Williamson, in the matter of Morago Nominees Pty Ltd (in liquidation)
[2013] FCA 1240
•21 November 2013
FEDERAL COURT OF AUSTRALIA
Williamson, in the matter of Morago Nominees Pty Ltd (in liquidation) [2013] FCA 1240
Citation: Williamson, in the matter of Morago Nominees Pty Ltd (in liquidation) [2013] FCA 1240 Parties: CHRISTOPHER MICHAEL WILLIAMSON AND DAVID ASHLEY NORMAN HURT AS FORMER JOINT AND SEVERAL ADMINISTRATORS OF MORAGO NOMINEES PTY LTD (IN LIQUIDATION) ACN 008 810 964 File number: WAD 414 of 2013 Judge: MCKERRACHER J Date of judgment: 21 November 2013 Catchwords: CORPORATIONS – application to fix remuneration of former administrators on the papers – whether remuneration reasonable – where no notice of objection given by served creditors – application referred to Registrar of the Court for assessment Legislation: Corporations Act 2001 (Cth) ss 449E(1)(c), 449E(1C), 449E(4)
Federal Court of Australia Act 1976 (Cth) s 20ACases cited: Re Clynton Court Pty Ltd (2005) 53 ACSR 432
Re Timeshare Resort Club Ltd (in liq) (2010) 187 FCR 13Date of hearing: Determined on the papers Date of last submissions: No submissions filed Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 25 Counsel for the Plaintiff: Mr A Mason Solicitor for the Plaintiff: Roe Legal Services
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 414 of 2013
IN THE MATTER OF MORAGO NOMINEES PTY LTD (IN LIQUIDATION)
ACN 008 810 964
BETWEEN: CHRISTOPHER MICHAEL WILLIAMSON AND DAVID ASHLEY NORMAN HURT AS FORMER JOINT AND SEVERAL ADMINISTRATORS OF MORAGO NOMINEES PTY LTD (IN LIQUIDATION) ACN 008 810 964
Plaintiff
JUDGE:
MCKERRACHER J
DATE OF ORDER:
21 NOVEMBER 2013
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.Pursuant to s 449E(1)(c) of the Corporations Act 2001 (Cth), the plaintiff be entitled to remuneration for the period 24 June 2013 to 10 July 2013 in respect of the work performed as joint and several administrators during the administration of Morago Nominees Pty Ltd (in liquidation) ACN 008 810 964 in such amount as to be assessed by the Court.
2.The plaintiff's application for remuneration be referred to a Registrar of this Court for assessment in accordance with these reasons for decision and s 449E(4) of the Corporations Act 2001 (Cth).
3.The costs of and incidental to the assessment before the Registrar be costs in the administration of Morago Nominees Pty Ltd (in liquidation) ACN 008 810 964 to be determined by the Registrar.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 414 of 2013
IN THE MATTER OF MORAGO NOMINEES PTY LTD (IN LIQUIDATION)
ACN 008 810 964
BETWEEN: CHRISTOPHER MICHAEL WILLIAMSON AND DAVID ASHLEY NORMAN HURT AS FORMER JOINT AND SEVERAL ADMINISTRATORS OF MORAGO NOMINEES PTY LTD (IN LIQUIDATION) ACN 008 810 964
Plaintiff
JUDGE:
MCKERRACHER J
DATE:
21 NOVEMBER 2013
PLACE:
PERTH
REASONS FOR JUDGMENT
INTRODUCTION
By originating process filed on 5 November 2013, the plaintiff applies pursuant to s 449E(1)(c) of the Corporations Act 2001 (Cth) (CA) for the administrators’ remuneration to be fixed. It seeks the remuneration to be fixed under Pt 5.3A CA for the period 24 June 2013 to 10 July 2013 at $72,067 plus Goods and Services Tax (GST). It has asked that the application be heard on the papers.
BACKGROUND
Mr Christopher Williamson and Mr David Hurt were appointed joint and several voluntary administrators of Morago Nominees Pty Ltd (in liquidation) ACN 008 810 964 (the Company) on 24 June 2013 pursuant to s 436A CA.
A creditor’s winding up application filed on 29 April 2013 in this Court was adjourned to 26 June 2013.
The then administrators requested that the hearing be further adjourned to 24 July 2013 in order for the financial position of the Company to be determined.
The administrators ceased trading operations of the Company on 27 June 2013. As a result, they made a further application to this Court for the adjourned hearing to be brought forward and for the Company to be wound up.
The Court made orders on 10 July 2013 appointing Messrs Williamson and Hurt as joint and several official liquidators of the Company.
Having carried out necessary tasks until 10 July 2013 in relation to the administration of the Company, the administrators informed the Company’s creditors of their intention to have their remuneration fixed by the Court. They have declared that they have undertaken a proper assessment of the remuneration claim in accordance with the law and applicable professional standards.
They have declared that they are satisfied that the remuneration claimed in respect of necessary work was properly performed in the conduct of the administration.
Section 449E(1)(c) CA permits this course providing as follows:
(1)The administrator of a company under administration is entitled to receive such remuneration as is determined:
…
(c)if there is no such agreement or resolution [between the administrator and the committee or creditors or by the Company’s creditors] - by the Court.
And s 449E(1C) CA provides:
(1C) The Court may determine remuneration under paragraph (1)(c) even if:
(a)there has been no meeting of the committee of creditors; or
(b)there has been no meeting of the company’s creditors.
The application is supported by two affidavits of Mr Williamson, and affidavits of Ms Caitlin Vandeleur Mulcahy and Mr Pathidaran Yogaratnam.
Mr Williamson identifies the five largest creditors of the Company and confirms the identity of the sole shareholder of the company. Mr Williamson’s solicitors caused a copy of his affidavit and Form 16 documents to be sent by post on 18 September 2013 to four of the five largest creditors. As a result they were deemed to be served. The Deputy Commissioner of Taxation and the Director of the Company were both served on 25 September 2013 and 8 October 2013 respectively.
Nature of services performed
The work carried out as confirmed by affidavit is in the following areas:
Task area Amount
(excluding GST)($) Assets 7,180 Creditors 33,756 Employees 3,854 Trading 12,650 Investigations 231 Administration 13,905 Taxation 203 Legal 288 Total 72,067
The detailed remuneration report provided sets out a summary of the administrators’ time costs for the relevant period from which it is apparent that thirteen directors or employees have been involved in a total of 223.7 hours over that period to time broken up in various areas referred to above. Those hours are then broken in to detailed time costing components with specific comment allocated for specific amounts of time incurred by various personnel and their charge out rate.
There was presumably a reasonable degree of complexity involved because the itemised projected creditors’ claims exceed $20 million in value and comprise a significant number of creditors.
No objection
No objection has been raised to the remuneration which has been claimed. It must be said that the remuneration is considerable given that it applies to approximately a three week period. Nevertheless, it is all broken down in schedules and accounted for and is apparently within appropriate scales.
More importantly, the Form 16 served on four of the largest creditors on 24 September 2013, on the Deputy Commissioner on 25 September and on the Director of the Company on 8 October 2013 provided that notice should be given of any objection raised. That notice is in the following terms:
TAKE NOTICE that, not less than 21 days after this notice is served on you, we, Christopher Michael Williamson and David Ashley Norman Hurt both of WA Insolvency Solutions Pty Ltd level 10, 111 St Georges Terrace, Perth WA, the former administrators of the above company, intend to apply to the Court to determine our remuneration.
If you object to my application, you must, within 21 days after being served with this notice, serve on me a notice of objection stating the grounds of objection to the remuneration claimed.
CONSIDERATION
The Court’s discretion under s 449E(1) CA is far from unfettered. Indeed, s 449E(4) CA provides as follows:
(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.
(emphasis added)
In the present circumstances, there has been no specific agreement for the purposes of s 449E(1)(a) or (b) CA and the circumstances are, in that regard, similar to those considered by Barker J in Re Timeshare Resort Club Ltd (in liq) (2010) 187 FCR 13. I would adopt what his Honour said in that case (at [34]-[35]) in the following terms:
34 This means that the Court has a very broad function to consider such of those matters as may be relevant – the expression “take into account any or all of the following matters” (emphasis added) indicates that some of those matters may be particularly relevant to the case at hand while others may not be. What s 449E(4) emphasises, however, is that the Court must have regard to the primary rule – whether the remuneration is “reasonable”. The factors listed are designed to assist the Court in applying that rule. This seems to be confirmed by [4.90] of the Explanatory Memorandum to the Corporations Amendment (Insolvency) Bill 2007 (Cth) by which this subsection was introduced into the Act.
35 While I have observed above that the administration work claimed by Mr Huxtable, as set out in his affidavit made 23 December 2009, appears to be reasonable, it seems to me that a detailed assessment of the costs claimed in that regard still needs to be undertaken by a registrar of the Court. I will make an order to that effect. The registrar will necessarily regard the items of work claimed and assess their reasonableness by reference to such of these factors as is relevant.
It is clear that the Court may make an order pursuant to s 447A(1) CA authorising determination of the remuneration by a Registrar of the Court experienced in dealing with remuneration for insolvency practitioners: see Re Clynton Court Pty Ltd (2005) 53 ACSR 432.
On the papers
In addition to the power prescribed under the CA for fixing the remuneration, the Court is empowered to deal with civil matters without an oral hearing pursuant to s 20A of the Federal Court of Australia Act 1976 (Cth) (FCA). That provision is in the following terms:
20A Power of the Court to deal with civil matters without an oral hearing
(1)This section applies in relation to any civil matter coming before the Court in the original jurisdiction of the Court.
(2)The Court or a Judge may deal with the matter without an oral hearing (either with or without the consent of the parties) if satisfied that:
(a)the matter is frivolous or vexatious; or
(b)the issue or issues on which determination of the matter depends have been decided authoritatively in the case law; or
(c)determination of the matter would not be significantly aided by an oral hearing because:
(i)there is no real issue of fact relevant to determination of the matter; and
(ii)the legal arguments in relation to the matter can be dealt with adequately by written submissions.
(3)This section does not limit subsections 20(4) and (6).
I am satisfied that it is appropriate to deal with this matter without an oral hearing in circumstances where no creditor or director has raised an objection within the time limit prescribed under the Form 16 notice and on the basis that determination would not be significantly aided by an oral hearing as there is no real ‘issue’ of fact relevant to determination of the matter. That is because I will not be determining the precise fee total. Although I do not have the benefit of written submissions as contemplated by s 20A(2)(c)(ii) FCA, the relevant considerations have been raised in the affidavit material.
However, while there is detail as to the extent of and nature of the work performed there is very little detail provided as to the mandatory consideration that the Court be satisfied the work was reasonably necessary. It may very well have been (and there is no reason to support that it was not) but information in summary form in support of the relevant considerations under s 449E(4) should be supplied to a Registrar of the Court in a format to be determined by the Registrar.
There is no reason on the face of the materials to think that the fees were not otherwise properly incurred having regard to the considerations under s 449E(4) CA. Nevertheless, in the absence of materials going to the reasonableness factors, I propose to refer the finalisation of the remuneration to a Registrar.
CONCLUSION
The following orders are made:
1.Pursuant to s 449E(1)(c) of the Corporations Act 2001 (Cth), the plaintiff be entitled to remuneration for the period 24 June 2013 to 10 July 2013 in respect of the work performed as joint and several administrators during the administration of Morago Nominees Pty Ltd (in liquidation) ACN 008 810 964 in such amount as to be assessed by the Court.
2.The plaintiff’s application for remuneration be referred to a Registrar of this Court for assessment in accordance with these reasons for decision and s 449E(4) of the Corporations Act 2001 (Cth).
3.The costs of and incidental to the assessment before the Registrar be costs in the administration of Morago Nominees Pty Ltd (in liquidation) ACN 008 810 964 to be determined by the Registrar.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate:
Dated: 21 November 2013
0