Sampson, in the matter of PWUO Trading Pty Ltd (In Liquidation) (No 2) [2021] FCA 1060

YATES J: 1 On 2 December 2020, the Court made orders appointing the plaintiffs as receivers and managers of the assets and undertaking of the PWUO Trading Unit Trust (the Unit Trust) in the circumstances set out in Sampson (Administrator), in the matter of PWUO Trading Pty Ltd (Administrators Appointed) [2020] FCA 1746. 2 The appointed trustee of the Unit Trust was PWUO Trading Pty Ltd (in liquidation) (the company). At the time of their appointment as receivers and managers, the plaintiffs were the administrators of the company. Subsequently, on 3 February 2021, the company's creditors resolved that the company be wound up, with the plaintiffs appointed as liquidators. 3 On the evidence before me, the only business activities undertaken by the company were those carried out in its capacity as the trustee of the Unit Trust. All assets of the company were held by it as the trustee of the Unit Trust and all debts incurred by the company were incurred by it in its capacity as trustee of the Unit Trust. 4 The principal asset of the Unit Trust was the business known as Paul's Warehouse USA Outlet. This business was the retailing of sports apparel and footwear. Following their appointment as receivers and managers, the plaintiffs continued to trade the business until 18 April 2021, when the business was sold. 5 In an affidavit made on 28 May 2021, Mr Hurst, who is one of the plaintiffs, has verified a Receipts and Payments Summary detailing the trading and non-trading receipts and payments of the plaintiffs as receivers and managers as at 24 May 2021. Mr Hurst also gives an account of the marketing and sale of the business. 6 Now that the business has been sold, and the assets of the Unit Trust realised, the plaintiffs seek to be discharged as receivers and managers. They also seek their remuneration of for acting as receivers and managers. 7 Based on Mr Hurst's affidavit, I am satisfied that the object of the plaintiffs' appointment as receivers and managers has been achieved and that it is appropriate that an order be made for their discharge as receivers and managers. 8 Related to their discharge, the plaintiffs also seek an order that they be relieved of the formal requirements of r 14.25 of the Federal Court Rules 2011 (Cth) relating to the filing and examination of accounts. The purpose of filing accounts is to achieve the object of examining accounts, so as to verify that all amounts received in the course of the receivership are accounted for, and that all payments made in the course of the receivership have been properly made and are evidenced. As I explained in Sprowles, in the matter of Triumph N Triumph Pty Ltd (in liq) (No 2) [2021] FCA 405 at [13] - [15], courts have readily made orders dispensing with this requirement where the benefit obtained by adhering to the standard procedure of passing accounts is outweighed by the significant costs and time involved in undertaking the task. 9 In the present case, there is no existing order requiring the plaintiffs to file accounts. However, as I have noted, in his affidavit of 28 May 2021, Mr Hurst has verified the trading and non-trading receipts and payments of the plaintiffs in their capacity as receivers and managers. 10 Further, on 29 June 2021, the Court made orders that the plaintiffs give notice of their application to be discharged as receivers and managers to creditors of the company (including persons claiming to be creditors) and to the beneficiaries of, or unit holders in, the Unit Trust. In an affidavit made on 26 July 2021, supplemented by an affidavit made on 27 July 2021, Mr Hurst deposes to the giving of that notice, including to other persons he considered might have an interest in the outcome of the application. No person has come forward to oppose the application or has expressed any interest in participating in the present proceeding. Importantly, the only person recorded as a unit holder in the Unit Trust is PWUO Investments Pty Ltd, as trustee for the PWUO Investments Discretionary Trust. But, PWUO Investments Pty Ltd was deregistered on 12 July 2020. On the evidence before me, there is no other unit holder. 11 In these circumstances, I am satisfied that no purpose would be achieved in filing and examining accounts in the present case. Indeed, fulfilment of any requirement to do so would simply be a barren exercise, adding unnecessary expense to the conduct of the receivership. It is appropriate, therefore, that the plaintiffs be relieved of the requirements of r 14.25. 12 The plaintiffs, as receivers and managers, seek remuneration of $71,683 (excluding GST). This is separate to their remuneration as administrators of the company, and as liquidators of the company. 13 The plaintiffs have provided a remuneration report dated 28 May 2021 which details the work conducted by the plaintiffs and their staff in relation to the receivership. This report contains the name of each employee who completed tasks in relation to the receivership and their position in the plaintiffs' firm; the hourly rates, total hours spent, and total costs incurred in relation to work undertaken by the plaintiffs and their employees; and a detailed description of the work performed by the plaintiffs and their staff, with an explanation of why the work was undertaken. Extracts from timesheets have been provided. 14 Mr Hurst has reviewed the remuneration report and the extracts from the timesheets and has deposed, in his affidavit of 28 May 2021, that the times recorded are reasonable for the work performed; that the work performed was reasonably necessary to give effect to the plaintiffs' appointment to deal with the trust assets; that the work was performed professionally by staff who were adequately qualified to perform that work; and that the work was performed in a timely and efficient manner. He has also deposed to his belief that the hourly rates charged and time spent is consistent with market rates in the insolvency industry, and that the time spent on the relevant tasks (including by delegating work, wherever possible, to staff members who have the lowest charge out rates) is appropriate. 15 Following a question raised by me at the hearing of this application on 27 July 2021, Mr Hurst filed a supplementary affidavit, made the same day, in which he clarified how time is recorded in his firm's timesheet computer program when the plaintiffs are acting in different capacities in the one matter (here as administrators, liquidators, and as receivers and managers). 16 I am satisfied that the remuneration sought by the plaintiffs as receivers and managers is reasonable and appropriate, particularly in circumstances where there has been a trade-on of the business for over four months. 17 Further, in circumstances where the company has traded solely as the trustee of the Unit Trust, it is appropriate that the plaintiffs have recourse to the assets of the Unit Trust for payment of their remuneration: In the matter of EMA Consulting Pty Ltd (in liquidation) [2018] NSWSC 1993 at [10]. 18 Finally, as a result of the deregistration of PWUO Investments Pty Ltd, all property that PWUO Investments Pty Ltd held on trust at the time of deregistration belongs to the Commonwealth, and all non-trust property belongs to the Australian Securities and Investments Commission (ASIC). ASIC is the only party legally able to deal with the property held by PWUO Investments Pty Ltd. 19 ASIC was informed of the present application on 30 June 2021. On 24 August 2021, ASIC advised that it does not intend to take any steps on behalf of PWUO Investments Pty Ltd to assert, exercise, enforce, or waive any rights that it may have in the trust assets. ASIC also advised that, on the strict understanding that no orders are sought against it, and no orders are made that directly affect it on behalf of the Commonwealth, it does not wish to be heard in, and does not wish to be joined as a party to, this proceeding. 20 At the time of the time of the plaintiffs' appointment as receivers and managers, an order was made that they not distribute the Trust Assets (as defined) without the direction of the Court. In this particular circumstances of this case, the appropriate direction is that, after the payment of their approved remuneration, the plaintiffs pay the assets to themselves in their capacity as liquidators of the company for distribution in accordance with the priorities set out in Div 6 of Pt 5.6 of the Corporations Act 2001 (Cth). I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.