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Re AAA Financial Intelligence Ltd (in liq) (No 2)

Re AAA Financial Intelligence Ltd (in liq) (No 2)

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Case Copied 17 September 2014 37 min read

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of AAA Financial Intelligence Ltd (in liquidation) ACN 093 616 445 (No 2) [2014] NSWSC 1270
Hearing dates: Monday, 1 September 2014
Decision date: 17 September 2014
Jurisdiction: Equity Division - Corporations List
Before: Brereton J
Decision:
The liquidators would be justified in distributing the Stockbroker Funds pari passu among those Stockbrokers whom they are satisfied have a proprietary claim against those funds; and in distributing the Adviser Funds, as to $26,702.18, in payment of their costs of these proceedings; as to $51,593, in recoupment of their expenses; as to $36,000, in payment of their remuneration; and as to the balance, pari passu among those Advisers whom they are satisfied have a proprietary claim against those funds

Catchwords: CORPORATIONS - External administration - winding up - liquidator's applications - application for directions - liquidator's remuneration - whether entitled to remuneration out of assets held by company on trust - whether disbursements justified - fixing remuneration - whether time-cost basis appropriate held, time-cost is but one factor and neither dominant factor nor default position
Legislation Cited: (CTH) Corporations Act 2001, s 473(10), s 499, s 504(2), s 511
(CTH) Bankruptcy Act 1966, s 162(2)
(CTH) Bankruptcy Regulations 1996, reg 8.07
(NSW) Trustee Act 1925, s 63
(VIC) Trustee Companies Act 1984, s 21
Cases Cited: Alphena Pty Ltd v PS Securities Pty Ltd [2013] NSWSC 447; (2013) 94 ACSR 160
Conlan v Adams [2008] WASCA 61; (2008) 65 ACSR 521
In the matter of AAA Financial Intelligence Ltd (in liquidation) ACN 093 616 445 [2014] NSWSC 1004
Kirchoff v Flynn (1986) 786 F 2d 320
Mirror Group Newspapers plc v Maxwell (No 2) [1998] 1 BCLC 638
Re Anderson Group Pty Ltd [2002] NSWSC 764; (2002) 20 ACLC 1607
Re Carton Ltd (1923) 39 TLR 194
Re Stockford Ltd; Korda [2004] FCA 1682; (2004) 52 ACSR 279
Re Sutherland; French Caledonia Travel Service Pty Ltd (2003) 59 NSWLR 361
Re Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171
Re Wm Rose & Co Ltd (1897) 3 ALR (CN) 65
Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96
Category: Principal judgment
Parties: Bradley John Tonks and John Vouris in their capacity as liquidators of AAA Financial Intelligence Ltd (plaintiffs)
Representation: Counsel:
D L Cook (plaintiffs)
Solicitors:
Norton Rose Fulbright Australia (plaintiffs)

File Number(s): 2014/200292

Judgment

The plaintiffs Bradley John Tonks and John Vouris are the liquidators of AAA Financial Intelligence Ltd. By originating process filed on 7 July 2014, the liquidators seek directions pursuant to (CTH) Corporations Act 2001, s 511, and advice pursuant to (NSW) Trustee Act 1925, s 63, to the effect that they would be justified in applying the certain funds that were received by the company upon trust for the Advisers and Stockbrokers engaged by it to provide services to client ("Adviser Funds" and "Stockbroker Funds" - together "trust funds"), first in payment of their reasonable costs and expenses…

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: [2014] NSWSC 1270
Decision Date: 17 September 2014

CaseChat Overview and Summary

The parties involved in this matter are the liquidators of AAA Financial Intelligence Ltd, in liquidation, and the respondent. The liquidators sought directions from the court regarding the determination of their remuneration and whether they were entitled to be paid from assets held by the company on trust. The dispute also involved the justification of disbursements made by the liquidators and the appropriate method for fixing their remuneration. The matter was heard in the Supreme Court of New South Wales.

The primary legal issues before the court were whether the liquidators were entitled to remuneration from assets held by the company on trust, and if so, the extent of that entitlement. The court also had to consider the justification of the disbursements made by the liquidators, as well as the appropriate method for fixing their remuneration. Specifically, the court needed to determine whether the time-cost basis was an appropriate method for calculating the liquidators' remuneration.

The court found that the liquidators were entitled to remuneration from the trust assets, but this entitlement was subject to the same considerations as any other creditor. The court held that the time-cost basis was but one factor in determining the appropriate level of remuneration, and was neither the dominant factor nor the default position. The court also noted that the liquidators had made justified disbursements, which should be taken into account when calculating their remuneration. The court provided directions to the liquidators regarding the calculation of their remuneration and the consideration of justified disbursements.

The court made orders that the liquidators' remuneration should be determined based on a range of factors, including the time-cost basis, but also considering other relevant factors such as the complexity of the administration and the skill and experience of the liquidators. The court also ordered that the liquidators' justified disbursements should be taken into account when calculating their remuneration.

Orders