Shannon (in his capacity as receiver and manager of North East Wiradjuri Co... [2012] FCA 836 | Case summary

REASONS FOR JUDGMENT 1 This is an application made by Mr Shannon and Mr Gleeson seeking a number of orders, the effect of which are to provide for payment of remuneration of the applicants for the period 1 October 2011 to 24 June 2012, and also for the termination of the receiverships of the two respondent companies which I have described in earlier judgments as "NEWCO" and "NEWCF". 2 The claim for remuneration is for an amount of $92,318.60 including GST. The period for which the remuneration is sought is 1 October 2011 to 24 June 2012. The application relies upon s 57 of the Federal Court Act 1976 (Cth). However, it seems to me, dealing first with the application for remuneration, that this order is properly to be made under s 425(1) of the Corporations Act 2001 (Cth) (the Act). It seems to me that the provisions of s 425(5), which make no reference to the standing of a receiver, do not affect the scope of the power under s 425(1) which specifically refers to the power of the court to fix the remuneration of a receiver. 3 This seems to be clear enough on the face of the section itself, and is supported by the terms of r 9.1(1) of the Federal Court (Corporations) Rules 2000, which assumes that an application may be made by a receiver under s 425(1) of the Act to fix the receiver's remuneration. Indeed, earlier applications which I have heard were based upon the power under s 425(1), and much of the evidence to which I have been taken is in similar terms to the evidence which was before me in the earlier applications. I am satisfied that the substantive and procedural requirements referred to in s 425(8) and r 9.1(6) have been met. The evidence contained in Mr Shannon's affidavit of 5 July 2012 addresses the various considerations to which I referred in particular in my reasons for judgment of 9 August 2011 in the matter of Shannon (in his capacity as receiver and manager of North East Wiradjuri Co Ltd) v North East Wiradjuri Co Ltd (No 2) [2011] FCA 1007 at [5] to [11]. 4 I should mention that in the earlier applications, I made an order dispensing with the requirement of service of the notice of intention to apply on condition that the documents be served on the solicitors for the parties. In those cases, I dispensed with the requirements laid down in r 9.1(2)(e). However, in the present matter, my attention has been drawn to the provisions of that rule which require notice to be given to creditors and members. 5 There is no question of notice to creditors in the present case, and the companies are both corporations which are limited by guarantee. They do not have members, so that, strictly speaking, the provisions of r 9.1(2)(e)(ii) are not enlivened. There is, therefore, no need to dispense with the requirements laid down in that subsection. Nevertheless, in the present case, notice has been given to the solicitors for the parties, as was done in each of the other applications. Importantly, the solicitors have written to the solicitors for the receivers indicating that they do not oppose the present application, and that is an important matter which I have taken into account in the exercise of my discretion to make the orders. 6 For those reasons, I will make an order under s 425(1) of the Act that the remuneration of the applicants for the period 1 October 2011 to 24 June 2012 be fixed in the amount of $92,318.60 including GST. 7 I turn, then, to the question of the order which is sought that the receiverships of NEWCO and NEWCF be terminated, and that the applicants retire as receivers and managers forthwith. 8 There is power in s 434B(1) of the Act to make the order which is sought. Section 434B(2) provides that the court may only make an order under subsection (1) if satisfied that the objectives for which the controller was appointed have been achieved. That subsection reflects the case law on the question. I have been referred to two authorities which bear this out. The first is the decision of Austin J in Re United Medical Protection Limited (2003) 47 ACSR 705 at [31], and another decision of Austin J in the matter of the Commonwealth of Australia v ABC2 Group Pty Limited (2009) NSWSC 1442 at [27]. 9 The effect of what Austin J said in both of those cases was that the court has power to confirm the discharge of court appointed receivers where the object of the appointment has been achieved. However, as a general rule, receivers will not be discharged where some relevant claim remains unsatisfied or unresolved. In the present case, I am satisfied that the objects for which the receivers were appointed has been achieved. This is because the receivers were appointed to enable the companies to have proper accountable governance pending resolution of a dispute as to who are the proper members and directors of the companies. The dispute was, effectively, determined as a result of a reference conducted by the Honourable Murray Wilcox QC. 10 I adopted the report made by his Honour on 9 February 2012. An annual general meeting of NEWCO took place on 24 May 2012, and directors were elected at that meeting. The constitution of NEWCF provides for NEWCO to appoint directors of NEWCF. Accordingly, as Mr Shannon deposes, it is unnecessary for the receivers to involve themselves in the process if I am satisfied that the proper course is for NEWCO's newly appointed board to attend to this. I am so satisfied. I have evidence from Mr Shannon in an affidavit of 2 August 2012 that to the best of his knowledge there are no current claims that have been made in respect of either NEWCO or NEWCF which remain unsatisfied or unresolved. 11 Mr Shannon also says he does not believe there are any other issues, claims or aspects of the receivership of the companies which remain unsatisfied or unresolved. The only exception to this is that the amount which I have ordered as the remuneration of the receivers for the period in question will not be able to be satisfied in full. This is because the cash at bank in NEWCO as at 28 June 2012 was a little over $31,000, and NEWCF held cash at bank as at that date of nearly $42,000. However, Mr Shannon has stated that he and Mr Gleeson are prepared to wait until further funds become available for NEWCO and NEWCF before calling on the remuneration as fixed. Mr Shannon states that the alternative would be for the receivers to remain in office until funds become available, but this would impose an unnecessary burden on the companies. 12 In the circumstances where the receivers are now prepared to retire and, as I have said, it is appropriate for them to do so, it seems to me that in these circumstances the exception to which I have referred above, namely, that receivers will not be discharged where a relevant claim remains unsatisfied, has no application. The only unsatisfied claim will be that of the receivers themselves and they have indicated that they are prepared to await the payment of those funds. Moreover, there is evidence which satisfies me that both of the companies will receive payments which will be more than sufficient to satisfy the outstanding remuneration payable to the receivers. 13 Accordingly, I will order pursuant to s 434B(1) of the Act that the receivers of NEWCO and NEWCF be terminated and that the applicants retire as receivers and managers of the respondents forthwith. I will also make order 2 in the interlocutory process. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Shannon (in his capacity as receiver and manager of North East Wiradjuri Co Limited) v North East Wiradjuri Co Limited

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