Pleash v Gold Coast Property Investments and Management Pty Limited (Receivers and Managers Appointed) (in liquidation)

[2010] FCA 541

FEDERAL COURT OF AUSTRALIA

Pleash v Gold Coast Property Investments & Management Pty Limited (Receivers and Managers Appointed) (in liquidation) [2010] FCA 541

Citation:		Pleash v Gold Coast Property Investments & Management Pty Limited (Receivers and Managers Appointed) (in liquidation) [2010] FCA 541
Parties:		BLAIR PLEASH and BRENT KIJURINA v GOLD COAST PROPERTY INVESTMENTS & MANAGEMENT PTY LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)
File number:		NSD 146 of 2010
Judge:		STONE J
Date of judgment:		26 May 2010
Legislation:		Corporations Act 2001 (Cth) s 449E(1)(1c) Federal Court (Corporations) Rules 2000
Date of hearing:	26 May 2010
Place:	Sydney
Division:	GENERAL DIVISION
Category:	No catchwords
Number of paragraphs:	14
Solicitor for the Applicants:	D Anderson, ERA Legal

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 146 of 2010

BETWEEN:

BLAIR PLEASH
First Applicant

BRENT KIJURINA
Second Applicant

AND: GOLD COAST PROPERTY INVESTMENTS & MANAGEMENT PTY LTD (RECEIVERS AND MANAGERS APPOINTED)(IN LIQUIDATION)
Respondent

JUDGE:	STONE J
DATE OF ORDER:	26 MAY 2010
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.That the remuneration of the applicants be fixed for the administration period of 7 July 2008 to 13 October 2008 in the amount of $74,718.05, including GST, broken down into the following components:

(a)The amount of $22,727.10, including GST, for the initial period of the administration from 7 July 2008 to 5.30 pm on 9 July 2008, and

(b)The amount of $51,990.95, including GST, for the period commencing from 5.30 pm on 9 July 2008 to 13 October 2008.

2.        That the applicant be empowered to draw upon such remuneration forthwith.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 146 of 2010

BETWEEN:

BLAIR PLEASH
First Applicant

BRENT KIJURINA
Second Applicant

AND: GOLD COAST PROPERTY INVESTMENTS & MANAGEMENT PTY LTD (RECEIVERS AND MANAGERS APPOINTED)(IN LIQUIDATION)
Respondent

JUDGE:	STONE J
DATE:	26 MAY 2010
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is an application made under section 449E(1)(c) of the Corporations Act 2001 (Cth) and r 9.2 of the Federal Court (Corporations) Rules 2000 by the applicants who were appointed initially as administrators of the respondent company and then as liquidators. A few days after their appointment as administrators the major secured creditor, the National Australia Bank appointed receivers and managers to the company. The applicant seeks orders fixing their remuneration. The application is supported by a number of affidavits, in particular, that of Blair Pleash, sworn on 26 October 2009. Mr Pleash is one of the applicants in this proceeding. In form, the present application comes by way of an appeal from a decision of Deputy District Registrar Hannigan made on 22 April 2010.

2. An application for review of such a decision is, however, a de novo hearing in the strict sense, and therefore, in substance, it is not a matter of reviewing the decision of the Deputy District Registrar, but considering the matter afresh and making an independent decision.  Part of the history of this matter is that a similar application was brought before the Queensland Supreme Court, where on 4 February 2009, Fryberg J declined to make the orders sought by the applicants.  In concluding that the orders sought in this Court should be made, I have taken into account the reasons why both Fryberg J and Deputy District Registrar Hannigan declined to make the orders sought. 

3. I have considered the issues identified as lacking in the previous applications in making my own decision, although, of course, I have reviewed all of the issues and make an independent decision.  I am satisfied by affidavits of William Park, sworn on 11 December 2009, and Chantel Birchall, sworn on 1 February 2010, that notification of this application has been served on creditors and shareholders of the respondent company together with a notice of intention to apply for remuneration and a copy of the affidavit of Blair Pleash, mentioned above.  I am further satisfied by an additional affidavit of Mr Pleash, sworn on 8 February 2010, that no objection has been received to this application.

4. I am satisfied on the evidence that all creditors and shareholders were notified as to the present application.  The affidavit of Chantel Birchall lists the names of a number of creditors and shareholders whose notification letters were returned unopened for reasons including that the addressees were not known at the address indicated.  There is only a small number of persons in that category, and as the notifications were sent to the addresses held in the appropriate registers, the fact that the notifications have been returned should not interfere with the present application being heard. 

5. In his reasons of 4 February 2009, Fryberg J listed the issues that would need to be addressed by further evidence and submissions: Pleash and Kijurine v Gold Coast Property Investments & Management Pty Ltd [2009] QSC 17. As summarised by Deputy District Registrar Hannigan they are:

   (a) A comparison of the professional fees of insolvency firms in Queensland to those of Hall Chadwick [the firm to which the present applicants belong];

   (b) The difference between the remuneration claimed by Hall Chadwick, if the fees claimed were recalculated by reference to the hourly rates charged in Queensland or the Gold Coast;

   (c) Evidence as to whether the cost of the Administration was increased as a result of the Applicant retaining interstate staff; 

   (d) A detailed breakdown of the tasks completed before and after the appointment of the receivers;

   (e) An explanation as to why creditors were not informed of the investigations carried out in relation to the misappropriation of the trust funds;  and

   (f) An explanation as to what books and records were not obtained by the Administrators and why they were not retrieved. 

   The rate of remuneration

6. Each of these issues has been addressed at the hearing before me today.  In the exhibit to his affidavit of 26 October 2009, Mr Pleash provided a comparison of the professional fees of insolvency firms in Queensland, and the difference between the amount of remuneration claimed before the Queensland Supreme Court and the amount that would have been claimed had the Queensland hourly rates been used.  It is not necessary to consider that matter further, since the amount of remuneration claimed has, in the present application, been reduced, by calculating the total using the average rates of Queensland insolvency practitioners.  Accordingly, issues (a) and (b) above are no longer of concern.

   The deployment of interstate staff

7. Mr Anderson who appeared for the applicants, told me from the bar table that Hall Chadwick is a national firm, which has offices throughout Australia, including along the eastern seaboard.  This is relevant for the question of whether the cost of the administration was increased as a result of the applicant retaining interstate staff.  One matter which was not initially clear to me on reading the papers, but which was pointed out by Mr Anderson, was that the applicants do not seek any disbursements in relation to travel. Therefore, the only additional cost for interstate staff is for the time spent in travelling.  That being so, it is reasonable to assume that whether staff had been deployed from Queensland, or from any other place, the amount of time spent in actually doing the work would have been more or less the same.  Given the extent of travel involved, I do not think additional travel time is material, and in any event, Mr Pleash deposes, that in order to address the issue of misappropriation of funds appropriately, it was necessary to engage the services of an expert in this area from Melbourne.  It does not seem to me that the cost of interstate staff is a reason for refusing the orders sought. 

   Administration period

8. One issue which appeared to trouble both Fryberg J and the Deputy District Registrar was the amount of remuneration attributable to the short period during which the company was in voluntary administration before receivers and managers were appointed.  The applicants were appointed on 7 July 2008, and receivers and managers were appointed, as it were, over the top of the administrators, on 9 July 2008.  Detailed timesheets were exhibited to the affidavit of Mr Pleash, and from those timesheets, it is clear that in the three days, a significant amount of work (approximately 72 hours) was done by a team of eight or nine people, including Mr Pleash.  In the circumstances, I do not regard this as excessive, and as the rates have now been adjusted to reflect the hourly rates charged in Queensland, I am satisfied that there is no issue here that should preclude me from making the orders sought.

   Books and Records

9. When the application came before the Supreme Court of Queensland, a notice of objection to the application was filed by the National Australia Bank.  The only issue that the bank raised, which has not been already discussed, was that the bank sought an explanation as to what books and records were not obtained by the administrators.  Fryberg J also required an explanation on this point.  It would appear that the administrators had access to all of the books and records of the company in the three days before receivers and managers were appointed. 

10. During that time, with the assistance of the team of people to whom I have already referred, the applicants were able to do the necessary work in relation to those books.  Mr Pleash, in his affidavit, says that during the first three days of the administration, he and his staff reviewed and obtained copies of the majority of the company’s books and records which were relevant to the conduct of preliminary investigations.  He also lists books and records which were not in his possession, and which were in the possession of the receivers and managers.  He states that those books and records were not removed from the company’s trading premises, as the receivers and managers required this information in order to continue trading the business, and to conduct their investigations into the business and affairs of the company for the secured creditor, the National Australia Bank.  I note that the National Australia Bank has not sought to oppose the present application.  I am satisfied with the explanation given and do not see this issue as any reason not to make the orders sought.

    Misappropriation of funds

11. The alleged misappropriation of funds was apparently an issue leading to the appointment of an administrator to the company.  The question arises why the creditors were not informed of the investigations carried out in relation to the alleged misappropriation.  The issue was addressed by Mr Pleash in his affidavit:

    The investigations carried out by me and my staff, in relation to the misappropriation of trust funds was not disclosed to creditors for the following reasons:-

    (a) Any disclosure of the misappropriation of the trust account monies may have prejudiced any sale/realisation of the Company’s business and assets;

    (b) I was requested by the Receivers and Managers’ office not to disclose my investigations regarding the trust accounts to creditors in my reports.

12. In his submissions, Mr Anderson, who appeared for the applicants, explained that the alleged misappropriation appears to have been related to rent moneys received by the company, and held in its trust account.  The rationale for not disclosing these investigations to creditors appears to be the potential to jeopardise the sale of the company’s property, because the major asset was the rental roll.  It is not clear to me that this was necessarily the wisest decision, however I have no basis on which to criticise decisions made by experienced insolvency practitioners.  There is nothing to suggest to me that there is anything sinister about the decision, or that it has, in any way, prejudiced creditors or the applicants’ claims.

13. I am satisfied that the issues raised by Fryberg J have been addressed.  I am also satisfied from my own review of the relevant material that the orders sought should be made. 

14. The orders of the Court are: 

    (1)That the remuneration of the applicants be fixed for the administration period of 7 July 2008 to 13 October 2008 in the amount of $74,718.05, including GST, broken down into the following components:

    (a)The amount of $22,727.10, including GST, for the initial period of the administration from 7 July 2008 to 5.30 pm on 9 July 2008, and

    (b)The amount of $51,990.95, including GST, for the period commencing from 5.30 pm on 9 July 2008 to 13 October 2008.

    (2) That the applicant be empowered to draw upon such remuneration forthwith. 

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate:

Dated:        1 June 2010