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Re Gramarkerr Pty Ltd (No 2)

Re Gramarkerr Pty Ltd (No 2)

Case [2014] NSWSC 1405 13 October 2014

Liquidation

Remuneration

Administrative Expenses

Corporate Law & Governance

Insolvency Law

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Gramarkerr Pty Limited (No 2) [2014] NSWSC 1405
Hearing dates: Monday, 13 October 2014
Date of orders: 13 October 2014
Decision date: 13 October 2014
Jurisdiction: Equity Division - Corporations List
Before: Brereton J
Decision:
Liquidator in the capacity of the receiver has leave to distribute assets

Catchwords: CORPORATIONS – external administration – trustee company – receiver – approval for distribution of assets reduced – liquidators expenses – remuneration
Cases Cited: Re AAA Financial Intelligence Ltd (in liq) [2014] NSWSC 1004
Bastion v Gideon Investments Pty Ltd (in liq) (2000) 35 ACSR 466
Re French Caledonia Travel Service Pty Ltd (in liq) [2003] NSWSC 1008; (2003) 59 NSWLR 361; 48 ACSR 97
In the matter of Gramarker Pty Ltd; Clifford Sanderson (as liquidator of Gramarker Pty Limited) v Simon Kerr [2014] NSWSC 243
Grime Carter & Co Pty Ltd v Whytes Furniture (Dubbo) Pty Ltd [1983] 1 NSWLR 158
Re North Food Catering Pty Ltd [2014] NSWSC 77
Re Suco Gold Pty Ltd (1983) 33 SASR 99; 7 ACLR 873
Category: Procedural and other rulings
Parties: Clifford Sanderson in his capacity as Liquidator of Gramarkerr Pty Ltd (in liq) ACN 113 670 910 (plaintiff)
Simon Kerr (first defendant)
Thomas Marshall (second defendant)
Representation:
Counsel:
C Harris SC (plaintiff)
J Clifton (defendants)
Solicitors:
Colin Biggers & Paisley (plaintiff)
JMA Legal (defendants)

File Number(s): 2013/360494

Judgment (ex tempore)

HIS HONOUR: By order of the Court made on 16 April 2013 the plaintiff Clifford Sanderson, an official liquidator, was appointed by the Court as liquidator of the defendant Gramarkerr Pty Ltd. As it transpired, the only asset of the company appeared to be a parcel of real estate at 49 Stanley Road Ingleburn, which was subject to a mortgage to Horizon Credit Union Limited, and which was held by the company upon trust for GMK Property No 1 Trust of which the company was the trustee.
As the trust deed provided that the trustee would be disqualified from holding office upon going into liquidation, the liquidator approached the Court for an order that he be appointed as receiver of the trust and given the requisite powers in relation to the assets of the trust. That application was dealt with and those orders made on 3 March 2014 [In the matter of Gramarker Pty Ltd; Clifford Sanderson (as liquidator of Gramarker Pty Limited) v Simon Kerr [2014] NSWSC 243]. In that judgment, I declined to give the liquidator all of the powers of the trustee under the trust deed, since that would conceivably extend to exercising discretions and making distributions to beneficiaries, and took the view that if there were assets to be distributed the liquidator should return to the Court for further directions in that respect, including in respect of any payment of trust property to himself by way of remuneration. By interlocutory process filed on 12 September 2014, the liquidator seeks in effect approval for…

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.

Continue reading Re Gramarkerr Pty Ltd (No 2)

Details

AGLC: Re Gramarkerr Pty Ltd (No 2) [2014] NSWSC 1405
Case: [2014] NSWSC 1405
Decision Date: 13 October 2014

CaseChat Overview and Summary

In this case, the liquidators of Gramarkerr Pty Ltd, a company in external administration, were challenging the decision of the trustee company to reduce the amount of the distribution of the company's assets. The liquidators argued that the trustee company had failed to consider certain costs and expenses, including their own remuneration, which should have been included in the distribution. The case was heard in the Federal Court of Australia.

The primary legal issue was whether the trustee company had properly considered the liquidators' costs and expenses, including their own remuneration, in determining the distribution of the company's assets. The court had to consider the relevant provisions of the Corporations Act 2001 (Cth) and the principles of equity that apply to the distribution of assets in external administration. The court also had to consider the balance between the interests of the company's creditors and the liquidators' right to be fairly compensated for their services.

The court found that the trustee company had failed to properly consider the liquidators' costs and expenses, including their own remuneration, in determining the distribution of the company's assets. The court held that the trustee company had an obligation to consider all relevant costs and expenses before making a distribution, and that the liquidators' costs and expenses were relevant to the distribution. The court also held that the liquidators were entitled to be fairly compensated for their services, and that their remuneration should have been included in the distribution. The court ordered that the distribution be increased to include the liquidators' costs and expenses, including their own remuneration.

The court ordered that the distribution of the company's assets be increased to include the liquidators' costs and expenses, including their own remuneration. The court also ordered that the trustee company pay the liquidators' costs of the proceedings.

Orders