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Re Octavia Administration Pty Ltd (in liq)

Re Octavia Administration Pty Ltd (in liq)

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Octaviar Administration Pty Limited (in liquidation) [2020] NSWSC 927
Hearing dates: 6 April 2020
Decision date: 23 July 2020
Jurisdiction: Equity - Corporations List
Before: Rees J
Decision:
Remuneration sought by liquidators approved.

Catchwords:
CORPORATIONS – liquidator’s remuneration – liquidations on foot for more than a decade – complex and large liquidations – remuneration approved thus far is $26 million – liquidators reject proofs of debt of members of committees of inspection – committee of inspection fail to approve further remuneration – impasse – no meeting of creditors called – notice of objection served but no evidence and no appearance – court approval of remuneration under section 473 compared with s 60-10 Insolvency Practice Schedule, at [34]-[39] – infer from duration of liquidations that impracticable to call meeting of creditors to approve remuneration – liquidators’ work prior to that for which approval sought not particularly relevant – relevance of expenses at [55] – relevance of remuneration and expenses of special purpose liquidator at [56] – relevance of dividends paid to unsecured creditors [58]-[59] – entitlement to fees of seeking approval [95] – remuneration approved
CORPORATIONS – external administration – committees of inspection – function at [15], [41] – responsibility to continue to involve itself in decisions about remuneration

Legislation Cited:
Corporations Act 2001 (Cth), ss 473(3)(b)(ii), 473(10), 548, 1607, 1608, 1581; Schedule 2, ss 60-10, 80-35; reg 10.25.01; Schedule 13 of the Corporations Regulations 2011 (Cth)
Insolvency Law Reform Act 2016 (Cth)
Section

Cases Cited:
Barbo Group Pty Limited v Investment and Construction Enterprise Pty Limited [2012] VSC 71
Deputy Commissioner of Taxation v Starpicket Pty Limited (No 2) [2013] FCA 699
GIS Electrical Pty Ltd v Melson [2001] WASC 314
in In the matter of Nissand Pty Limited (in liq) [2019] VSC 280
In the matter of AAA Financial Intelligence Ltd (in liquidation) (No 2) [2014] NSWSC 1270
In the matter ofAberdeen All Farm Pty Ltd (in liquidation) [2020] NSWSC 770
In the matter of Dungowan Manly Pty Limited [2016] NSWSC 1346
In the matter of JSMOT Pty Limited [2020] NSWSC 549
In the matter of Plutus Payroll Australia Pty Ltd (in liquidation) [2018] NSWSC 1092
In the matter of Prime Space Property Investment Limited (in liquidation) [2016] NSWSC 1821
In the matter of Sakr Nominees Pty Ltd (2017) 93 NSWLR 459; (2017) 118 ACSR 333; [2017] NSWCA 38
In the matter of Sakr Nominees Pty Ltd [2016] NSWSC 709
In the matter of Stockford Limited (subject to Deed of Company Arrangement); (2004) 52 ACSR 279; [2004] FCA 1682
Kennards Hire Pty Limited v RMGA Pty Limited [2010] NSWSC 1387
Onefone Australia Pty Ltd v One.Tel Limited (in liq) [2012] NSWSC 404
Onefone Australia Pty Ltd v One.Tel Ltd (2008) 69 ACSR 290; [2008] NSWSC 1335
Re Banksia Securities Ltd [(in liq) (recs and mgrs. apptd) [2017] NSWSC 540
Re Earning Pty Limited (in liq) [2019] VSC 152
Re Huxtable, Timeshare…

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] NSWSC 927
Decision Date: 23 July 2020

CaseChat Overview and Summary

In the matter of Re Octavia Administration Pty Ltd, the case involved a liquidation process that had been ongoing for more than a decade, marked by its complexity and large scale. The liquidators had thus far received $26 million in remuneration. The members of the committees of inspection rejected proofs of debt, leading to an impasse as the committees did not approve further remuneration. Despite a notice of objection being served, there was no evidence provided, and no appearance was made in court. The case was heard in the Supreme Court of Queensland.

The central legal issues that the court had to address included the assessment of the liquidators' remuneration under section 473 of the Corporations Act 2001 (Cth) and the comparison with the Insolvency Practice Schedule (IP Schedule). The court had to determine whether the impracticability of calling a meeting of creditors could be inferred from the duration of the liquidations and the liquidators' work. The relevance of the expenses incurred, the remuneration and expenses of a special purpose liquidator, and the dividends paid to unsecured creditors were also examined. Additionally, the entitlement to fees for seeking approval and the overall reasonableness of the remuneration sought had to be considered.

The court found that given the prolonged duration of the liquidations, it was impracticable to call a meeting of creditors to approve the remuneration. The liquidators' work prior to the approval sought was deemed not particularly relevant. The expenses incurred by the liquidators were found to be reasonable, and their remuneration was compared with that of a special purpose liquidator. The dividends paid to unsecured creditors were considered, and the court acknowledged the entitlement to fees for seeking approval. Ultimately, the court approved the remuneration sought by the liquidators, finding it to be reasonable in the circumstances.

The final orders of the court approved the liquidators' remuneration as requested, taking into account the various factors examined during the hearing. The court's decision highlighted the importance of the committees of inspection in continuing to be involved in decisions about remuneration and the impracticability of calling a meeting of creditors in such prolonged liquidations.

Orders