Wrenkle and Wrenkle

[2010] FamCA 745

FAMILY COURT OF AUSTRALIA

WRENKLE & WRENKLE [2010] FamCA 745

FAMILY LAW – PROPERTY – Court appointed receiver and manager – Determination of remuneration – Approved as claimed  

Family Law Act 1975 (Cth) s79
Corporations Act 2001 (Cth) ss 420(2)(b) and (g)

APPLICANT: Ms Wrenkle

RESPONDENT: Mr Wrenkle

FILE NUMBER: BRC 418 of 2008

DATE DELIVERED: 10 August 2010

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: O’Reilly J

HEARING DATE: 9 August 2010

REPRESENTATION

SOLICITOR FOR MR L AS RECIEVER AND MANAGER

Mr Saunders

Shand Taylor Lawyers

NO OTHER APPEARANCES

Orders

IT IS ORDERED

1. Mr L receiver and manager of N Pty Ltd and N Trust appointed by orders of the Federal Magistrates Court on 9 September 2009 and 14 October 2009 is allowed remuneration as follows:

   The sum of $85,893.64 (inc GST) made up as:

   a.the amount of $45,780.04 (inc GST) in respect of remuneration for work carried out during the period 10 September 2009 to 25 February 2010; and

   b.the amount of $5,957.86 (inc GST) in respect of remuneration for work carried out during the period 8 March 2010 to 20 July 2010; and

   c.the amount of $21,602.42 (inc GST) in respect of outlays and expenses incurred during the period 10 September 2009 to 25 February 2010, made up as follows:-

   i.The amount of $4,482.02 (inc GST) in respect of Mr L’s outlays;

   ii.The amount of $17,128.40 (inc GST) in respect of legal fees.

   d.the amount of $11,101.32 (inc GST) in respect of outlays and expenses incurred during the period 26 March 2010 to 28 July 2010, in respect of legal fees.

   e.The amount of $1,452.00 (inc GST) in respect of outlays and expenses incurred during the period 29 July 2010 to 9 August 2010, in respect of legal fees.

IT IS NOTED that publication of this judgment under the pseudonym Wrenkle & Wrenkle is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER:  BRC 418 of 2008

MS WRENKLE

Applicant

And

MR WRENKLE

Respondent

REASONS FOR JUDGMENT

Application

1. This is an application by Mr L for determination of his remuneration as receiver and manager appointed by the Federal Magistrates Court and an order that it be fixed in the amount of $85,893.64.

Matters requiring consideration and determination

1. In considering the application I am required to consider and determine:

   a.   whether the amount claimed is reasonable having regard to the rates charged, time spent and activities undertaken in the course of the receivership having regard to the complexity or otherwise of the matter and the objectives for which the receiver was appointed; and

   b.   the objections filed.

Background

1. On 9 September 2009, Mr L was appointed by Jarrett FM receiver and manager of three companies: 

   ·T Pty Ltd

   ·N Pty Ltd

   ·Wrenkle Holdings Pty Ltd.

2. On 14 October 2009, Mr L was appointed by Jarrett FM (by "amendment" to the orders made on 9 September 2009) receiver and manager of two trusts:

   ·N Trust (of which N Pty Ltd is trustee)

   ·Wrenkle Holdings Trust (of which Wrenkle Holdings Pty Ltd is trustee).

3. The orders made on 9 September 2009 included that Mr L provide a report to the Federal Magistrates Court "in respect of the financial state of the businesses" within six weeks.

4. The orders made on 14 October 2009 included that Mr L be entitled to enter into possession and take control of the assets of the companies and trusts, that he be entitled to receive remuneration as may be approved by a Registrar of the Federal Magistrates Court and that he report to the husband and the wife regarding the progress of the "administration" as appropriate.

5. On 26 November 2009, the proceedings were transferred to this Court.

6. On 4 February 2010, Mr R and Mr V were appointed liquidators of the three companies.

7. On 22 February 2010, I dismissed an application by the wife filed 11 February 2010 for orders that the appointment of Mr R and Mr V as liquidators of the three companies be set aside and that instead Mr L and a Mr G be appointed as liquidators or alternatively provisional liquidators of the three companies.

8. On the same date, 22 February 2010, I ordered that an application by Mr L filed 17 February 2010 and an application by the husband by his response filed 22 February 2010 be listed for further hearing on 25 February 2010.  Mr L’s application had been for an order that the orders made on 9 September 2009 be further amended to include the power to sell the assets of the three companies and two trusts as he deemed appropriate in accordance with the provisions of the Corporations Act 2001 (Cth). The husband's application by his response had been that Mr L’s receivership be terminated and the appointments of Mr R and Mr V be "approved".

9. On 25 February 2010, after negotiations, I ordered by consent that Mr L’s appointment as receiver and manager be discharged, that Mr R and Mr V as liquidators were entitled to take possession and control of the assets of the three companies and the two trusts, that Mr L be entitled to such remuneration as may be agreed or determined by the Court and procedural orders relating to the serving of Mr L’s accounts, inspection of the documents on which the accounts were based upon the giving of reasonable notice to Mr L, the serving of objections if any and the filing by Mr L of his accounts and the objections if any for examination and determination by the Court.

The effect of transfer to this Court

1. As the proceedings were transferred to this Court it is appropriate, although Mr L’s appointment was made by the Federal Magistrates Court, that the determination of his remuneration be by this Court.  The power is not one which in this Court is delegated to Registrars.

Objections

1. Mr L received objections by:

   a.   the husband by letter from South Burnett Lawyers to Shand Taylor Lawyers dated 19 April 2010 (annexure MGL16 to Mr L’s affidavit filed 10 May 2010)

   b.   the liquidators by letter from them to Shand Taylor Lawyers dated 16 April 2010 (part of ex 2).

2. The wife, by her solicitors Kelly & Frecklington Pty Ltd, notified Mr L by letter dated 19 July 2010 that she did not object to Mr L’s claim (annexure MGL19 to Mr L’s affidavit filed 29 July 2010) and notified the Court by letter dated 19 July 2010 to similar effect (ex 3).

3. The husband's trustee in bankruptcy (the husband became a bankrupt on 15 March 2010) notified by email 12 July 2010 from Gretsas & Associates Lawyers to Shand Taylor Lawyers that the trustee in bankruptcy did not propose to challenge the receiver's claim for fees and would abide by the decision of the Court (annexure MGL 21 to Mr L’s affidavit filed 29 July 2010).

4. The husband, by his solicitors South Burnett Lawyers, whilst maintaining reliance on his objections, notified Shand Taylor Lawyers by letter dated 23 July 2010 that the husband would abide by any decision of the Court (annexure MGL20 to Mr L’s affidavit filed 29 July 2010) and notified the Court by letter dated 6 August 2010 to similar effect and that accordingly there would be no appearance for him (ex 1). 

5. It should be noted that as yet the husband's trustee in bankruptcy has not decided whether to join in the principal proceedings so that the husband has standing to object and to have his objections determined.

6. The liquidators, whilst maintaining reliance on their objections, notified Shand Taylor Lawyers by letter dated 26 May 2010 that they would not appear in order to save costs and notified the Court by letter dated 5 August 2010 to similar effect (both letters part of ex 2). 

Amount claimed

1. Initially, Mr L claimed $67,382.46 plus the costs of his application for the determination of his remuneration (written submissions filed 27 May 2010).  I am satisfied that notice has been given by Shand Taylor Lawyers of the amount now claimed $85,893.64 inclusive of the costs of his application for the determination of his remuneration and other amounts previously not included (affidavit Mr L filed 29 July 2010 and affidavit Mr Saunders filed by leave 9 August 2010) save in respect of item (e) in the claim which is for the final amount of work in preparation for the hearing yesterday and judgment today. 

Claim only in relation to N Pty Ltd and N Trust

1. Mr L has made clear that no claim for remuneration is made in relation to T Pty Ltd, Wrenkle Holdings Pty Ltd and Wrenkle Holdings Trust, as they have either no or negligible assets, and that the entire amount sought $85,893.64 relates only to N Pty Ltd and N Trust. 

Determination of the objections

1. In what follows in relation to the liquidators’ and the husband's objections, although the plural is used, in particular in relation to the companies, the objections should be read sensibly now as relating to N Pty Ltd and N Trust.

Liquidators' objections

1. The liquidators object to all fees incurred by Mr L after 4 February 2010, the date of their appointment, on the bases that:

   ·Mr L’s role was to investigate the affairs of the companies and provide a report to the Court, which was done as at 20 October 2009 before their appointment

   ·Mr L’s fees since 4 February 2010 relate predominantly to his seeking to have his powers "extended" to the power of sale

   ·They, as liquidators, after 4 February 2010 were in the position to realise the companies’ assets such that Mr L’s fees incurred since 4 February 2010 have not provided commercial benefit to the companies' creditors

   ·Shand Taylor's invoice 23 March 2010 for the period 8 February 2010 to 25 March 2010 was for fees incurred following their appointment and incurred to assist Mr L’s application filed 17 February 2010 which fees were not in the interests of creditors.

2. I accept, however, the submissions of Mr Saunders, solicitor, who appeared for Mr L, as set out in the written submissions filed 27 May 2010 and expanded upon orally by Mr Saunders yesterday.  In short, it is misconceived that Mr L’s appointment was "only" to provide a report to the Court.  On the contrary, specifically it was ordered that he enter into possession and take control of the assets of the companies and the trusts, and, despite the appointment of the liquidators on 4 February 2010, Mr L remained the Court appointed receiver and manager until his discharge on 25 February 2010.  Indeed, I accept the veracity and common sense approach of the content of a letter 12 February 2010 Shand Taylor Lawyers to the liquidators (annexure MGL5 to Mr L’s affidavit filed 17 February 2010), specifically the following:

   ·Prior to the orders made on 14 October 2009 it was agreed between the wife and the husband that the order not specifically include that Mr L have power of sale (the wife having wanted that and the husband having opposed it, such that there was agreement, by resolution of that dispute, that the order not include it)

   ·However, as the orders 9 September 2009 and 14 October 2009 were not limiting of power, Mr L, in any event, had the power of sale pursuant to sections 420(2)(b) and (g) of the Corporations Act 2001 (Cth)

   ·Mr L, properly, having regard to the agreement between the wife and the husband, was reluctant to exercise power of sale without specific Court order

   ·Mr L, as at 12 February 2010, had become aware of the appointment of Mr R and Mr V as liquidators

   ·However, Mr L is "now in the position" to realise assets of the companies and the trusts but first wishes to make application to the Court specifically to extend his powers to do so in view of the agreement between the wife and the husband referred to

   ·As at 12 February 2010 there was a significant degree of utility, efficiency and costs saving in Mr L being the person who conducts the sales (he in effect having progressed to that point), whereas the liquidators' appointment was recent (inferring that if they then took over the proposed sales there would be unnecessary incurrence of costs by no doubt duplication of some or all of the work done by Mr L to that time).

3. Importantly, the letter specifically said:

   In view of the recent appointment of the liquidators to the companies, we have been instructed to write to you before we file the application, to seek confirmation from the liquidators that they do not have any objection or opposition to the receiver selling the relevant assets and dealing with the net proceeds in the manner outlined above.

   We would appreciate your prompt response. (emphasis added)

4. Saliently, before Mr L filed his application on 17 February 2010, apart from formalities in correspondence, the liquidators did not communicate to Mr L that they had any objection to the very sensible course proposed by Mr L.

5. Mr L’s application filed 17 February 2010 resulted in the consent orders made on 25 February 2010, to which I have referred, which orders “behind the scene” were based not only upon Mr L’s agreement to let the liquidators have the benefit of all of his work to date, but also the liquidators agreeing to their fees being capped at $20,000 (excluding GST and outlays) to be paid as a priority upon the realisation of the companies' assets (exhibit 2, letter 26 May 2010 Mr R and Mr V to Shand Taylor Lawyers, final paragraph).

6. These evidentiary matters are sufficient to dispose of the liquidators' objections, save for the observation that whether or not any step taken by a receiver necessarily is in the interests of creditors is not an applicable test for the performance of a receiver's duty to the Court as an officer of the Court.  Moreover, as I find, all of the steps taken by Mr L in fact were in the interests of creditors for the reasons explained in the letter 12 February 2010, which I accept, and as expanded upon in the written submissions, which I also accept. 

7. In short, even though Mr L’s proposal that he, rather than the liquidators, exercise the power of sale for the benefit to the creditors of “a significant degree of utility, efficiency and costs saving” ultimately was not accepted by the liquidators, the steps taken by Mr L were within power, and proper, and as at 17 February 2010 the liquidators had not criticised Mr L’s sensible proposal although ultimately it was agreed that they, not he, actually would exercise the power of sale with possession and control of the assets transferred to them by him for that purpose by the consent orders 25 February 2010.

The husband's objections

1. The husband's objections may be dealt with even more shortly.  I summarise them as follows:

   ·A complaint that Mr L’s accounts needed reference to the underlying documents for them to be fully understood

   ·Numerous items may not have been "authorised" by Jarrett FM's orders, in particular relating to Mr L’s proposed realisation of assets

   ·All items of charge beyond 20 October 2009, when Mr L completed his report to the Federal Magistrates Court, were not “authorised” by Jarrett FM

   ·Work was undertaken by Mr L "in anticipation of" his eventually being appointed liquidator, which did not occur

   ·Some of the work undertaken by Mr L, even before his report to the Federal Magistrates Court 20 October 2009, may not have been "authorised" by Jarrett FM

   ·An “informed decision” cannot be made because "sufficient information" has not been provided.

2. I reject the grounds based upon lack of information or non inspection of documents underlying the accounts, as opportunity was afforded the husband to examine the accounts and documents, and neither he nor his lawyers availed of that opportunity.  The contention that some of Mr L’s work was not authorised by the Court orders is misconceived, and I reject it for the same reasons as set out already in relation to the liquidators' objections.  Similarly, I reject that Mr L’s only role was to provide a report to the Court. 

3. The contention that Mr L undertook work in anticipation of being appointed liquidator is baseless.  The work properly was undertaken in the course of the receivership for the purpose of attaining the objectives for which the receiver was appointed (section 420(1) and (2)), even if there had been no subsequent liquidation, and further, that work now has benefited the liquidators in their role.  Mr L recommended the appointment of liquidators.  It may well have been that he anticipated becoming the liquidator or one of the liquidators,  however, that does not retrospectively have effect that his work as receiver was beyond the attaining of the objectives for which he was appointed.

Conclusion on objections

1. I determine, for the reasons given, all objections against the objectors.

Assessment

1. Initially I asked Mr Saunders for evidence for example from another professional person accustomed to acting as a receiver or registered liquidator or a chartered accountant or insolvency lawyer who could depose that the rates charged by Mr L for himself and his personnel set out in his affidavit filed 10 May 2010 (book of annexures page 2) are reasonable.  However, Mr Saunders persuaded me that the circumstance that neither the liquidators nor the husband's trustee in bankruptcy, who is a representative of ITSA, has made objection to the rates has effect that I should infer that they are reasonable and within the range of usual charges and I do so. 

2. As to the hours charged no objection was taken as to time spent for the achievement of specific tasks on the grounds that the time seemed excessive and similarly I would infer that the time spent is reasonable.

3. Further, in relation to these two aspects of the matter, Mr L acted as an officer of the Court and, absent any suggestion by others entitled to object that his rates or hours were not reasonable, I am able to infer that he has not abused his office and that they are reasonable.

4. As to the activities undertaken, having dealt with the objections, I am satisfied that all activities undertaken by Mr L were reasonable. 

5. Having regard to those factors and the complexity of the matter as demonstrated by Mr L’s initial report to the Federal Magistrates Court and the work undertaken for it and since, and the purpose of attaining the objectives for which Mr L was appointed, which undoubtedly included to hold and protect assets and if necessary realise them for the purpose of the section 79 proceedings between the husband and the wife, I am satisfied that his remuneration claimed in all respects is reasonable. 

Conclusion

1. I approve that Mr L in his capacity as receiver and manager of N Pty Ltd and N Trust appointed by orders of the Federal Magistrates Court on 9 September 2009 and 14 October 2009 be remunerated in accordance with his claim which will be reflected in the order I will make.

2. I have mentioned that there is an agreement between Mr L and the liquidators that the liquidator's fees will be capped at $20,000 (excluding GST and outlays) but will have priority of payment upon the realisation of assets.  There is no need for me to make any order about that it being the subject of existing agreement.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O'Reilly

Associate:     

Date:              24 August 2010