SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
In the Matter of EASTWOOD INSULATION PTY LTD (IN LIQUIDATION)
MACKS & ANOR v MAKA & ANOR
[2015] SASC 200
Reasons of Judge Bochner a Master of the Supreme Court
22 December 2015
CORPORATIONS - WINDING UP - LIQUIDATORS - REMUNERATION
Application by liquidators for approval of their remuneration for work undertaken first as deed administrators and subsequently as liquidators pursuant to Section 449E and Section 504 respectively of the Corporations Act 2001 (Cth).
Corporations Act 2001 (Cth) s 449E and s 504, referred to.
Barbo Group Pty Ltd trading as Alice Roof Tiles v Investment & Construction Enterprise Pty Ltd [2012] VSC 71; ASIC v Groundhog Developments Pty Ltd [2011] QSC 263, applied.
Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96; Conlan v Adams [2008] WASCA 61; Re Traditional Values Management Limited (in liq) (No 2) [2015] VSC 126; Thackray v Gunns Plantations Ltd [2011] VSC 380; Re AAA Financial Intelligence Ltd (in liquidation) (No 2) [2014] NSWSC 1270; Warner, In the matter of GTL Tradeup Pty Ltd (in liq) [2015] FCA 323; Templeton v ASIC [2015] FCAFC 137, considered.
MACKS & ANOR v MAKA & ANOR
[2015] SASC 200
JUDGE BOCHNER. This is an application by liquidators of a company for determination of their remuneration, firstly, as joint and several deed administrators of the company and, secondly, as joint and several liquidators of the company. Throughout these reasons, I will refer to the plaintiffs jointly as “Macks Advisory”. It is useful at the outset to set out a brief chronology of the facts in this matter. These facts are taken largely from the affidavit of Ian Wayne Burford sworn on 2 March 2015 (the first Burford Affidavit).
Four companies made up the Eastwood Group, Eastwood Insulation Pty Ltd (In Liquidation) (the Company), East Insulation Pty Ltd (Subject to Deed of Company Arrangement) (East), and Portisle Pty Ltd (Portisle). The company was the main trading entity of the group. Mr Stanley Zbigniew Maka (Maka) was the sole director and shareholder of the company and Portisle, and a director and shareholder of East. In addition, Maka was and remains the sole director and shareholder of the fourth company in the group, Thermal Clad Pty Ltd (Thermal Clad). The following facts appear to be uncontested:
· On 4 July 2013, Maka placed the company, East and Portisle into voluntary administration, appointing Macks Advisory as joint and several administrators.
· On 8 August 2013, at the second meeting of creditors, Maka proposed a Deed of Company Arrangement (DOCA) for each company. The meeting was adjourned to allow the creditors an opportunity to consider the proposal.
· On 21 August 2013, at the resumed meeting, the creditors resolved to enter into the DOCAs in respect of each company, and to appoint a Committee of Inspection.
· On 30 August 2013, the DOCAs were executed with Maka and Thermal Clad as proponents. Macks Advisory were appointed…
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- AGLC
- Macks v Maka [2015] SASC 200
- Case
- [2015] SASC 200
- Decision Date
CaseChat Overview and Summary
The primary legal issues involved the evaluation of the liquidators' work and the circumstances that made the administration and liquidation process more arduous than usual. This included the reliability of the company's financial records, Maka's non-cooperation, and the additional tasks that arose due to his actions. The court had to decide if the remuneration sought was commensurate with the complexities and additional work required to achieve a successful outcome.
The court examined the affidavit evidence provided by Burford, highlighting the significant difficulties faced by Macks Advisory. The unreliable financial records and Maka's lack of cooperation resulted in repeated work and additional tasks. Despite these challenges, the court found that the remuneration claimed was reasonable, considering the circumstances. The court also noted the successful resolution of debt recovery actions and the settlement with Maka and Thermal Clad. Ultimately, the court determined that the remuneration sought by the liquidators was fair and reasonable.
The final orders of the court approved the remuneration claimed by Macks Advisory, taking into account the difficulties encountered during the administration and liquidation process. The court also directed that Maka and Thermal Clad pay the liquidators the sum of $237,500.00 in full and final settlement of all claims related to the debt recovery action.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Close reading of the extensive affidavit material provided by Burford demonstrates that, while this could not be described as a particularly complex matter, there were a number of significant difficulties which hampered Macks Advisory’s ongoing conduct of the DOCA administration and liquidation. Again, it is useful to set out some of the salient features:· At some point during Macks Advisory’s investigation of the company’s books and records, email correspondence came to light which cast doubt on the reliability of those books and records. The email from Maka to his then accountant, and dated 28 June 2012, reads as follows:I think I know why there seems to be so much profit which is causing the tax blow out.Our friend Vin Cobiiac was preparing a good looking set of figures to enhance the chance to sell Eastwood Insulation to a prospective buyer.Obviously you have these details and are using these figures instead of real numbers. Somewhere in Vins office are real figures and not doctored numbers.Vin spent a hell of a lot of time to get those figures to look real which is why he could not put in a tax form also maybe Darren Ness fed you some inappropriate information.…· Burford deposes that this email along with other deficiencies in the company’s books and records, and the failure of Maka to provide books and records for the period 2008 to 2010 and the 2010 accounts until 2015 caused Macks Advisory to consider that the accounts otherwise provided by Maka could not be relied on.· On 7 August 2013, the day before the second meeting of creditors, Maka applied to this Court for an injunction to prevent the administrators from auctioning the company’s plant and equipment. Maka’s application was dismissed.· Throughout August to October 2013, the staff of Macks Advisory were required to provide ongoing assistance to Maka, in relation to matters where they had already provided the requested information, or where Maka had already been advised of his responsibilities or tasks required from him. This led to a significant repetition of work and advice which would not have otherwise been required.· At the same time, Maka did not comply with his own obligations, in relation to taking control of the company’s bank accounts, providing regular information on debtor recoveries, responding to requests from Macks Advisory, and otherwise carrying out his obligations under the DOCA.· It appears that Maka may have made payments to creditors outside of the terms of the DOCA.· There was an ongoing dispute at to whether Maka and Thermal Clad were debtors or creditors of the company. · Proceedings were subsequently issued against Maka and Thermal Clad for recovery of debt, and finally settled on the first day of trial on 5 June 2015, with Maka and Thermal Clad agreeing to pay the liquidators on behalf of the company, the sum of $237,500.00 in full and final settlement of all claims, relating to the debt recovery action.· As at the date of the hearing of this matter, Macks Advisory was pursuing two further recovery actions, one against Maka for insolvent trading, and one preference claim against the ATO.The Remuneration Sought