Reeves & Hillman
[2023] FedCFamC1F 480
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Reeves & Hillman [2023] FedCFamC1F 480
File number(s): BRC 1750 of 2016 Judgment of: BAUMANN J Date of judgment: 16 June 2023 Catchwords: FAMILY LAW – COSTS – Application for costs by liquidator – Where the liquidator seeks the payment of liquidator’s remuneration – Application granted Legislation: Family Law Act 1975 (Cth) Cases cited: Hillman & Hillman [2020] FamCA 630
Hillman & Hillman (No 2) [2020] FamCA 893
Sandersonas Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38
Division: Division 1 First Instance Number of paragraphs: 32 Date of last submission/s: 6 March 2022 Date of hearing: 10 February 2022 Place: Brisbane Counsel for the Applicant: Mr C Coulsen Solicitor for the Applicant: QBM Lawyers Solicitor for the Respondent: Litigant in person ORDERS
BRC 1750 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR REEVES
Applicant
AND: MR HILLMAN
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
16 JUNE 2023
THE COURT ORDERS:
1.That the remuneration of Mr Reeves and Mr AS as liquidators of HH Pty Ltd for the period from 17 November 2016 to 1 February 2021 be fixed in the amount of $67,056.73 (inclusive of GST).
2.That pursuant to the Orders made 17 November 2016, that the remuneration of the liquidators, together with the outlays incurred or payable by the liquidators, be paid by the husband, Mr Hillman.
3.That if the liquidator seeks to pursue the application for costs of and incidental to the Application filed 12 May 2021, the following process shall be adopted:
(a)The liquidator shall file and serve any written submissions as to costs within thirty (30) days of this Order, which includes a quantification of the costs sought;
(b)The husband shall file and serve any written submissions in response within sixty (60) days of this Order; and
(c)Unless otherwise ordered, the question and quantum of costs shall be determined on the papers in chambers.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Reeves & Hillman has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
INTRODUCTION
In the midst of strenuously contested property proceedings between Ms Hillman (who for these Reasons I shall describe as “the wife”) and Mr Hillman (who for these Reasons I shall describe as “the husband”), an Order was made by Austin J on 17 November 2016 (amended 22 September 2017) that:
1.In accordance with the orders in the document signed by parties and/or their legal representatives, marked as Exhibit A and placed with the court file:
1.1[HH Pty Ltd] (“the Company) be wound up pursuant to sections 233(1)(a) of the Corporations Act 2001 (“the Corporations Act”).
1.2Pursuant to section 472 of the Corporations Act, [Mr Reeves] and [Mr AS] of [AT Accountants, Suburb AU] in the State of Queensland, Official Liquidators, be appointed jointly and severally as liquidators of the Company (“the Liquidators”).
1.3The Liquidators are directed to undertake an investigation into, and take an account of, monies received by the husband, or related entities of the husband from the Company, and to prepare a report to the Court in relation to their findings in that regard prior to any distribution being made.
1.4The Liquidators shall bring to the accounts of the Company money taken from it by the husband (and/or his related entities) so as to rectify the books and records of the Company having regard to these orders and the Affidavit of [Ms Hillman], filed 12 September 2016.
1.5Pursuant to section 121 of the Family Law Act, the parties have liberty to provide to the Liquidators material related to, or filed in these proceedings.
1.6The Liquidators have leave to apply to the Court for directions pursuant to section 479(3) of the Corporations Act.
1.7The costs of the Liquidators are to be paid in the first instance by the Company. In the event that the Company does not have sufficient funds to pay the Liquidators’ costs then the Husband is to pay such fees.
1.8The Application in a Case, filed 14 November 2016 be dismissed.
1.8AThe Application in a Case, filed 12 September 2016 is dismissed.
1.8BThe Response to an Application in a Case, filed 11 November 2016 is dismissed.
1.9The Applications for Contempt, filed 4 November 2016 to [Mr C] and [Ms Hillman] be dismissed.
1.10The Subpoena to [E Company], dated 1 August 2016 be set aside.
1.11The Husband is to pay the Wife’s costs of and incidental to this Application, the Application in a Case, filed 14 November 2016 and the Application for Contempt, filed 4 November 2016, fixed in the sum of $15,000 and to be paid from the Husband’s share of any proceeds received by way of property settlement following agreement between the parties, or order of the Court.
2.The solicitor for the applicant wife shall file a typed script of Exhibit A within 24 hours hereof.
(“the said liquidation Order”)
A trial of the contested property proceedings between the wife and the husband took place in March 2019 and Reasons for Judgment delivered 18 September 2020 identified reasons why further submissions as to the form of order were required (see Hillman & Hillman [2020] FamCA 630 at [134]–[142]).
After hearing further submissions, supplementary Reasons were delivered on 23 October 2020 (see Hillman & Hillman (No 2) [2020] FamCA 893) and final Orders for property alteration were pronounced on that day. The Orders were not the subject of appeal, although further enforcement applications between the husband and wife were filed and determined.
Ultimately the major asset, being a home at Suburb VV was sold; the wife received her benefits under the Orders made (essentially $160,000), with the husband retaining the nett balance of the proceeds of sale. These funds were all distributed in around May 2021.
THE CURRENT APPLICATION TO BE DETERMINED
Around the time of the settlement of the sale of the former matrimonial home, an Application in a Case was filed by one of the appointed liquidators, Mr Reeves seeking the following relief:
1.The remuneration of [Mr Reeves] and [Mr AS] as Liquidators of [HH Pty Ltd] for the period from 17 November 2016 to 1 February 2021 be assessed in the amount of $67,056.73 inclusive of GST pursuant to the Corporations Act 2001 (Cth) Schedule 2, Insolvency Practice Schedule (Corporations), Division 60‑10.
2.The remuneration of the Liquidators, together with the outlays incurred or payable by the Liquidators be paid by the Husband, [Mr Hillman], pursuant to Order 1.7 of the Orders made by Justice Austin on 17 November 2016 (amended 22 September 2017).
3.Such further or other Orders as the Court deems appropriate.
Although the wife was named as a party to the Application by Mr Reeves, the wife was excused from further participation in this Application by Order made on 19 July 2021. This was essentially as a result of Order 8 made on 23 October 2020 that:
8.That the husband pay the costs of the liquidator of [HH Pty Ltd] pursuant to Order 1.7 of the Orders made by Justice Austin on 17 November 2016 (amended 22 September 2017).
In pronouncing that Order, the Court dealt with a submission the husband made that he not be responsible for any fees of the liquidator, by saying at paragraph 4(c)(vi) of the supplementary Reasons that:
[A]s to Order 4(f), it will be a matter for the liquidators to seek to enforce payment of any fees against the husband pursuant to Order 1.7 of the Court made 17 November 2016. There is no evidence they have sought to do so.
For completeness, the liability which arose against the husband under the said order 1.7 (made by consent) only became an issue for the husband if “the Company does not have sufficient funds to pay the Liquidators’ costs”
At [46]–[52] of the Reasons for Judgment delivered in the substantive property proceedings, the Court considered, explained and made findings in relation to the liquidation of the company and the liquidators’ report. Mr Reeves did not participate in the property trial although he was aware of the ongoing proceedings. Simply the reason for his election not to be a participant was because the very modest assets of the company capable of collection did not provide sufficient funds to undertake the further investigations and actions into related entity transactions. For reasons not adequately explained by the wife, she had failed to notify the liquidator immediately of the order for liquidation.
However at [50], the Court recorded the following
50.It is reasonable to infer that, to some extent, it suited the parties to not have the liquidator “control” the sale of assets as more costs of liquidation would have been incurred. It seems that, before the liquidation order was made by Austin J in November 2016, and for some period thereafter the parties personally benefited from accessing company funds, at least to the extent identified by the liquidator, namely:
Husband - $112,959.09 + $65,031.01 = $177,990
Wife - $93,000.00 + $55,000.00 = $148,000
The result of these actions is that I am satisfied that the company “does not have sufficient funds to pay the liquidators’ costs”.
On 19 July 2021, the husband (who is an intelligent man but has at all times been unrepresented) made an oral application that the Application in a Case be struck out “for form”. That application was dismissed for the reasons apparent in the transcript.
The Court encouraged the husband to seek to obtain some independent legal advice from a practitioner with experience in insolvency matters so as to assist him to distil any available legal argument to challenge his liability for the costs of $67,056.73 claimed by Mr Reeves or the quantum of those costs.
To some extent the liquidator, through his Counsel Mr Coulsen, exhibited frustration with the Court giving the husband some further time to get advice which was understandable.
However, despite the husband being given that opportunity the husband continued to represent himself and make oral submissions which were often unintelligible, without legal basis, but almost always shaped by emotion.
Succinct written submissions were filed on behalf of Mr Reeves on 13 August 2021, and despite, as earlier indicated, the husband being given the opportunity to obtain legal advice and even attempt to negotiate a compromise, by 20 October 2021 it was apparent that the mater had to be listed for trial at least to attempt to achieve some finality in the matter. On that day the Court ordered that:
1.That within thirty (30) days, the Respondent provide to the Applicant’s legal representative in writing, a list in chronological order setting out objections taken to Exhibit K of the affidavit of [Mr Reeves] filed 12 May 2021 either because:
a.the task was not undertaken or it was not reasonable to undertake the task; or
b.the claim for time in respect to the task was unreasonable.
2.That within thirty (30) days, the Respondent file and serve written submissions setting out:
a.the basis for the challenge to the creditor’s resolution dated 27 March 2018 as to remuneration; and
b.authorities relied upon.
3.That these proceedings be adjourned for Case Management Hearing at 9.30am on 25 November 2021 in the Federal Circuit and Family Court of Australia Division 1 at Brisbane.
4.That these proceedings be set down for Final Hearing for not more than two (2) days commencing at 10.00am on 10 February 2022 in the Federal Circuit and Family Court of Australia Division 1 at Brisbane.
5.That the costs of today be reserved.
The Orders permitted he husband to raise objections to the particulars of charges made by Mr Reeves. Importantly, the husband did not file any written submissions setting out the basis for any challenge to the creditors’ resolution of 27 March 2018.
At the Case Management Hearing on 25 November 2021, there seemed no other option but to permit the matter to proceed to final hearing on 10 February 2022 as the Court understood the husband wished to have an opportunity to cross-examine Mr Reeves on his affidavit as to the work performed and charges made for that work.
On 10 February 2022, the husband appeared personally as did Mr Reeves and his lawyers on the record who had retained Mr Coulsen of Counsel.
The husband did briefly cross-examine Mr Reeves. Further oral submissions were made by Mr Coulsen, but in circumstances where it appeared to the Court that the husband was becoming somewhat overwhelmed by the proceedings – and the clear possibility that the Court was being invited, by Mr Reeves’ Application, to order the husband to pay a significant sum of money for the liquidators’ costs, the Court ordered the husband to file written submissions, which he did on 6 March 2022.
I have considered those submissions which, for completeness, I mark as Appendix One to these Reasons.
On 21 March 2022, the solicitors for Mr Reeves informed the Court that he did not intend to file further submissions in reply as no new issues have been raised by the husband.
SUBMISSIONS AND DISCUSSION
Despite the criticisms of the liquidator by the husband, including an assertion in cross-examination that Mr Reeves is “a liar” and has made up the work undertaken and charges assessed because he is “totally dishonest”, I accept the submission of the liquidator that there can be “no suggestion that the liquidator in any way failed to carry out his obligations under the November 2016 Order.”
It is of fundamental importance that on 27 March 2018, the creditors by resolution approved remuneration in the period from 17 November 2016 to 9 March 2018 in the amount of $49,759.86 (inclusive of GST), and further the creditors resolved that the liquidators’ remuneration from 9 March 2018 to finalisation of the liquidation be capped in the amount of $23,507 (inclusive of GST) – a total of $73,266.86. In fact the claimed remuneration is less than this figure, and was the reduced sum of $67,056.73.
In cross-examination, Mr Reeves confirmed that the husband was not at the creditors’ meeting, and although the wife did attend, and had filed a Proof of Debt, she abstained from voting on the resolution.
In my view, the belief that the husband appears to still hold, that in some way the wife has acted in an improper way to cause these resolutions to be carried/caused and enforceable, so as to cause further financial detriment to him, cannot be sustained.
The husband did not seek to review the resolution.
I was properly directed by Counsel for the liquidator to the decision of the New South Wales Court of Appeal, specially constituted by five Justices, in Sandersonas Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38 which considered s 473(b) of the Corporations Act 2001 (Cth) and found that in exercising its powers under s 473(3)(b)(ii) to fix a liquidator’s remuneration, the Court applies a test of reasonableness.
I accept the submission of Counsel for the liquidator that s 473(3) of the Corporations Act 2001 (Cth) is now found in Section 60-12 of the Insolvency Practice Schedule and I accept the evidence of Mr Reeves that time-base remuneration is an appropriate approach and the rates are consistent with industry standards.
Whilst it is true that the liquidators’ actions did not result in any return to creditors, and further that this was a relatively small insolvency, I am satisfied the work was reasonable and necessarily required to be performed to prepare the report, required by the Court Orders.
The liquidator was entitled to rely upon the Remuneration Approval Report, and the challenges raised in the husband’s submissions and in his brief cross-examination of Mr Reeves do not persuade me otherwise.
For these reasons, I make the orders set out at the commencement of these Reasons.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 16 June 2023
APPENDIX ONE
History and previous Submissions
1.I refer to both Court ordered submissions filed on the 05 August 2021 and 22 November 2022.
2.I hereby submit for the Court to take into consideration submissions referred to in paragraph 1.
3.No mediation was ordered by the Court. No disclosures were asked for nor submitted and in Breach of Family Court rules.
4.I now refer to annexure marked with the letter “E” dealing with the Report by the Liquidators dated the 09 March 2018.
5.The Report contains unsigned and unverified documents in these proceedings.
6.No evidence whatsoever exists to substantiate the amount claimed as per page 40, Part 2: Executive Summary of $ 73.266.86.
7.During Cross examination, Mr Reeves was asked in regard to Annexure marked with the letter “F”, page 054 to page 058.
8.On page 055 under the heading of “Liquidators current remuneration”, the report states that “the chairperson declared the resolution passed on the voices”.
9.On page 055 under the heading of “Liquidators future remuneration”, the report states that The chairperson declared the resolution passed on the voices”.
10.On page 055 under the heading of “Internal Disbursement”, the report states that the chairperson declared the resolution passed on the voices.
11.While under cross examination on 10 February 2022, Mr Reeves admitted that No actual Voices were heard or in fact existed. Mr Reeves was unable to explain the term, “on the voices” to the Court.
12.The only alleged creditor and shareholder attending the meeting was Ms Hillman, the former wife of the applicant in these proceedings. Ms Hillman abstained from all voting during the alleged Creditors meeting.
13.No votes whatsoever were in fact taken.
14.The resolution passed was in fact a fabrication by Mr Reeves for the purpose to establish a debt to be paid by the Mr Hillman to the Liquidator in these proceedings.
15.I submit to the Court to set aside Annexure “E” and “F” and declare the alleged Report by the Liquidators, dated the 09 March 2018 Null and Void.
16.Further I submit to the Court the following.
(a)Procedural unfairness, abuse of process and bias of the Court, openly assisting the Liquidator.
(b)The application brought by Mr Reeves was out of time.
(c)The application by Mr Reeves dated the 12 May 2021 was defective.
(d)The affidavit dated the 12 May 2021 was defective.
(e)The application dated the 12 May 2021 was unlawful, citing Family Law Rules 2004 – Rule 5.01 Restrictions in relation to applications.
17.I submit to the Court for the application filed by Mr Reeves on the 12 May 2021 be set aside.
18.I further submit to the Court that during this time of an endless litigation including over 2 years for the Court to deliver Final Orders in Property since Final Hearing in 2018, Mr Reeves failed to make appropriate application or otherwise approach the Court.
19.My mother recently passed away, while the child left in my care suffers mentally as a result of the Courts disastrous decision, leaving my children in a state of permanent psychological damage.
20.I submit to the Court to restrict Mr Reeves from making any further applications regarding this matter in the future.
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