22 The standard procedure for taking accounts in relation to partnership suits in which there is some dispute is set out at [14,007] of volume 2 of Ritchie's Supreme Court Procedure NSW. That procedure involves a number of steps including the filing of a notice of motion, the filing of accounts by the receiver, vouching of those accounts before the Chief Clerk, cross examination of the receiver on his accounts before a Master, the filing of surcharges and/or falsifications, and then the trial and final determination of the issues arising on the surcharges and falsifications. This seven stage process carries with it considerable cost to the parties and significant time delay, at times taking years to come to fruition.
23 A surcharge to accounts is an allegation that the accounting party has omitted something for which credit ought to be given. A falsification is an allegation that an entry in the accounts is in respect of money not paid or improperly paid: see Pit v Colmondeley (1754) 2 Ves Sen 565, 566; 28 ER 360.
24 In determining whether the court is justified in bypassing the usual procedure for taking accounts it is incumbent on a judge to consider, on the one hand, the benefits of and the reasons behind implementing the standard procedure and, on the other hand, the benefits associated with taking a more holistic approach by making a determination in a less formal way in accordance with s 63 of the Supreme Court Act 1970.
25 Where there are many issues arising on accounts, the time honoured practice on taking accounts has much to commend it as it focuses on the whole issue as well as identifying all the sub-disputes which will need to be determined in order to decide the main issue. It also prescribes the onus of proof, the onus with surcharges being on the surcharging party and the onus with falsifications being on the accounting party. The present case involves a falsification, so that the onus would be on the receiver.
26 The importance of adhering to this process is realised in cases dealing with substantial assets and those ranging from the middle to the higher end of the financial scale. However, in cases where the gross assets of the receivership are minimal and the parties are not wealthy and indeed in cases such as the present, any benefit obtained by adhering to the standard procedure is outweighed by the significant costs and time involved.
27 In Marra Developments Ltd v B W Rofe P/L [1977] 2 NSWLR 616 at 626, Hutley JA rightly said that granting declarations in proceedings where there should be one trial on the accounts offends against s 63 because it encourages multiplicity of proceedings as against one trial of all issues.
28 However, in this 21st century, the court is more ready to take a practical approach. It is true that hearing applications for declaration may in the long run be more costly and a more convoluted procedure than taking of accounts. On the other hand, the practice of taking accounts was worked out in the 18th century and whilst excellent for complicated matters, can be slow and costly in relatively simple matters. This is demonstrated by the relatively few accounts matters that pass through all stages in the Master's Office and the large number of accounts that are referred out to private accountants.
29 It should also be observed that under the English practice, receivers' accounts are now dealt with far more informally with the parties having to make specific objections to the accounts and only the subject of the objections being considered. If there are no objections, the accounts pass automatically; see Kerr on Receivers 17th ed (Sweet & Maxwell, London 1989) pp 339 et seq.
30 A court must also, however, remember that its power to grant declaratory relief should only be exercised in circumstances where the declaration sought will have practical utility and should not be used to determine matters which may well be otiose.
31 Although I may be accused of proceeding contrary to the Court of Appeal's decisions that I have cited, it seems to me that in the current climate, a judge must evaluate each of the above competing factors when reaching a decision as to whether to examine and grant declaratory relief in a case where the likelihood is that the decision will end the controversy between the parties even though there is no guarantee of this.
32 In the present case, it is true that there are a couple of other disputes between the parties as I have outlined above. However, the present question as to whether receivers may charge a partnership for the time spent assisting police with their enquiries over an incident that occurred whilst carrying out their duties as receivers is a discrete one. It will not go away no matter what the accounts may otherwise show. Furthermore, it is of some general public interest.
33 I take on board Mr Golledge's point that there is no current application for remuneration before the court. However, it is almost certain that, in due course such an application will be filed and that the receivers will claim remuneration for this time spent. I note that all parties seem to assume that the receivers will be able to justify the time claimed. The only issue is whether it is billable time.
34 In my view, the scales are tipped in favour of determining the issue. This is a case where the monetary value in dispute is relatively low with the receivers claiming some $20,000. The costs associated with the standard procedure would outweigh the benefit to be gained by any party.
35 Under some modern rules of court, a superior court would not concern itself with a dispute over $20,000. However, some small disputes are merely instances of a wider problem. In the present case, it seems to me that it is in everybody's interest that the question be decided and preferably with as little expenditure of time and cost as possible.
36 (b) A receiver will, unless it is otherwise ordered or unless the receiver consents to act without salary, be allowed a proper salary or have allowances made to him for his care and pains in the execution of his duties. The question here is whether time taken to assist police with their enquiries when an incident occurred in the course of the receivers' agents' duties where one partner fatally shot the other partner's representative is billable as being within the receivers' mandate.
37 I have consulted the standard works on receivers, particularly Kerr on Receivers; Picarda, The Law Relating to Receivers, Managers & Administrators 3rd ed (Butterworths, London, 2000); Lightman & Moss, The Law of Receivers and Administrators of Companies (Sweet & Maxwell, London 2000) and O'Donovan, Company Receivers and Managers (LBC, Sydney, 1981).
38 One can find in those works, broad, general statements about the principles on which a receiver's remuneration is fixed, but little on the specific problem with which I have to deal. It is, however, of some use to set out some of those general statements.
39 First, the court constituted by a judge, never considers a review of quantum, but only matters of principle: Re Catlin (1854) 18 Beav 508; 52 ER 200; Australian Coal and Shale Employees' Federation v Commonwealth (1953) 94 CLR 621.
40 Secondly, as Kerr says at p 233, a receiver is entitled to have his costs, charges and expenses properly incurred in the discharge of his ordinary duties, or in the performance of extraordinary services which have been sanctioned by the court. It is important to note that Kerr at page 235 says that where a receiver has undertaken such extraordinary services without the approbation of the court, allowances for them will not generally be sanctioned: Bristowe v Needham (1847) 2 Ph 190; 41 ER 914; Malcolm v O'Callaghan (1837) 3 My & Cr 52; 40 ER 844 and Viola v Anglo-American Cold Storage Co [1912] 2 Ch 305 at 311.
41 Picarda elaborates at page 482, noting that a receiver who, without applying to the court for directions, performs extraordinary or extra services going beyond what it was his duty as a receiver and manager to perform may be allowed remuneration in addition to his salary or commission if what he has done has benefited the receivership assets.
42 Thirdly, as Lightman & Moss say at 22-029:
"The receiver must justify the reasonableness and prudence of the tasks undertaken for which remuneration is sought, in the same way as he must justify the reasonableness and prudence of incurring disbursements for which he seeks allowance and reimbursement."
43 Thus, as with a falsification of accounts, the relevant onus is on the receiver.
44 Fourthly, it must always be remembered that a receiver's remuneration is not in the same category as costs: Mirror Group v Maxwell [2001] BCC 488. The receiver is making application for a fair recompense for what he or she has properly done. The award is in the discretion of the court according to well known guidelines: Lindley on Partnership 18th ed (Sweet & Maxwell, London, 2002) [23-177].
45 Fifthly, the court's objective is to award a sum or devise a formula which will reasonably compensate the receiver for the time and trouble expended in the execution of his duties and, to some extent, the responsibility he has assumed: Re Alexander McLean (1912) 14 GLR 561, 562. As Dennison J said in that case the vital question is what is the value to the estate of the work done by the receiver.
46 This point was taken up by Ferris J in Mirror Group Newspapers v Maxwell (No 2) [1998] 1 BCLC 638, 652 where His Lordship said that the court's task in assessing a receiver's remuneration is to reward value not indemnify against cost. His Lordship repeated this in Re Independent Insurance Co Ltd (No 2) [2003] 1 BCLC 640. This, of course, does not mean that the receiver is only remunerated if successful in adding value to the assets; see Waldron v MG Securities (Australasia) Ltd [1979] ACLC 40-541.
47 However, the mere fact that the work done is of value to the partnership is not enough if the work done is outside the receiver's remit. Thus in Venetian Nominees Pty Ltd v Conlan (1998) 16 ACLC 1653, a provisional liquidator was not remunerated for preparing statutory returns which were the duty of the directors to prepare.
48 Sixthly, the court will usually work off 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. As Ferris J said in Mirror Group Newspapers v Maxwell (No 2) [1998] 1 BCLC 638, 648:
"They must explain the nature of each main task undertaken, the considerations which led them to embark upon the task, and, if the task proved more difficult or expensive to perform than first expected, to persevere in it … . The amount of detail which needs to be provided will, however, be proportionate to the case."