Federal Court of Australia

Niardone v Clubb (No 2) [2021] FCA 54

ORDERS

THE COURT ORDERS THAT:

1.    The first respondents be granted leave to file in Court an interlocutory process dated 29 January 2021 and the affidavit of Duncan Edward Clubb sworn on 29 January 2021, subject to the undertaking of the solicitors for the first respondents to pay the applicable filing fees.

2.    The interlocutory process be returnable instanter.

3.    Pursuant to s 447A of the Corporations Act 2001 (Cth) (Act), Part 5.3A of that Act operate in relation to the third respondent, The Agency Group Australia Ltd (administrators appointed), such that the remuneration of the first respondents, Andrew Thomas Sallway and Duncan Edward Clubb, as external administrators of the third respondent for the period 18 January 2021 up to and including 1 February 2021, be fixed in the amount of $14,323 (plus GST, if applicable) and paid from the assets of the third respondent.

4.    Costs of this interlocutory process be costs in the first respondents' external administration of the third respondent, such costs to be paid from the assets of the third respondent.

THE COURT NOTES THAT the third respondent reserves its position as to any application to seek to recover from any other person the costs of the administrators the subject of these orders.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLVIN J:

1    On 18 January 2021, administrators were appointed to The Agency Group Australia Ltd (The Agency) by MCL 105 Pty Ltd (MCL) on the basis of a claim by MCL that it was entitled to enforce a security interest against The Agency. The directors of The Agency brought an urgent application to restrain the further conduct of the administration. On 20 January 2021, I made orders to the effect that the administration would come to an end on 1 February 2021 subject to any application by a creditor of The Agency or other interested party to vary or discharge those orders (Orders). I also made orders confining the steps to be taken by the administrators in the meantime.

2    In the expectation that the administration would come to an end pursuant to the Orders, the administrators applied for an order fixing their remuneration. The further orders were sought on the basis that they would not prejudice any future application by The Agency to seek to recover those costs from MCL. The making of the further orders was not opposed by the directors. The application for the orders was not served on MCL on the basis that the application concerned only the administrators and The Agency because it sought orders for remuneration to be paid to the administrators by The Agency.

3    The orders fixing remuneration were sought pursuant to s 447A of the Corporations Act 2001 (Cth). I dealt with the nature of that power in providing my reasons for making the orders to the effect that the administration would come to an end on 1 February 2021: Niardone v Clubb [2021] FCA 14 at [23]-[30]. It provides for orders about how Part 5.3A (which deals with administration of companies with a view to executing a deed of arrangement) will operate in relation to a particular company. I made the orders sought on the papers. These are my reasons for making those orders.

4    In Commonwealth Bank of Australia v Fernandez [2010] FCA 1487 at [95], Finkelstein J made orders pursuant to s 447A to vary the operation of what was then s 449E so that the administrators’ remuneration, unless otherwise ordered, will be set by the court. However, remuneration of administrators is now dealt with in Division 60 of Schedule 2 of the Act being the Insolvency Practice Schedule (Corporations). Therefore, the determination of the appropriate level of remuneration of the administrators would not take place by operation of Part 5.3A.

5    The Orders expressly provided for the continuation of the operation of Division 60 of Schedule 2 to the administration of The Agency. However, by s 447A(3), an order made under s 447A(1) may be made subject to conditions. In my view, in a particular case where the power under s 447A(1) is to be, or has been, exercised, s 447A(3) empowers the Court to impose conditions relating to the mode of assessment of remuneration of the administrators if appropriate to do so consistently with the evident purpose of Part 5.3A. The fact that the assessment of reasonableness of remuneration would not otherwise be undertaken under Part 5.3A did not mean that a condition to the effect sought could not be included in the orders made pursuant to s 447A(3).

6    I was satisfied that conditions to the effect that the remuneration of the administrators be fixed in the amount of $14,323 (plus GST, if applicable) were appropriate in respect of period of administration of The Agency in circumstances where the Orders had been made for the reasons given in my earlier decision.

7    In particular, on the evidence, the nature of the work undertaken by the administrators had been described and itemised by reference to time recording records, the work done was verified, Mr Clubb (one of the administrators) had reviewed the remuneration and concluded that it was reasonable, the fees included an estimate for finalising the administration pursuant to the Orders and an undertaking not to recover fees in excess of the estimate, the costs of undertaking a more formal assessment would be out of proportion to the amounts involved, the directors of The Agency did not oppose the orders and the making of the orders was consistent with the object of Part 5.3A.

Associate:

Dated:    2 February 2021