Re Jugganort Constructions Pty Ltd (in liquidation)
[2020] VSC 13
•31 January 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S ECI 2019 05479
IN THE MATTER of JUGGANORT CONSTRUCTION PTY LTD (in liquidation) (ACN 135 361 787)
BETWEEN:
| GREG ANDREWS (in his capacity as the liquidator of Jugganort Constructions Pty Ltd (in liquidation) (ACN 135 361 787)) | Plaintiff |
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JUDICIAL REGISTRAR: | Matthews JR |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 31 January 2020 |
CASE MAY BE CITED AS: | Re Jugganort Constructions Pty Ltd (in liquidation) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 13 |
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CORPORATIONS – External administration – Application by former administrator for determination of remuneration – Section 60-10(1)(c) of the Insolvency Practice Schedule (Corporations) (Schedule 2 to the Corporations Act 2001 (Cth)) – Remuneration approved.
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The plaintiff has served all parties required to be served with notice of the intention to make this application and no such party opposed it. In such circumstances and in light of the provisions of r 9.2 of the Supreme Court (Corporations) Rules 2013, it was considered appropriate to deal with the application in the absence of the public and without the necessity for the plaintiff to attend at Court.
JUDICIAL REGISTRAR:
Introduction
Nature of the application and material relied upon
Jugganort Constructions Pty Ltd (in liquidation) (‘Company’), went into voluntary administration on 23 March 2018 when the Plaintiff, Greg Andrews, and Andrew Juzva (‘Administrators’) were appointed as administrators.[1]
[1]Affidavit of Gregory Stuart Andrews sworn 24 September 2019 (‘First Andrews Affidavit’), [3].
Prior to that time, the Deputy Commissioner of Taxation (‘the DCOT’) had issued winding up proceedings in the Federal Court against the Company, which were listed for hearing on 20 April 2014 and adjourned on that date at the request of the Administrators to 4 May 2018.[2]
[2]First Andrews Affidavit, [8].
The administration of the Company came to an end on 4 May 2018, when orders were made by the Federal Court that the Company be wound up and that Mr Andrews be appointed as liquidator of the Company.[3] The Company was wound up prior to the second meeting of creditors in the administration of the Company being held and thus the second meeting did not occur.[4]
[3]First Andrews Affidavit, [16]; Exhibit GSA-03.
[4]First Andrews Affidavit, [15].
By originating process filed 2 December 2019, the Plaintiff applies under the provisions of the Insolvency Practice Schedule (Corporations) (Schedule 2 of the Corporations Act 2001 (Cth)) (‘Practice Schedule’), for a declaration that he is entitled to remuneration for performing his role as administrator of the Company, an order fixing the cost of that remuneration in the amount of $28,031.30 (plus GST), and an order that his costs of this application be costs in the liquidation of the Company (‘Application’). Rule 9.2 of the Supreme Court (Corporations) Rules 2013 (‘Rules’) also governs such applications.
The Application is supported by the following:
(a) the First Andrews Affidavit;
(b) a further affidavit from Mr Andrews sworn 2 December 2019 (‘Second Andrews Affidavit’);
(c) an affidavit of Kylie Dianne Sharp sworn 2 December 2019 (‘First Sharp Affidavit’). Ms Sharp is a solicitor in the employ of Madisons Lawyers Pty Ltd (‘Madisons’), solicitors for the Plaintiff;
(d) a further affidavit from Ms Sharp sworn 15 January 2020 (‘Second Sharp Affidavit’);
(e) three affidavits of service sworn 9 October 2019 by Pauline Jane Stonehouse, an office manager employed by Madisons;
(f) two affidavits of service sworn 3 October 2019 by Geoffrey Dunlop, process server; and
(g) an affidavit of attempted service sworn 17 October 2019 by Mr Dunlop.
For the reasons set out below, the Application will be granted.
Manner of determining the Application
Before making an application of this type, r 9.2 of the Rules requires the Plaintiff to serve certain persons with a copy of the principal affidavit in support of the application and a notice in accordance with Form 16 of the Rules stating that it is the Plaintiff’s intention to apply to the Court for an order determining his remuneration.
Rule 9.2(2) of the Rules requires the following persons to be served with the Form 16 notice and the principal affidavit:
(a) each creditor who was present, in person or by proxy, at any meeting of creditors;
(b) each member of any committee of inspection;
(c) if there is no committee of inspection, and no meeting of creditors has been convened and held—each of the 5 largest (measured by amount of debt) creditors of the Company;
(d) each member of the Company whose shareholding represents at least 10% of the issued capital of the Company.
Ms Sharp deposes that six creditors attended (including by proxy) meetings of creditors held on 6 April 2018 and 6 June 2018. These were Robert Andrew Bayliss, Theresa Joy Bayliss, Elephant & Co Pty Ltd, Acknowledge Accounting Pty Ltd, the DCOT, and Jarrod Bayliss.[5] Jarrod Bayliss is the sole shareholder and director of the Company.[6] These six creditors, including Jarrod Bayliss, are the persons required to be served pursuant to r 9.2(2) of the Rules (‘Required Persons’).
[5]First Sharp Affidavit, [3].
[6]ASIC Search dated 3 December 2019 for the Company, filed with the Court.
The Required Persons were served with the Form 16 notice and the First Andrews Affidavit as follows:
(a) On Robert Andrew Bayliss, by personal service by Mr Dunlop on 1 October 2019;
(b) On Theresa Joy Bayliss, by personal service by Mr Dunlop on 1 October 2019;
(c) On Elephant & Co Pty Ltd, by post to its registered office on 26 September 2019, by Ms Stonehouse;
(d) On Acknowledge Accounting Pty Ltd, by post to its registered office on 26 September 2019, by Ms Stonehouse;
(e) On the DCOT, by post on 26 September 2019, by Ms Stonehouse; and
(f) On Jarrod Bayliss, by email sent by a graduate lawyer at Madisons to the last known email address the Plaintiff has for him, on 28 October 2019.[7] Ms Sharp deposes as to the last known address and telephone number which the Plaintiff has recorded for Jarrod Bayliss,[8] and Mr Dunlop’s affidavit of attempted service establishes that he attempted service on Jarrod Bayliss at that address on 5 occasions between 1 and 12 October 2019 and that he called the last known telephone number on 11 October 2019 and received a message from Optus that the number had been disconnected.
[7]First Sharp Affidavit, [8]-[9].
[8]First Sharp Affidavit, [7].
I am satisfied, on the evidence adduced, that the Required Persons have been served with the Form 16 notice and the First Andrews Affidavit.
Mr Andrews deposes that, as at 2 December 2019, he had not received any notice of objection to the remuneration claimed within the 21 day period prescribed by r 9.2(3) of the Rules or after that time.[9]
[9]Second Andrews Affidavit, [7].
Ms Sharp deposes that Madisons did not receive any notices of objection within the 21 day period or the period leading up to 15 January 2020.[10]
[10]Second Sharp Affidavit, [4].
Rule 9.2(4) provides that if a notice of objection is not received within the 21 day period, the administrators can file an affidavit stating the date(s) upon which the requisite persons were served and that no objection has been received, and the administrators can endorse the originating process with a request that the application be dealt with in the absence of the public and without any attendances by or on behalf of the administrators. Rule 9.2(4)(c) then permits the application to be dealt with in that way.
The originating process filed in this case contains this endorsement. Since all elements of r 9.2(4) of the Rules have been complied with and there are no notices of objection, I am satisfied that it is appropriate that I proceed to determine the application in the absence of the public and without attendance by or on behalf of the Plaintiff.[11]
[11]On notice to the Plaintiff’s solicitors, I listed the Application for directions on 12 December 2019, where I asked the Plaintiff to clarify whether Madisons had received any notices of objection and whether the Plaintiff had prepared a ‘work in progress’ report. The Second Sharp Affidavit was filed in response to these issues.
Applicable principles
Statutory provisions
For the purposes of the Practice Schedule, an external administrator is defined as an administrator, an administrator under a deed of company arrangement, a liquidator, or a provisional liquidator, of the company.[12] A company is taken to be under external administration for the purposes of the Practice Schedule on the occurrence of certain events, being under administration, a deed of company arrangement has been entered into, a liquidator has been appointed, or a provisional liquidator has been appointed.[13]
[12]Practice Schedule, s 5-20.
[13]Practice Schedule, s 5-15.
Section 60-10(1)(c) of the Practice Schedule applies to this Application. Section 60-10 relevantly provides:
60-10 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.
…
(3)[Amount of remuneration] 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.
In exercising the power to determine the Plaintiff’s remuneration, s 60-12 of the Practice Schedule states that 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.
While the criteria in s 60-12 of the Practice Schedule direct the Court to the factors that are to be taken into account, the ultimate question is whether the remuneration claimed by the Plaintiff is reasonable.
The Court’s approach when considering applications for approval of an administrator’s remuneration
The principles concerning applications for approval of the remuneration incurred by insolvency practitioners are well established and have been referred to in many decisions of this Court. While many of the decisions concern liquidators, the same approach has been applied in respect of administrators.[14] These principles were developed when the previous statutory provisions applied, as I will briefly explain.
[14]By way of example, see Re AsiaPAC Communications Group Pty Ltd (In Liquidation) (Receivers and Managers Appointed) [2015] VSC 413.
The Practice Schedule is relatively new, having been introduced with numerous amendments made to the provisions of the Corporations Act 2001 (Cth) (‘the Act’) relating to external administrators by the Insolvency Law Reform Act 2016 (Cth) (‘ILRA’). Amongst other things, the ILRA repealed s 449E of the Act (which had provided for the determination of administrators’ remuneration) and introduced the Practice Schedule. The factors contained in s 60-12 of the Practice Schedule are materially the same as the factors which were set out in s 449E(4) of the Act.[15]
[15]There are some minor changes to the language used: for example, s60-12 of the Practice Schedule refers to the extent to which the work was ‘necessary and properly performed’, whereas s 449E(4) of the Act referred to the extent to which the work performed was ‘reasonably necessary’.
The commencement of the new provisions concerning remuneration in Division 60 of the Practice Schedule were deferred until 1 September 2017.[16] Since the Plaintiff and Mr Juzva were appointed as administrators of the Company after that date, the new provisions apply.
[16]Regulation 10.25.02(3) of the Corporations Regulations 2001 (‘Corporations Regulations’).
As the relevant provisions are relatively new, and as the factors to be taken into account are materially the same, the earlier authorities remain pertinent.
Gardiner AsJ summarised the relevant principles in IMO Traditional Values Management Limited (in liq)[17] (‘Traditional Values’) at paragraphs [18] to [25].
[17][2012] VSC 650 (14 December 2012).
For convenience I adopt his Honour’s summary, which referred to the principles identified by Davies J in Thackray v Gunns Plantations:[18]
[18](2011) 85 ACSR 144 (‘Thackray’).
At [60], her Honour summarised the principles to be applied by reference to the decision of the Full Court of the West Australian Supreme Court in Venetian Nominees v Conlan as follows:
(a)A summary procedure was involved, not unlike that applicable to the taxation of solicitor’s costs, which is not necessarily subject to all the rules that would apply in an action.
(b)The initial task of the Court is to consider whether the liquidator has made out a prima facie case on the evidence before the Court that the remuneration claimed is fair and reasonable. The Court must make that assessment ‘bringing an independent mind to bear on the relevant issues’ even though at that point there is no objector.
(c)There is no absolute rule regarding the amount of detail required to support a remuneration claim. But the evidence relied on should be sufficient to enable potential objectors to review the amounts claimed and to ascertain whether there are matters to which objection should be taken. If there is inadequate evidence supporting the claim, no order should be made.
(d)If the liquidator establishes a prima facie case, the Court should allow for an objection procedure to enable objections to be made.
(e)If there are objectors to the claim or any part, the Court should then establish the validity of those objections.
At [63] and [64] of Thackray, her Honour stated:
…. the receivers accepted that the principles set out Venetian Nominees Pty Ltd v Conlan are persuasive and that they should put sufficient evidence before the Court to enable the Court to determine that the amounts claimed are fair and reasonable. That involved providing sufficient detail of the work that was done and the expenses claimed for the Court to assess the reasonableness of the remuneration claimed for that work and the reasonableness of the expenses incurred by the receivers. The reasonableness of remuneration may be adduced by evidence for example of an appropriate benchmark, such as the Insolvency Practitioners Association of Australia rates, for comparative work by persons with the relevant status and qualifications for that kind of work and justification of the hours spent. That amount can then be adjusted up or down to reflect other factors including:
(a) complexity above the norm for the kind of work involved;
(b) novelty and difficulty of the issues faced;
(c) the ultimate outcome obtained by the claimant.
The Court is looking for evidence of overcharging. Excessive charging may be indicated if there is a lack of proportionality between the cost of the work done relative to the value of the services provided. But there is no universal approach applicable in all circumstances by which the “reasonableness” of remuneration claimed or expenses incurred should be measured. The size, importance and complexity of the tasks performed are all factors to be taken into account. What is needed is sufficient information for the Court and any objector to have a clear view about what was done so that an assessment can be made about the reasonableness of the claim.[19]
[19]Traditional Values [60], citing Thackray (2011) 85 ACSR 144, [63]-[64] (citations omitted).
Black J of the New South Wales Supreme Court also summarised the applicable principles in In the matter of Sakr Nominees Pty Limited.[20] In addition to the matters referred to above, his Honour stated the following propositions:
[T]he Court will generally need to be provided with an account in itemised form, setting out at least the details of the work done; the persons who did the work; the time taken to perform the work; the remuneration claimed; and, to the extent relevant, the expenses incurred[21].
Proportionality is an important matter in considering the question of whether remuneration is reasonable, and the ‘value’ of a liquidator’s work can include the benefit of resolving the position of creditors and beneficiaries; the benefit to the community of not permitting assets to remain unproductively in the hands of a defunct company for a long period; and can include work that was required to be done, although it did not result in a return to creditors.[22]
[20][2017] NSWSC 668 (‘Sakr’).
[21]Sakr, [23].
[22]Sakr, [23].
His Honour also canvassed a number of authorities regarding the method for calculating the remuneration, such as time costing or remuneration based on a percentage of realisations, concluding that:[23]
Most decisions … have applied time costing as at least the starting point for a calculation of remuneration, although those decisions also emphasise the need for proportionality between the costs of the work done and the value of the services provided.
[23]Sakr, [24].
On this point, his Honour concluded by referring to the New South Wales Court of Appeal decision in Sanderson, as liquidator of Sakr Nominees Pty Ltd (in liquidation) v Sakr[24] which he said did not prefer any particular approach over another. Black J then stated:
Whether time-based remuneration or a percentage of recoveries is appropriate in a particular case will depend, in part, on the basis on which the liquidator puts his or her application for remuneration; and, in part, the view taken by the Court.[25]
[24][2017] NSWCA 38.
[25]Sakr, [25].
The Plaintiff’s evidence
Information about the Administration of the Company
The debt claimed by the DCOT in the winding up application was $320,630.52.[26]
[26]First Andrews Affidavit, [8].
On 28 March 2018, the Administrators forwarded to each known creditor of the Company a notice of the first meeting of creditors, to be held on 6 April 2018. Attached to this notices was an initial remuneration notice (‘IRN’).[27] At that first meeting, the creditors confirmed the appointment of the Administrators.[28]
[27]First Andrews Affidavit, [10]; Exhibit GSA-01.
[28]First Andrews Affidavit, [11]; Exhibit GSA-01.
On 12 April 2018, Jarrod Bayliss submitted a proposal that the Company enter into a deed of company arrangement (‘DOCA’). The essential features of the proposed DOCA were as follows (‘DOCA Proposal’):[29]
[29]First Andrews Affidavit, [12].
(a) The Administrators would sell the Company’s real property assets, being a property situated in Fitzroy Street, Kilmore (‘Kilmore Property’);
(b) Jarrod Bayliss would not prove for a debt owed to him in the amount of $43,925.10;
(c) The Administrators’ remuneration, including in respect of administering the proposed DOCA, would not exceed $35,000 (plus GST) so as to ensure the Company’s superannuation obligations would be paid in full; and
(d) A deed fund would be established and administered in accordance with the requirements of s 556 of the Act.
On 20 April 2018, the Administrators obtained an adjournment of the DCOT’s application to wind up the Company.[30]
[30]First Andrews Affidavit, [13].
On 27 April 2018, the Administrators forwarded to all known creditors of the Company a circular in respect of the second meeting of creditors, to be held on 7 May 2018. Attached to this notice was a remuneration request approval report (‘RRAP’) and the Administrators’ report into the affairs of the Company (‘the Administrators’ Report’).[31]
[31]First Andrews Affidavit, [14]; Exhibit GSA-02. The Administrators’ Report is a substantive document that is required for the second meeting of creditors pursuant to rule 75-225 of the Insolvency Practice Rules (Corporations) 2016 (Cth).
On 3 May 2018, the DOCT’s solicitor notified the Administrators’ solicitor that the DCOT considered that the Proposed DOCA was unacceptable and that she was instructed to proceed with the winding up application listed for hearing on 4 May 2018.[32]
[32]First Andrews Affidavit, [15].
As referred to above, on 4 May 2018, the Federal Court made orders winding up the Company and appointing Mr Andrews as liquidator of the Company.[33]
[33]First Andrews Affidavit, [16]; Exhibit GSA-03.
Information about the Company and its creditors
The Company operated as a builder specialising in house framing.[34]
[34]First Andrews Affidavit, [7].
According to the First Andrews Affidavit and the Administrators’ Report, the Company’s assets were:
(a) The Kilmore Property, in respect of which the Westpac Banking Corporation (‘Westpac’) had a first registered mortgage and Jarrod Bayliss’ parents (Robert and Theresa Bayliss) had a registered caveat claiming an interest as mortgagee (the Company’s books indicating a loan from them of $152,338.28). The Administrators obtained a valuation of the Kilmore Property, valuing it at $240,000. An unconditional offer to purchase the Kilmore Property for $300,000 was accepted by the Administrators, however settlement could not be effected due to the winding up order being made;[35] and
(b) Two motor vehicles, which were both encumbered. The Administrators determined that there was no equity in the vehicles and disclaimed the loan contracts in respect of each.[36]
[35]First Andrews Affidavit, [17]-[23].
[36]First Andrews Affidavit, [25]-[26].
According to the First Andrews Affidavit, the Company had the following priority and secured creditors:
(a) The DCOT is a priority creditor for $93,732.12 in respect of the Superannuation Guarantee Charge, in respect of which a proof of debt was received for $116,927.98 (including the principal liability, interest and penalties). On 15 February 2019, in his capacity as liquidator, the Plaintiff paid the DCOT $73,783.15 being a priority dividend;[37]
(b) Co Invest lodged a proof of debt for $2,593.75 in respect of long service leave charges;[38] and
(c) Westpac was owed $135,351.76 as at 4 May 2018 pursuant to its mortgage, which was fully discharged when settlement of the Kilmore Property was effected on 19 October 2018.[39]
[37]First Andrews Affidavit, [27].
[38]First Andrews Affidavit, [28].
[39]First Andrews Affidavit, [29].
The Company had eight unsecured creditors, owed a total of $423,582.74.[40]
[40]First Andrews Affidavit, [30]-[32].
Work performed by the Administrators
In the First Andrews Affidavit, the Plaintiff sets out the work the Administrators and their staff undertook during the period of the administration. This includes:[41]
[41]First Andrews Affidavit, [34].
(a) Reviewing Company books and records;
(b) Conducting statutory searches and attending to lodgement of the requisite notices with statutory and regulatory bodies such as ASIC and the ATO;
(c) Attending to enquiries from creditors including in relation to proofs of debt;
(d) Preparing for and attending the first meeting of the Company’s creditors, which involved tasks such as preparing meeting notices and reports to creditors (including a remuneration report, a s 436E report and the Administrators’ Report), preparing a meeting package (including an attendance/proxy register, a list of creditors, a report of creditors and draft minutes);
(e) Attending to general correspondence regarding the administration of the Company;
(f) Filing documents and updating checklists;
(g) Reviewing asset searches;
(h) Undertaking valuations of the Kilmore Property;
(i) Conducting negotiations in respect of the Kilmore Property;
(j) Valuing, analysing and ultimately disclaiming the Company’s interest in two motor vehicles;
(k) Analysing and evaluating the DOCA Proposal, and reporting to creditors in relation to same;
(l) Instructing solicitors to act in seeking an adjournment of the winding up application;
(m) Corresponding with the solicitors acting for the petitioning creditor in respect of the DOCA Proposal;
(n) Considering the reasons for the Company’s financial position and reviewing information relating to whether it was insolvent; and
(o) Conducting discussions regarding the progress of the administration
(collectively, the ‘Administration Tasks’).
The Administrators’ remuneration
The IRN provided the creditors with information about how the Administrators proposed to set their remuneration in respect of conducting the administration. The IRN stated that the Administrators’ remuneration would be calculated on a time and cost basis in accordance with the rates set out in the G.S. Andrews Advisory Guide to Hourly Rates (‘Fee Schedule’) and estimated the remuneration to be between $25,000 and $35,000 (plus GST), subject to the variables described in the IRN.[42]
[42]First Andrews Affidavit, [10]; Exhibit GSA-01.
The RRAP provided detailed particulars regarding the Administrators’ remuneration, including the basis on which it would be charged and the actual amount incurred to 26 April 2018, being $23,300.60, together with the Administrators’ estimate of their future remuneration to the completion of the administration.[43]
[43]First Andrews Affidavit, [14]; Exhibit GSA-02.
The Plaintiff deposes that during the administration, the Administrators and their staff expended 107 hours on the Administration Tasks, resulting in work in the amount of $28,031.30 (plus GST). [44]
[44]First Andrews Affidavit, [35].
To arrive at the remuneration sought, the Plaintiff says that he calculated it on a time cost basis in accordance with the Fee Schedule and with the procedure detailed by the Australian Restructuring Insolvency and Turnaround Association.[45] The First Andrews Affidavit contains the following description in respect of the Fee Schedule:
[45]First Andrews Affidavit, [36].
Title Description $ per hour (excl GST) Principal/Appointee Registered Liquidator. Partner bringing his or her specialist skills to the administration or insolvency task. $395 Manager 1 More than 7 years’ insolvency experience, more than 5 years as a manager, qualified accountant. Answerable to the appointee but otherwise responsible for all aspects of the liquidation. Experienced on all levels and considered very competent. Supervises staff and their training. $292 Manager 2 More than 5 years’ experience. Qualified accountant with well-developed technical and commercial skills. $220 Supervisor More than 4 years’ experience. $180 Senior 1 More than 2 years’ experience. $162 Senior 2 1-2 years’ experience. $130 Intermediate 1 0-2 years’ experience. $111 Intermediate Trainee. $102 Secretary/WPO/Logistics Appropriate skills including machine usage. $112
Each staff member who worked on this administration recorded details of the time expended on the tasks in an accounting software program called MYOB Accounting Enterprise Program (‘the Software Platform’). This records the time entered in six-minute intervals. The standard practice at G.S. Andrews Advisory is for the employee who performed the relevant tasks to record their entries electronically on the Software Platform on the file created for a specific administration and to also include a description of the work which was performed, contemporaneous to the work being carried out.[46]
[46]First Andrews Affidavit, [37]-[39].
The Plaintiff exhibits what he describes as the work in progress reports for the administration of the Company (‘WIP Report’).[47] This reflects the remuneration sought, calculated in the manner described above.
[47]First Andrews Affidavit, [35]; Exhibit GSA-10.
The WIP Report contains a table setting out a description of the work performed in each of four task areas (administration, assets, creditors and investigations), giving the total number of hours and fees for each of those task areas. The descriptions, while detailed, do not contain a breakdown of each individual task, the time spent on it, the employee performing it, and the fees charged for it.
The WIP Report contains another table showing the total hours and fees for each employee, broken down by the task areas. I have summarised that information in the below table:
Employee Position Hourly Rate $ (excl GST) Total Hours Total fees $ (excl GST) Greg Andrews Appointee 395 14.7 5,806.50 Andrew Juzva Appointee 395 13.6 5,372.00 Andrew Juzva Manager 1 292 0.4 116.80 Employee Position Hourly Rate $ (excl GST) Total Hours Total fees $ (excl GST) Peter Aloi Manager 1 292 0.4 116.80 Angela Kennedy Manager 1 292 39.4 11,504.80 Carla Anderson Supervisor 180 11.8 2,124.00 Craig Leonard Logistics 112 6 672.00 Chris Walker Secretary/WPO 112 3 336.00 Michelle Pallisco Secretary/WPO 112 9.2 1,030.40 Dimitria Voukelatos Secretary/WPO 112 4.5 504.00 Teri Brugman Secretary/WPO 112 4 448.00 Total $28,031.30
A further breakdown of the work performed by each individual employee of G.S. Andrews Advisory on this administration is recorded in a ‘pre-billing report’ maintained by that firm (‘Pre-Billing Report’).[48] The information recorded in the Pre-Billing Report is manually imputed into the Software Platform contemporaneous to the performance of the work by the relevant employee, and a record of that information can be printed off when required.[49] The Pre-Billing Report, and Ms Sharp’s explanation of it, which she obtained from the Plaintiff, were provided in response to a query raised at the directions hearing, as set out above.
[48]Second Sharp Affidavit, [5]; Exhibit KDS-5.
[49]Second Sharp Affidavit, [5].
The Pre-Billing Report contains the narrations for each individual piece of work performed, the time spent on it, the fees for it, the employee performing it, and the relevant task area.
Taken together, the WIP Report and the Pre-Billing Report provide the details in respect of each task performed. This comprises:
(a) A description of the task;
(b) A classification of the task to identify the aspect of the administration of the Company to which it related. These were: administration; assets; creditors; and investigations;
(c) The identity and position of the G.S. Andrews Advisory employee or partner carrying out the task;
(d) The dates upon which that task was performed;
(e) The time taken for the task; and
(f) The rate charged for the task, calculated in accordance with the Fee Schedule.
The Plaintiff deposes that based on his experience in the insolvency industry and his work in other liquidations, he believes that the fees charged by G.S. Andrews Advisory during the administration of the Company were reasonable having regard to the experience and qualifications of each staff member, the nature and complexity of the work, and comparable rates in the insolvency industry.[50]
[50]First Andrews Affidavit, [43].
Consideration
The Plaintiff’s prima facie case for approval
I am satisfied, based on the evidence filed by the Plaintiff and the summary of evidence provided above, that the Plaintiff has made out a prima facie case for payment of his remuneration, within the meaning referred to in paragraph 25 above. That is, the Plaintiff has made out a prima facie case that the remuneration claimed is reasonable, and there is sufficient information to enable potential objectors to review the amounts claimed and to ascertain whether there are matters to which objection should be taken.
Although no objection has been taken to the remuneration claimed by the Plaintiff, the Court is still required to review the claimed remuneration, taking the matters identified in s 60-12 of the Practice Schedule into account.
Amount of remuneration to be approved
As noted above, the Plaintiff seeks approval for his remuneration for the administration period in the sum of $28,031.30 (plus GST).
In terms of the matters identified in s 60-12 of the Practice Schedule, I am satisfied that:
(a) The work performed by the Administrators and their staff was necessary and properly performed;
(b) The period during which the work was performed was 23 March 2018 to 4 May 2018. While this is a relatively short period, in my experience it is usual for the first few weeks of an administration to require an intense injection of time and effort;
(c) The work was performed to an appropriate standard;
(d) The Plaintiff does not appear to have been required to perform any complex work or to deal with any extraordinary issues, save for the winding up application, the consideration of the DOCA Proposal, and dealing with the Kilmore Property and the motor vehicles;
(e) The Plaintiff was not required to accept a higher level of risk or responsibility than was usually the case;
(f) The Plaintiff was required to deal with some property of a significant value, being the Kilmore Property;
(g) The dealings with creditors appear to have been in the ordinary course, noting that there was a secured creditor, three priority creditors and eight unsecured creditors; and
(h) The remuneration was calculated on a time basis, and the time taken by the Administrators and each employee is set out in sufficient detail, by reference to the evidence adduced. Further, from my experience in matters connected with insolvency administrations, I know the rates set out in the Fee Schedule to be commensurate with or lower than the hourly rates typically charged by insolvency practitioners.
I have reviewed the WIP Report, the Pre-Billing Report and the description of work given by the Plaintiff. These contain sufficient detail for me to be satisfied as to the amounts claimed. In particular, I am satisfied that:
(a) There was an appropriate degree of delegation of the work to be performed, such that the matters which could be adequately handled by junior staff were dealt with at a suitable level of seniority, experience, and charge out rate;
(b) The tasks described are necessary to have been performed. These tasks are the Administration Tasks (described in paragraph 40 above), along with a number of other tasks which I consider to have been necessary;
(c) The time taken to perform those tasks, and therefore the amounts charged for them, was reasonable; and
(d) There is no evidence of duplication, or unnecessary duplication, of work.
I am satisfied that the quantum of the remuneration for which approval is sought is reasonable and properly incurred.
Conclusion
Accordingly, I will approve the Plaintiff’s remuneration in the amount of $28,031.30 plus GST for the work performed during the administration of the Company.
I will also make orders that the Plaintiff’s costs of the Application be costs in the liquidation of the Company.
Once the parties have had an opportunity to consider these reasons, the Court requests that the Plaintiff’s solicitors provide a draft form of order to my Associate.
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