In the matter of El Zorro Transport Pty Limited [2014] NSWSC 135

Solicitors: MSB Lawyers (applicants) File Number(s): 2013/157013

Judgment (EX TEMPORE) 1HIS HONOUR: By interlocutory process filed on 11 December 2013, the applicants Sule Arnautovic, Glenn Crisp and Dino Bernardino Calvisi apply for an order pursuant to (Cth) Corporations Act 2001, s 449E(1)(c), fixing their remuneration for acting as administrators of the company El Zorro Transport Pty Limited and, if necessary, an order pursuant to Corporations Act, s 447A to the effect that s 449E operate in relation to El Zorro in such a manner that the court may determine their remuneration notwithstanding that the administration has come to an end. 2The applicants were appointed administrators of the company on 14 June 2013. Their appointment came to an end when the company was wound up by order of the court on 8 July 2013 and liquidators other than the applicants were then appointed. 3The first question is whether in those circumstances s 449E authorises the court to make an order fixing their remuneration, and/or whether an order pursuant to s 447A to enable it to do so is necessary. Section 449E(1) relevantly provides as follows: (1) The administrator of a company under administration is entitled to receive such remuneration as is determined: (a) by agreement between the administrator and the committee of creditors (if any); or (b) by resolution of the company's creditors; or (c) if there is no such agreement or resolution--by the Court. 4In Re CMC Cairns Pty Limited (In Liquidation) [2011] QSC 240, Atkinson J dealt with circumstances in which the creditors had voted at an annual general meeting to approve further remuneration of the administrators for the time from the second meeting of creditors at which an earlier amount of remuneration had been approved until the company subsequently went into liquidation. Her Honour said: By then, of course, the company was, as I have mentioned, already in liquidation. It was not therefore strictly a resolution of the creditors of a company under administration and so was not effective under s 449E(1)(b) to be sufficient authority for the applicants to be paid the additional fees. 5Her Honour proceeded to hold that s 447A was available to support an order altering the operation of s 449E so that it would be available in the circumstances. 6The circumstances before her Honour are not identical to those before me, since her Honour was dealing with a resolution of the company's creditors rather than a determination by the court. However, it seems to me that s 449E(1)(b) ought not be construed as being limited to a resolution of the company's creditors while the company is a company under administration, and would extend to a resolution of the company's creditors even after the company has gone into liquidation. In any event, in my opinion s 449E(1)(c) enables the court to fix the administrator's remuneration in the absence of relevant agreement or resolution, whether before or after the administration has come to an end. In this view, I am supported by what was said by Austin J in Re Currabubula Holdings Pty Limited (in liquidation); ex parte Lord [2004] NSWSC 255; (2004) 48 ACSR 734 (at [6]: It may be open to Mr Lord to obtain an order of the court fixing his remuneration under 449E(1)(b). [I interpose that this was before the 2007 amendments effected, inter alia, a renumbering and lettering of the section]. His Honour continued: Under that provision the court is empowered to fix the remuneration to which the administrator is entitled, 'on the application of the administrator'. 'Administrator' is defined in s 9, relevantly, to mean an administrator of an entity appointed under Part 5.3A. It seems to me at least arguable that a person appointed as administrator has standing to apply to the Court for approval of his or her remuneration under s 449E(1)(b) after the administration has come to an end. It is not easy to see any necessity for construing the section to mean that the administrator's opportunity to have his or her remuneration fixed comes to an end if the administration is terminated and there has been no opportunity to convene a meeting of creditors. I note that for the purposes of some other provisions of the Corporations Act (such as the definition of 'deferred expenses' in s 556(2)) a person may be an "administrator" notwithstanding that the administration has come to an end. 7However, his Honour was not invited to exercise the discretion to fix remuneration under 449E in that case, and the matter was approached on a different basis. His Honour continued (at [7]): Since, however, I have not been invited to exercise the discretion to fix remuneration under s 449E(1)(b), and there is no good reason for declining to make a direction about remuneration under s 479(3), I shall proceed under latter provision. I do not regard s 449E as preventing the former administrator of a company that has gone into liquidation from making a claim for fees properly and reasonably incurred during the administration, in circumstances where there has been no opportunity to have the fees fixed by the creditors or the Court under the section. I shall now make a direction that Mr Lord, as liquidator, is justified in admitting a proof of debt by himself as administrator of the company in the amount of $2,917.42. 8In this case that course is not open, as the liquidators are not the former administrators. 9On the day before delivering judgment in Re Currabubula, Austin J had given judgment in Re Guerra Transport: Ex parte Jay [2004] NSWSC 245, in which his Honour said (at [33]): The plaintiff has also applied for an order under s 447A, having the effect that the committee of creditors of the company will be empowered to approve the plaintiff's remuneration as administrator pursuant to s 449E(1). Section 449E(1) states (to the extent relevant) that an administrator is entitled to such remuneration as is fixed by resolution of the company's creditors passed at a meeting convened under s 439A. A meeting of creditors has not yet approved the plaintiff's remuneration. If the meeting were to be adjourned to 30 June 2004, the plaintiff would have been without remuneration in respect of his role as administrator of the company for nearly ten months ... here, however, the administration will come to an end on 31 March 2004, for the reasons I have given. The committee of creditors of the company will cease to have any functions, since their functions are conferred in respect of a company under administration: Section 435F. Therefore, the order proposed is inappropriate. In my opinion it will be open to the plaintiff to make an application to the court for remuneration in respect of the administration under s 449E(1)(b), notwithstanding that the administration will have come to an end before the application is made. 10Accordingly, I hold that an administrator may apply to the court for remuneration under s 449E(1)(c), notwithstanding that the administration has come to an end when the application is made. It follows that relief under s 447A is unnecessary. 11Notice of the application has been served on the liquidators, who have not appeared to oppose it nor otherwise indicated any opposition to it. Notice of the application has also been given, in compliance with Supreme Court Corporations Rules, r 9.2, to each of the creditors of the company. The administrators have not received any notice of objection to the remuneration claimed from any of those creditors. 12The amount of remuneration claimed is some $102,941 for the period of the administration, and a further $9,453.50 post-administration. So far as the post administration period is concerned, an administrator is entitled to be remunerated for work necessarily done by him or her by way of complying with the law subsequent to the termination of the appointment (see Re Reiter Brothers Exploratory Drilling Pty Ltd ex parte Andrew Charles Robert Lee (1994) 3 Tas R (NC) N10; (1994) 12 ACLC 430. 13The supporting affidavit sets out in detail the matters in respect of which remuneration is claimed. While it seems a very large amount for an administration that lasted only some three weeks before it was terminated, the claim is justified in detail by the evidence, and the rates charged are within - albeit at the higher end of - the range, of those charged by insolvency practitioners. In those circumstances, in the absence of objection by any creditor or the liquidators, I do not think I should scrutinise closely examine the quantum of the claim. 14As the administrators have ceased to be administrators, they no longer have a lien over the company's property for their disbursements. They therefore seek an order that the costs of this application be paid on an indemnity basis. That, in the circumstances, seems to me a reasonable course, as they would have had such an indemnity had they remained in office as administrators. 15Pursuant to Corporations Act, s 449E, the court orders that: (1)The applicants are entitled to receive remuneration for work done as administrators of El Zorro Transport Pty Limited, for the period 14 June 2013 to 8 July 2013 in the amount of $102,941 and in respect of work done after the end of the administration, in the amount of $9,453.50. (2)The applicants' costs of the application on the indemnity basis be paid out of the assets of the defendant.