Liquidator’s remuneration approved, and power of sale confirmed

In yet another decision on remuneration, and the power of a liquidator to sell trust assets to recoup that remuneration, a Court has found that remuneration was properly claimed on a time basis, and that the liquidator’s exercise of the power of sale over trust assets were not unreasonable. No drama.

See In the matter of F Basile & Associates Pty Ltd (in liq) [2016] VSC 690.

The Court addressed all the section 473(10) factors in detail by reference to time sheet and remuneration reports from the liquidator

The Court followed the established process for assessing a liquidator’s claim for remuneration in Venetian Nominees v Conlan and as subsequently applied in decisions like ACN 004 323 184 Pty Ltd v Spark and Barbo Group v Investment and Construction Enterprise, that being:

  • the process is a summary one in which strict observance of the rules of evidence is not ordinarily required;
  • the onus is on the liquidator to establish that the remuneration claimed is fair and reasonable;
  • the function of the court is to make an independent determination, based on the material proffered, of whether the remuneration claimed is fair and reasonable;
  • if the liquidator establishes a prima facie case on the basis of the submitted material, the court should then consider the validity of any objections;
  • ordinarily, the liquidator will provide a statement of account reflecting in the appropriate itemised form, details of the work done, the identity of the persons who did the work, the time taken for doing the work, and the remuneration claimed accordingly;
  • the statement of account should be verified by affidavit;
  • more or less particularised statements may be appropriate in different cases and every case depends on its own circumstances; and
  • the overriding principle is that sufficient information be provided to the court to enable it to perform its function.

Power of sale as trustee

s to the power of sale, the Court rejected the director’s claim that the liquidator had acted improperly and in breach of trust in dealing with trust property, that claim being made on the basis of Stansfield DIY Wealth Limited (in liq), where Brereton J found that a liquidator does not have the power to sell trust property, notwithstanding the equitable charge, because such property is not the property of the company.

As the Court  pointed out, that is but one line of authority, the other being the decision in Re Suco Gold Pty Ltd (in liq), of the Full Court of South Australia, and Aspostolou as trustee of the Vasilou Family Trust v VA Corporation of Australia, and later cases.  “Given the state of the authorities is far from clear”, the Court considered that “the Liquidator acted reasonably in preparing the Properties for sale, insuring them and otherwise dealing with the Trust assets in the manner that he did”.


As to the details of the remuneration claim:

      • “some of that work will need to be discounted as a result of what appears to be an excessive amount of time spent by various persons updating timesheets. … a proper recording of time to begin with may have reduced this amount of work”.
      • “it is appropriate to allow the component of the remuneration claim associated with anticipated future work until the conclusion of the liquidation. The amount budgeted for this future work is a minor proportion of the total remuneration claim …”.
      • Based on the Judge’s “experience in insolvency law, including having regard to notices of consent to act provided by liquidators in winding up applications, the rates charged for work performed by the Liquidator and his staff appear to reflect current industry practice. … [and] the rates are fair and reasonable given the size and complexity of the liquidation in question”;
      • “the relevant work has been carried out by a staff member at an appropriate level within the Liquidator’s firm. It appears that more difficult tasks have been undertaken by people at the appropriate charge-out rates for their level of seniority and the less complex tasks have been delegated appropriately”.
      • The Judge queried the liquidator and a senior staff members both attending a court hearing, and 11.7 hours spent on preparing a chronology of events.

The Court assessed the total remuneration claim:

    • Remuneration claimed: $85,327.25 (exclusive of GST)
    • Less deductions: $9,527.60
    • Remuneration allowed: $75,799.65 (plus GST).

Legal costs

As to legal costs of $71,000, the court considered it necessary to assess these, relying upon AAA Financial Intelligence (No 2), as this would minimise costs and expense and “put to an end any potential objection” about the costs.

  • No separate costs agreement was required because the Liquidator was a “commercial or government client” in accordance with s 170 of the Legal Profession Uniform Law.
  • Having reviewed the lawyers’ timesheets the Court was “largely satisfied that the amounts charged are not unreasonable and represent work that was necessary given the history and features of this particular liquidation”.
  • There were some excessive attendances on the liquidator and his staff in a short space of time and too long spent on preparing submissions.
  • The Court allowed a global amount of $45,100, with no basis to reduce the fees charged by counsel, whose time was both efficient and productive.

Comments welcome.

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