In the matter of Mema Developments Pty Ltd [2011] NSWSC 1340

Judgment 1Mr Gleeson is the liquidator of Mema Developments Pty Ltd. He seeks, in that capacity, an order fixing his remuneration. 2The winding up of Mema Developments Pty Ltd arose as a sequel to voluntary administration under Part 5.3A of the Corporations Act 2001 (Cth) and is accordingly a creditors' voluntary winding up. The voluntary administration commenced on 1 June 2007. The resolution of creditors that the company be wound up was passed on 28 June 2007. 3In this case of a creditors' voluntary winding up that commenced before the advent of the Corporations Amendment (Insolvency) Act 2007 (Cth) on 31 December 2007, the effect of s 1480(7) of the Corporations Act is that the fixing of a liquidator's remuneration is governed by s 499(3) of the Corporations Act as it stood before that date: "The committee of inspection, or, if there is no such committee, the creditors, may fix the remuneration to be paid to the liquidator." 4No committee of inspection was appointed. Several resolutions of the creditors have fixed remuneration of the liquidator. A resolution of 28 June 2007 fixed the remuneration of the liquidator at $25,000.00 plus GST, with a rider that if any further amount needed to be approved, it would be considered by a future meeting of creditors. 5At a meeting of creditors on 30 January 2009, remuneration was fixed at $19,072.50 plus GST for the period 28 June 2007 to 8 January 2009 and $20,000.00 plus GST for the period 8 January 2009 to "the finalisation of the liquidation". 6At a meeting of creditors held on 3 March 2011, it was resolved to "approve the additional remuneration for work done by the liquidator, his principals, his employees and consultants, in respect of the liquidation for the period 28 June 2007 to the finalisation of the liquidation, to an amount of $20,000 (plus GST)". 7At each of the second and third meetings, therefore, a sum of remuneration was determined for the balance of work to be done to "the finalisation of the liquidation". 8Mr Gleesons's application to the court was presented as an application under s 511(1)(a) of the Corporations Act by which the court was called upon to answer a question that had arisen in the winding up - the question being as to the quantum of the liquidator's remuneration where the remuneration fixing machinery created by the Corporations Act had broken down or become unworkable. The unworkability was said to have arisen by virtue of the fact that all creditors had been paid 100 cents in the dollar in respect of their admitted claims, plus interest under s 563B, so that, it is contended, there are no longer any "creditors" who can meet and pass a resolution as contemplated by s 499(3). The court's ability to fix remuneration in circumstances of "unworkability" of the statutory machinery has been recognised in Re Walker & Anor (as liquidators of One.Tel Ltd) [2005] NSWSC 557; (2005) 221 ALR 320. 9I do not think that that is the correct approach to this case. The creditors have already, by resolution, fixed remuneration for the whole of the liquidator's work. The most recent resolution of creditors, like the one immediately before it, specified a particular sum as remuneration for a period ending with "the finalisation of the liquidation". What the liquidator really seeks, therefore, is a variation of what has already been determined. A meeting of creditors, if it were possible to have one, might be competent to vary the quantum it had already determined or to vote further remuneration. The court is certainly capable of varying the already determined quantum by virtue of its power to "review the amount of the remuneration of the liquidator". 10That power is conferred on the court by s 504. Having regard again to s 1480(7), the applicable version of s 504 is that which existed immediately before the commencement of the Corporations Amendment (Insolvency) Act 2007, that is: "Any member or creditor, or the liquidator, may at any time before the deregistration of the company apply to the Court to review the amount of the remuneration of the liquidator, and the decision of the Court is final and conclusive." 11As now in force, s 504 consists of two sub-sections. The first is in the terms just set out. Sub-section (2) is in these terms: "In exercising its powers under subsection (1), the Court must have regard to whether the remuneration is reasonable, taking into account any or all of the following matters: (a) the extent to which the work performed by the liquidator was reasonably necessary; (b) the extent to which the work likely to be performed by the liquidator is likely to be reasonably necessary; (c) the period during which the work was, or is likely to be, performed by the liquidator; (d) the quality of the work performed, or likely to be performed, by the liquidator; (e) the complexity (or otherwise) of the work performed, or likely to be performed, by the liquidator; (f) the extent (if any) to which the liquidator was, or is likely to be, required to deal with extraordinary issues; (g) the extent (if any) to which the liquidator 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 liquidator; (i) whether the liquidator was, or is likely to be, required to deal with: (i) one or more receivers; or (ii) one or more receivers and managers; (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 liquidator in performing the work; and (ii) whether the total remuneration payable to the liquidator is capped; (l) any other relevant matters." 12Because s 504 applies to this case in its unamended form, the court is not constrained by the present s 504(2) to have regard to the matters there set out. It is clear, however, that they are matters to which the court would appropriately pay close attention even if not compelled by statute to do so. 13Mr Gleeson's affidavit shows very clearly that he has had to deal with a range of matters that were not contemplated - and could not reasonably have been contemplated - when creditors, at their meeting of 3 March 2011, fixed an amount of remuneration for the remainder of the period to "the finalisation of the liquidation". There is, to my mind, ample ground to think that the amount so fixed, viewed in light of the evidence that is now available about those matters, may not represent fair and reasonable remuneration for the period in question. 14In those circumstances, it is appropriate that there be a review pursuant to s 504. 15Because the creditors have been paid in full, there is no need for notification to them. There is, however, a need for notification to each member with a shareholding of at least 10% ( Supreme Court (Corporations) Rules 1999, rule 9.4A). The liquidator has given a notice to those persons (of whom there are only a few) but it should be supplemented by a further notice making it clear that the matter to be before the court is a review of remuneration already fixed, not an application for further remuneration. 16The review should be conducted by a registrar in the usual way. I will direct that the matter be placed in the registrar's list for mention and directions on a day sufficiently in the future to accommodate the rule 9.4A notification I have mentioned. 17The orders and directions of the court are: