Re Aus Streaming Ltd (in liq)
[2022] VSC 182
•8 April 2022 (given ex tempore, revised)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2021 04513
IN THE MATTER of AUS STREAMING LIMITED (IN LIQUIDATION) (ACN 600 577 348)
BETWEEN:
| CRAIG CROSBIE AND DANIEL WALLEY IN THEIR CAPACITIES AS SPECIAL PURPOSE LIQUIDATORS OF AUS STREAMING LIMITED (IN LIQUIDATION) (ACN 600 577 348) | Plaintiffs |
| v | |
| AUS STREAMING LIMITED (IN LIQUIDATION) (ACN 600 577 348) | Defendant |
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JUDGE: | Hetyey AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4, 25 February 2022, 8 April 2022 |
DATE OF JUDGMENT: | 8 April 2022 (given ex tempore, revised) |
CASE MAY BE CITED AS: | Re Aus Streaming Ltd (in liq) |
MEDIUM NEUTRAL CITATION: | [2022] VSC 182 |
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CORPORATIONS – External administration – Application by special purpose liquidators for approval of remuneration – Applicability of s 60-10 of the Insolvency Practice Schedule (Schedule 2 to the Corporations Act 2001 (Cth)) – s 50-20 of Practice Schedule – Whether special purpose liquidator an ‘external administrator’ – Consideration of factors set out in s 60‑12 of Practice Schedule – Incidental orders for expenses and costs – Where part of remuneration claimed already remitted pursuant to funding agreement — Remuneration ultimately approved with slight discount — Treatment of expenses and legal costs of application — s 90‑15 of Practice Schedule.
CORPORATIONS — Supreme Court (Corporations) Rules 2013 (Vic) — r 9.2(2) — Requirements for notice of remuneration application — Direction under r 1.8 that notice requirements be complied with by modified notice regime.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Kohn | Johnson Winter & Slattery |
TABLE OF CONTENTS
Background......................................................................................................................................... 1
Material relied upon.......................................................................................................................... 2
Procedural history......................................................................................................................... 3
Requirement for notice to interested persons................................................................. 4
Statutory provisions.......................................................................................................................... 7
Application of s 60-10(1)(c) of the IPS to remuneration of special purpose liquidators...... 9
Applicable principles for assessment of the remuneration claim.......................................... 11
General rulings regarding remuneration claim......................................................................... 11
Method of calculating remuneration.............................................................................. 11
Extent to which work was necessary and properly performed, quality of work performed (s 60-12(a) and s 60-12(d)) and applicable rates.................................................... 12
Complexity of work performed (s 60-12(e)).................................................................. 12
Application of rulings to remuneration claimed and treatment of expenses and costs.... 14
ANNEXURE – Orders to the judgment....................................................................................... 16
HIS HONOUR:
This matter concerns an application by Craig Crosbie and Daniel Walley as special purpose liquidators of Aus Streaming Limited (In Liquidation) (‘the Company’ and ‘the SPLs’, respectively) for a determination that they are entitled to remuneration in relation to work completed during the period between 1 June 2020 and 28 July 2021 (‘the Period’) for the sum of $197,353.50 (exclusive of GST) plus disbursements in the sum of $741.01 (exclusive of GST).
Background
The SPLs were appointed on 27 May 2020 pursuant to orders made by Connock J in proceeding S ECI 2020 01581 (‘the Orders’). The circumstances of the appointment are more fully described in the judgment of Connock J of In the matter of Aus Streaming (In Liq)[1]. Those circumstances included:
[1][2020] VSC 313.
(a) the substantial value of investments as recorded in the books of the Company (‘the Investments’);
(b) the limited information available regarding the existence and value of the Investments, especially to the liquidators initially appointed to the Company, namely Mr Ronald Dean-Willcocks and Mr Cameron Gray (‘the primary liquidators’);
(c) the failure of the Company to make payments into a deed fund as contemplated by the terms of a Deed of Company Arrangement (‘DOCA’) prior to its termination;
(d) the non-payment of creditors of the Company notwithstanding the stated book value of the Investments and the terms of the DOCA that provided for relevant creditors to receive 100 cents in the dollar plus interest; and
(e) a process in relation to the sale of the Investments which had apparently stalled or failed.
The Orders stipulate that the SPLs were appointed to conduct investigations into specific matters set out in the schedule to the Orders, including:
(a) the existence, valuation, and the basis of the Investments;
(b) the steps taken to crystallise and monetise the Investments;
(c) the conduct (including any breach of duty whether statutory, at common law or in equity, and any misleading or deceptive conduct whether statutory or at common law) of the Company’s directors, Mr Andrew Turner[2] (and companies associated with Mr Turner) and the Company’s auditors, in connection with the Investments; and
(d) any claims of the Company arising from those matters.
[2]According to the SPLs, Mr Turner is a consultant, adviser and representative of one of the Company’s shareholder. Mr Turner was apparently central to all aspects of the Company’s business, through his role as an employee of Hamirah Holdings Limited, which consulted to the Company.
In addition, paragraph 2 of the Orders contemplate regular reporting by the SPLs to the Company’s creditors and the primary liquidators. Paragraph 3 of the Orders states that the SPLs are not to be paid their remuneration, costs and expenses from any property of the Company, except that which they recover as a consequence of the actions they have specifically been appointed to undertake pursuant to the Orders. The SPLs gave an undertaking to similar effect which is also recorded in the Orders. The Court is informed that the SPLs will instead seek to have recourse to an applicable funding agreement in respect of their claim for remuneration and expenses, which appears to be consistent with the position advanced in the application for their appointment in proceeding S ECI 2020 01581.
Material relied upon
In support of their application, the SPLs rely upon the affidavits of Mr Crosbie sworn 29 November 2021 and 6 April 2022 (‘the first Crosbie affidavit’ and ‘the second Crosbie affidavit’, respectively), together with their exhibits, the affidavit of Mr Paul Buitendag (‘the Buitendag affidavit’) sworn 25 February 2022, together with its exhibits, and their written submissions dated 3 February 2022.
Procedural history
The originating process in this matter was filed on 30 November 2021. By order dated 17 December 2021, Connock J referred the proceeding to an Associate Judge for hearing and determination pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘the Rules’) and r 16.1(3) of the Supreme Court (Corporations) Rules 2013 (Vic) (‘the Corporations Rules’).
The matter was first heard on 4 February 2022. At the first return, the SPLs submitted that this was not a conventional application for approval by the Court of remuneration under s 60-10 of the Insolvency Practice Schedule (Corporations) (‘the IPS’) found at Schedule 2 of the Corporations Act 2001 (Cth) (‘the Corporations Act’). This was despite the reference to that provision in the originating process. Instead, it was argued that the determination of the remuneration and disbursements of the SPLs involved the exercise of the inherent equitable powers of the Court,[3] along with powers incidental to the Orders by which the SPLs were appointed. However, the SPLs suggested it was nevertheless appropriate to have regard to the criteria found in s 60-12 of the IPS (to the extent applicable) in determining and fixing the remuneration sought.
[3]Citing Traditional Values Management Limited (In Liquidation) [2015] VSC 338 at [39] (Gardiner AsJ).
Because the SPLs initially contended that their remuneration application was not made under s 60-10 of the IPS, they considered it unnecessary to give notice of the application to the Company’s creditors, shareholders and members of any committee of inspection in accordance with r 9.2(2) of the Corporations Rules.[4]
[4]In summary, the process under r 9.2(2) of the Corporations Rules requires that at least 21 days before the filing of an application for the determination, the external administrator must give notice to each creditor of the company, each member of any committee of inspection (or if there is no committee, the five largest creditors of the company by value of their debt) and each member of the company whose shareholding represents at least 10% of the issued capital. The persons served are afforded 21 days to give the external administrator notice of their objection. In the event no objection is received, the external administrator is entitled to file the affidavit material relied upon and request that the application be dealt with in the absence of the public and without any attendance by, or on behalf of, the external administrator. Where objection is received, the objecting party is required to be served with all relevant material and the process is determined on a contested basis.
Counsel for the SPLs also referred to correspondence from the primary liquidators dated 3 February 2022 in which the primary liquidators state that they do not oppose the making of the orders sought in the application on the basis that the remuneration, costs and expenses (including those of and incidental to the remuneration application) be paid in accordance with the terms of paragraph 3 of the Orders and not out of any assets of the Company. The primary liquidators otherwise do not wish to be heard in respect of the remuneration application.
Orders were made on 4 February 2022 for the filing of an amended originating process and for the balance of the application to be heard and determined on the papers, subject to any further order. An amended originating process was subsequently filed on 7 February 2022 which refined the scope of relief sought, including by no longer seeking a declaration that the remuneration claimed be paid in accordance with the applicable funding agreement.
Requirement for notice to interested persons
On the Court’s own motion, the matter was listed for mention on 25 February 2022. At that time, I raised with the plaintiffs a number of matters, including revisiting the application of s 60-10 of the IPS to the SPLs’ remuneration claim and the extent to which it was necessary to notify interested persons of the application.
At the mention, counsel for the SPLs informed the Court that despite previous submissions to the contrary, the SPLs now take the view that the remuneration application is properly made under s 60-10 of the IPS. There was evidence before the Court that the relevant funder did not oppose the approval for payment of the SPLs’ remuneration and expenses pursuant to the underlying funding agreement and had remitted the sum of $150,000 (including GST) on account of remuneration and expenses into the SPLs’ solicitors’ trust account. The Court was also informed by counsel for the SPLs that the amount paid by the funder corresponded with a funding cap contained in the underlying funding agreement and that the amount was held by the SPLs’ solicitors pending the Court’s determination in this proceeding.
Although the SPLs now contend that the remuneration application was made under s 60-10 of the IPS, at the mention on 25 February 2022 they sought a dispensation from the notice requirements under r 9.2(2) of the Corporations Rules. However, the Court instead made specific orders on that day requiring the plaintiffs to email the Company’s creditors and shareholders, together with the litigation funder referred to in the Buitendag affidavit, providing a link to the key documents relating to the matter. Further, the 25 February 2022 orders stipulated that the interested persons were to file and serve by 30 March 2022 a notice of appearance indicating any intention to be heard in relation to the application and/or to object to the application. The matter was then listed for further hearing today.
The process of notification of interested persons envisaged by the 25 February 2022 orders was, in effect, a modified form of the notice requirements set out in r 9.2(2) of the Corporations Rules in respect of remuneration applications made under the IPS. This approach can be contrasted with the position taken in the matter of Phoenix Institute of Australia Pty Ltd (in liq),[5] where Cheeseman J was prepared to dispense with the notice requirements set out under r 9.2(2) of the Federal Court (Corporations) Rules 2000 (Cth) (which is in equivalent form to r 9.2(2) of the CorporationsRules). There, her Honour was satisfied that the remuneration of special purpose liquidators was to be made from a funding agreement previously approved by the Court under s 477(2B) of the Corporations Act and not from the assets of the company, such that creditors and shareholders would not be affected by the approval of the remuneration sought.
[5][2021] FCA 1203 (‘Phoenix Institute’).
Re Pluton Resources Limited(rec & mgrs apptd) (in liq)[6] also involved an application for approval of remuneration by a special purpose liquidator. Judicial Registrar Irving (as his Honour then was) was also inclined to make an order dispensing with the notice requirements in r 9.2(2) of the Corporations Rules. However, in that case there was evidence as to the impracticality of fully complying with the requirements and the special purpose liquidator had instead served the remuneration application on the company’s five largest creditors and the single shareholder, none of whom raised objection.
[6][2021] VSC 155 (‘Re Pluton Resources’).
In this matter a modified process of notice to all interested parties whose interests may be affected was considered appropriate for the following reasons:
(a) in their application the SPLs are seeking an amount in excess of the sum paid by the funder;
(b) unlike in Phoenix Institute, the underlying funding agreement does not appear to be the subject of any previous application for approval and is not otherwise in evidence before the Court;
(c) in contrast to the position in Pluton Resources, the SPLs did not make any prior attempt to serve interested persons with the application; and
(d) in the event the SPLs later recover property as a consequence of the actions they were appointed to undertake, they may conceivably seek to be remunerated from that property to the extent their remuneration is not covered under the applicable funding agreement.
The second Crosbie affidavit confirms that the SPLs have sought to comply with the Court’s orders of 25 February 2022 for notice to interested parties. Where the SPLs did not have direct email addresses for a number of creditors and shareholders, they contacted the lawyers formally acting for those parties and requested that the information be forwarded on. The relevant documents were also posted to the known physical addresses held for those persons. The relevant funder was also given a link to the material and acknowledged receipt, but did not correspond further. In the circumstances, I am satisfied that the SPLs have complied with the Court’s orders of 25 February 2022. To the extent necessary, a direction will be made under r 1.8 of the Corporations Rules that substantial compliance with r 9.2(2) of the Corporations Rules be achieved by compliance with the process set out in the Court’s orders of 25 February 2022.
Statutory provisions
Section 60-5(1) of the IPS provides:
Remuneration in accordance with remuneration determinations
(1)An external administrator of a company is entitled to receive remuneration for necessary work properly performed by the external administrator in relation to the external administration, in accordance with the remuneration determinations (if any) for the external administrator (see section 60-10).
Section 60-10 of the IPS relevantly states:
Remuneration determinations
(1)A determination, specifying remuneration that an external administrator of a company (other than an external administrator in a members’ voluntary winding up) is entitled to receive for necessary work properly performed by the external administrator in relation to the external administration, may be made:
(a)by resolution of the creditors; or
(b)if there is a committee of inspection and a determination is not made under paragraph (a)—by the committee of inspection; or
(c)if a determination is not made under paragraph (a) or (b)—by the Court.
Note: For determinations made by the Court, see also section 60-12 (matters to which the Court must have regard).
…
(3)A determination under this section may specify remuneration that the external administrator is entitled to receive in either or both of the following ways:
(a)by specifying an amount of remuneration;
(b)by specifying a method for working out an amount of remuneration.
Remuneration on a time-cost basis
(4)If a determination under this section specifies that the external administrator is entitled to receive remuneration worked out wholly or partly on a time-cost basis, the determination must include a cap on the amount of remuneration worked out on a time-cost basis that the external administrator is entitled to receive.
…
Section 5-5 of the IPS incorporates by reference to s 5-20 a definition of ‘external administrator’. Section 5-20 of the IPS, in turn, defines an ‘external administrator’ as follows:
A person is an external administrator of a company if the person is:
(a)the administrator of the company; or
(b)the administrator under a deed of company arrangement that has been entered into in relation to the company; or
(ba)the restructuring practitioner for the company; or
(bb)the restructuring practitioner for a restructuring plan that has been made in relation to the company; or
(c)the liquidator of the company; or
(d)the provisional liquidator of the company.
Note:A person is not an external administrator of a company for the purposes of this Schedule merely because the person has been appointed as a receiver, receiver and manager, or controller in relation to property of the company.
Section 60-12 of the IPS provides that, in exercising its power to make a remuneration determination in accordance with s 60-10(1)(c), ‘the Court must have regard to whether the remuneration is reasonable, taking into account any or all of the following matters’:
(a)the extent to which the work by the external administrator was necessary and properly performed;
(b)the extent to which the work likely to be performed by the external administrator is likely to be necessary and properly performed;
(c)the period during which the work was, or is likely to be, performed by the external administrator;
(d)the quality of the work performed, or likely to be performed, by the external administrator;
(e)the complexity (or otherwise) of the work performed, or likely to be performed, by the external administrator;
(f)the extent (if any) to which the external administrator was, or is likely to be, required to deal with extraordinary issues;
(g)the extent (if any) to which the external administrator was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case;
(h)the value and nature of any property dealt with, or likely to be dealt with, by the external administrator;
(i)the number, attributes and conduct, or the likely number, attributes and conduct, of the creditors;
(j)if the remuneration is worked out wholly or partly on a time-cost basis—the time properly taken, or likely to be properly taken, by the external administrator in performing the work;
(k)whether the external administrator was, or is likely to be, required to deal with one or more controllers, or one or more managing controllers;
(l) if:
(i)a review has been carried out under Subdivision C of Division 90 (review by another registered liquidator) into a matter that relates to the external administration; and
(ii)the matter is, or includes, remuneration of the external administrator;
the contents of the report on the review that relate to that matter;
(m) any other relevant matters.
Application of s 60-10(1)(c) of the IPS to remuneration of special purpose liquidators
Before turning to the substance of the remuneration application, it is necessary to say something about the question of whether this application was properly commenced under s 60-10(1)(c) of the IPS.
As already noted, at the hearing on 25 February 2022, counsel for the SPLs confirmed that the SPLs had, despite their previous position, ultimately taken the view that this application was properly made under s 60-10(1)(c) of the IPS. That appears to be the correct interpretation of the relevant statutory provisions.
Whilst an ‘external administrator’ is defined in s 5-20 of the IPS to include ‘the liquidator of the company’, a special purpose liquidator is also a liquidator of the company, although appointed for a specific purpose. The singular use of the term ‘the liquidator’ encompasses the plural.[7] I note that both Pluton Resources and Phoenix Institute proceeded on the basis that a special purpose liquidator was entitled to claim remuneration under s 60-10 of the IPS. In the case of Traditional Values Management Limited (In Liquidation)[8], the remuneration of the special purpose liquidators involved the exercise of the inherent equitable powers of the Court, albeit by reference to the statutory criteria set out in s 473(10) of the Corporations Act (the predecessor provision to s 60-12 of the IPS). However, in that case the special purpose liquidators’ remuneration was assessed in accordance with a process specifically contemplated by the orders of the Judge who made the appointment of the SPLs (Ferguson J (as her Honour then was)). There do not appear to have been any such orders in Pluton Resources and Phoenix Institute by which the relevant assessments were to be conducted. Nor are there any similar orders here. Further, it would be surprising if Parliament had made provision for the assessment of the remuneration of other external administrators in the IPS but excluded special purpose liquidators from that regime. There is nothing to indicate such a result was intended. The better view is that a special purpose liquidator falls within the definition of an external administrator in s 5-20 of the IPS and that their remuneration may accordingly be determined under s 60-10(1)(c).
[7]See Acts Interpretation Act 1901 (Cth) s 23(b). Further, s 5-25 of the IPS makes plain that a reference in the IPS to ‘the external administrator of a company’ encompasses two or more joint external administrators and two or more joint and several external administrators of a company.
[8][2015] VSC 338 (Gardiner AsJ).
Where, as in this case, a special purpose liquidator holds an amount for their remuneration which has been remitted in accordance with a funding agreement but not drawn upon by the special purpose liquidator, it would seem prudent for the special purpose liquidator to seek approval for that remuneration under s 60-10 of the IPS in order to account for the work performed and the amount claimed for that work.
Applicable principles for assessment of the remuneration claim
The process and principles applicable to assessing a liquidator’s claim for remuneration were recently set out by me in Re Barokes Pty Ltd (in liq)[9] and I need not repeat them in full. In the absence of determination by members, creditors or a committee of inspection, the ultimate question for the Court in making a remuneration determination is whether the amount claimed by a liquidator is reasonable.[10] Further, whilst a remuneration determination by the Court is not a ‘rubber stamping’ exercise[11] and the Court must independently consider the nature and extent of the remuneration claimed and make an assessment of its reasonableness having regard to the work performed and the particular features of the external administration,[12] the Court is not required to undertake a line by line review of the billing record provided and can review the narrations ‘in a broad way in order to satisfy itself that they support the other evidence led in respect of the claimed remuneration’.[13]
[9][2020] VSC 555 [32]-[33] (Hetyey AsJ).
[10]Ibid [33] citing ReTwenty-Seventh Android Pty Ltd [2019] VSC 563, [21] (Matthews JR, as her Honour then was) (‘Twenty-Seventh Android’).
[11]Re Graziers’ Investment Company Limited (in Liquidation) and GIC Holdings Pty Ltd [2020] VSC 8, [28] (Hetyey JR, as his Honour then was).
[12]Ibid.
[13]In the matter of Fearndale Holdings Pty Ltd (admin apptd) (recs & mgers apptd) [2020] NSWSC 901, [38] (Black J).
General rulings regarding remuneration claim
The SPLs have established a prima facie entitlement to their claim for remuneration on the material relied upon. Set out below are a series of general rulings I have made in relation to the remuneration claim. In making these rulings, I have had regard to the principles and statutory provisions referred to earlier, including the factors set out in s 60-12 of the IPS most relevant to the application and the material relied upon.
Method of calculating remuneration
The SPLs seek approval for their remuneration on a time-cost basis and have provided the Court with a schedule which records the time spent by them and each of their staff on specific tasks performed during the Period (‘the Schedule’).[14] The Court considers the use of a time-based method for determining the remuneration to be appropriate in the circumstances and the narrations contained within the Schedule to be meaningful. The work itself has been allocated according to the following distinct categories: administration (5.65% of time spent); creditors (41.21% of time spent, largely relating to the preparation of detailed reports to creditors) and investigations (53.14% of time spent). The SPLs have also produced a table setting out, in summary form, the name of each person who performed work during the Period, their role, and the total time billed by each person.
Extent to which work was necessary and properly performed, quality of work performed (s 60-12(a) and s 60-12(d)) and applicable rates
[14]See page 181 of exhibit CC01 to the first Crosbie affidavit.
The Court is satisfied that the work undertaken by the SPLs during the Period was, with minor exception,[15] both necessary and properly performed. The evidence also suggests the work has largely been undertaken efficiently, satisfactorily and competently. The rates charged are within the range typically charged by insolvency practitioners and are fair and reasonable given the nature of their appointment and the features of the Company and its liquidation.
[15]The minor exception relates to the delegation of work within the liquidators’ office and the time spent on some tasks (see further below).
Complexity of work performed (s 60-12(e))
The SPLs were required to deal with a number of complex issues including considering appropriate valuation methodologies in respect of the Investments which comprise shares held by the Company in foreign unlisted energy and resource companies with a book value of over USD$128 million as at 31 March 2020. As regards the Investments, the SPLs have:
(a) ascertained that at the time of the appointment of administrators to the Company on 3 February 2018, the Company was not the legal owner of the Investments but only had a beneficial interest in the Investments since April/May 2017 when they were apparently transferred to ASAF Critical Metals Ltd (‘ASAF’) under the terms of ASAF’s facility and security agreements;
(b) identified a systematic and deliberate attempt since at least 6 September 2016 to mislead the Company’s external stakeholders as to the value of the Investments;
(c) been unable to establish any credible and independently verifiable information supporting the substance and financial position of the companies that comprise the Investments; and
(d) undertaken other investigations of relative complexity including matters pertaining to the audit of the Company, such as the sufficiency of audit evidence.
The investigations undertaken by the SPLs reveal that potential claims may exist against:
(a) ASAF and/or its directors in relation to representations made about the Investments, the enforcement of ASAF’s security and its role in the asset realisation process to create a DOCA fund;
(b) the Company’s directors (including Mr Turner as a de facto director) and officers of the Company for breach of duties in relation to entering into a transaction with ASAF that was represented to provide $138 million of assets in exchange for shares in the Company, and breaches of due care and diligence and the requirement to act in good faith; and
(c) the auditor Nexia Perth Audit Services Pty Ltd for potential deficiencies in the audit of the Company’s 2016 financial report (as an unlisted public company, pursuant to s 301 of the Corporations Act, the Company was required to have its financial reports audited in accordance with Division 3 of the Corporations Act and to obtain an auditor’s report.).
There are approximately 16 creditors of the Company who have claims worth over $2.1 million, most of which are unsecured. Over $443,878 is owed to ASAF as a secured creditor. The SPLs have produced five reports to the Company’s creditors dated 2 June 2020, 26 August 2020, 25 November 2020, 5 May 2021 and 30 August 2021, respectively. The 5 May 2021 report is a substantive document (over 78 pages long) which sets out the investigations undertaken.
Because of the complex nature of the tasks the SPLs were required to perform, this has necessitated a higher level of involvement by senior personnel within the SPLs’ office than would otherwise be the case. Of the 350.2 hours which are the subject of the remuneration claim, over 39.3 hours were spent by Mr Crosbie (one of the SPLs with a rate of $685 per hour, exclusive of GST) which equates to around 11% of the work performed and 268 hours were spent by Ms Melissa Humann (a managing director with a rate of $565 per hour, exclusive of GST) which equates to 76.5% of the total work performed.
However, a perusal of the Schedule suggests there were opportunities for both Mr Crosbie and Ms Humann to have delegated less complex and administrative tasks to others within the organisation with a lower charge-out rate, such as Mr Adrian D’Aprano as a senior consultant (with a rate of $315 per hour, exclusive of GST).[16] Some of the work drafting reports to creditors which was undertaken by Mr Crosbie and Ms Humann could also have reasonably been delegated to Ms Leah Campbell (a senior manager with a rate of $520 per hour, exclusive of GST). There are also some minor examples of internal meetings between members of the SPLs’ office which appear to be excessive in the circumstances.[17]
[16]Examples include items 40, 42, 59 and 258 to the Schedule.
[17]Examples include items 33, 38, 194, 197 and 207 to the Schedule.
Application of rulings to remuneration claimed and treatment of expenses and costs
Having regard to the matters referred to above, it is appropriate and efficient to apply a global discount of 3% (or approximately $5,942.00) in respect of the liquidators’ total remuneration claim of $197,353.50. The remuneration claim will therefore be allowed in the total sum of $191,411.50 (plus GST) in respect of the Period.
The Court notes that expenses are claimed in the sum of $741.01 (excluding GST) during the Period, including internal document production costs of $197.75. The expenses appear to be modest and appropriate. The Court will grant, to the extent necessary and applicable, the SPLs leave under s 60-20(3)(b) of the IPS to derive a profit or advantage in respect of internal disbursements which have been claimed. Whilst s 60-10 of the IPS does not confer jurisdiction upon the Court to approve a liquidator’s expenses and disbursements,[18] I am prepared to make an order pursuant to s 90-15, or alternatively under the inherent jurisdiction of the Court, approving these expenses.
[18]Twenty-Seventh Android [157] (Matthews JR).
Lastly, the SPLs claim their legal costs associated with the making of this application. The Court has a general discretion to determine those costs under s 24 of the Supreme Court Act 1986 (Vic) and order 63 of the Rules. It is appropriate that an order be made entitling the SPLs to their costs of this proceeding on an indemnity basis.
I will make orders in the terms set out in the Annexure to these reasons.
ANNEXURE – Orders to the judgment
To the extent necessary, the Court makes a direction under rule 1.8 of the Supreme Court (Corporations Rules) 2013 that substantial compliance with rule 9.2(2) be achieved by the process set out in the Court’s Orders of 25 February 2022.
Pursuant to section 60-10(1)(c) of the Insolvency Practice Schedule (IPS), the plaintiffs are entitled to remuneration of $191,411.50 (plus GST), for the period between 1 June 2020 and 28 July 2021 (Period), for work performed as a consequence of their actions, having regard to Justice Connock’s Orders made 27 May 2020 in Supreme Court proceeding S ECI 2020 1581.
Pursuant to section 90-15 of the IPS, or alternatively, the inherent jurisdiction of the Court, the plaintiffs’ expenses for the Period be determined in the sum of $741.01 (plus GST).
To the extent necessary and appropriate, leave be granted to the plaintiffs pursuant to s 60-20(3)(b) of the IPS to derive a profit or advantage from the external administration of the Company to the extent that the internal disbursements of the plaintiffs for the Period cause them to directly or indirectly derive a profit or advantage in breach of s 60-20(1) of the IPS.
The plaintiffs’ remuneration, costs and expenses of this application be paid on an indemnity basis.
Liberty to apply.
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