Re Metropolis City Promotions Pty Ltd (In Liq)
[2018] VSC 381
•11 July 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2016 00064
IN THE MATTER OF METROPOLIS CITY PROMOTIONS PTY LTD (IN LIQUIDATION) (ACN 005 485 692)
| PETER ROBERT VINCE IN HIS CAPACITY AS FORMER ADMINISTRATOR OF METROPOLIS CITY PROMOTIONS PTY LTD (IN LIQUIDATION) (ACN 005 485 692) | Plaintiff |
---
JUDGE: | GARDINER AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 11 July 2018 |
CASE MAY BE CITED AS: | Re Metropolis City Promotions Pty Ltd (In Liq) |
MEDIUM NEUTRAL CITATION: | [2018] VSC 381 |
The Court considers that the persons required to be notified under r 9.2(2) of the Supreme Court (Corporations) Rules 2013 have been served with the prescribed notice and that none of those persons have provided the plaintiff with a notice of objection to the remuneration claimed. The Court has determined pursuant to r 9.2(3) of the Supreme Court (Corporations) Rules 2013 that the plaintiff’s application may be dealt with in the absence of the public and without any attendance by or on behalf of the plaintiff.
---
CORPORATIONS – External administration – Application for determination of remuneration by former administrator of company pursuant to s449E of Corporations Act 2001 (Cth) – Operation of transitional provisions of Insolvency Law Reform Act 2016 (Cth) – Remuneration determined in amount claimed.
---
APPEARANCES: | Solicitors |
| For the Plaintiff | Maddocks Lawyers |
HIS HONOUR:
The plaintiff, Mr Vince, seeks his remuneration as administrator of Metropolis City Promotions Pty Ltd (In Liquidation) ACN 005 485 692 (‘the Company’) for the period 20 April 2016 and ending on 29 April 2016 in the amount of $9,449.00 inclusive of GST. The application, by interlocutory process filed 11 May 2018, is supported by Mr Vince’s affidavits sworn on 21 April 2016, 29 April 2016, 29 November 2017 and 23 March 2018.
Mr Vince requests that his application for determination of his remuneration be dealt with in the absence of the public and without any attendance by him or on his behalf.
I am satisfied that the plaintiff has complied with the requirements of Rule 9.2(4) of the Supreme Court (Corporations) Rules 2013 (‘the Rules’) in respect of provision of notice to the prescribed parties. The plaintiff has not received any objection to the Form 16 notice served by him on the persons required to be notified, being the creditors, the Australian Securities & Investments Commission, John Trimble (the sole director and member of the Company), and the former accountants for the Company, Bryant & Bryant.
On 29 April 2016, Randall AsJ made orders terminating the administration pursuant to s 447A of the Corporations Act 2001 (Cth) (‘the Act’), winding up the Company in insolvency and appointing Glen Anthony Crisp as liquidator. Accordingly, the administration of Metropolis which had begun on 20 April 2016 ended on 29 April 2016 (the Relevant Period).
Despite the termination of the administration, the plaintiff has standing to apply to the Court under s 449E for approval of his remuneration after the administration has come to an end.[1]
[1]ReLime Gourmet Pizza Bar (Charlestown) Pty Ltd [2015] NSWSC 244 at [71] and [78].
The application is made under s 449E of the Act. While s 449E was repealed with effect from 1 March 2017,[2] I agree with the plaintiff’s submission that the application is properly brought by reason of s 1581 of the Act. Section 1581(1) provides:
Despite the repeal of sections 449E and 473 and the repeal and substitution of sections 499(3) to (7) of the old Act by Schedule 2 to the Insolvency Law Reform Act 2016, the old Act continues to apply in relation to the remuneration of an external administrator of a company who is appointed before the commencement date.
[2]Insolvency Law Reform Act 2016 (Cth), s 2; sch 2; item 135.
While s 449E was repealed with effect from 1 March 2017, section 2 of the transitional provisions of the Insolvency Law Reform Act 2016 (Cth) (ILRA) operate so that in the circumstances of an external administrator who is appointed before the commencement date of the provisions, ss 449E and 473 continue to apply.[3]
[3]See discussion in Re Firebrace Life Pty Ltd (In Liq) [2018] VSC 252 (per Matthews JR) at [20] and [21].
By item 5 of the table set out in section 2 of ILRA, the commencement date was the day after the period of 12 months beginning on the day the ILRA received Royal Assent. The ILRA received Royal Assent on 29 February 2016 so the commencement date was 1 March 2017. Mr Vince, the administrator, was appointed on 20 April 2016 and accordingly s 449E continues to apply in these circumstances.
Section 449E(1)(c) of the Act provides relevantly:
449E Remuneration of administrator
(1)The administrator of a company under administration is entitled to see receive such remuneration and is determined:
(a) by agreement between the administrator and the committee of creditors (if any); or
(b)by resolution of the company’s creditors; or
(c) if there is no such agreement or resolution – by the Court.
In this case, because Mr Vince did not have an opportunity to reach an agreement with the committee of creditors of the Company or to put a resolution in regard to his remuneration to the second meeting of creditors by reason of the intervening winding up order, the Court has jurisdiction to deal with this application.
Section 449E(4) of the Act prescribes the discretionary criteria which the Court must take into account when exercising the power to awards remuneration. It provides as follows:
449E Remuneration of administrator
…
(4)In exercising its powers under subsection (1), (1A) or (2), 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 performed by the administrator was reasonably necessary;
(b)the extent to which the work likely to be performed by the administrator is likely to be reasonably necessary;
(c)the period during which the work was, or is likely to be, performed by the administrator;
(d) the quality of the work performed, or likely to be performed, by the administrator;
(e)the complexity (or otherwise) of the work performed, or likely to be performed, by the administrator;
(f)the extent (if any) to which the administrator was, or is likely to be, required to deal with extraordinary issues;
(g)the extent (if any) to which the 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 administrator;
(i) whether the administrator was, or is likely to be, required to deal with:
(i) one or more receivers; or
(ii) one or more receivers and managers;
(j) the number, attributes and behaviour, or the likely number, attributes and behaviour, of the company’s creditors;
(k)if the remuneration is ascertained, in whole or in part, on a time basis:
(i)the time properly taken, or likely to be properly taken, by the administrator in performing the work; and
(ii)whether the total remuneration payable to the administrator is capped;
(l) any other relevant matters.
While these criteria must be taken into account, it is apparent that they are all directed to assessing whether, on the evidence, the remuneration claimed by the administrator is reasonable in the circumstances of this administration.
In the plaintiff’s written submissions, I was referred to the decision of In the matter of Sakr Nominees Pty Limited,[4] wherein Black J summarised the principles applicable to a claim for remuneration by an administrator or liquidator as including:
[4][2017] NSWSC 668 at [23]-[25].
(a) a liquidator or administrator is entitled to reasonable remuneration for his services;
(b) the liquidator or administrator bears the onus of establishing the remuneration he seeks is fair and reasonable;
(c) in determining a liquidator’s or administrator’s reasonable remuneration, the court will have regard to the matters specified in the Act;
(d) the court must bring an independent mind to bear the question whether the remuneration sought by the liquidator or administrator is fair and reasonable;
(e) the liquidator or administrator must lead evidence in sufficient detail that the court can determine that question;
(f) the 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 relevant extent, the expenses incurred;
(g) proportionality is an important matter in considering the question of whether remuneration is reasonable and the “value” of a liquidator’s or administrator’s work can include the benefit of resolving the position of creditors and beneficiaries;
(h) the benefit to the community is of not permitting assets to remain unproductive in the hands of a defunct company for a long period;
(i) the fact that the work does not increase the funds available to distribution to creditors or contributories does not mean that the administrator or liquidator is not entitled to be remunerated for it;
(j) most decisions have applied time costing as at least the starting point for a calculation of remuneration, although the decisions also emphasise the need for proportionality between the cost of the work done and the value of the services provided; and
(k) the Court of Appeal in Sanderson did not prefer any of the particular approach to remuneration over another approach (such as percentage of the assets realised). Whether time based remuneration or a percentage of recovery is appropriate in a particular case will depend, in part, on the basis on which the liquidator or administrator puts his or her application for a remuneration, in part, on the view taken by any persons who opposed the remuneration application and, in part, the view taken by the court.
Mr Vince was appointed as administrator of the Company as well as two related entities, Daily Planet Australia Pty Ltd (‘DPA’) and Cameron Lane Pty Ltd (‘Cameron Lane’). Mr Vince was appointed as administrator of the Company, DPA and Cameron Lane 20 April 2016, being the day before the fourth return of the winding up applications commenced by Bryantcraft Pty Ltd in proceedings against those entities numbered S CI 2016 00061 (DPA), S CI 2016 00064 (the Company) and S CI 2016 00065 (Cameron Lane) (together ‘the winding up proceedings’).
On 21 April 2016, Mr Vince swore an affidavit in the winding up proceedings seeking an adjournment to conduct a thorough investigation into the affairs of each of the three entities. The winding up proceedings were adjourned to 29 April 2016. Mr Vince was required to provide the Court with a report at the adjourned date detailing various matters, including the asset and liability position of the Company and his recommendation whether it was in the interests of creditors to continue with the administration or for the Company to be wound up.
On 28 April 2016, Mr Vince swore further affidavits in the winding up proceedings. In those affidavits, he deposed to tasks undertaken following his appointment, including listing the Company’s books and records received and exhibiting an estimate of the Company’s assets and liabilities, which showed an estimated surplus of $2.824 million before the costs of administration or winding up.
Mr Vince also deposed as to the viability of the deed of company arrangement (‘DOCA’) proposal received from Robert Bottazzi in relation to DPA, Cameron Lane and the Company. The DOCA proposal involved Mr Bottazzi paying $200,000 to the deed administrator.
Mr Vince noted a number of issues arising from the DOCA proposal that required further investigation including Mr Bottazzi’s ability to make the contribution to the DOCA fund. He recommended that he be given further time to continue his investigations and prepare a report to creditors of the Company pursuant to s 439A of the Act.
Mr Vince also set out his preliminary views on potential insolvent trading and voidable transaction claims.
On 29 April 2016, at the further hearing of the winding up applications, DPA and the Company were wound up in insolvency and Mr Glenn Crisp was appointed as liquidator of each entity.
On 29 November 2017, Mr Vince swore a further affidavit detailing the work undertaken in the Relevant Period including:
(a) collection, review and analysis of the books and records of the Company;
(b) communicating with creditors of the Company;
(c) arranging appropriate insurance and assessing risk exposure; and
(d) instructing solicitors, and liaising with solicitors, in relation to the winding up proceedings;
(e) investigating the affairs of the Company including potential recovery proceedings in order to report to the Court as to whether it was in the best interests of the creditors to allow the voluntary administrations of the Company, Cameron Lane and DPA to continue or for the companies to be wound up.
It is submitted on Mr Vince’s behalf that much of the work carried out by him was necessitated by the orders of Randall AsJ on 21 April 2016. It was contended that there was a degree of complexity in the administration which arose by reason of the company’s relations with DPA, Cameron Lane, and Planet Platinum Limited (in liquidation) (a creditor of the Company at the date of Mr Vince’s appointment), which were intricate and took some time to unravel. In addition the Company was the corporate trustee of the John Trimble Family Trust.
I have considered the submissions and the evidence filed in support of the application and I am of the opinion that:
(a) the work undertaken was reasonable and necessary and proportionate to the issues facing Mr Vince during the period of the administration;
(b) given that no assets were realised during the administration, a time based approach to determination of his remuneration is appropriate. In particular, Mr Vince was required to devote substantial time and attention to the winding up application;
(c) a total of 27.42 hours was spent undertaking the work in the Relevant Period by six professional staff and three support staff. Most of the professional time was spent by Mr Vince (5.93 hours at $460 per hour), a director (5.62 hours at $460 per hour) and a senior accountant (8.5 hours at $220 per hour). Given the ongoing winding up application, I consider that Mr Vince’s personal time spent in the Relevant Period was necessary and appropriate and that it appears that the balance of the work was allocated to persons at an appropriate level of seniority in his firm;
(d) further, it was appropriate for the work to be performed by Mr Vince and senior members of his staff due to the fact that DPA and the Company operated a brothel at the Property;
(e) as to Mr Vince’s hourly rates, he deposes that they are comparable to other firms of similar size. I agree that his firm’s fees are in the range of the Melbourne fee “market” for insolvency practitioners;
(f) Mr Vince has exhibited with an account in itemised form setting out details of the work performed, the category to which the work relates (eg assets, creditors, investigations, legal and administration) the persons who performed the work, the time taken and the remuneration claimed which contains sufficient detail to enable me to perform my responsibility of considering whether his claim is reasonable; and
(g) Mr Vince claims GST on the basis that the work undertaken constitutes taxable supply within the meaning of the New Tax System (Goods and Services Tax) Act 1999 (Cth) and consider that to be appropriate.
I consider that on the evidence the amount claimed by Mr Vince is reasonable and I will order that Mr Vince’s remuneration in his capacity as voluntary administrator for the period 20 April 2016 to 29 April 2016 be determined in the sum of $9,449.00 (inclusive of GST).
0
3
0