Kirman & Harris, Re [2020] QSC 99 (6 May 2020)

1. This application be determined on the papers.
2. The remuneration of the second plaintiffs in their capacity as receivers and managers of the Beacos Trust be approved in the amount of $3459.00 (plus GST) made up as follows:
   • (a) $2194.00 (plus GST) in respect of work previously carried out;
   • (b) $1265.00 (plus GST) in respect of the work identified as prospective work.
3. The disbursement, costs and expenses incurred by the second plaintiffs in their capacity as receivers and managers of the Beacos Trust be approved in the amount of $39,860.43.
4. The remuneration of the twelfth plaintiffs in their capacity as receivers and managers of the Digga Trust be approved in the amount of $3267.50 (plus GST) made up as follows:
   • (a) $2002.50 (plus GST) in respect of work previously carried out; and
   • (b) $1265.00 (plus GST) in respect of costs and expenses.
5. The disbursement, costs and expenses incurred by the twelfth plaintiffs in their capacity as receivers and managers of the Digga Trust be approved in the amount of $11,535.65.
6. Paragraph 8 of the Orders dated 11 December 2019 be varied to delete the words "and if insufficient to be their costs in the winding up" and insert "and if insufficient to be their costs in the administration of the second and twelfth plaintiffs".
7. The Receivers be relieved of the obligation to submit accounts.
8. Upon payment of the amounts in paragraphs 2 and 3, the second plaintiffs be discharged from their appointment as Receivers to the Beacos Trust.
9. Upon payment of the amounts in paragraphs 4 and 5, the twelfth plaintiffs be discharged from their appointment as Receivers to the Digga Trust.
10. The costs of this application be costs of the Receivership of the Beacos Trust and Digga Trust, equally, and if insufficient be their costs in the administration of the second and twelfth plaintiffs.

CORPORATIONS - RECEIVERS, CONTROLLERS AND MANAGERS - REMUNERATION AND EXPENSES -where applicants sought approval of remuneration and disbursements, costs and expenses of the Receiverships - where the work as identified was reasonably necessary to the Receiverships - whether the remuneration sought by the applicants in their capacity as Receivers should be approved

CORPORATIONS - RECEIVERS, CONTROLLERS AND MANAGERS - DUTIES - GENERALLY - where the applicants sought to be relieved of the obligation to submit accounts pursuant to r 270 Uniform Civil Procedure Rules 1999 (Qld) (UCPR) - whether it is appropriate in the circumstances

CORPORATIONS - RECEIVERS, CONTROLLERS AND MANAGERS - TERMINATION OF RECEIVERSHIP - where applicants sought orders that they be discharged from their appointments as Receivers following payment of remuneration and disbursements, costs and expenses incurred - whether appropriate that Receivers be discharged from their duties in the circumstances

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - MOTIONS, INTERLOCUTORY APPLICATIONS AND OTHER PRE-TRIAL MATTERS - OTHER MATTERS - where applicants sought determination of application without an oral hearing - whether it is appropriate for application to be dealt with without an oral hearing pursuant to r 489 Uniform Civil Procedure Rules 1999 (Qld) (UCPR)

PROCEDURE - JUDGMENTS AND ORDERS - AMENDING, VARYING AND SETTING ASIDE JUDGMENTS AND ORDERS - GENERAL PRINCIPLES - where applicants sought amendment of previous court order pursuant to r 388 UCPR - where it was not apparent that a mistake or error resulting from an accidental slip or omission was made - where there are other sources of power to make the amendment sought - whether it is appropriate to make amendment in the circumstances

Corporations Act 2001 (Cth), s 447A

Uniform Civil Procedure Rules 1999 (Qld), r 269, r 270, r 272, r 388, r 489, r 491

Golden Star Resources Limited & Another v Rosel [2010] QSC 28, considered

Mohamed v Hurstville Tower Medical Clinic Pty Ltd (in Liquidation) [2006] NSWSC 4, considered

Laven for the second and twelfth plaintiffs/applicants

[1] This is an application for orders by the second and twelfth plaintiffs pursuant to ss 447A, 90-15 and 90-20 of Schedule 2 of the Corporations Act 2001 (Cth) and rr 269 and 272 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR).

[2] The application is for the following relief:

• (a) This application be determined on the papers.
• (b) The remuneration of the second plaintiffs in their capacity as receivers and managers of the Beacos Trust be approved in the amount of $3459.00 (plus GST) made up as follows:
  • (i) $2194.00 (plus GST) in respect of work previously carried out; and
  • (ii) $1265.00 (plus GST) in respect of work identified as prospective work.
• (c) The disbursement, costs and expenses incurred by the second plaintiffs in their capacity as receivers and managers of the Beacos Trust be approved.
• (d) The remuneration of the twelfth plaintiffs in their capacity as receivers and managers of the Digga Trust be approved in the amount of $3267.50 (plus GST) made up as follows:
  • (i) $2002.50 (plus GST) in respect of work previously carried out; and

[5] The material relied upon by the second and twelfth plaintiffs in respect of the application is as follows:

• (a) Their application filed on 9 April 2020 (incorrectly referred to as dated 9 December 2019 in the supporting submissions);
• (b) The affidavit of William James Harris sworn on 21 November 2019;
• (c) The affidavit of William James Harris sworn on 9 December 2019;
• (d) The affidavit of William James Harris sworn on 10 December 2019;
• (e) The affidavit of William James Harris sworn on 9 April 2020 (incorrectly referred to as dated 2019 in the supporting submissions) (fourth Harris affidavit);
• (f) The affidavit of Clair Petersen sworn on 17 April 2020 (Petersen affidavit).

[6] The first issue to be considered is whether it is appropriate for this matter to be dealt with without an oral hearing pursuant to r 489 UCPR.

[7] Rule 489 UCPR states as follows:

"(1) A party making an application, including an application in a proceeding, may propose in the application that it be decided without an oral hearing.

(2) If the applicant proposes the application be decided without an oral hearing, the court must decide the application without an oral hearing unless -

(a) under rule 491, the court considers it inappropriate to do so; or

(b) under rule 494, the respondent requires an oral hearing; or

(c) under rule 495, the applicant abandons the request for a decision without an oral hearing; or

(d) the Chief Justice or Chief Judge suspends the operation of this rule by direction."

[8] Subsections (b), (c) and (d) are not relevant to the current circumstances.

[9] Subsection (a) refers to r 491 which states:

"(1) The court may decide at any time that an application is inappropriate for decision without an oral hearing.

(2) If the court decides this before the date set for deciding the application, the court -

(a) must immediately notify the parties to the application of the decision by telephone or in some other way; and

[10] It is submitted that this matter is appropriate to be dealt with without an oral hearing given that the Receivers' remuneration sought is modest and that otherwise if the matter proceeded to a hearing then the costs of preparing for and attending the hearing would exceed the remuneration claim. Further, as set out in the fourth Harris affidavit at paragraph 50, 51, 55 and 56, the following factors weigh in favour of it being appropriate to deal with this application without an oral hearing:

• (a) The only secured creditors of the Beacos Trust and the Digga Trust have each been repaid and released from their securities.
• (b) The parties that were formally secured creditors have confirmed that no amounts are owing or have been paid during the course of administration.
• (c) Other creditors have been notified of the application and no creditors have raised an objection.

[11] The affidavit of Jason Thomas Henry Pietzner sworn on 28 April 2020 outlines the steps taken to advise creditors of the application and the hearing on the papers listed on 29 April 2020. Mr Pietzner deposes that no response has been received from any creditors except for one which merely acknowledged receipt of the correspondence.[1] Further, the affidavit also deposes to the fact that the directors of Beacos Pty Ltd and Vac-U-Digga Pty Ltd, in their respective capacity as trustee of the Beacos Trust and the Digga Trust, were also advised of the filing of the application and the hearing on 29 April 2020. Similarly, no response was received.[2]

[12] In these circumstances, I consider it appropriate to deal with the application on the papers without the need for an oral hearing.

[13] The second issue to be determined is whether the remuneration sought by the second and twelfth plaintiffs in their capacity as Receivers should be approved.

[14] The relevant principles concerning a Receiver's remuneration were identified in the submissions as being summarised in the case of Golden Star Resources Limited & Another v Keryn Beatrice Rosel [2010] QSC 28 at [25]. In that case, White J (as her Honour then was) adopted the propositions of principle summarised by Barrett J in Mohamed v Hurstville Tower Medical Clinic Pty Ltd (in Liquidation) [2006] NSWSC 4 at [8]:

"1. The court constituted by a judge never considers a review of quantum, but only matters of principle.

2. 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 that have been sanctioned by the court.

3. The receiver must justify the reasonableness and prudence of the tasks undertaken for which remuneration is sought. The relevant onus is on the receiver.

4. A receiver's remuneration is not in the same category of [sic] [as] costs. The receiver is making application for a fair recompense for what he or she has actually done.

5. 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.

6. The court will usually work off time sheets created in the receiver's office provided 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.

7. The court is guided by a professional scale of charges, with emphasis on the broad average or general rate charged by persons of the relevant status and qualifications who carry out relevant work." (Footnotes omitted)

[15] Paragraph 21 of the fourth Harris affidavit outlines the work undertaken by the Receivers since the commencement of the Receivership on 11 December 2019. This includes having negotiated and entered into the Westpac agreement (as defined), negotiated and entered into the Lease (as defined), notified insurers regarding ongoing insurance arrangements relating to the Receivership and attended to various statutory matters, lodgements and notifications relating to the appointment of Receivers.

[16] Exhibited to the fourth Harris affidavit as Exhibit WJH-35 is a remuneration request approval report. This report is in the format recommended by ARITA (which is the Australian Restructuring Insolvency and Turnaround Association).[3] The report contains a breakdown of the remuneration sought in relation to both the Beacos Trust and the Digga Trust. Further, it contains information setting out specified task areas, a general description, as well as a description of work covered in each of the areas.[4]

[17] In relation to the Beacos Trust, this includes:[5]

• (a) Considering obligations in respect to appointment; holding discussions with solicitors in relation to Receivers' ongoing obligation;
• (b) Corresponding with insurer regarding initial ongoing insurance requirements;
• (c) Reviewing rental agreements with third parties, considering issues in relation to rental agreements for use of equipment;
• (d) Notifying ATO of appointment;
• (e) Maintaining physical and electronic engagement files and updating checklists;
• (f) Preparing and lodging ASIC forms; corresponding with ASIC regarding statutory forms;
• (g) Discussions regarding administration and conduct of the Receiverships; and
• (h) Dealing with records relating to Receivership.

[18] In relation to the Digga Trust, the report also identifies the following work undertaken including:[6]

• (a) Considering obligations with respect to appointment; holding discussions with solicitors in relation to Receivers' ongoing obligations;
• (b) Corresponding with insurer regarding initial and ongoing insurance requirements;

Application to be relieved of obligation to file accounts

[33] An application is made under r 270 UCPR for an order that the Receivers be relieved of the obligation to submit accounts. Rule 270 UCPR states:

"(1) Unless the court otherwise orders, a receiver must submit accounts under this rule.

(2) A receiver must submit accounts to the parties and at the intervals or on the dates the court directs.

(3) A party to whom a receiver is required to submit accounts may, on giving reasonable written notice to the receiver, inspect, either personally or by an agent, the documents and things on which the accounts are based.

(4) A party who objects to the accounts may serve written notice on the receiver -

(a) specifying the items to which objection is taken; and

(b) requiring the receiver to file the receiver's accounts with the court within a stated period of not less than 14 days after the notice is served.

(5) The party must file a copy of the notice served with the court.

(6) The court may examine the items to which objection is taken.

(7) The court must by order declare the result of an examination under subrule (6) and may make an order for the costs and expenses of a party or the receiver."

[34] Reliance is placed on the decision of Golden Star Resources Limited v Rosel [2010] QSC 28. At paragraph 24, White J (as her Honour then was) stated:

"Rule 270 places the onus upon a receiver to persuade the court that accounts need not be ordered. Young CJ at Common Law when CJ in Equity observed in Ide v Ide that there are benefits associated in taking a holistic approach to this question. Here the receivership was straight forward, the defendant has not sought to challenge any basis upon which the Receivers proceeded to discharge their obligations under the order of 25 February 2009 and there is nothing which calls for the cumbersome procedure of an account. His Honour mentioned that 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. That is what the Receivers have done here." (Citations omitted)

[35] It is submitted that a similar "holistic" approach should be taken in this matter, particularly as it is submitted that the Receiverships were straightforward and, to date, there were no objections seeking to challenge the Receivers' remuneration. Further, it is submitted that there are no factual matters which call for the procedure of an account and that the remuneration report, which is exhibited to the fourth Harris affidavit, meets the requirements in relation to specifying the work undertaken, the hours spent in respect of employees and the tasks completed.

[36] Given the evidence before the court, and in particular the size and the remuneration and disbursements, costs and expenses sought, I consider in the circumstances that it is appropriate to relieve the Receivers of the obligation to submit accounts.

[37] The application seeks an order that the Receivers maintain all documents held by them in relation to their appointment as Receivers of the Beacos Trust and Digga Trust for a period of seven years from the date they are discharged as Receivers, following which they are at liberty to dispose of all documents held by them in relation to the Receivership. This part of the application has not been addressed in the submissions provided to the court, nor is it addressed in the supporting affidavits.

[38] I do not consider it appropriate in the circumstances to make the order sought. The documents should be retained by the Receivers in accordance with any professional standards obligations and other obligations according to law.

[39] The application seeks orders that upon the payment of the relevant amounts in respect of the remuneration of the Receivers and the disbursements, costs and expenses incurred by the Receivers, that they be discharged from their appointments as Receivers of the Beacos Trust and the Digga Trust respectively.

[40] Paragraphs 15, 16, 17, 19 and 20 of the fourth Harris affidavit address this point.

[41] These paragraphs outline the conclusion of various steps as follows:

• (a) Under the deed of company arrangement, control of the defined companies has been returned to the directors of those companies. It is identified that this has been done to enable those companies to resume (as much as possible) normal business trading conditions pending adjudication of creditor claims received by the administrators.
• (b) The deed of administrators have received payment of the entire first and second contributions, it is no longer necessary for the Receivers to continue their appointment over the assets of the Beacos Trust and the Digga Trust.
• (c) Where the companies have resumed business as usual, it is no longer necessary or appropriate that the assets of the Beacos Trust and the Digga Trust be realised. This is particularly so where some plant and equipment of the trusts is integral to the group's ability to continue normal trading.
• (d) The Receivers have entered into the Westpac agreement and entered into the Lease in relation to dealing with the assets of the Beacos and Digga Trusts.
• (e) Further, Mr Harris deposes to the fact that he does not consider there are any additional tasks for completion by the Receivers in order to give effect to the terms of the deed of company arrangement (with the exception of seeking these orders, collecting any remaining receivables and adjudicating claims of any creditors in accordance with the terms of the deed of company arrangement).
• (f) At paragraph 20, Mr Harris deposes that "the Receivers consider it appropriate in the circumstances that the Receivership ends".

[42] On the basis of the circumstances set out in the affidavit material before the court, I consider that it is appropriate that the Receivers be discharged from their duties as receivers and managers of the Beacos Trust and the Digga Trust.

Amendment to paragraph 8 of the orders dated 11 December 2019

[43] The application also seeks an amendment to paragraph 8 of the orders dated 11 December 2019. It is sought to delete the words "and if insufficient to be their costs in the winding up" and insert "and if insufficient to be their costs in the administration of the second and twelfth plaintiffs".

[44] It is submitted that the amendment is "sought in circumstances where neither the Trusts nor the relevant Trustees are, or are proposed to be, the subject of a winding-up order. In the circumstances, where the relevant Trustees (as corporate members of the Group) are the subject of a DOCA, the Receivers submit the amendment is appropriate (to the extent that Trust assets are insufficient) and consistent with the order of priorities otherwise confirmed by sections 443D and 556 of the Corporations Act in circumstances where the application to appoint the Receivers was brought by the then administrators of the Group as an incidence of their appointment to the Group".[14]

[45] The submissions on behalf of the applicants rely on r 388 of the UCPR for the court's power to vary this order.

[46] Rule 388 UCPR states:

(a) there is a clerical mistake in an order or certificate of the court or an error in a record of an order or a certificate of the court; and

(b) the mistake or error resulted from an accidental slip or omission.

(2) The court, on application by a party or on its own initiative, may at any time correct the mistake or error.

(3) The other rules in this part do not apply to a correction made under this rule."

[47] It is not apparent from the submissions made by the applicant (or the affidavit evidence) that this can be classified as a mistake or error resulting from an accidental slip or omission. From the nature of the submission made, it suggests that it is more in the nature of a change in circumstances, in that the matters are not proceeding to winding-up.

[48] Arguably, there would be other sources of power to vary this order such as the wide power given in r 272 UCPR or alternatively, s 447A of the Corporations Act. The power to make the orders would include a power to vary the orders. In the circumstances, I am satisfied that the order dated 11 December 2019 should be varied as proposed.

[49] It is also sought that the costs of the application be costs of the Receivership of the Beacos Trust and the Digga Trust shared equally and if insufficient, the costs and administration of the second and twelfth plaintiffs.

[50] It is appropriate to make this costs order in the circumstances.

[51] Accordingly, the court orders as follows:

1. This application be determined on the papers.
2. The remuneration of the second plaintiffs in their capacity as receivers and managers of the Beacos Trust be approved in the amount of $3459.00 (plus GST) made up as follows:
   • (a) $2194.00 (plus GST) in respect of work previously carried out;
     • (b) $1265.00 (plus GST) in respect of the work identified as prospective work.
3. The disbursement, costs and expenses incurred by the second plaintiffs in their capacity as receivers and managers of the Beacos Trust be approved in the amount of $39,860.43.
4. The remuneration of the twelfth plaintiffs in their capacity as receivers and managers of the Digga Trust be approved in the amount of $3267.50 (plus GST) made up as follows:

   • (a) $2002.50 (plus GST) in respect of work previously carried out; and

• (b) $1265.00 (plus GST) in respect of costs and expenses.

1. The disbursement, costs and expenses incurred by the twelfth plaintiffs in their capacity as receivers and managers of the Digga Trust be approved in the amount of $11,535.65.
2. Paragraph 8 of the Orders dated 11 December 2019 be varied to delete the words "and if insufficient to be their costs in the winding up" and insert "and if insufficient to be their costs in the administration of the second and twelfth plaintiffs".
3. The Receivers be relieved of the obligation to submit accounts.
4. Upon payment of the amounts in paragraphs 2 and 3, the second plaintiffs be discharged from their appointment as Receivers to the Beacos Trust.
5. Upon payment of the amounts in paragraphs 4 and 5, the twelfth plaintiffs be discharged from their appointment as Receivers to the Digga Trust.
6. The costs of this application be costs of the Receivership of the Beacos Trust and Digga Trust, equally, and if insufficient be their costs in the administration of the second and twelfth plaintiffs.

[1] Paragraph [3] of affidavit of Jason Thomas Henry Pietzner sworn on 28 April 2020.

[2] Paragraph [2] of affidavit of Jason Thomas Henry Pietzner sworn on 28 April 2020.

[3] Paragraph [23] of the fourth Harris affidavit.

[9] Pages 435 and 437 of Exhibit WJH-35.

[10] As identified in the fourth Harris affidavit at paragraph 38 and the report at page 438 of Exhibit WJH-35.

[14] Paragraph [29] of Outline of Argument [CFI 24].