Supreme Court New South Wales Medium Neutral Citation: In the matter of PrimeSpace Property Investment Limited (in liquidation) [2019] NSWSC 390 Hearing dates: In chambers Decision date: 09 April 2019 Jurisdiction: Equity - Corporations List Before: Black J Decision: Judicial advice given that the Liquidators are justified in paying their remuneration for the period 1 July 2018 to the completion of the liquidation from funds held by PPIL on trust. Judicial advice given that the Liquidators are justified in distributing funds held by PPIL in its personal capacity to reimburse it, as trustee for PSNT, for amounts that were paid by PPIL as trustee for PSNT, on behalf of PPIL as trustee for PAPF and PSPT3 to the extent that PPIL does not hold sufficient funds on trust for PAPF or PSPT3 to reimburse itself as trustee for PSNT. Catchwords: CORPORATIONS – external administration – application for direction that liquidators of company are justified in acting in accordance with remuneration approvals given by committee of inspection – where remuneration claimed amounts to a large proportion of amounts recovered due to complexity of liquidation – whether liquidators are justified in acting in accordance with remuneration approvals – where company is trustee of a trading trust and has no other activities – whether liquidators should be permitted to recover remuneration from trust assets. Legislation Cited: - Corporations Act 2001 (Cth) ss 479, 511 - Trustee Act 1925 (NSW) s 63 Cases Cited: - Re EMA Consulting Pty Ltd (in liq) [2018] NSWSC 1993 - Re PrimeSpace Property Investment Limited (in liq) [2018] NSWSC 2001 Category: Procedural and other rulings Parties: Shaun Robert Fraser (First Plaintiff) Anthony Gregory McGrath (Second Plaintiff) PrimeSpace Property Investment Limited (Third Plaintiff) IQIT Nominees Pty Ltd as trustee for the IQ Investment Trust (Defendant) Representation: Counsel: V Whittaker SC/J Anderson (Plaintiffs) Solicitors: Johnson Winter & Slattery (Plaintiffs) File Number(s): 2016/107316 Judgment 1. This application concerns the liquidation of PrimeSpace Property Investment Limited ("PPIL"), which is the trustee for the PrimeSpace Northbourne Trust ("PSNT") and the PrimeSpace Property Trust No 3 ("PSPT3") and responsible entity for the Prime Access Property Fund ("PAPF") and is the former trustee for the IQ Investment Trust ("IQIT"). The Defendant in the proceedings, IQIT Nominees Pty Ltd ("IQIT Nominees"), is the current trustee for IQIT, although it did not seek to be heard in this application. 2. By my judgment delivered on 24 December 2018 ([2018] NSWSC 2001) ("Earlier Judgment"), I determined certain matters raised by an Amended Interlocutory Process filed on 16 October 2018 by the Plaintiffs, Messrs Fraser and McGrath ("Liquidators") as joint and several liquidators of PPIL. Among other things, I made orders in respect of the Liquidators' remuneration for the period to 30 June 2018. A corresponding direction was sought, but not pressed at that hearing, in respect of payment of the Liquidators' remuneration from 1 July 2018 to the completion of the liquidation. By email dated 4 February 2019, the Liquidators requested that claim now be determined on the basis of further affidavit evidence and submissions. 3. The Liquidators relied on a further affidavit dated 18 February 2019 of one of the Liquidators, Mr Fraser. Mr Fraser refers to his earlier affidavit evidence as to his firm's practice with respect to time recording, billing and project management of the liquidation. He notes that, as set out in an earlier affidavit, the committee of inspection has previously approved the Liquidators' remuneration up to $253,047 for the period 1 July 2018 to the completion of the liquidation and resolved to support the Liquidators' application for approval to pay the specified amounts from the assets of PSNT, PAPF and PSPT3 respectively. Mr Fraser also refers to his earlier affidavit setting out the basis on which approval of remuneration was sought for the period from 1 July 2018 to completion of the liquidation. Mr Fraser also gives evidence of further work undertaken since 1 July 2018 for PPIL; for PPIL in its capacity as trustee of PSNT; PPIL in its capacity as trustee of PAPF; and for PPIL in its capacity as trustee of PSPT3. Mr Fraser also addresses the remaining work that will be required in respect of the liquidation of PPIL in its own capacity, and in the administration and winding up of the several trusts. Mr Fraser also notes that the future estimates of remuneration for each entity, as at 30 June 2018, remain accurate and the Liquidators do not anticipate needing to seek creditor or Court approval for any additional amounts. 4. First, the Liquidators seek a direction, under ss 479(3) and 511 of the Corporations Act 2001 (Cth) and s 63 of the Trustee Act 1925 (NSW) that they are justified in distributing the funds held by PPIL to pay their remuneration from 1 July 2018 to the completion of the liquidation, as to funds held by PPIL as trustee for PSNT up to $93,459; as to funds held by PPIL as responsible entity for PAPF up to $33,303; and as to funds held by PPIL as trustee for PSPT3 up to $40,311. Ms Whittaker and Mr Anderson, who appear for the Liquidators, point out that IQIT Nominees supports the Liquidators' application for reimbursement of their remaining and future remuneration, and creditors and unitholders for whom the Liquidators have contact details have been given notice of the application and none have objected to the application. Ms Whittaker and Mr Anderson refer to the principles applicable to the determination of a liquidator's remuneration, which I have now been addressed of in several judgments in respect of this matter, and which I need not repeat. The Liquidators note that they propose to cap their fees for each of the trusts to the completion of the winding up in the amounts now sought in the Further Amended Interlocutory Process dated 23 November 2018. 5. As I noted in the Earlier Judgment, I note that the Liquidators may properly seek a direction that they are entitled to rely on the approval of their remuneration by the committee of inspection, in seeking reimbursement of that remuneration from trust assets: Re EMA Consulting Pty Ltd (in liq) [2018] NSWSC 1993. I am satisfied that I should make this direction, having regard to that approval and to Mr Fraser's evidence as to the conduct of the liquidation; the manner in which remuneration and costs have been charged; and the work which has been undertaken in the liquidation, which, as I have noted in earlier judgments, was a particularly complex liquidation. The directions sought are also consistent with previous judgments in this matter so far as it allocates remuneration as between the several trusts. 6. The Liquidators also seek a direction under s 479(3) and 511 of the Corporations Act and s 63 of the Trustee Act that they are justified in distributing the funds held by PPIL in its personal capacity to pay those amounts, to the extent that PPIL does not hold sufficient funds on trust to do so, namely, up to $33,303 on behalf of PAPF. The Liquidators submit that, consistent with the resolution of the committee of inspection and the basis on which the Court approved their remuneration for the period up to 1 June 2018, PPIL should pay their remuneration for work performed winding up PAPF out of funds held on its personal capacity, so far as there are insufficient funds held in trust for PAPF. I reviewed the relevant issues in the Earlier Judgment and gave such a direction in respect of the Liquidators' remuneration for the period to 30 June 2018. I am satisfied that the corresponding direction should be made for the same reasons in respect of the Liquidators' remuneration for the period from 1 July 2018 to the completion of the liquidation. 7. The Liquidators also seek an order that they be released from undertakings recorded in order 9 of the Court's orders of 7 February 2017. They point out that those undertakings relate to remuneration that was paid pursuant to orders 4, 6 and 8 of the Court's orders of 7 February 2017, and that the relevant remuneration was allocated between PPIL and the trusts and paid pursuant to the Court's orders made on 5 February 2019, and those undertakings no longer have any work to do. I accept that those undertakings should now be released on that basis, and because all issues as to the Liquidators' remuneration have now been determined. 8. Ms Whittaker and Mr Anderson also addressed a question whether the costs of the Further Amended Interlocutory Process should be costs in the winding up of PPIL, payable by PPIL in its own capacity and in its capacity as trustee of the various trusts in proportion to the amount of remuneration payable by each entity. They point out that I reached that result in the Earlier Judgment in respect of the Liquidators' earlier remuneration application for the period to 30 June 2018. They submit that, on the basis that the relief now sought in this application is granted, a corresponding order should be made in respect of costs in this application. It seems to me that that order should be made on that basis. 9. Accordingly, I make the following orders: 1 Pursuant to sections 479(3) and 511 of the Corporations Act 2001 (Cth) ("Corporations Act") and section 63 of the Trustee Act 1925 (NSW) ("Trustee Act"), the First and Second Plaintiffs ("Liquidators") are justified in distributing the funds held by PPIL to pay the Liquidators' remuneration from 1 July 2018 to the completion of the liquidation calculated in accordance with the schedule of McGrathNicol's hourly rates exhibited to the Sixteenth Affidavit of Shaun Robert Fraser sworn 31 August 2018 in the following manner: (a) As to the funds held by PPIL as trustee for PSNT, up to $93,459; (b) As to the funds held by PPIL as responsible entity for PAPF, up to $33,303; and (c) As to the funds held by PPIL as trustee for PSPT3, up to $40,311. 2 Pursuant to sections 479(3) and 511 of the Corporations Act and section 63 of the Trustee Act, the Liquidators are justified in distributing the funds held by PPIL in its personal capacity to pay the amounts in order 1 above to the extent that PPIL does not hold sufficient funds on trust to pay those amounts, namely $33,303 on behalf of PAPF. 3 The Plaintiffs and the Defendant are released from the undertakings recorded in order 9 of the orders made on 7 February 2017. 4 The Plaintiffs' and Defendant's costs of and incidental to this application be costs in the winding up of PPIL: (a) to be paid from funds held on trust by PPIL as trustee for PSNT, PAPF and PSPT3 pro rata by reference to the amounts in order 1 made on 5 February 2019 and order 1 above; and (b) in the event that PPIL does not hold sufficient funds on trust, out of funds held in its personal capacity. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 April 2019