Re the Go2 People Limited (Administrators Appointed) [No 2]
[2023] WASC 249
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE THE GO2 PEOPLE LIMITED (ADMINISTRATORS APPOINTED) [No 2] [2023] WASC 249
CORAM: LUNDBERG J
HEARD: 24 MAY 2023 AND 22 JUNE 2023
DELIVERED : 6 JULY 2023
FILE NO/S: COR 65 of 2023
EX PARTE
ROBERT CONRY BRAUER as administrator of THE GO2 PEOPLE LIMITED
First Plaintiff
ROBERT MICHAEL KIRMAN as administrator of THE GO2 PEOPLE LIMITED
Second Plaintiff
ROBERT CONRY BRAUER as administrator of GO2 RECRUITMENT PTY LTD
Third Plaintiff
ROBERT MICHAEL KIRMAN as administrator of GO2 RECRUITMENT PTY LTD
Fourth Plaintiff
ROBERT CONRY BRAUER as administrator of GO2 SKILLS & TRAINING PTY LTD
Fifth Plaintiff
ROBERT MICHAEL KIRMAN as administrator of GO2 SKILLS & TRAINING PTY LTD
Sixth Plaintiff
ROBERT CONRY BRAUER as administrator of HUNTER EXECUTIVE SEARCH CONSULTANTS PTY LTD
Seventh Plaintiff
ROBERT MICHAEL KIRMAN as administrator of HUNTER EXECUTIVE SEARCH CONSULTANTS PTY LTD
Eighth Plaintiff
ROBERT CONRY BRAUER as administrator of NARA TRAINING AND ASSESSING PTY LTD
Ninth Plaintiff
ROBERT MICHAEL KIRMAN as administrator of NARA TRAINING AND ASSESSING PTY LTD
Tenth Plaintiff
ROBERT CONRY BRAUER as administrator of SKILL HIRE AUSTRALIA PTY LTD
Eleventh Plaintiff
ROBERT MICHAEL KIRMAN as administrator of SKILL HIRE AUSTRALIA PTY LTD
Twelfth Plaintiff
ROBERT CONRY BRAUER as administrator of SKILL HIRE WA PTY LTD
Thirteenth Plaintiff
ROBERT MICHAEL KIRMAN as administrator of SKILL HIRE WA PTY LTD
Fourteenth Plaintiff
ROBERT CONRY BRAUER as administrator of THE GO2 PEOPLE AUSTRALIA PTY LTD
Fifteenth Plaintiff
ROBERT MICHAEL KIRMAN as administrator of THE GO2 PEOPLE AUSTRALIA PTY LTD
Sixteenth Plaintiff
Catchwords:
Corporations - External administration - Voluntary administrators - Further orders sought to limit the liability of the voluntary administrators in relation to variations to the original Loan Facility
Corporations - External administration - Receivers - Application to discharge receivership - Orders sought for protection of the liability of the receivers - Approval for the receivers' remuneration sought pursuant to O 51 r 4 of the Rules of the Supreme Court 1971 (WA)
Legislation:
Corporations Act 2001 (Cth), s 435A, s 447A
Insolvency Practice Schedule (Corporations) (Cth), s 90-15, s 90-20
Rules of the Supreme Court 1971 (WA), O 51 and O 67B
Result:
Interlocutory orders made on 24 May 2023 as sought by the plaintiffs
Interlocutory orders made on 22 June 2023 as sought by the third and fourth plaintiffs
Category: B
Representation:
Counsel:
| First Plaintiff | : | J D Malone |
| Second Plaintiff | : | J D Malone |
| Third Plaintiff | : | J D Malone |
| Fourth Plaintiff | : | J D Malone |
| Fifth Plaintiff | : | J D Malone |
| Sixth Plaintiff | : | J D Malone |
| Seventh Plaintiff | : | J D Malone |
| Eighth Plaintiff | : | J D Malone |
| Ninth Plaintiff | : | J D Malone |
| Tenth Plaintiff | : | J D Malone |
| Eleventh Plaintiff | : | J D Malone |
| Twelfth Plaintiff | : | J D Malone |
| Thirteenth Plaintiff | : | J D Malone |
| Fourteenth Plaintiff | : | J D Malone |
| Fifteenth Plaintiff | : | J D Malone |
| Sixteenth Plaintiff | : | J D Malone |
Solicitors:
| First Plaintiff | : | Blackwall Legal LLP |
| Second Plaintiff | : | Blackwall Legal LLP |
| Third Plaintiff | : | Blackwall Legal LLP |
| Fourth Plaintiff | : | Blackwall Legal LLP |
| Fifth Plaintiff | : | Blackwall Legal LLP |
| Sixth Plaintiff | : | Blackwall Legal LLP |
| Seventh Plaintiff | : | Blackwall Legal LLP |
| Eighth Plaintiff | : | Blackwall Legal LLP |
| Ninth Plaintiff | : | Blackwall Legal LLP |
| Tenth Plaintiff | : | Blackwall Legal LLP |
| Eleventh Plaintiff | : | Blackwall Legal LLP |
| Twelfth Plaintiff | : | Blackwall Legal LLP |
| Thirteenth Plaintiff | : | Blackwall Legal LLP |
| Fourteenth Plaintiff | : | Blackwall Legal LLP |
| Fifteenth Plaintiff | : | Blackwall Legal LLP |
| Sixteenth Plaintiff | : | Blackwall Legal LLP |
Case(s) referred to in decision(s):
Davy v Gronow (1845) 14 LJ Ch 134
Francis (Trustee); In the matter of Fotios (Bankrupt) v Helios Corporation Pty Ltd (No 3) [2023] FCA 251
Hoskins v Campbell [1869] WN 59
In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396
Inland Revenue Commissioners v Hoogstraten [1985] 1 QB 1077
Official Assignee in Bankruptcy of The Property of James Adair Hanna v Hanna [2019] FCA 1934
Re The Go2 People Limited (Administrators Appointed) [2023] WASC 142
Refund Property Fees Pty Ltd v Prime Project Development (Cairns) Pty Ltd [2015] FCA 613
Richardson v Ward [1822] EngR 393; (1822) 6 Madd 266; 56 ER 1092
Sigma Chemicals (1986) Pty Ltd v Brown [2002] WASC 52
Sprowles, in the matter of Triumph N Triumph Pty Ltd (in liq) (No 2) [2021] FCA 405
Tewart v Lawson (1874) LR 18 Eq 490
University of Western Australia v Gray (No 30) [2010] FCA 1063
Table of Contents
A. Introduction and summary
B. Background
C. Second application
Background
Disposition
D. Third application
Background
Discharge of the Receivers (order 2)
Liability of the Receivers (order 3)
Remuneration of the Receivers (order 1)
Passing of accounts
E. Orders
ATTACHMENT A
ATTACHMENT B
LUNDBERG J:
A. Introduction and summary
On 1 May 2023, the plaintiffs to this proceeding were appointed as the voluntary administrators (Administrators) to several companies in the group which is headed by the ASX listed entity Go2 People Limited (the Group).[1] The Group had been operating as an executive search, labour hire and workplace training business.
[1] The companies in the Group over which the Administrators were appointed were: (a) The Go2 People Limited (Administrators Appointed) (ACN 616 199 896); (b) Go2 Recruitment Pty Ltd (Administrators Appointed) (ACN 152 130 473); (c) Go2 Skills & Training Pty Ltd (Administrators Appointed) (ACN 156 136 748); (d) Hunter Executive Search Consultants Pty Ltd (Administrators Appointed) (ACN 164 138 023); (e) Nara Training and Assessing Pty Ltd (Administrators Appointed) (ACN 600 658 553); (f) Skill Hire Australia Pty Ltd (Administrators Appointed) (ACN 143 386 707); (g) Skill Hire WA Pty Ltd (Administrators Appointed) (ACN 143 388 881); and (h) The Go2 People Australia Pty Ltd (Administrators Appointed) (ACN 616 564 115).
The voluntary administration of the Group has now largely concluded, with several deeds of company arrangement being executed on 14 June 2023 in respect of six of the eight companies in the Group.[2] The deeds executed included a deed of company arrangement with respect to Go2 Recruitment Pty Ltd (the Go2 Recruitment DOCA). The several deeds of company arrangement, including the Go2 Recruitment DOCA, allow the majority of the Group to continue in existence. This outcome is consistent with the first stated purpose of the regime established by pt 5.3A of the Corporations Act 2001 (Cth) (CA), namely:
…for the business, property and affairs of an insolvent company to be administered in a way that…maximises the chances of the company, or as much as possible of its business, continuing in existence…[3]
[2] The excluded entities were Skill Hire Australia Pty Ltd and The Go2 People Limited.
[3] CA, s 435A(a).
At the hearing before the court on 22 June 2023, counsel for the Administrators summarised the status of the administration:
…when we first appeared before you on the second day of the administration, the future of the Group and the employment of its 972 employees were in some jeopardy. We're pleased to say that a solution has been found for the Group, which contemplates a new owner taking over the Group and only four of the 972 employees being made redundant, with the balance of the employees continuing their employment. Today's hearing relates to the final substantive step in that restructuring process.[4]
[4] ts 20 - 21.
During the course of the administration of the Group, it has been necessary for the plaintiffs to approach the court on three occasions for urgent relief. The present reasons relate to the second and third applications, which were heard by the court on 24 May 2023 and 22 June 2023 respectively, and explain why I was satisfied that the orders made at those hearings were appropriate.
B. Background
On 2 May 2023, the court dealt with an urgent ex parte application brought by the Administrators. I published reasons on 3 May 2023 explaining why I granted the orders at that first hearing: Re The Go2 People Limited (Administrators Appointed) [2023] WASC 142.
The orders made by the court on 2 May 2023 (which are set out in the previous reasons) authorised the appointment of the Administrators (in their capacity as administrators of one of the companies) as receivers and managers (Receivers) of the assets of a particular trust within the Group (the Go2 Recruitment Trust). The orders also limited the personal liability of the Administrators, pursuant to s 443A(1) and s 447A(1) of the Corporations Act 2001 (Cth) (CA) in respect of liabilities arising out of, or in connection with, a Loan Facility Agreement entered into with Intowork Australia Limited on 1 May 2023 (Loan Facility).
The Loan Facility was required given the Group's lack of funding and the Administrator's assessment of the likelihood, which I accepted, that they would not be in a position to continue operating the Group as a going concern. The lack of funding and inability to continue as a going concern may otherwise have resulted in decisions being made to terminate hundreds of employees and terminate commercial contracts to which the companies in the Group were a party.
On 24 May 2023, a second interlocutory application was heard by the court to deal with the Administrators' personal liability arising out of a variation to the Loan Facility and certain drawdown notices. Mr J D Malone appeared as counsel for the plaintiff at the hearing. I granted the orders sought (with some modifications) and indicated I would publish reasons in due course. The orders made are set out in Attachment A to these reasons.
On 22 June 2023, a third interlocutory application was heard by the court to deal with the approval of the remuneration of the receivers of the Go2 Recruitment Trust, the discharge of the receivers of the assets of the Go2 Recruitment Trust, and the liability of the Receivers. Again, Mr J D Malone appeared as counsel for the plaintiff at the hearing. I granted the orders sought (again with some modifications) and indicated I would publish reasons in due course. The orders made are set out in Attachment B to these reasons.
C. Second application
Background
The orders sought at the second hearing were supported by three affidavits filed by the Administrators, being a confidential affidavit of Mr Brauer sworn 23 May 2023 (Confidential Brauer Affidavit), a further affidavit of Mr Brauer sworn 23 May 2023 (Second Brauer Affidavit), and an affidavit of Mr Haslam sworn 24 May 2023 (Haslam Affidavit).
At the hearing, counsel for the Administrators took me through the affidavit material, which deposed to the following matters:[5]
[5] Second Brauer Affidavit, [9] - [18].
(a)The Administrators had progressed the administration of the Group and had conducted the first creditors' meeting as is required. The work undertaken included stabilising and maintaining the operations of the Group, securing the support of the Group's employees, customers, and key financiers, and drawing down funds from the Loan Facility which were used to pay approximately $1.5 million of pre-appointment wages outstanding to employees and to fund the operating costs of the Group.
(b)The Administrators had negotiated and entered into an exclusivity arrangement with Intowork Australia Limited, and had facilitated access to the due diligence material required by Intowork Australia Limited to conduct its due diligence to determine if it would present a restructuring proposal for some or all of the companies in the Group, ahead of the second creditors' meeting.
(c)The Administrators had commenced an expression of interest campaign, consistent with the terms of the exclusivity arrangement with Intowork Australia Limited, and marketed the Group to ascertain whether there is interest from third parties to recapitalise or purchase the businesses. An information memorandum had been issued to various parties in this regard.
(d)Importantly, the Loan Facility entered into on 1 May 2023 had been fully drawn down and there remained a funding shortfall in respect of the businesses of two of the companies in the Group (referred to in the material as the 'Funding Shortfall Entities'). The Loan Facility had provided for a loan facility limit of $3.0m. Intowork Australia Limited had agreed to increase the amounts capable of being drawn down under the Loan Facility to address the funding shortfall.[6]
(e)The affidavit material before the court included the two drawdown notices to be issued by the Administrators in the event court approval was forthcoming.[7] The amounts in those drawdown notices were $555,000 and $180,000.
(f)Following the first drawdowns on the Loan Facility on 2 and 3 May 2023, Intowork Australia Limited had advised the Administrators that it would require an exclusivity arrangement in relation to transactions relating to the Group, as a condition of further drawdowns under the Loan Facility. As a result, the Administrators entered into a side letter with Intowork on 5 May 2023 (Exclusivity Agreement). Within that Exclusivity Agreement, the Administrators sought terms which would allow the Administrators to test the market and allow third parties to develop initial proposals.
(g)Ultimately, the Administrators formed the view that entering into some form of exclusivity agreement with Intowork Australia Limited was necessary in order to give the businesses of the Group the best possible chance of continuing in existence.[8]
Disposition
[6] Second Brauer Affidavit, [31] - [37].
[7] Second Brauer Affidavit, Attachments RCB-16 and RCB-17.
[8] Second Brauer Affidavit, [16(b)].
At the first hearing of this matter, I formed the view that the funding provided to the Group by the Loan Facility was necessary to avoid the business facing the dire scenario in which a large number of employees would need to be terminated, material commercial contracts might be terminated, and the ability of the Administrators to secure potential proponents would be substantially reduced. I thus considered that the entry into, and continuation of, the Loan Facility was (and remains) in the best interests of the Group and in the best interests of the creditors.[9]
[9] Re The Go2 People Limited (Administrators Appointed) [2023] WASC 142 [44].
Further, I was of the view at the first hearing that the personal liability exposure of the Administrators should be protected through the making of orders pursuant to s 447A(1) CA to modify the operation of s 443A(1) CA.[10]
[10] Re The Go2 People Limited (Administrators Appointed) [2023] WASC 142 [45].
The variations to the Loan Facility (and the proposed issue of the additional drawdown notices) were appropriate and necessary in my view, and consistent with the views I expressed at the first hearing regarding the importance of ongoing funding for this Group. The companies across the Group were, at the time of the second hearing, incurring trading liabilities on a daily basis of around $200,000.[11] The Administrators had made a commercial decision to carry the risk of personal liability for further liabilities which were not funded (i.e. which were beyond the known sources of funds), at least for a short time.
[11] Second Brauer Affidavit, [23].
However, that position was, it seems to me, always likely to be a holding position and I can understand the sense in the Administrators decision to ultimately secure the further funding from Intowork Australia Limited and to approach the court to seek approval in this regard. The material adduced by the Administrators on the second hearing strongly demonstrated that the administration process was, as at 24 May 2023, moving forward in an efficient manner, in the sense that the businesses of the Group remained viable and there had been genuine interest from a number of proponents desirous of acquiring and restructuring those businesses.
In seeking this additional funding, the personal liability exposure of the Administrators should be protected through the making of orders pursuant to s 447A(1) CA to modify the operation of s 443A(1) CA and I accepted it was appropriate to order accordingly.
I was therefore satisfied the orders sought by the Administrators should be made, with some modifications which were discussed with counsel at the hearing.[12]
[12] ts 12 - 16.
As to appropriate notice, at the second hearing I was satisfied that notice (albeit short notice) had been given to creditors regarding the application to the court.[13] Short notice had also been given to the ASIC.[14] As with the initial orders made by the court in this matter, the Administrators proposed that a direction be made to allow interested persons liberty to apply to modify or discharge the orders made.[15] The court did not subsequently receive any applications of this nature.
[13] Second Brauer Affidavit, [38] - [40] and Haslam Affidavit, [8] and ts 9 - 10.
[14] Second Brauer Affidavit, [41] and Haslam Affidavit, [6] and ts 10.
[15] See order 4 of the orders made on 24 May 2023.
I also made orders to restrict access to the Confidential Brauer Affidavit, pursuant to O 67B r 5 RSC. That affidavit contained information as to the non-binding indicative proposals and DOCA proposals received from various third parties, and it was appropriate to restrict access to such material during the course of the negotiations which were then being undertaken by the Administrators.[16]
[16] ts 12.
D. Third application
Background
The interlocutory application which necessitated the third hearing was brought pursuant to O 51 r 4 RSC and the inherent jurisdiction of the court. The application was filed by the third and fourth plaintiffs solely in their capacity as the Receivers of the Go2 Recruitment Trust. The application was supported by the fourth affidavit of Mr Brauer sworn on 20 June 2023 (Fourth Brauer Affidavit), with reliance also placed on the earlier affidavit material filed in the proceedings.
The Fourth Brauer Affidavit runs to over 600 pages, and attaches a number of documents including:
(a)the Administrators' Report to Creditors dated 29 May 2023;
(b)the Go2 Recruitment DOCA (and certain allied instruments, being the Repayment Deed and the Loan Agreement);
(c)the forecast cash position of the Go2 Recruitment Trust; and
(d)the Remuneration Approval Report prepared for the Go2 Recruitment Trust dated 20 June 2023 (the Receivers' Remuneration Approval Report).
The submissions filed by the Receivers explained that the orders sought on the application (other than as to the Receivers' remuneration) were conditions precedent to the Go2 Recruitment DOCA and were required to allow the Go2 Recruitment DOCA to effectuate.[17] I refer to cl 4.1 of the Go2 Recruitment DOCA in this regard.[18]
[17] Outline of submissions dated 20 June 2023, [11].
[18] Fourth Brauer Affidavit, Attachment RCB31.
The Go2 Recruitment DOCA was one of several deeds of company arrangement entered into in relation to companies in the Group. Under the terms of the Go2 Recruitment DOCA, the holding company within the Group was to sell to Intowork Australia Limited, for nominal value and free from encumbrances, the two ordinary shares held by The Go2 People Ltd in Go2 Recruitment Pty Ltd (essentially comprising the whole of the shares on issue in the capital of Go2 Recruitment Pty Ltd).[19] Additionally, The Go2 People Ltd would sell to Intowork Australia Limited for nominal value and free from encumbrances, all of the units held by The Go2 People Ltd in the Go2 Recruitment Trust (comprising the whole of the units on issue in the capital of the Trust). I refer to cl 4.1(g) of the Go2 Recruitment DOCA in this regard.[20]
[19] Fourth Brauer Affidavit, [18] and Attachment RCB31, pg 396.
[20] Fourth Brauer Affidavit, Attachment RCB31, pg 396.
Further, the Receivers were required by the terms of the Go2 Recruitment DOCA to seek (and obtain) orders of the court resigning their position as receivers and ending the receivership of the Go2 Recruitment Trust. I refer to cl 4.1(e) and (f) of the Go2 Recruitment DOCA in this regard.[21]
[21] Fourth Brauer Affidavit, Attachment RCB31, pg 396.
Finally, and relevantly for present purposes, the Go2 Recruitment DOCA contemplated the establishment of a trust by way of a creditors' trust comprising of two trust funds from which, amongst other things, the costs and liabilities incurred by the Receivers would be paid. I refer to cl 4.1(b) and cl 12.2.1 of the Go2 Recruitment DOCA in this regard.[22]
Discharge of the Receivers (order 2)
[22] Fourth Brauer Affidavit, Attachment RCB31, pgs 395 and 405.
It is uncontroversial that, even though the rules of the court may make no specific provision for the discharge of a receiver, a court-appointed receiver may be discharged when the object of the appointment has been fully effected: In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396; Official Assignee in Bankruptcy of The Property of James Adair Hanna v Hanna [2019] FCA 1934; and Francis (Trustee); In the matter of Fotios (Bankrupt) v Helios Corporation Pty Ltd (No 3) [2023] FCA 251. In the first mentioned of these authorities, Brereton J summarised the position as follows:
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 [citing Richardson v Ward [1822] EngR 393; (1822) 6 Madd 266; 56 ER 1092]. A receiver may also be discharged when the continuance of the appointment is unnecessary [citing Davy v Gronow (1845) 14 LJ Ch 134], or (which is much the same thing) the object of the appointment has been achieved [citing Tewart v Lawson (1874) LR 18 Eq 490 and Hoskins v Campbell [1869] WN 59].[23]
[23] In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396 [33] (Brereton J).
In the present case, the object of the receivership was to care for and preserve the assets of the Go2 Recruitment Trust until such time as it could be determined whether there was a prospect of restructuring Go2 Recruitment so that it could continue in existence.
The Go2 Recruitment DOCA now provides for the restructuring of the business so that the business may continue in existence. That being the case, on effectuation of the Go2 Recruitment DOCA and following re-appointment of its former trustee, the purpose of the receivership will be satisfied. Accordingly, I considered it appropriate that the court-appointed receivership established by the orders made on 2 May 2023 be terminated following the occurrence of those two events.
Liability of the Receivers (order 3)
The court has the power to protect the Receivers, as officers of the court, from liabilities arising from acts done in the course of their duties: Official Assignee in Bankruptcy of The Property of James Adair Hanna v Hanna [2019] FCA 1934; and Francis (Trustee); In the matter of Fotios (Bankrupt) v Helios Corporation Pty Ltd (No 3) [2023] FCA 251. This can be achieved by making an order for their release and discharge.
In University of Western Australia v Gray (No 30) [2010] FCA 1063, Barker J made an order of this nature after noting the receiver's evidence that he was unaware of any claims against him in relation to his appointment as manager and receiver.
Further, in Francis (Trustee); In the matter of Fotios (Bankrupt) v Helios Corporation Pty Ltd (No 3) [2023] FCA 251, Colvin J held that providing releases of this nature is appropriate when terminating a receivership in the absence of any contrary reasons. The relevant passage from his Honour's reasons is as follows (at [20]):
As I am persuaded that the other orders should be made, it is appropriate for orders to be made discharging the Receivers and for an appropriate release. This is usual practice and, in the absence of any contrary reason such as threatened or foreshadowed claims against the Receiver or some reasonable basis for entertaining that possibility, such an order would usually be made.
In Inland Revenue Commissioners v Hoogstraten [1985] 1 QB 1077, Dillon LJ opined at 1094 that:
…It has always been recognised that the court has power, by making an order for release and discharge, to protect its officer, whether a sequestrator or a receiver, from all liability for acts done in the course of his duties.
The evidence before the court amply supported the exercise of this power in the present case, and justified why the Receivers should have the benefit of a court-ordered release on the terms proposed in the application. I refer to the following matters in particular:
(a)The liabilities accrued by the Receivers were expected to be discharged prior to the termination of the receivership.[24]
(b)Go2 Recruitment had provided an indemnity in relation to any liabilities after termination (see cl 12.2.1 of the Go2 Recruitment DOCA).[25] Mr Brauer also deposed to the establishment of a secondary trust fund and a primary trust fund, the former of which was expected to be sufficient in its own right to satisfy the external administration liabilities. The primary trust fund was established to accommodate any unexpected contingencies.
(c)Mr Brauer had deposed that he was unaware of any claims against the Receivers.[26]
(d)Mr Brauer had estimated that the distributions required under the terms of the creditors' trust would be made within three months and if any unresolved claims were to emerge during that period it was Mr Brauer's usual practice to withhold distributions until such matters were resolved.
[24] Fourth Brauer Affidavit, [31].
[25] Fourth Brauer Affidavit, [33].
[26] Fourth Brauer Affidavit, [41].
I was also satisfied the order should be made to take effect following termination of the creditors' trust. Prior to that time, the Receivers would have recourse to the assets of the creditors' trust in accordance with its terms, which will not be available to the Receivers after termination of that trust. It is well accepted that the court has power to make such an order to take effect at a future date: Refund Property Fees Pty Ltd v Prime Project Development (Cairns) Pty Ltd [2015] FCA 613 (Logan J).
Remuneration of the Receivers (order 1)
The Receivers also sought approval of their fees and disbursements. The court's power to approve the remuneration of court-appointed receivers is found in O 51 r 4 RSC.
The relevant principles to be applied in assessing the remuneration of a court-appointed receiver were relatively recently set out by Brereton J in In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396 [6] and need not be fully restated in these reasons.[27] For present purposes, it is sufficient to note that:
(a)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.[28]
(b)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.[29]
[27] See also Civil Procedure in Western Australia, [51.4.4] and Sigma Chemicals (1986) Pty Ltd v Brown [2002] WASC 52 [4] - [10] (Sanderson M).
[28] In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396 [6(2)] (Brereton J).
[29] In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396 [6(3)] (Brereton J).
The material before the court included a detailed accounting of the Receivers' fees and disbursements, together with confirmation from the Receivers that the amounts had been properly incurred.[30] Counsel for the Receivers drew my attention to the evidentiary material supporting the remuneration claim during the course of the hearing, including the detailed Receivers' Remuneration Approval Report.
[30] Fourth Brauer Affidavit, [43] and Attachment RCB38.
The Remuneration Approval Report prepared by the Receivers provides a description of the activities undertaken during the course of the receivership and outlines the rates charged by the Receivers for the work undertaken.[31] The report explains the costs adjustments made by the Receivers to the time recorded by the Receivers and their staff (representing a downward adjustment of approximately $56,000). The schedules to the report set out the details of the work already completed, the time recorded by all staff members on the engagement, the details of work to be undertaken in the future (and the expected costs thereof), the disbursements paid to third parties, and a schedule of hourly rates. The rates applied by the Receivers were the same as the rates applied by the plaintiffs in their capacity as Administrators, which were approved by creditors.
[31] Fourth Brauer Affidavit, [43] - [47] and Attachment RCB38.
Mr Brauer further deposed that no comments in relation to the Receivers' remuneration were raised by creditors at the second meeting of creditors on 6 June 2023.[32]
[32] Fourth Brauer Affidavit, [47].
I was also informed at the hearing that there was provision in the Go2 Recruitment DOCA for the fees and disbursements of the Receivers to be paid from the assets of the creditors' trust. I refer to cl 12.1 of the Go2 Recruitment DOCA in this regard.[33]
[33] Fourth Brauer Affidavit, Attachment RCB31, pg 404.
The assessment of the reasonableness of a receiver's remuneration does not typically warrant an approach akin to a taxation of a bill of costs. Rather, an impressionistic approach to the assessment is sufficient.[34] This is so even though the receivers are appointed by the court and are officers of the court in performing their role.
[34] In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396 [6(8)] and [27] (Brereton J).
Adopting such an approach, I was satisfied in the present circumstances and on the affidavit material adduced by the Receivers, that the remuneration fixed in the sum of $181,110.15 for the period from 2 May 2023 to 9 June 2023 should be approved, as should remuneration in the sum of $50,000 for the period from 10 June 2023 until termination of the receivership. The Remuneration Approval Report was, as I have already explained, a comprehensive report which allowed a satisfactory degree of visibility as to the work undertaken and the manner in which it had been charged. Significantly, as well, the reduction applied by the Receivers to the time recorded (which reduced the fees by around $56,000) provided the court with a further layer of confidence that the final amount sought was reasonable.
Passing of accounts
There are formal requirements in the Rules of this court for the filing and passing of accounts by court-appointed receivers: see O 51 r 5 to O 51 r 8 RSC. However, I did not make orders requiring the Receivers to file accounts as part of the court-appointed receivership and, accordingly, the Receivers have not been obliged to comply with the passing of accounts regime in order to conclude this receivership. Nevertheless, the affidavit material adduced by the Receivers provided a summary of receipts and payments made during the course of the receivership, to which counsel drew my attention at the hearing.[35]
[35] Fourth Brauer Affidavit, [48] and Attachment RCB38 (page 609).
In any event, it has not been uncommon for courts to make orders dispensing with this requirement. It has been explained that this will be appropriate where the benefit obtained by adhering to the standard procedure of passing accounts is outweighed by the significant costs and time involved in undertaking that task: see, for example, Sprowles, in the matter of Triumph N Triumph Pty Ltd (in liq) (No 2) [2021] FCA 405 [13] (Yates J).
E. Orders
The orders I made at the hearing of the second and third applications are set out, respectively, in Attachment A and Attachment B to these reasons.
ATTACHMENT A
ORDERS MADE ON 24 MAY 2023 AT THE HEARING OF
THE SECOND APPLICATION
ATTACHMENT B
ORDERS MADE ON 22 JUNE 2023 AT THE HEARING OF
THE THIRD APPLICATION
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IHN
Associate to the Honourable Justice Lundberg
6 JULY 2023
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