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Re Barokes Pty Ltd (in liq)

Re Barokes Pty Ltd (in liq)

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Case Copied 1 September 2020 60 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2020 00344

IN THE MATTER of BAROKES PTY LTD (ACN 079 714 579)

JAMES KOUTSOUKOS and DAVID COYNE as the Joint and Several Liquidators of Barokes Pty Ltd (ACN 7079 714 579)	Plaintiff
- and -
DAIWA CAN COMPANY	Other Party

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JUDGE:	Hetyey AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	24 February 2020 and 21 April 2020. Supplementary submissions filed 11 May 2020 and 18 May 2020.
DATE OF JUDGMENT:	1 September 2020
CASE MAY BE CITED AS:	Re Barokes Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2020] VSC 555

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CORPORATIONS – External administration – Application by liquidators for approval of remuneration – s 60-10 of the Insolvency Practice Schedule (Schedule 2 to the Corporations Act 2001 (Cth)) – Objections by majority shareholder and major creditor by value – Consideration of factors set out in s 60-12 of Practice Schedule – Whether appropriate to consider unproven allegations about liquidators’ conduct in undertaking remuneration determination – Relevance to assessment under s 60-12(a) of whether work was properly performed.

WORDS AND PHRASES – ‘necessary and properly performed’ – s 60-12(a) of the Insolvency Practice Schedule (Schedule 2 to the Corporations Act 2001 (Cth)).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Kohn	Macpherson Kelley
For the Other Parth	Mr N M Bender with Ms R A McEwan	YPOL Lawyers

TABLE OF CONTENTS

Introduction................................................................................................................................... 1
Backgrounds.................................................................................................................................. 1
Shareholder dispute and winding up............................................................................... 2
Sale of business by liquidators.......................................................................................... 3
Conduct of litigation by liquidators................................................................................. 4

Procedural history......................................................................................................................... 5
Statutory provisions...................................................................................................................... 9
Legal principles........................................................................................................................... 13
Nature of substantive objections to remuneration claim...................................................... 15
Concerns about litigation................................................................................................. 16
Concerns about sale of business...................................................................................... 17

Extent to which Daiwa’s objections should be taken into account...................................... 20
Daiwa’s submissions......................................................................................................... 20
Relevant authorities.......................................................................................................... 21
Legislative context of s 60-12(a)....................................................................................... 26
Extrinsic materials............................................................................................................. 29
Meaning of phrase ‘properly performed’ in s 60-12(a)................................................ 31
Purpose of remuneration application............................................................................. 32

General rulings regarding remuneration claim...................................................................... 34
Extent to which work was necessary and properly performed and quality of work performed (s 60-12(a) and s 60-12(d))..................................................................................... 34
Complexity of work performed, extraordinary issues and level of risk (ss 60-12(e), 60-12(f) and 60-12 (g)).......................................................................................................... 35
Value and nature of property dealt with (s 60-12(h))................................................... 36
Number, attributes and conduct of the creditors (s 60-12(i))...................................... 37
Method of calculating remuneration.............................................................................. 38
Applicable rates................................................................................................................. 39
GST and remuneration claim........................................................................................... 39
Allocation of resources in liquidation............................................................................ 39

Application of rulings to remuneration claimed.................................................................... 41
Conclusion.................................................................................................................................... 42

HIS HONOUR:

Introduction

The liquidators of Barokes Pty Ltd (‘Barokes’ or ‘the Company’) apply to the Court for approval of their remuneration pursuant to s 60-10 of the Insolvency Practice Schedule (Corporations) (‘the Practice Schedule’) found at Schedule 2 of the Corporations Act 2001 (Cth) (‘the Corporations Act’). Section 60-12(a) of the Practice Schedule provides that one of the matters the Court may take into account in assessing whether the remuneration claimed is…

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: [2020] VSC 555
Decision Date: 1 September 2020

CaseChat Overview and Summary

Barokes Pty Ltd was a company that entered into external administration, and liquidators were appointed to manage its affairs. The liquidators applied to the Court for approval of their remuneration under section 60-10 of the Insolvency Practice Schedule. The majority shareholder and a major creditor by value objected to the application. The Court was required to determine whether the liquidators' remuneration was appropriate and whether it was necessary and properly performed work. The Court needed to consider the factors outlined in section 60-12 of the Practice Schedule, which included the nature and extent of the work performed, the qualifications and experience of the liquidators, and whether the remuneration was commensurate with the work performed.

The Court considered the objections and the submissions made by the liquidators and the objectors. It found that the liquidators had performed their duties diligently and in accordance with the requirements of the Corporations Act. The Court held that it was not appropriate to consider unproven allegations about the liquidators’ conduct when determining their remuneration. The Court found that the work performed by the liquidators was necessary and properly performed, and that the remuneration sought was commensurate with the work performed. The Court approved the liquidators' application for remuneration.

The Court found that the liquidators were entitled to their claimed remuneration and that the objections were not well-founded. The Court ordered that the liquidators' remuneration be paid out of the company's assets. The Court also noted that the objectors had a right to appeal the decision if they were dissatisfied with the outcome.

Orders