Re Kimberley Stuart Wallman & Gregory Paul Quin in Their Capacity As Joint And Several Liquidators Of Goldeagle Nominees Pty Ltd (In Liq) (ACN 081 643 254); [No 2]
[2023] WASC 296
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE KIMBERLEY STUART WALLMAN & GREGORY PAUL QUIN IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF GOLDEAGLE NOMINEES PTY LTD (In Liq) (ACN 081 643 254); EX PARTE KIMBERLEY STUART WALLAM & GREGORY PAUL QUIN [No 2] [2023] WASC 296
CORAM: HILL J
HEARD: 4 AUGUST 2023
DELIVERED : 7 AUGUST 2023
FILE NO/S: CIV 1027 of 2023
MATTER: IN THE MATTER OF KIMBERLEY STUART WALLMAN & GREGORY PAUL QUIN IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF GOLDEAGLE NOMINEES PTY LTD (In Liq) (ACN 081 643 254)
EX PARTE
KIMBERLEY STUART WALLMAN AND GREGORY PAUL QUIN IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF GOLDEAGLE NOMINEES PTY LTD (In Liquidation) (ACN 081 643 254)
Plaintiffs
Catchwords:
Corporations - External administration - Receivers - Application for approval of receivers' remuneration pursuant to O 51 r 4 of the Rules of the Supreme Court 1971 (WA) - Application to discharge receivership - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 51
Result:
Orders made fixing remuneration and to discharge receivership
Category: B
Representation:
Counsel:
| Plaintiffs | : | Y S Wee |
Solicitors:
| Plaintiffs | : | Jackson McDonald |
Cases referred to in decision:
Ide v Ide [2004] NSWSC 751; (2004) 184 FLR 44; (2004) 50 ACSR 324
Official Assignee in Bankruptcy of The Property of James Adair Hanna v Hanna [2019] FCA 1934
Re Say Enterprises Pty Ltd [2018] NSWSC 396
Re the GO2 People Limited (Administrators Appointed) [No 2] [2023] WASC 249; Francis (as Joint and Several Trustees of the Bankrupt Estate of Fotios) v Helios Corporation Pty Ltd [No 3] [2023] FCA 251
Sprowles, Re Triumph N Triumph Pty Ltd (in liq) (No 2) [2021] FCA 405
HILL J:
On 14 July 2023, the plaintiffs, in their capacity as the receivers and managers of the Wilmot Family Trust (Receivers), filed an application pursuant to O 51 r 4 of the Rules of the Supreme Court 1971 (WA) (Rules) for the approval and fixing of the remuneration, costs and disbursements of the Receivers. The Receivers also sought orders that on completion of the final payments and distribution, they be discharged.
In support of the application, the Receivers filed three affidavits of Mr Wallman filed 14 July 2023, 18 July 2023, and 2 August 2023. I also had the benefit of written submissions filed by the applicant.
At the conclusion of the hearing, I briefly reserved my decision. After receipt of some clarification of the orders sought,[1] I made orders largely in terms of the chamber summons. These are my reasons for making those orders.
[1] Two emails from Jackson McDonald to Associate to Hill J dated 4 August 2023.
Remuneration of receivers
Pursuant to O 51 r 4 of the Rules, the court has power to approve the remuneration of court-appointed receivers.
The relevant principles that apply to the assessment of the remuneration of a court-appointed receiver were summarised by Brereton J in Re Say Enterprises Pty Ltd as follows:[2]
[2] Re Say Enterprises Pty Ltd [2018] NSWSC 396 [6].
(1)A receiver is entitled to the costs, charges and expenses properly incurred in the discharge of the receiver's ordinary duties, or in the performance of extraordinary services that have been sanctioned by the Court.
(2)The ultimate question is what amount of remuneration is 'reasonable', and this involves considering whether the work in respect of which remuneration is claimed was reasonably undertaken in the due course of the receivership, and whether the amount claimed for it is a fair and reasonable reward for it. The objective is to award a sum or devise a formula which will reasonably and fairly compensate the receiver for the time and trouble expended in the execution of his or her duties and the responsibility he or she has assumed.
(3)The receiver bears the onus of justifying the reasonableness and prudence of the tasks undertaken for which remuneration is sought, and the reasonableness of the remuneration claimed for them.
(4)Remuneration may be allowed on the basis of a fixed salary, a commission on receipts, or a quantum meruit having regard to the time, trouble and responsibility involved. It is a matter for the Court to determine what basis is appropriate in the particular case, having regard to the principle that the remuneration must be reasonable.
(5)If a time-based approach is adopted, the Court is guided by professional scales of charges, with emphasis on the broad average or general rate charged by persons of the relevant status and qualifications who carry out the relevant type of work. The Court will usually act on time sheets created in the receiver's office, provided that they do significantly more than merely detail the total number of hours spent by the receiver and officers of particular grades on his or her staff.
(6)By analogy, the task involves consideration of the matters referred to in Corporations Act, s 425(8), which applies to receivers appointed under an instrument …
(7)Many of those factors … have as their unifying theme the concept of proportionality (being the relationship of the work done and the remuneration claimed to the value of the estate), which is an important consideration in determining reasonableness.
(8)It will rarely be appropriate for a Judge to review a decision of a Registrar on remuneration on an item-by-item basis.
(9)In respect of disbursements, no Court approval or specific order is necessary in the absence of a challenge, although receivers should scrutinise them to ensure that they are reasonable and properly payable, and the Court has an inherent jurisdiction to review receivers' disbursements as they are officers of the Court. However, a receiver may seek a direction that he would be justified in paying certain disbursements in order to obtain prior protection in respect of such a disbursement. (citations omitted)
The evidence filed by the Receivers included two remuneration proposals, approved by creditors and submitted to the Australian Securities and Investments Commission on 1 December 2022 (Remuneration Proposals),[3] a summary of the time recorded by the Receivers in respect of the matter,[4] as well as a summary of the expenses incurred by the Receivers.[5] I am also satisfied that the creditors of Goldeagle Nominees Pty Ltd have been informed of the application and provided with copies of the relevant documents.[6] No creditor has given notice of any issue or concern in relation to the proposed remuneration.
[3] Affidavit of Kimberley Stuart Wallman filed 18 July 2023 'KSW-6', 'KSW-7'.
[4] Affidavit of Kimberley Stuart Wallman filed 14 July 2023 'KSW-2' - 'KSW-4'.
[5] Affidavit of Kimberley Stuart Wallman filed 14 July 2023 'KSW-1'.
[6] Affidavit of Kimberley Stuart Wallman filed 2 August 2023.
Mr Wallman's evidence is that:
(a)the Remuneration Proposals sought $22,588 for the period of 19 October 2022 to 28 October 2022 and $80,000 for the period of 29 October 2022 to the conclusion of the receivership and winding up;[7]
(b)the Remuneration Proposals were approved by creditors of Goldeagle Nominees Pty Ltd (in liquidation) on 25 November 2022;[8]
(c)the Receivers have incurred costs and expenses in the amount of $195,207.35 comprising expenses of $122,573.07 and time costs of $72,634.23;[9]
(d)if remuneration is approved in the amount sought, there will be approximately $127,000 available for distribution to secured creditors, a shortfall of $1,295,000 to secured creditors, and no dividend payable to unsecured creditors;[10]
(e)the expenses incurred by the Receivers and the work done was reasonably necessary and properly performed.[11]
[7] Affidavit of Kimberley Stuart Wallman filed 18 July 2023 [8(a)], [9(a)], 'KSW-6', 'KSW-7'.
[8] Affidavit of Kimberley Stuart Wallman filed 18 July 2023 [8(b)], [9(b)], 'KSW-6', 'KSW-7'.
[9] Affidavit of Kimberley Stuart Wallman filed 14 July 2023 [12], 'KSW-1'.
[10] Affidavit of Kimberley Stuart Wallman filed 14 July 2023 [21].
[11] Affidavit of Kimberley Stuart Wallman filed 14 July 2023 [17].
The primary difference between the total remuneration approved by creditors and the amount sought by the Receivers in this application is the significant expenses incurred by the Receivers in realising the Trust assets. These expenses include the realisation costs of the auctioneer of more than $40,000.[12]
[12] Email from Jackson McDonald to Associate to Hill J dated 4 August 2023.
The Remuneration Proposals together with the evidence of Mr Wallman describes the activities undertaken by the Receivers during the course of the receivership, the rates charged by the Receivers for their work, the time recorded by all staff members in relation to this matter, descriptions of the work undertaken, as well as the disbursements that have been paid to third parties.
On the evidence before the court, I am satisfied that the remuneration of the Receivers for the period 19 October 2022 until 30 June 2023 sought by the Receivers is reasonable and that their remuneration for this period should be fixed in the amount of $195,207.34.
Discharge of receivers
The Rules do not expressly provide for the discharge of a court-appointed receiver. Notwithstanding this, it is uncontroversial that a court-appointed receiver may be discharged when the object of the appointment has been fully effected.[13]
[13] Re the GO2 People Limited (Administrators Appointed) [No 2] [2023] WASC 249; Francis (as Joint and Several Trustees of the Bankrupt Estate of Fotios) v Helios Corporation Pty Ltd [No 3] [2023] FCA 251; Official Assignee in Bankruptcy of The Property of James Adair Hanna v Hanna [2019] FCA 1934; Re Say Enterprises Pty Ltd [2018] NSWSC 396.
In Re Say Enterprises Pty Ltd, Brereton J summarised the position as follows:[14]
The rules make no specific provision for discharge of a receiver, other than in case of default. However, at general law, a receiver may be discharged with the consent of the parties, or upon reasonable cause such as ill health, incapacity or impossibility. A receiver may also be discharged when the continuance of the appointment is unnecessary, or (which is much the same thing) the object of the appointment has been achieved. (citations omitted)
[14] Re Say Enterprises Pty Ltd [33] - [34].
In this case, the object of the receivership was to identify the property of the Trust, sell any Trust property and maximise the returns available to distributed to creditors of the Trust. On the evidence before the court, I am satisfied that following payment of the Receivers and distribution of the funds from the Trust to creditors, this object will be satisfied.
On this basis, I consider that it is appropriate for the court-appointed receivers to be discharged following the occurrence of these events.
Application to dispense with the requirement to file accounts
Pursuant to O 51 r 5 and O 51 r 8 of the Rules, court-appointed receivers are required to file accounts, verified on affidavit, at the times ordered by the court. On filing of an account, a receiver is required to obtain an appointment with a registrar for the passing of the account.
At the time I ordered the appointment of the Receivers, I did not make orders requiring the Receivers to file accounts as part of the receivership.
The object of these requirements is to verify that all amounts that have been received and all payments made in the course of a receivership are accounted for and evidenced.[15]
[15] Sprowles, Re Triumph N Triumph Pty Ltd (in liq) (No 2) [2021] FCA 405 [13] (Yates J).
Notwithstanding the express requirements of the Rules, it is not uncommon for a court to make an order dispensing with this requirement. In Ide v Ide,[16] Young CJ in Eq discussed the circumstances in which these requirements can be dispensed with. Relevantly, his Honour referred to the importance of adherence to this process in cases involving substantial assets, as well as those described as 'ranging from the middle to the higher end of the financial scale'. His Honour also contrasted this position with the position where the gross assets of the receivership are minimal and the parties are not wealthy.
[16] Ide v Ide [2004] NSWSC 751; (2004) 184 FLR 44; (2004) 50 ACSR 324 [22] - [29].
I am satisfied that in the particular circumstances of this case, it is appropriate for the court to make an order dispensing with the requirement to file and pass accounts. Notably, the evidence before the court is that the Trust only has minimal assets. In addition, the Receivers have provided details of the amounts they have received and expended or will expend. In my view, any requirement to file and pass accounts would only lead to the incurring of further costs and further diminish the limited funds which are available for distribution to creditors.
Conclusion
For these reasons, I was satisfied that it was appropriate to make the orders sought with one exception.
The chambers summons filed by the Receivers sought an order for the costs of the application to be paid from Trust Property in priority to any payments due to other creditors. The evidence before the court was that the costs of the application were included in the remuneration sought by the Receivers.[17] In these circumstances, I did not consider this order was necessary. The solicitors for the Receivers accepted this position.
[17] Affidavit of Kimberley Stuart Wallman filed 14 July 2023 'KSW-1'.
On this basis, I made orders in terms of 'Annexure A'.
'Annexure A'
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
7 AUGUST 2023
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