- Ide v Ide

- Ide v Ide - [2021] NSWSC 1346 - NSWSC 2021 case summary — Zoe

[3]

Affidavit evidence

Mr Copeland relies on several affidavits in support of the application. He reads his affidavit dated 6 May 2019, which provided background information in respect of the Company and the Trust, and referred to investigations which Mr Copeland had undertaken as to the ownership of a property at Gerroa in New South Wales by the Trust, and to his assessment of the financial position of the Company and the Trust. He reads a second affidavit dated 3 October 2019, which referred to his appointment as receiver of assets of the Trust and to steps which he had taken to realise equity in the Gerroa property. Mr Copeland also relies on an affidavit dated 5 December 2019, which referred to further investigations which had been undertaken, and to possible claims against persons associated with the Company and the Trust, and addressed the circumstances of a potential realisation of the Trust assets, by a transfer of the trust property to a new trustee appointed by Mr Battaglia. The Court ultimately declined to give a direction that that transaction was justified.
The primary evidence relied on in respect of the application is Mr Copeland's further affidavit dated 30 August 2021, where he refers to the basis on which remuneration is claimed, on a time costing basis, and sets out, at some length, the assets and liabilities of the Trust, the circumstances of his appointment as receiver, and the further investigations which had been undertaken in respect of the Gerroa property which indicated that that property was secured to the National Australia Bank ("NAB") in respect of an amount owing by Mrs Battaglia. Mr Copeland also there addressed the application to the Court for directions as to a transaction with the new trustee of the Trust, which did not proceed after the Court declined to give the direction noted above, although noting that Mr Copeland should have his costs of the application from Trust assets in the relevant circumstances.
Mr Copeland also refers to the steps he has subsequently taken to obtain possession of the Gerroa property and to market it and bring about its sale. I note, without needing to set out at any length, that that process was difficult and that several steps were taken by persons associated with the Battaglia family to obstruct the sale process and obstruct attempts to obtain possession of the property. I need say nothing further as to those steps, other than to note that they would have increased the costs incurred by Mr Copeland in realisation of that property and required, in particular, an application to be made to the Court for an order for possession of the property, where it was occupied by persons related to Mrs Battaglia.
Mr Copeland's evidence also addresses the proceeds obtained from the sale, and it is plain from that evidence that a good result was achieved, exceeding both the valuation which Mr Copeland had obtained for the property, admittedly some time prior to the sale, and the agent's estimate of a potential sale price, by a considerable margin. In the result, a surplus has been achieved from the sale, after the legal costs incurred in the various steps necessary to bring about the sale and the agent's fees payable in respect of the sale, which will potentially be available to creditors of the Company and the Trust, as appropriate.
Mr Copeland also addresses the basis of his claim for remuneration, referring to reports to creditors which he has provided in respect of the remuneration, confirming that he has had regard to the principles and standards of conduct prescribed in the ARITA Code of Conduct in respect of remuneration, and setting out the time recording process adopted by his firm, which records time against the well-recognised ARITA categories as to work done. Mr Copeland also addresses the process for review of time charged, which is in common form for insolvency firms, and addresses the hourly rates charged by his firm. Mr Copeland expresses the view that those hourly rates are reasonable, having regard to relevant matters, including the experience of staff members and the nature and complexity of the work done. Although a view expressed by an insolvency practitioner of that character is not determinative, it is desirable that an insolvency practitioner addresses that matter, by evidence on oath or affirmation. I have also here had regard to the detailed evidence by way of time recording entries and by the account of the work done, which underpins Mr Copeland's assessment of that work. Mr Copeland also expresses the view, which is again relevant although not determinative, that the hourly rates charged by his firm and the total remuneration claimed were proper and reasonable in the relevant circumstances, and that the work undertaken was performed in an efficient and timely manner, and he expresses his view that the remuneration claimed is fair and reasonable in the circumstances.
An exhibit to Mr Copeland's affidavit in turn evidenced the steps which were taken to realise the property, including the filing of an application for possession of the property, given the difficulties to which I referred above; a further application which needed to be made to release a freezing order on the property so as to bring about a sale, increasing the complexity of the sale process; and the dealings with the agent in respect of the sale, which confirm Mr Copeland's evidence as to the favourable result achieved in the course of the sale. The exhibit to Mr Copeland's affidavit also evidenced the charge-out rates of his firm and the work done, which is set out in a very detailed schedule of attendances, and also in a summary schedule which allows the Court to assess the distribution of work done, which shows the work was split between, in particular, Mr Copeland and another member of his staff who had a lower charge-out rate, reducing the average charge-out rate across the matter. It is not surprising that Mr Copeland was required to undertake a significant amount of work personally, given the contentious and difficult character of the receivership, and the steps which had been taken to interfere with the sale process, to which I referred above.
Mr Copeland also relies on an affidavit dated 14 September 2021 of his solicitor, Mr Whiffen, which refers to service of the application on SX Projects and its liquidators, another entity and its liquidator, and the Deputy Commissioner of Taxation. I have regard to the fact that each of those persons plainly have the capacity to assess an application of this kind; SX Projects and its liquidator had indicated their intent carefully to review the extent of the remuneration claimed by Mr Copeland; and none of them have ultimately sought to oppose the application for remuneration claimed.

[4]

Submissions and determination

Mr Krochmalik, who appears for Mr Copeland, in turn makes detailed submissions, setting out the factual background to the application and the work done in the course of the receivership, which I have largely addressed by reference to the affidavit evidence above. Mr Krochmalik in turn refers to the Court's power to approve the remuneration claimed, in respect of a receivership over trust assets, and to the Court's inherent jurisdiction to allow remuneration to a trustee and the receiver of trust assets, in an application of this kind: Re North Food Catering Pty Ltd [2014] NSWSC 77; Re Aberdeen All Farm Pty Ltd (in liq) [2020] NSWSC 770 at [11]ff.
Mr Krochmalik in turn refers to the process which a Court will adopt in dealing with a remuneration claim of this kind, including that the Court will not itself undertake a line-by-line review of remuneration, but will instead address issues of principle and, generally, undertake a broad review of the remuneration claimed, including by reference to the total hours spent on a time costing basis and the proportionality of the work done in the relevant circumstances: Ide v Ide (2004) 184 FLR 44; (2004) 50 ACSR 324; [2004] NSWSC 751 at [39]ff, followed in Mohamed v Hurstville Tower Medical Clinic Pty Ltd (in liq) [2006] NSWSC 4 at [8]. The Court will, of course, also have regard to the principles applicable to the assessment of remuneration more generally, to satisfy itself that the remuneration claimed is proportionate to the work done: Templeton v Australian Securities and Investments Commission (2015) 108 ACSR 545; [2015] FCAFC 137; Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr (2017) 93 NSWLR 459; (2017) 118 ACSR 333; [2017] NSWCA 38.
I recognise that, as Mr Krochmalik points out, proportionality is plainly a relevant consideration, but issues of proportionality may also be affected by the value of the assets which are the subject of an insolvency, and the complexity of the work which needs to be done. Here, the amount of remuneration claimed is at the lower end of percentages that are generally seen in matters of this kind, although the complexity of the work undertaken will have been increased by the steps taken by interests associated with the company and the Trust to resist the sale process, to which I referred above. I have noted above that I should also have regard, here, to the fact that creditors of the Company and the Trust include informed parties, who had both capacity to undertake a detailed review of it, and reason to object if that review indicated that the amount claimed was not proportionate or was unreasonable in the relevant circumstances, but have not done so.
I am here satisfied, having regard to the matters to which Mr Krochmalik refers in submissions and the evidence to which I have referred above, that the work undertaken reflects the steps necessary in respect of the investigation of the affairs of the Trust and the realisation of the Gerroa property, where there was resistance to the realisation of that property, and resulted in a favourable realisation of that property at a premium to the original valuations for it. Having regard to the time records which have been tendered, and Mr Copeland's evidence, there is no reason to think that the work was not performed in an efficient manner or that the charge-out rates were unreasonable or that there was not a sensible distribution of work between Mr Copeland and members of his staff, to seek to minimise the overall average cost of the work undertaken. As I have noted above, the remuneration appears to be proportional to the value of the assets realised, having regard to the additional complexities involved in that realisation.
For these reasons, I make orders in accordance with the short minutes of order initialled by me and placed in the file. These include an order that Mr Copeland's costs of the application be costs in the receivership and be paid from the assets of the Trust, where this application is a proper step in the administration of the Trust assets.

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Cases Cited (9)

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