In the matter of Hellion Protection Pty Ltd (In Liquidation) [2014] NSWSC 1299

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Hellion Protection Pty Ltd (In Liquidation) [2014] NSWSC 1299 Hearing dates: Monday, 22 September 2014 Decision date: 22 September 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Application dismissed Catchwords: CORPORATIONS - winding up - liquidators - application for directions - liquidator's remuneration Legislation Cited: (CTH) Corporations Act 2001, s 504 Cases Cited: In the matter of AAA Financial Intelligence Ltd (in liquidation) ACN 093 616 445 (No 2) [2014] NSWSC 1270 Category: Interlocutory applications Parties: Roderick May Sutherland in his capacity as liquidator of Hellion Protection Pty Ltd (in liq) ACN 117 659 248 Representation: Ms G Polczynski (solicitor) Solicitors: Kells Lawyers (plaintiffs) File Number(s): 2014/189670

Judgment (ex tempore) 1HIS HONOUR: By originating process filed on 26 June 2014, Roderick McKay Sutherland in his capacity as liquidator of Hellion Protection Pty Ltd seeks an order pursuant to (CTH) Corporations Act 2001, s 504, reviewing the amount of remuneration fixed at a creditors' meeting on 24 December 2012 of $25,000, by increasing that amount by $22,399 to a total of $47,399 plus GST. 2The winding up is a creditor's voluntary winding up, the members of the company having resolved on 13 December 2012 that the company be wound up. At a creditors' meeting on 24 December 2012, such creditors as were present - which seems to have been one in person, holding proxies from another three creditors, all of whom were related to the company - approved the liquidator's proposal that his remuneration be fixed on a time-cost basis according to his firm's usual scale, but to a maximum amount of $25,000, above to which further approval would be required. 3The liquidator has exhibited to his affidavit his firm's time-cost records which, applying the firm's standard hourly rates to every minute of work done, produces a total amount equivalent to the amount for which approval is now sought. 4It is impossible to read the totals that appear in that record, because they appear to be highlighted in black or dark grey, but it might be observed that a large amount appears to have been spent on administration. It is noteworthy that on 28 February 2013, one of the partners of the firm spent six minutes signing a cheque and charged $55 for it, and another partner spent six minutes and incurred $55 on 14 January for signing a vehicle search request; another $55 on the same day for signing a trust account cheque; another $55 on the same day for signing an Alliance Workers' Compensation cancellation form, and another $55, seven days later, for signing an Office of State Revenue Freedom of Information cheque. 5In In the matter of AAA Financial Intelligence Ltd (in liquidation) ACN 093 616 445 (No 2) [2014] NSWSC 1270, I commented on the difficulties that arise from the routine application of a time/cost approach to liquidations - especially small liquidations - and that liquidators cannot be expected to be remunerated at the same hourly rate for small liquidations as for large liquidations. In that case I referred to authorities which supported a percentage - or commission - approach to a liquidator's remuneration and to cases which indicated ranges that might be appropriate, starting from the statutory $5,000 where no amount is otherwise approved; to the bankruptcy scale commencing from 10 percent of realisations in smaller bankruptcies; to cases which had commented, in the liquidation context, that 5 percent on realisations and 5 percent on distribution was a very high allowance. In AAA, because of the peculiar circumstances of the case, I allowed 20 percent of realisations. In this case it would seem that $30,000, or just over that, has been realised - if one excludes the GEERS claims, of which some $246,000 was realised. 6So far as the GEERS claims are concerned, the Department of Employment and Work Place Relations is principally responsible for the administration of those claims, although it obtains information from insolvency practitioners and uses insolvency practitioners to distribute payments to employees. But the moneys so received are not funds recovered or reduced by the liquidator; they are funds received on trust for the employees. 7Aside from GEERS funds, the principal recovery was $30,000 recovered from the Commissioner of Taxation as a preference claim. The liquidator says that he identified transactions entered into between the company and the ATO during the period 13 June 2012 to 13 December 2012 which constituted unfair preferences, issued a demand for $112,252, but settled the matter for $30,000 in full and final settlement. 8As at the date of his report to creditors in February 2014, the liquidator had available funds of $46,457, including the proceeds of the unpaid preference claim. After payment of his already approved remuneration of $25,000, GST on that, and his out-of-pocket expenses, it appears that he retains $10,204.25, which would be entirely eroded by the additional remuneration he now claims, even before providing for the costs of these proceedings. 9As it seems to me, taking a general view, the liquidator should be allowed 10 percent on the first $50,000 of realisations, which would be about $4,500, but given that the statute provides for a $5,000 starting point, I would start with $5,000. On top of that, while the GEERS receipts are not in truth receipts of the liquidation, it is fair to acknowledge that the liquidator has done work in connection with them, and I would allow the liquidator 5 percent on the GEERS receipts of approximately $250,000, which would be $12,500. 10Accordingly, were I approaching this matter afresh, I would be inclined to allow the liquidator not more than about $20,000 in remuneration. However, as the creditors approved his remuneration, and no creditor has sought to review it, I would not disturb what has already been approved. But that approval was subject to a cap, and in a liquidation of this scale, I see no occasion to increase the amount above that cap. 11Accordingly, I dismiss the application for review.