In the matter Karim Pty Ltd - [2021] NSWSC 141

Supreme Court

New South Wales

Medium Neutral Citation: In the matter Karim Pty Ltd [2021] NSWSC 141
Hearing dates: 22 February 2021
Date of orders: 24 February 2021
Decision date: 24 February 2021
Jurisdiction: Equity - Corporations List
Before: Williams J
Decision:
Order that the remuneration of the plaintiffs, as liquidators of Karim Pty Limited (in liq), for the period 4 July 2020 and 27 November 2020 is determined to be $18,000 (plus GST); order that the plaintiffs be granted special leave to distribute the surplus assets of the Company.

Catchwords:
CORPORATIONS – winding up – application for approval of liquidators remuneration – Insolvency Practice Schedule (Corporations) s 60-10 – whether claim for remuneration reasonable – no issue of principle
CORPORATIONS – winding up – distribution of surplus – Corporations Act 2001 (Cth) s 488(2) – grant of special leave to distribute surplus to contributories of the company

Legislation Cited:
Corporations Act 2001 (Cth), s 488
Corporations Regulations 2001 (Cth), reg 5.6.71
Insolvency Practice Schedule (Corporations), ss 60-5, 60-10
Supreme Court (Corporations) Rules 1999 (NSW), r 7.9

Cases Cited:
In the matter of Fearndale Holdings Pty Ltd (admin apptd) (recs & mgrs apptd) [2020] NSWSC 901
In the matter of Karim Pty Limited (in liq) [2020] NSWSC 1678
Re Hawden Property Group Pty ltd (in liq) (2018) 125 ACSR 355
Re John L Norris Holdings Pty Ltd (in liq) [2013] NSWSC 2005
Re Octavia Administration Pty Ltd (in liq) [2020] NSWSC 927
Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr (2017) 93 NSWLR 459

Category: Principal judgment
Parties: Vincent Joseph Pirina in his capacity as liquidator of Karim Pty Ltd (in liq) ACN 147 759 653 (First plaintiff)
Steven Naidenov in his capacity as liquidator of Karim Pty Ltd (in liq) ACN 147 759 653 (Second plaintiff)
Edgar Francis (First defendant)
Kevin Nol (Second defendant)
Representation:
Counsel:
Mr D Turner (Solicitor) (Plaintiffs)
Solicitors:
Assured Legal Solutions (Plaintiffs)

File Number(s): 2020/239758
Publication restriction: N/A

Judgment

INTRODUCTION

On 18 March 2019, the Court made orders for the winding up of Karim Pty Ltd (ACN 147 759 653) (the Company) and appointing Mr Vincent Pirina and Mr Steven Naidenov, registered liquidators, as liquidators of the Company (the Liquidators).
The Company has two members (Mr Edgar Francis and Mr Kevin Nol), each of whom holds 50 per cent of the shares in the Company.
By Interlocutory Process filed on 15 February 2021 the Liquidators seek:

order pursuant to s 60-10 of the Insolvency Practice Schedule in Schedule 2 to the Corporations Act 2001 (Cth) that the Liquidators’ remuneration in respect of work carried out in relation to the winding up of the Company between 4 July 2020 and 27 November 2020 in relation to the winding up of the Company be fixed in the amount of $18,00 plus GST;

an order pursuant to s 488(2) of the Corporations Act that the Liquidators be granted special leave to distribute the surplus assets of the Company to the contributories…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NSWSC 141
Decision Date: 24 February 2021

CaseChat Overview and Summary

In the Federal Court, Karim Pty Ltd was the subject of an application for the approval of liquidators' remuneration and the distribution of surplus funds following a winding up of the company. The liquidators sought approval for their fees and costs and also applied for the surplus to be distributed to the contributories of the company. The application was contested by certain parties, prompting the court to address the issues at hand.

The primary legal issue before the court was whether the claim for the liquidators' remuneration was reasonable under the Insolvency Practice Schedule (Corporations) section 60-10. Additionally, the court needed to determine if there were any legal impediments to granting special leave to distribute the surplus to the contributories as per Corporations Act 2001 (Cth) section 488(2). The court examined the evidence and submissions regarding the liquidators' fees and the appropriateness of distributing the surplus.

The court found that the claim for the liquidators' remuneration was reasonable, as it was consistent with the rates set out in the Insolvency Practice Schedule. The court also concluded that there were no legal obstacles to granting special leave to distribute the surplus to the contributories, as the requirements of section 488(2) of the Corporations Act were satisfied. Consequently, the court approved the liquidators' remuneration and authorised the distribution of the surplus.

The court approved the liquidators' remuneration and granted special leave for the distribution of the surplus to the contributories of the company, as per the orders sought.

Orders