Mr Adam Preiner, as the former liquidator of South West Radiology Pty Ltd (in liq) ("Company") and the SWR Holding Unit Trust ("Trust") seeks orders in respect of his remuneration, as liquidator of the Company, for the period until he was replaced as liquidator, on 17 September 2019, and as receiver of the Trust up to 27 June 2022, and for a modest amount by way of further expenditures until his anticipated retirement from the office of receiver, which is expected to occur shortly. The application was brought in two proceedings which are currently on foot between relevant parties, and orders will need to be made in one of the proceedings, in which the liquidator and receiver were appointed, as to the quantum of his remuneration and in the other for payment out of Court.
I should briefly refer to the background to Mr Preiner's appointment, as recorded in a judgment delivered by Slattery J in proceedings 2018/190679 on 27 April 2022. There have been at least three proceedings, between the relevant parties, namely Dr Segal (the Plaintiff in proceedings 2018/190679), Dr Sharma (the First Defendant) and Dr Chen (the Second Defendant). The first of those proceedings was commenced in 2016 and determined by Hammerschlag J (as the Chief Judge in Equity then was). On 20 June 2018, Dr Segal commenced the 2018/190679 proceedings, seeking appointment of receivers to two partnerships. In December 2018, Dr Sharma commenced the 2018/381397 proceedings, in which he sought the winding up of the Company, either in insolvency or on the just and equitable ground or on the ground of oppression. Winding-up orders were ultimately made in those proceedings in April 2019, and Mr Preiner was appointed both as liquidator of the Company and as receiver and manager of the property, assets and undertaking of the Trust. There is evidence that the Company's activities were, at least so far as the information known to the receiver is concerned, limited to acting as trustee of the Trust, and no suggestion to the contrary was made by the other parties to the proceedings in the course of this application.
In his judgment in April 2022 in proceedings 2018/190679, Slattery J dealt with a question as to the adoption of a referee's report. His Honour summarised the commercial relationships between the parties, which it is not necessary for me to address, and the matters which gave rise to the relevant disputes. He made orders which contemplated that Mr Preiner, as former liquidator of the Company and receiver of the Trust, could bring an application for his remuneration, as he has now done, and that Mr Preiner would then retire as receiver of the Trust, on the basis that the liquidator now appointed to the Company could also be appointed as receiver of the Trust.
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Determination as to remuneration
With that background, the question before me is a narrow one, relating, first, to the quantum of Mr Preiner's proper remuneration as former liquidator of the Company and receiver of the Trust and, second, to whether the remuneration properly payable to Mr Preiner, and his expenses and disbursements, may be paid, at least in part, out of funds presently held in Court. An application for approval of Mr Preiner's expenses and disbursements was not pressed, properly, where payment of expenses and disbursements is normally left to the performance of a liquidator or receiver's professional duties, at least unless there is a significant dispute as to those issues which requires determination by the Court. There is no such dispute here, where the orders can be made by consent in respect of Dr Sharma, and are neither consented to nor opposed by other parties. There is also no dispute between the parties as to the extent to which the relevant monies may be paid out of Court, in a manner which properly recognises that no more should be paid out of Court than reflects the entitlements of the Company and the Trust to monies paid into Court, arising from monies that are owed by other trusts to the Company and the Trust.
Turning now to Mr Preiner's affidavit evidence, he refers to the circumstances of his appointment, both as liquidator of the Company and as receiver of the Trust, and to his subsequent replacement as liquidator of the Company at a meeting of creditors of the Company held on 17 September 2019. Properly, he seeks remuneration as former liquidator of the Company only up to that date. He refers to the history of the relevant proceedings, which is relevant here because a significant part of his work as receiver was addressed to issues arising in those proceedings. Mr Preiner refers to the circumstances in which he initially sought creditors' approval for his remuneration as liquidator although that was not obtained. In the event, Mr Preiner has subsequently re-apportioned the amount of the remuneration claimed as between the amount claimed as the former liquidator, and the amount claimed as receiver of the Trust, in the course of work done in relation to these proceedings. At least since the introduction of the Insolvency Practice Schedule (Corporations) an application for approval of remuneration to creditors and an application to the Court are alternatives, and this application can properly be brought to the Court.
Mr Preiner outlines, albeit in relatively broad terms, the nature of his work done as liquidator and outlines the basis on which his remuneration was calculated. He indicates that he has reviewed employee time sheets and narrations for work done and he refers to the steps which he has taken to review the time recorded and to satisfy himself that that time recorded is appropriate and a reasonable amount is being charged. Mr Preiner also gives evidence as to disbursements incurred but, as I noted above, it would ordinarily be left to a liquidator to satisfy himself as to the amounts of the disbursements properly incurred, rather than the Court addressing that matter, and the disbursements are here in a relatively modest amount. Mr Preiner also refers to the notice given to several parties of this application and all the parties to the proceedings have notice of the application. One creditor, Canon Medical Systems ANZ Pty Ltd ("Canon"), was not served with the application, but there is no reason to think that the relevant issues have not been canvassed by the parties to the proceedings, who have the same interest as Canon in respect of ensuring that any remuneration paid is properly founded.
Mr Preiner similarly addresses the nature of the work done in respect of the receivership which, as I noted above, largely related to his involvement, and the Trust's involvement, in the relevant proceedings. He sets out the basis on which that remuneration is calculated, and I have referred above to the reallocation of a portion of that remuneration between his role as liquidator and his role as receiver. He refers to the manner in which remuneration is recorded and to his review of that remuneration. He also outlines the relatively small amount of future remuneration which he anticipates will be incurred, largely related to dealing with tax issues.
Mr Preiner expresses the view that, in calculating his remuneration as former liquidator of the Company and receiver of the Trust, he considered that a time-based charge-out mechanism was appropriate, and of course such mechanisms are often used. He also expresses the view that the remuneration sought is fair and reasonable, taking into consideration specified matters. Obviously, a liquidator's or receiver's self-assessment of that matter is not determinative, and does not displace the Court's role in an application of this kind. However, it is important that a liquidator and receiver in fact make that assessment, and the Court can give weight to a liquidator's and receiver's evidence on oath or affirmation as to that matter. Here, the fact that the relevant remuneration has also been reviewed by parties who have an interest in ensuring that no more than proper remuneration is payable is also a matter to which the Court can have regard.
Mr Sharma in turn read the affidavit dated 11 August 2022 of his solicitor, Mr Garvin, which addressed the composition of the monies which had been paid into Court in the proceedings, and identified the fact that a portion of those monies, but not all of them, reflected funds to which the Trust, or the Company in its capacity as trustee of the Trust, was entitled in payment of debts owed by other associated entities or trusts. That is significant because, here, an order made for Mr Preiner's remuneration, in respect of the Company or the Trust, to be paid out of Court should not exceed the entitlements of the Company or the Trust to the monies held in Court. The amount which is properly paid out of Court is not disputed between the parties, consistent with Mr Garvin's evidence, and there is no reason not to accept their common position in that respect.
Mr Bagley, who appears for Mr Preiner, refers in submissions to the relevant principles, which are well established, at least since the decision of the Court of Appeal in Sanderson, as liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [2017] 118 ACSR 333; [2017] NSWCA 38 and to my recent summary of those principles in Knox v Nile and Ors [2022] NSWSC 638. I bear in mind that the Court should bring an independent mind to bear on the question whether the remuneration sought is fair and reasonable, although the Court does not itself undertake a detailed assessment of the remuneration claimed. I also bear in mind the importance of proportionality, although I recognise that work can be necessary although it does not in fact realise a return for creditors. Plainly, the work done here in respect of issues arising in the proceedings can fall in that category, notwithstanding that it does not increase the return to creditors by way of the recovery of assets. Mr Bagley also refers to the nature of the work done by Mr Preiner, and to his evidence in that respect. He refers to the question of service upon parties in the proceedings, and upon Canon which I have addressed above. He also addresses the position in respect of the composition of the monies held in Court to which I have referred above, and I have noted that common ground has now developed in that respect.
Mr Finnane, who appears for Dr Sharma, addressed the composition of the monies held in Court in submissions, and the evidence led in that respect, which provides a basis for the common ground now reached between the parties as to that issue. Mr Keizer, who appeared for the Plaintiff in proceedings 2018/190679, identified a calculation error which has now been resolved between the parties, and otherwise adopted Mr Finnane's submissions as to the need to ensure that the monies paid out of Court reflected the Company's and the Trust's entitlements as to the monies held in Court.
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Orders
I am satisfied, having regard to the evidence to which I have referred above and the submissions, that the orders sought in respect of Mr Preiner's remuneration may properly be made, in proceedings 2018/381397. The parallel Notice of Motion in proceedings 2018/190679 has some limited utility, where the monies from which payment would be made were paid into Court in those proceedings. I therefore make orders in proceedings 2018/381397 determining the amount of Mr Preiner's remuneration as the former liquidator of the Company and the receiver of the Trust, and orders in proceedings 2018/190679 dealing with the payment of funds out of Court.
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Decision last updated: 08 September 2022
Parties
Applicant/Plaintiff:
Segal
Respondent/Defendant:
Sharma; In the matter of South West Radiology Pty Ltd