procedure exceeds any benefit that may accrue from doing so: Kerr, in the matter of Angel's Castle Pre-School Pty Ltd (in liq) (No 2) [2012] FCA 57 at [5]. 21 I accepted that adhering to the requirement to pass final accounts (beyond the Summary of Receipts and Payments referred to above) would incur additional costs, which would outweigh any benefit that would accrue from doing so. 22 Accordingly, I was satisfied that I should grant leave to dispense with that requirement. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.