Federal Court of Australia

Deppeler, in the matter of Moulamein Grain Co-Operative Limited (in liquidation) [2024] FCA 65

ORDERS

THE COURT ORDERS THAT:

1.    The first and second plaintiffs are justified and acting reasonably in paying to the NSW Trustee and Guardian any “Unclaimed Distribution Funds” (as defined in an affidavit of Nathan Deppeler sworn on 21 December 2023 (Deppeler Affidavit)) still held by the first and second plaintiffs 45 days after the date of the first and second plaintiffs making a final distribution to the “Owners” (as defined in the Deppeler Affidavit), in accordance with s 47 of the Trustee Act 1925 (NSW) and without further order of the court.

2.    Pursuant to r 14.24 of the Federal Court Rules 2011 (Cth), the remuneration of the first and second plaintiffs’ acting in their capacity as receivers of the Consignment Grain (as defined in the order of the court made in this proceeding on 13 September 2022) in the period from 27 March 2023 up to and including the finalisation of the receivership, be fixed in the sum of $226,952.75 (excluding GST).

3.    Pursuant to r 1.34 of the Federal Court Rules 2011 (Cth), the formal requirements of r 14.25 of the Federal Court Rules 2011 (Cth) be dispensed with and the accounts of the first and second plaintiffs acting in their capacity as receivers be passed.

4.    Upon making payment to the NSW Trustee and Guardian pursuant to paragraph 1, the first and second plaintiffs be discharged as receivers of the Consignment Grain.

5.    The costs of the application filed by the plaintiffs on 21 December 2023 be costs in the receivership.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J

Introduction

1    On 13 September 2022, the first and second plaintiffs (Receivers) were appointed by the court as joint and several receivers of grain (Consignment Grain) then held by the third plaintiff, the New South Wales based Moulamein Grain Co-Operative Limited (Moulamein). See Re Moulamein Grain Co-Operative Limited (in liq) (No 2) [2023] FCA 658. Having substantially completed the receivership of the Consignment Grain, the Receivers now make an application by way of interlocutory process filed on 21 December 2023 seeking orders discharging them from their role as receivers, along with ancillary relief relating to unclaimed funds generated in the receivership and approval of the Receivers’ final claim for remuneration.

Evidence regarding receivership

2    The Receivers relied on two affidavits of the first plaintiff, Nathan Deppeler, sworn on 21 December 2023 and on 24 January 2024, in which he deposed to further steps undertaken and developments regarding the receivership since swearing his previous affidavit in this proceeding on 18 May 2023.

Receivers’ submissions

3    In this matter, I was greatly assisted by the helpful written submissions of Mr DF McAloon, counsel for the plaintiffs. Having reviewed the evidence and those submissions, I formed the view that it was appropriate to determine the application on the papers.

4    I will now turn to consider those submissions and the evidence in support of each of the orders sought.

Treatment of Unclaimed Distribution Funds

5    Mr Deppeler deposed that, having realised the Consignment Grain and obtained directions regarding the manner in which the net proceeds were to be applied, on 19 September 2023, the Receivers commenced the process of making an interim distribution to those parties identified as having delivered Consignment Grain to Moulamein (Owners). A total of $432,848.98 was distributed, equivalent to approximately 50% of the Owners’ entitlements. Mr Deppeler said that following determination of this application, the Receivers intend to make a final distribution to those Owners in accordance with their assessed entitlements.

6    However, twelve of the Owners have not provided payment details to the Receivers. Mr Deppeler expects that the total amount payable to these “non-responsive” Owners will be $4,003.93 (Unclaimed Distribution Funds). He deposed that $2,784.02 relates to three of the non-responsive owners and the balance of $1,129.91 relates to the remaining nine. The expected distributions to the non-responsive Owners range between $1.62 and $1,310.47.

7    He said that he was concerned, if the Receivers were required to hold the Unclaimed Distribution Funds for any period of time up to or longer than 45 days following completion of the final distribution process, that this would delay the conclusion of the receivership and may result in the incurring of disproportionate costs in excess of the Unclaimed Distribution Funds.

8    Sub-section 47(1) of the Trustee Act 1925 (NSW) provides that where any money is held on trust for a person who cannot be found, the trustee may pay the money to the NSW Trustee, and on such payment, furnish the NSW Trustee with a copy of the trust instrument (or where there is no such instrument, with a statutory declaration setting forth the trusts on which the money is held), and furnish the NSW Trustee with such information as to the identity of the person for whom the money is held in trust as the NSW Trustee might require. Section 5 of the Trustee Act 1925 (NSW) defines “NSW Trustee” as the NSW Trustee and Guardian constituted under the NSW Trustee and Guardian Act 2009 (NSW).

9    The Receivers submitted that to avoid the delay in the conclusion of the receivership and the incurring of disproportionate costs, the court should make an order that the Receivers are justified and acting reasonably in paying to the NSW Trustee and Guardian any Unclaimed Distribution Funds still held by the Receivers at the end of the period ending 45 days from the date of the Receivers making a final distribution to the Owners.

10    Counsel submitted that such an order is generally consistent with the relief granted by Ward CJ in Equity (as her Honour then was) in Re Direct Acceptance Corporation Ltd (Receiver Appointed) (in liq) [2019] NSWSC 395. In that case, a privately appointed receiver obtained a direction that he was justified in paying funds to the NSW Trustee and Guardian in accordance with s 47 of the Trustee Act 1925 (NSW) and without further order of the court. Her Honour made that direction because she accepted the submissions recorded at [54] and [56], as follows:

It is noted that funds become unclaimed money, within the meaning of the Unclaimed Money Act 1995 (NSW), only upon the effluxion of six years (s 7(1)(a)). It is submitted that for Mr Madden to be required to wait for that period to elapse would place an unnecessary cost on the receivership and delay further the winding up of the Company … Accordingly, it is submitted that it would be appropriate for Mr Madden to be directed that he would be justified in disposing of the funds at an earlier point in time (see Georges & McCluskey in their capacity as Liquidators of Radiata Plantations Ltd (In Liquidation) v Radiata Plantations Ltd (In Liquidation) [2009] NSWSC 994 (Radiata Plantations) at [14]).

…

… It is accepted that Mr Madden does not hold the funds in his own right; rather, that he holds the Company’s property on behalf of the secured creditors (at law, the Trustees and beneficially, the Noteholders) or, if the debts of the secured creditors have been paid in full, on behalf of the Company. In that sense, it is submitted (and I agree) that Mr Madden is properly classified as a trustee within the meaning of ss 47 and 95 of the Trustee Act 1925 (NSW) (which provisions permit a trustee to pay moneys to the NSW Trustee and Guardian (or a trustee company) or into Court, respectively).

11    In my view, it is appropriate to make a similar direction in this case for the same substantive reasons, and because the individual amounts of the Unclaimed Distribution Funds are, in the scheme of things, trivial.

Final Remuneration Claim

12    The Receivers sought approval of their remuneration for work done from 27 March 2023 up to and including also the finalisation of the receivership (Final Remuneration Claim).

13    As an officer of the court, a receiver is required to obtain court approval for the payment of remuneration to themselves. See Cape v Redarb Pty Ltd (Receiver and Manager Appointed) (1991) 32 FCR 407 at 417. Rule 14.24 of the Federal Court Rules 2011 (Cth) provides that a receiver may apply to the court to have the court fix the receiver’s remuneration. Exercise of that power is governed by the general principle that the court should only allow remuneration which is fair and reasonable. See, by way of example only, Australian Securities and Investments Commission v Linchpin Capital Group Ltd (No 3) (2020) 142 ACSR 193; [2020] FCA 44 at [7]. The relevant principles were summarised by Brereton J in Re Say Enterprises Pty Ltd [2018] NSWSC 396 at [6], namely:

(1)    A receiver is entitled to the costs, charges and expenses properly incurred in the discharge of the receiver’s ordinary duties, or in the performance of extraordinary services that have been sanctioned by the court.

(2)    The ultimate question is what amount of remuneration is “reasonable”, and this involves considering whether the work in respect of which remuneration is claimed was reasonably undertaken in the due course of the receivership, and whether the amount claimed for it is a fair and reasonable reward for it. The objective is to award a sum or devise a formula which will reasonably and fairly compensate the receiver for the time and trouble expended in the execution of his or her duties and the responsibility he or she has assumed.

(3)    The receiver bears the onus of justifying the reasonableness and prudence of the tasks undertaken for which remuneration is sought, and the reasonableness of the remuneration claimed for them.

(4)    Remuneration may be allowed on the basis of a fixed salary, a commission on receipts, or a quantum meruit having regard to the time, trouble and responsibility involved. It is a matter for the court to determine what basis is appropriate in the particular case, having regard to the principle that the remuneration must be reasonable.

(5)    If a time-based approach is adopted, the court is guided by professional scales of charges, with emphasis on the broad average or general rate charged by persons of the relevant status and qualifications who carry out the relevant type of work. The court will usually act on time sheets created in the receiver’s office, provided that they do significantly more than merely detail the total number of hours spent by the receiver and officers of particular grades on his or her staff.

(6)    By analogy, the task involves consideration of the matters referred to in s 425(8) of the Corporations Act 2001 (Cth) which applies to receivers appointed under an instrument, namely:

(a)    the extent to which the work performed by the receiver was reasonably necessary;

(b)    the extent to which the work likely to be performed by the receiver is likely to be reasonably necessary;

(c)    the period during which the work was, or is likely to be, performed by the receiver;

(d)    the quality of the work performed, or likely to be performed, by the receiver;

(e)    the complexity (or otherwise) of the work performed, or likely to be performed, by the receiver;

(f)    the extent (if any) to which the receiver was, or is likely to be, required to deal with extraordinary issues;

(g)    the extent (if any) to which the receiver was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case;

(h)    the value and nature of any property dealt with, or likely to be dealt with, by the receiver;

(i)    whether the receiver was, or is likely to be, required to deal with:

(i)    one or more other receivers; or

(ii)    one or more receivers and managers; or

(iii)    one or more liquidators; or

(iv)    one or more administrators; or

(v)    one or more administrators of deeds of company arrangement;

(j)    the number, attributes and behaviour, or the likely number, attributes and behaviour, of the company’s creditors;

(k)    if the remuneration is ascertained, in whole or in part, on a time basis;

(l)    the time properly taken, or likely to be properly taken, by the receiver in performing the work;

(m)    whether the total remuneration payable to the receiver is capped; and

(n)    any other relevant matters.

(7)    Many of those factors — in particular, pars (d)–(e) and (g)–(h) — have as their unifying theme the concept of proportionality (being the relationship of the work done and the remuneration claimed to the value of the estate), which is an important consideration in determining reasonableness.

(8)    In respect of disbursements, no court approval or specific order is necessary in the absence of a challenge, although receivers should scrutinise them to ensure that they are reasonable and properly payable, and the court has an inherent jurisdiction to review receivers’ disbursements as they are officers of the court.

14    Mr Deppeler’s evidence was that on 15 September 2023, the Receivers issued a circular to interested parties which, among other things, provided details of the Receiver’s proposed remuneration from 27 March 2023 to the finalisation of the receivership. That circular was annexed to Mr Deppeler’s December affidavit, and quantified the actual and estimated costs forming part of the Final Remuneration Claim at $219,452.75 (excluding GST). Annexures attached to the circular set out additional work completed by the Receivers and future work to be completed, as well as a detailed remuneration report. Mr Deppeler deposed that no objection or query has been raised by interested parties in response to the proposed final remuneration amount.

15    In this application, the Receivers sought approval of a Final Remuneration Claim of $226,952.72 (excluding GST). This amount, which exceeds the projected total in the circular of 15 September 2023 by $7,499.97, was the subject of a further remuneration report subsequently prepared by the Receivers on 17 October 2023 for the benefit of the court. The further remuneration report, which was annexed to Mr Deppeler’s December affidavit, provides commentary and analysis regarding the remuneration that has been incurred (including details of the average hourly rate), the outcomes achieved from the work undertaken, the features of the receivership that serve to explain its relative complexity and an analysis of the proportionality of the remuneration to the total value of gross realisations from the sales of the Consignment Grain. Annexure A to the further remuneration report provides a breakdown of all time entries by the Receivers and their staff in the period from 27 March 2023 to 13 September 2023, itemising all work undertaken, accompanied by details of the date, staff member, time spent and associated cost.

16    The variation in the quantum of the Final Remuneration Claim and the projected total in the 15 September 2023 circular is the product of an increase in the estimated remuneration for the post-14 September 2023 period, from $42,500 to $50,000.

17    Mr Deppeler deposed that, having reviewed the time entries of the Receivers and their staff giving rise to the Final Remuneration Claim, he is satisfied that the remuneration was incurred by staff of appropriate seniority while undertaking tasks that were appropriate and necessary for the Receivers to discharge their role.

18    Counsel for the plaintiffs submitted that the evidence adduced by the Receivers, along with the lack of opposition to the Final Remuneration Claim, enabled the court to be satisfied that the sum is fair and reasonable and, accordingly, can be approved. Consistently with the principles set out above, I agree.

Completion of receivership

19    The Receivers also sought the following orders to formalise the completion of the receivership:

(a)    Pursuant to r 1.34 of the Federal Court Rules 2011 (Cth), the formal requirements of r 14.25 of the Federal Court Rules 2011 (Cth) be dispensed with and the accounts of the Receivers acting as receivers be passed; and

(b)    Upon making the payment to the NSW Trustee and Guardian of the Unclaimed Distribution Funds, the Receivers be discharged as receivers of the Consignment Grain.

20    As Mr Deppeler deposed, once the Receivers pay (i) the balance of the Owners’ entitlements and (ii) the Unclaimed Distribution Funds to the NSW Trustee and Guardian, their role as receivers of the Consignment Grain will be complete.

21    In those circumstances, I agree that it is appropriate for the court to confirm, by making orders in the form proposed, that the receivership will cease from that time.

Costs of this application

22    The Receivers also sought an order that the costs of this application be costs in the receivership.

23    The 15 September 2023 circular advised interested parties of the estimated legal expenses to be incurred by the receivership that the Receivers’ solicitors and counsel would be required to complete further work up to the finalisation of the Receivership, including seeking the court’s approval of the Final Remuneration Claim and taking steps to finalise the receivership.

24    In those circumstances, I consider it is appropriate to make the order sought that the costs of this application be costs in the receivership.

Associate:

Dated:    8 February 2024