Solicitors:
Kemp Strang (Applicant)
Deutsch Miller (Respondents)
File Number(s): 2015/289831
[2]
The nature of the application
By Amended Interlocutory Process filed in the proceedings for the winding up of Hunter Valley Dental Surgery Pty Ltd (in liq) ("Company"), the court-appointed liquidator of the Company, Mr David Kerr, seeks orders under s 473(3)(b)(ii) of the Corporations Act 2001 (Cth) that his remuneration as liquidator of the Company be approved. That section was repealed and replaced by the Insolvency Law Reform Act 2016 (Cth) with effect from 1 March 2017. However, the operation of that section is continued until 1 September 2017 by reg 10.25.02(3)(h) of the Corporations Regulations 2001 (Cth), introduced by the Corporations and Other Legislation Amendment (Insolvency Law Reform) Regulation 2016 (Cth).
Mr Kerr seeks approval of his remuneration for the 14 month period from 26 November 2015 to 31 January 2017 in the sum of $303,177.90 plus GST, and of his remuneration for the period 1 February 2017 to 5 May 2017 in the sum of $52,868.50 plus GST. The total remuneration claimed by Mr Kerr is therefore $356,046.40 exclusive of GST. Mr Kerr's application for approval of his remuneration was initially heard on 26 May 2017 and I delivered judgment on 2 June 2017 ([2017] NSWSC 691) ("Earlier Judgment"). I there referred to the affidavits on which Mr Kerr then relied and I adopt, but do not repeat, the outline of those affidavits and the factual background to the application contained in the Earlier Judgment. I also reviewed the applicable legal principles in that judgment and referred to my summary of those principles in Re Sakr Nominees Pty Ltd [2017] NSWSC 668 at [23]-[25], as follows:
"A liquidator is entitled to reasonable remuneration for his or her services and the liquidator bears the onus of establishing that the amount of remuneration they seek is fair and reasonable and, in determining a liquidator's reasonable remuneration, the Court will have regard to the factors specified in s 473(10) of the Corporations Act, to which I refer further below. The Court must bring an independent mind to bear on the question whether the remuneration sought by a liquidator is fair and reasonable; the liquidator must lead evidence in sufficient detail that the Court can determine that question; and the 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 by the liquidator: Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96 at 102-103. 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: Thackray v Gunns Plantations Ltd [2011] VSC 380; (2011) 85 ACSR 144 at [64]; Macks v Maka [2015] SASC 200; (2015) 110 ACSR 279 at [52]-[66]; Warner, Re GTL Tradeup Pty Ltd (in liq) [2015] FCA 323; (2015) 104 ACSR 633 at [70]-[71]; Templeton v Australian Securities and Investments Commission [2015] FCAFC 137; (2015) 108 ACSR 545. ...
In Sanderson, as liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [[2017] NSWCA 38], Bathurst CJ (with whom the other members of the Court of Appeal agreed) observed (at [54]) that the onus is on a liquidator to establish that the remuneration claimed is reasonable, and it is the Court's function to determine that remuneration by considering the material provided to it and bringing an independent mind to bear on the relevant issues; that many of the factors specified in s 473(10) of the Corporations Act have the concept of proportionality as an underlying theme, and that concept is an important consideration in determining whether remuneration is reasonable, so that the work done must be proportionate to the difficulty and importance of the task in the context in which it needs to be performed (at [55]); and that the fact that work does not increase the funds available for distribution to creditors or contributories does not mean that the liquidator is not entitled to be remunerated for it, where it was reasonable to carry out that work and the amount charged is reasonable (at [57]-[58]). The Court of Appeal's decision in Sanderson, as liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr above does not prefer any of the particular approaches to remuneration to which I have referred above to any other of those approaches and, in particular, does not require a time-based approach to remuneration to be adopted in preference to percentage-based approach to remuneration. 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; in part, on the view taken by any persons who oppose the remuneration application; and, in part, the view taken by the Court."
I noted (at [24]) that, in an application of this kind, a liquidator bears the onus of establishing that the amount of remuneration he or she seeks is fair and reasonable and proportionate to the needs of the liquidation having regard to the factors specified in s 473(10) of the Corporations Act. I also observed (at [25]) that:
"In seeking to establish that remuneration was fair and reasonable and proportionate, particularly where (as here) the claim is large in amount and attributable to work done by many staff members, a liquidator will often need to provide the Court with evidence, for example, that indicates what were the matters, issues or controversies that required substantial work in the liquidation, not only by reference to general categories such as "assets" or "investigation", but also by reference to what needed to be done in respect of the properties to be dealt with or the matters to be investigated, why that work was most efficiently done by staff members of the seniority involved in doing it, and why that work was particularly time-consuming if that was the case. That evidence may not need to be lengthy, although it may be longer if a liquidation is itself complex or lengthy or the amounts claimed are large. That evidence will, however, need to provide a sufficient evidentiary basis to address the fundamental questions that the Court must address in an application of this kind, namely what makes up the liquidator's claim for remuneration; what work needed to be done in the liquidation; what the liquidator and his or her staff in fact did in the liquidation; why the remuneration claimed for the work that was in fact done was reasonable and proportionate; and any matters relevant to the factors identified by s 473(10) of the Corporations Act."
I accepted (at [27]) that the period of the liquidation of the Company was extended by an application for termination of the winding up brought by Ms Alexandra Morphett, which is now listed for hearing on 8 August 2017, and by the substantial delays which have occurred in Ms Morphett completing the evidence on which she relies to support that application, and that the winding up generally had been complicated by Ms Morphett's and Mr Harvey's approach to it (Earlier Judgment [28]). I also observed (at [29]) that Mr Kerr had not been required to deal with extraordinary issues in the winding up; that there was no suggestion that his firm's hourly rates were unreasonably high; and I also addressed (at [30]) the question of the value and nature of the property that was dealt with by Mr Kerr.
I dealt with the question of the time spent in respect of the liquidation in the Earlier Judgment (at [32]ff) and noted that the amount of remuneration claimed by Mr Kerr was large, for a liquidation of a proprietary company of a relatively small scale, notwithstanding the extended period of the liquidation. I also noted that the evidence then led by Mr Kerr identified the time that was spent, and the work that was done to some extent, but provided limited assistance in the assessment of its necessity or proportionality. I noted that further explanation was required as to the length of time spent on the liquidation, and the number of staff members which have been involved in it, and observed (at [35]) that Mr Kerr's evidence:
"would likely need to address the need for the particular work done in its factual context, and address the need for the number of staff involved in it and why that work took the time claimed for it."
I concluded (at [37]) that:
"I have no doubt that Mr Kerr is entitled to remuneration in a substantial amount. However, the evidence as it stands does not leave me with any state of satisfaction that the amount claimed is justifiable in full or allow any rational basis for me to determine another amount that would be justifiable. I do not consider that I should dismiss the application for remuneration without allowing Mr Kerr the opportunity to seek leave to reopen and lead further evidence, if he wishes to do so, addressing more directly the matters to which I have referred above, such as the time costs that were attributable to the major tasks undertaken (as distinct from broad categories of work done); the number and level of staff allocated to those major tasks and the number of staff involved in the matter generally; and any matters that increased the costs incurred in particular tasks beyond what he would ordinarily expect for a company of this kind."
[3]
Mr Kerr's further affidavit
In addition to his affidavits previously read in this application, to which I referred in the Earlier Judgment, Mr Kerr now relies on his further affidavit sworn 18 July 2017. Parts of that affidavit were admitted, by agreement of the parties, subject to limiting orders under s 136 of the Evidence Act 1995 (NSW) as evidence of Mr Kerr's understanding and steps taken and otherwise not as proof of the asserted matters. Mr Kerr was not cross-examined in respect of his affidavits in respect of the remuneration application, including his further affidavit sworn 18 July 2017.
By that affidavit, Mr Kerr provided further information as to the questions identified in my Earlier Judgment, including who undertook the relevant work in the winding up, what work was required to be done and why that work was necessary. Mr Kerr's further evidence indicated that, although (as I noted in the Earlier Judgment) a relatively large number of staff had undertaken some work on the winding up, approximately 94% of the time charges were referable to work done by Mr Kerr (25% of that time), a manager (40% of that time), an assistant manager (15% of that time), an analyst (11% of that time) and a senior analyst (3% of that time). Mr Kerr's evidence also demonstrated that work was allocated between Mr Kerr and less senior staff in a manner that would ordinarily be desirable, so as to average down time charges by allocating work to less senior and less costly staff where appropriate. Mr Kerr referred to the experience of the key staff who were involved in the matter and to the use of additional staff in respect of particular issues, including valuation issues as to the dental practice operated by the Company and taxation advice concerning particular issues. I am satisfied that that evidence indicates that there is little reason to be concerned about the use of additional, albeit numerous, staff to provide assistance in the liquidation, where the time spent by those additional staff was limited. Mr Kerr's evidence is also that he has applied a substantial discount, of $52,238.50, to the amount claimed by way of remuneration (Kerr 18.7.17 [16]). I have regard to that matter, although I also recognise that the application of a discount to the amount originally claimed does not, in itself, establish that the balance claimed after that discount is either reasonable or proportionate.
Mr Kerr's evidence addressed the manner in which his remuneration reports were set out, using categories of work indicated in the ARITA Code of Professional Practice for Insolvency Practitioners. It is, of course, appropriate that liquidators record time and report to creditors in accordance with the several categories identified in that Code, namely assets, creditors, employees, "trade on", investigation, dividend and administration, and numerous subcategories. However, liquidators and their advisers should not assume that information organised in that manner will, without more, be sufficient to explain the extent of the work done, or why that work was necessary or why the costs referrable to it were proportionate in the relevant circumstances, for the purposes of an application to the Court for approval of a liquidator's remuneration. Although the information recorded in accordance with the ARITA Code will generally be relevant to an application for remuneration brought before the Court, it may not be sufficient, without further explanation of the matters to which I referred above, to secure approval of such an application. Mr Kerr's evidence also addressed the systems maintained by the firm with which he is associated for recording time, and there is no suggestion that those systems were not adequate for this purpose.
Mr Kerr provided a detailed account of the work done in respect of thirty-three areas of work, as set out in paragraph 34 of his affidavit dated 20 May 2017, to which I had referred in the Earlier Judgment, although he noted that those items were not intended to be definitive or exhaustive of the issues or matters that he and his staff had addressed in connection with the liquidation. Those areas of work included, variously, correspondence with the Westpac Banking Corporation, a substantial lender to the Company, in relation to specified matters; the conduct of investigations into specified matters; tasks associated with the day-to-day trading of the dental practice operated by the Company; seeking advice as to taxation issues on the winding up, which gave rise to several complexities; correspondence with the Australian Taxation Office in respect of a "ministerial inquiry" which Mr Harvey had initiated or prompted, or claimed to have initiated or prompted, relating to the Australian Taxation Office's application to wind up the Company; steps taken by Mr Kerr and his staff to obtain information relating to, and address, Ms Morphett's application to terminate the winding up; reporting to creditors, including reports to creditors in May 2016, October 2016 and February 2017 and other updates to creditors; dealing with the Australian Securities and Investments Commission ("ASIC") in relation to complaints made by Mr Harvey in respect of the winding up of the Company; work done in respect of the conduct of proceedings ("Rivergate proceedings") brought against the Company claiming fees in respect of a yacht owned by the Company, to which I referred in the Earlier Judgment; addressing issues in respect of the ownership of the client list and the dental practice raised by Mr Harvey; dealing with the fact that Mr Harvey ceased to account to the Company or the liquidator for trading receipts of the dental practice in July 2016; and dealing with the application to terminate the winding up which, as I noted above, has been substantially delayed by Ms Morphett's delays in finalising the evidence in support of the application. Mr Kerr's evidence is also that, where he has been appointed as liquidator for nearly 16 months, there have necessarily been statutory tasks and other steps which he has been required to undertake in the winding up.
The evidence led by Mr Kerr as to these matters is comprehensive and it is not necessary for me to summarise it in detail. Aspects of that evidence, largely relating to Mr Kerr's assessment of the effect of Ms Morphett's and Mr Harvey's approach to the winding up were admitted, as I noted above, subject to a limitation under s 136 of the Evidence Act. The views expressed with that limitation seemed to me to be largely inferences that were properly drawn from the account of events given by Mr Kerr, which was not subject to such a limitation. Mr Kerr also provided schedules summarising time costs incurred, dissected in several ways, including by reference to staff position and task areas. Those schedules demonstrated that work was appropriately allocated, so that less complex work was undertaken by less senior staff, and the matters dealt with at manager and partner level were generally of greater complexity or, in some cases, of a more controversial character given the issues raised by Mr Harvey in respect of the winding up.
Mr Kerr's affidavit also provided a further analysis of the work done, now divided into some twenty topics, as distinct from the thirty-three categories to which he had previously referred, in order to seek to limit overlaps and double-counting in those thirty-three items. I would hope that it should ordinarily not be necessary in an application of this kind to engage in reclassifications of this kind, as distinct from addressing the more fundamental questions as to what work was undertaken, by whom it was undertaken and why it was undertaken, to which I had referred in the Earlier Judgment, and which Mr Kerr has now addressed in the substance of his further affidavit. However, it is understandable that, in this case, Mr Kerr and his advisers may have considered a greater level of analysis was necessary, where his application for approval of his remuneration had not been approved on the evidence led at the first hearing.
Mr Kerr also addressed the substantive questions of the nature and necessity of the work done, noting that he estimated that three-quarters of the time spent related to investigations, including addressing the application to terminate the winding up, an application for consolidation lodged with the Australian Taxation Office, to which I referred in the Earlier Judgment, the Rivergate proceedings, investigations of the Company's affairs and responses to claims by Mr Harvey regarding ownership of the dental practice and relating to the legality of the trading of the dental practice during the liquidation. Mr Kerr also addressed the particular work undertaken by him and each of the key staff members working in the liquidation, referenced to categories of work and the amount and cost of work undertaken.
Mr Kerr expressed the view (in paragraph 281 of his further affidavit) that the work he and his staff had undertaken in respect of the winding up had been properly performed and, as he noted, had been approved by creditors of the Company other than Mr Harvey, and had been necessary, fair and reasonable. Mr Kerr pressed his application for remuneration in the amounts noted above on that basis. Mr Kerr also noted that he had a claim for remuneration since May 2017, but such a claim is not the subject of this application and I need not address it further.
[4]
Mr Kerr's submissions and Ms Morphett's and Mr Harvey's criticisms of the remuneration claimed
Mr Balafoutis, who appears for Mr Kerr, made brief further oral submissions in respect of his application for remuneration on 18 July 2017. Ms Morphett and Mr Harvey responded to Mr Kerr's analysis of his remuneration, within the twenty topics identified in his further affidavit, by written submissions made by their Counsel, Mr Newton, dated 25 July 2017. Mr Newton indicated that that submission was limited to topics where the amount of remuneration sought was relatively large or where Ms Morphett and Mr Harvey contended that "the issue of an excessive claim for remuneration appears relatively clear". That submission was not supported by evidence led by Ms Morphett and Mr Harvey in respect of the remuneration application. Mr Kerr in turn relied on submissions dated 27 July 2017 in reply to Ms Morphett's and Mr Harvey's submissions.
Mr Newton submitted that the amount of remuneration claimed by Mr Kerr in respect of the Rivergate proceedings was excessive, and submitted that Mr Kerr and another staff member had each spent a significant amount of time on the matter, which suggested duplication, and that it was difficult to understand why that time was spent when Mr Kerr did not put on evidence in those proceedings. Mr Balafoutis responded that the time spent by Mr Kerr and the staff member in respect of those proceedings reflected the fact that they were involved in correspondence concerning the proceedings for a period of about 15 months, from December 2015 until February 2017. It seems to me that the time spent largely reflects the fact that the Company was involved in the proceedings over a substantial period. The fact that two persons worked on the matter does not, in itself, imply duplication, particularly where one is less senior than the other, allowing costs to be averaged down, and Mr Kerr had a proper interest in addressing the Company's position in the proceedings, irrespective of whether the Company led evidence in them. Mr Newton also submits that Mr Kerr did not recover anything for time spent in respect of the Rivergate proceedings, but the case law makes clear that work done by a liquidator may reasonably be done in the conduct of the liquidation, notwithstanding that it does not give rise to recoveries.
Mr Newton also addresses Mr Kerr's claim for remuneration under the headings "Reporting to Creditors" and "Westpac Security", both of which involve substantial claims. Mr Newton notes that the two largest components of those time claims relate to creditor reports and meetings of creditors, and submits that the amount of remuneration claimed appears excessive, where the second and third reports were largely updates of the first report. Mr Balafoutis responds that the category of creditor reports includes not only three substantial reports to creditors, but also at least six circulars to creditors (Kerr 18.7.17 [142]) and submits that the amount charged is reasonable. I am satisfied that the amount claimed in respect of creditor reports is reasonably claimed, given the detailed time records which support those claims.
Mr Newton also submits that a number of staff appear to have attended the meetings of creditors and there should be a reduction in the amount of fees approved to reflect that matter. Mr Balafoutis points out that the evidence indicates that the first meeting of creditors was attended by Mr Kerr and two staff members (Ex A1, tab 14) and the second meeting of creditors was attended by Mr Kerr and one staff member (Ex A2, tabs 122, 123). Mr Balafoutis points out that Mr Kerr was required to chair the meetings, both meetings were contentious, and the staff member who attended both meetings had a significant involvement in the liquidation and detailed knowledge of it (Kerr 18.7.17 [146]-[149]). I am not satisfied that it was unreasonable for Mr Kerr to be supported by at least one staff member at the meeting, not least so that that staff member could assist in providing information sought by creditors and in preparation of minutes, and give evidence if there was a dispute as to what occurred. I do not consider that Mr Kerr's remuneration should be discounted because two staff members attended the first meeting of creditors, where an application of this kind is not in the nature of a taxation of particular items of costs.
Mr Newton also suggests that there may be an overlap between the amount claimed for "secured creditor reports" under the heading "Reporting to Creditors" and the amount claimed under the heading "Westpac Security". Mr Balafoutis acknowledged, in submissions, that there were some complexities in addressing potentially overlapping items in dividing the total remuneration into categories. Mr Balafoutis points out, and I accept, that any overlap in the allocation of amounts claimed between topics does not give rise to double recovery where, as he had pointed out in oral submissions, the total remuneration as allocated to topics substantially exceeds the remuneration claimed, because remuneration for work that relates to more than one topic has been allocated to each of the topics. I am satisfied that an overlap of classification within the total amount claimed does not indicate any duplication in the amount claimed.
Mr Newton notes that, under the heading "Trading", Mr Kerr identifies in excess of $110,000 of time and that this is the largest single amount of remuneration for which he seeks approval. Mr Newton submits that that amount is excessive having regard to the fact that Mr Harvey undertook the dental work at the dental practice, oversaw the staff and ran the dental practice on a day-to-day basis; Mr Kerr's role in trading was (largely) carried out from Sydney and "was in effect confined to carrying out the accounts department functions of the practice"; amounts contained in the sub-category "trade-on task" appear excessive; and the amount of fees incurred in undertaking the trading is a substantial portion of the amount realised by the trading as represented by money in the Company's bank account. Mr Balafoutis responds that Mr Kerr had addressed the work done within this category in paragraphs 64-79 and 205-207 of his further affidavit and that work is also detailed in the supporting schedules to Ex DJK-3 to that affidavit (Ex A6). Mr Kerr's evidence that this work included some involvement in the operation of the practice (although, naturally, Mr Harvey and his staff attended to the dental work); implementation and management of a purchase order system; preparation of cashflow and liquidity analyses; and addressing the issues that arose after Mr Harvey no longer accounted to the Company for income earned from the practice. I note, for completeness, that the amount claimed in respect of the "trade-on task", which was the subject of criticism by Ms Morphett and Mr Harvey, was also substantially discounted in respect of the remuneration claim pressed by Mr Kerr.
I do not accept Ms Morphett's and Mr Harvey's criticism of the level of costs in this category, and I am satisfied that the approach adopted by Mr Harvey, including the failure to comply with the earlier arrangements under which the practice was to be traded, gave rise to substantial complexities in respect of trading activities of the practice. Nothing can be drawn from the level of funds in the Company's bank account given the extent of the difficulties which have existed in recovering income earned in conducting the dental practice or rental and outgoings in respect of Mr Harvey's occupation of the Company's practice.
Mr Newton submits that the costs of Mr Kerr's dealing with Mr Harvey's complaint to ASIC are not proper charges in the liquidation but were for his personal benefit. Mr Balafoutis responds that Mr Kerr is entitled to charge for work done in the course of the liquidation, and that his role included responding to requests made by ASIC about the liquidation, irrespective of the reason such a request was made. Whatever the position had Mr Harvey's complaint led to adverse findings against Mr Kerr, I am satisfied that his responding to the complaint in the present circumstances was a proper expense in the liquidation.
Mr Newton submits that the remuneration of $69,107 claimed by Mr Kerr in respect of the application to terminate the winding up is excessive, on the basis that affidavits filed in the termination proceedings and remuneration proceedings are repetitive and that Mr Kerr has also incurred substantial legal costs in responding to the termination application and other matters, suggesting a degree of inefficiency in the preparation of evidence. Mr Balafoutis responds that Mr Kerr leads evidence as to the work done in respect of the termination application in paragraphs 106-114 and 215-235 of his further affidavit. Mr Balafoutis also points out that the schedules to Mr Kerr's affidavit record the detail of the work done in respect of this category of work, although he notes that the remuneration attributable to this category has also included work relating to the consolidation application lodged with the Australian Taxation Office. As I have pointed out, that overlap arises in allocating work to particular categories, and does not affect the total remuneration claimed. Mr Balafoutis also points to the fact that this category covers matters arising prior to the filing of the application to terminate the winding up, over a period of 18 months, and that matter emphasises the delays in this application to which I referred above. Mr Balafoutis also points to the fact that Ms Morphett filed several affidavits in that application. It seems to me that there were matters raised by those affidavits to which Mr Kerr properly responded, not least to ensure that the Court was properly informed in dealing with that application.
I have referred above to the circumstances in which the application to terminate the winding up has been prolonged, by the manner in which Ms Morphett has approached it, and without fault on the part of Mr Kerr. It seems to me that the substantial part of the time spent in relation to this work reflects the delays and repeated hearings involved in the application. I am satisfied that the costs claimed by Mr Kerr in respect of that matter are reasonably claimed, although they would likely have been substantially less had Ms Morphett approached the application to terminate the winding up with expedition.
Mr Newton also submits that time charges of approximately $25,500, referable to meetings with legal advisers regarding prospects appear to overlap with the claim for time spent in respect of the application to terminate the winding up and to show substantial time spent communicating with legal advisers which, Mr Newton submits, also suggests a degree of inefficiency in those communications. Mr Balafoutis accepts that there is a degree of overlap, in the classification of work done, between matters allocated to these two categories although he again points out that this does not give rise to double recovery in the remuneration claimed. Mr Balafoutis also points out that the amount claimed under this head was also increased by the length of the winding up and by the extended period during which the application to terminate the winding up has been brought. It seems to me that the time spent in dealing with those matters likely reflects the complexity of the issues and the delay in the application to terminate the winding up, to which I have referred above, and I am satisfied that it is reasonable in the circumstances.
Mr Newton also submits that the Court should apply a percentage reduction to the fees claimed by Mr Kerr in order properly to take into account the concept of proportionality, and submits that Mr Kerr is seeking approval of a similar amount to that approved in Re Banksia Securities Ltd (in liq) (recs and mgrs apptd) [2017] NSWSC 540 where "that was a matter with much greater complexity and where substantial recoveries were made". Mr Newton does not identify the percentage reduction which Ms Morphett and Mr Harvey contend would be appropriate in the circumstances. I am not satisfied that a percentage reduction should be applied, where the complexity of the winding up has been increased by the approach adopted by Mr Harvey in respect of the conduct of the winding up and by Ms Morphett in respect of the conduct of the application to terminate the winding up. It seems to me that the charges claimed by Mr Kerr are ultimately reasonable and proportionate, having regard to the complexity which arose by reason of those matters, although they would likely have been substantially less had Ms Morphett and Mr Harvey approached the winding up and the application to terminate it in a different fashion.
[5]
Conclusion
It has been necessary, in this application, for Mr Kerr to lead further evidence in order to support the amount of remuneration which he claims, and to establish that the work done was reasonable and the amount claimed is proportionate. That is perhaps not surprising where remuneration exceeding $355,000, exclusive of GST, is claimed over a period of about 18 months in respect of the winding up of a small proprietary company. I am satisfied that this winding up had particular complexities, partly by reason of the issues relating to the taxation position of the Company, including the consolidation application to which I referred in the Earlier Judgment; partly by reason of a lack of cooperation by at least Mr Harvey in respect of the winding up; and partly by reason of the delays, which have not been of Mr Kerr's making, in respect of the application to terminate the winding up. I am now also satisfied that work done by Mr Kerr and his staff was appropriately allocated between him and his staff, with several persons of appropriate seniority undertaking the large bulk of the work undertaken, and other persons involved only in limited areas and incurring limited time costs. I am satisfied that the work done was reasonably undertaken and I am satisfied that it was proportionate, where the winding up had been made more complex by the matters to which I have referred above, although the work done would likely have been much less substantial, and the remuneration associated with it likely much smaller, had the winding up not been made more complex by Mr Harvey's approach, and had Ms Morphett proceeded with the application to terminate the winding up in a more expeditious way.
I am therefore satisfied that orders should be made approving Mr Kerr's remuneration in the amounts claimed. It will be necessary that Mr Kerr be placed in funds for payment of that remuneration before any order is made for termination of the winding up. The parties should bring in agreed short minutes of order to give effect to this judgment, including as to costs, within 7 days or, if there is no agreement between them, their respective draft short minutes of order and short submissions as to the difference between them.
[6]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 10 August 2017
Legislation Cited (6)
Regulation 2016(Cth)
Corporations and Other Legislation Amendment (Insolvency Law Reform) Regulation 2016(Cth)