FEDERAL COURT OF AUSTRALIA

Hassan v Image Nominees Pty Ltd (In liquidation) [2024] FCA 487

ORDERS

THE COURT ORDERS THAT:

Image Nominees Pty Ltd (ACN 105 991 633)

1.    Pursuant to section 60-10(1)(c) of the Insolvency Practice Schedule (Corporations) (IPS) being Schedule 2 of the Corporations Act 2001 (Cth) (the Act), the remuneration that the applicants are entitled to receive for necessary work properly performed by them in the conduct of the provisional liquidation of Image Nominees Pty Ltd (ACN 105 991 633) (Image Nominees) for the period 1 November 2023 to 15 December 2023 be fixed in the sum of $288,134.50 (plus GST).

2.    Pursuant to section 90-15 of the IPS, the applicants are entitled to draw from the funds held in the bank account bearing BSB 183-XXX account number XXX XXX 269 in the name of Image Nominees:

(a)    the applicants' remuneration fixed in accordance with Order 1; and

(b)    the applicants' internal disbursements for the period 1 November 2023 to 15 December 2023 fixed in the sum of $3,000.00.

Smart Companies Group Pty Ltd (ACN 651 509 410)

3.    Pursuant to section 60-10(1)(c) of the IPS, the remuneration that the applicants are entitled to receive for necessary work properly performed by them in the conduct of the liquidation of Smart Companies Group Pty Ltd (ACN 651 509 410) for the period 1 November 2023 to 15 December 2023 be fixed in the sum of $3,152.50 (plus GST).

4.    Pursuant to section 90-15 of the IPS, the applicants are entitled to draw from the funds held in the bank account bearing BSB 183-XXX account number XXX XXX 269 in the name of Image Nominees:

(a)    the applicants' remuneration fixed in accordance with Order 3; and

(b)    the applicants' internal disbursements for the period 1 November 2023 to 15 December 2023 fixed in the sum of $300.00.

5.    Otherwise, the applicants' remuneration and internal disbursements be paid from the assets of Smart Companies Group Pty Ltd.

Concept Icon Pty Ltd (ACN 632 515 023)

6.    Pursuant to section 60-10(1)(c) of the IPS, the remuneration that the applicants are entitled to receive for necessary work properly performed by them in the conduct of the liquidation of Concept Icon Pty Ltd (ACN 632 515 023) for the period 1 November 2023 to 15 December 2023 be fixed in the sum of $3,531.50 (plus GST).

7.    Pursuant to section 90-15 of the IPS, the applicants are entitled to draw from the funds held in the bank account bearing BSB 183-XXX account number XXX XXX 269 in the name of Image Nominees:

(a)    the applicants' remuneration fixed in accordance with Order 6; and

(b)    the applicants' internal disbursements for the period 1 November 2023 to 15 December 2023 fixed in the sum of $300.00.

8.    Otherwise, the applicants' remuneration and internal disbursements be paid from the assets of Concept Icon Pty Ltd.

Physique Pty Ltd (ACN 632 514 955)

9.    Pursuant to section 60-10(1)(c) of the IPS, the remuneration that the applicants are entitled to receive for necessary work properly performed by them in the conduct of the liquidation of Physique Pty Ltd (ACN 632 514 955) for the period 1 November 2023 to 15 December 2023 be fixed in the sum of $3,205.00 (plus GST).

10.    Pursuant to section 90-15 of the IPS, the applicants are entitled to draw from the funds held in the bank account bearing BSB 183-XXX account number XXX XXX 269 in the name of Image Nominees:

(a)    the applicants' remuneration fixed in accordance with Order 9; and

(b)    the applicants' internal disbursements for the period 1 November 2023 to 15 December 2023 fixed in the sum of $300.00.

11.    Otherwise, the applicants' remuneration and internal disbursements be paid from the assets of Physique Pty Ltd.

AH International Pty Ltd (ACN 642 222 820)

12.    Pursuant to section 60-10(1)(c) of the IPS, the remuneration that the applicants are entitled to receive for necessary work properly performed by them in the conduct of the liquidation of AH International Pty Ltd (ACN 642 222 820) for the period 1 November 2023 to 15 December 2023 be fixed in the sum of $4,791.00 (plus GST).

13.    Pursuant to section 90-15 of the IPS, the applicants are entitled to draw from the funds held in the bank account bearing BSB 183-XXX account number XXX XXX 269 in the name of Image Nominees:

(a)    the applicants' remuneration fixed in accordance with Order 12; and

(b)    the applicants' internal disbursements for the period 1 November 2023 to 15 December 2023 fixed in the sum of $300.00.

14.    Otherwise, the applicants' remuneration and internal disbursements be paid from the assets of AH International Pty Ltd.

Domican Hassan Pty Ltd (ACN 633 772 460)

15.    Pursuant to section 60-10(1)(c) of the IPS, the remuneration that the applicants are entitled to receive for necessary work properly performed by them in the conduct of the liquidation of Domican Hassan Pty Ltd (ACN 633 772 460) for the period 1 November 2023 to 15 December 2023 be fixed in the sum of $3,285.50 (plus GST).

16.    Pursuant to section 90-15 of the IPS, the applicants are entitled to draw from the funds held in the bank account bearing BSB 183-XXX account number XXX XXX 269 in the name of Image Nominees:

(a)    the applicants' remuneration fixed in accordance with Order 15; and

(b)    the applicants' internal disbursements for the period 1 November 2023 to 15 December 2023 fixed in the sum of $300.00.

17.    Otherwise, the applicants' remuneration and internal disbursements be paid from the assets of Domican Hassan Pty Ltd.

Costs

18.    The applicants' costs of and incidental to this application are to be costs in the liquidations of Image Nominees Pty Ltd, Smart Companies Group Pty Ltd, Concept Icon Pty Ltd, Physique Pty Ltd, AH International Pty Ltd and Domican Hassan Pty Ltd.

19.    Pursuant to section 90-15 of the IPS, the applicants are entitled to draw from the funds held in the bank account bearing BSB 183-XXX account number XXX XXX 269 in the name of Image Nominees to pay the costs of and incidental to this application.

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

REASONS FOR JUDGMENT

MCELWAINE J:

1    Mr Nedin Talic and Mr Claudio Trimboli (Appointees) apply for approval of their remuneration as the former provisional liquidators of Image Nominees Pty Ltd, Smart Companies Group Pty Ltd, Concept Icon Pty Ltd, Physique Pty Ltd, AH International Pty Ltd and Domican Hassan Pty Ltd (Companies and Group).

2    The application is made pursuant to ss 60-10(1)(c) and 90-15 of the Insolvency Practice Schedule 2016 (IPS), which is Schedule 2 to the Corporations Act 2001 (Cth). The application is supported by two affidavits made by Mr Timboli on 13 February and 22 March 2024. The claim for remuneration is for the period 1 November 2023 to 15 December 2023. The first affidavit attaches detailed remuneration reports for each Group company which detail the work undertaken and when, the persons responsible and the rates of hourly charge. There is a description of each task reflected in time sheet recordings calculated to the minute, with the degree of accuracy that is to be expected of accountants and registered liquidators.

3    Each remuneration report contains a declaration by the Appointees:

We have undertaken a proper assessment of this remuneration claim for our appointment as Joint and Several Provisional Liquidators of the Company in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed and disbursements incurred are in respect of necessary work, properly performed, or to be properly performed, in the conduct of this external administration for the Period.

4    The Group conducted business under the trade name Smart Diet Solutions, which name belies why the Group is now in liquidation. In short, the domestic partners of the business fell out and became embroiled in bitter disputes which ultimately caused one of them to apply for winding up orders in respect of the Companies pursuant to ss 232 and 233 of the Act. Justice Beach made orders on 22 September 2023 whereby the appointors were appointed provisionally as joint and several liquidators of the Group.

5    For reasons that Beach J published on 15 December 2023, each Group company was wound up pursuant to s 461(1)(k) of the Act and the Appointees were appointed as joint and several liquidators: Hassan v Image Nominees Pty Ltd (in liquidation) [2023] FCA 1645. His Honour also ordered that the Group is a pooled Group for the purposes of s 579E of the Act.

6    The Appointees in their capacity as provisional liquidators within the period 22 September and 31 October 2023, performed work and claimed remuneration in the sum of $230,375.50 plus GST. On 18 December 2023, Beach J made orders approving that claim.

7    The remuneration claim now made is for $306,100.00 plus GST (Claim). There is a further amount claimed for disbursements. Rule 9.3(3) of the Federal Court (Corporations) Rules 2000 (Cth) sets out certain procedural requirements for the making of an application by a provisional liquidator for a determination under subsection 60–16 (1) of the IPS of the remuneration that the provisional liquidator is entitled to receive. I am satisfied that the Appointees have complied with the requirement of r 9.3(3) which is concerned with giving notice of the intention to apply for determination of the claim. There has not been any objection from the required five largest creditors of the Group companies measured by the quantum of debt owed, including the Deputy Commissioner of Taxation. I note that the interlocutory process of which notice was given was intended to be dealt with in the absence of the public and without any attendance by or on behalf of the Appointees.

8    Mr Trimboli explains in detail in his affidavit of 13 February 2024 the tasks undertaken during the period of the claim including, the complexity of some aspects of the administration. Those tasks included a public campaign seeking expressions of interest for a sale of the business as a going concern or of its assets, negotiations with bidders, the assessment of offers, management of the day-to-day activities of the business of the Group and the total amount of the claims for professional fees and disbursements. Each remuneration report for each of the companies addresses the work undertaken, tasks performed, the time charged by each of the Appointees and members of their staff, the timesheets are annexed and there is a summary of receipts and payments. I have considered this material. I am satisfied that it comprehensively sets out the evidentiary basis for the claim.

9    I am also satisfied, in accordance with the evidence of Mr Trimboli, that some complexity arose in aspects of the provisional liquidation. Mr Trimboli expresses the opinion that all of the work was necessarily and properly performed in the conduct of the provisional liquidation of the Group and that upon review of the costs and disbursements incurred he considers the claim to be fair and reasonable. Of course, these opinions do not bind me, but they are matters of weight as expressed by an officer of this Court.

10    Section 60-12 of the IPS requires me to have regard to whether the remuneration is reasonable, taking into account each of the matters at subparagraphs (a)–(m). Justice Davies, in considering the predecessor of this provision in Thackray v Gunns Plantations Ltd [2011] VSC 380 at [60] usefully summarised the general principles by reference to the decision of the Full Court of the Supreme Court of Western Australia in Conlan (as liquidator of Rowena Nominees Pty Ltd) v Adams [2008] WASCA 61 as follows:

(a)     A summary procedure is involved, not unlike that applicable to the taxation of solicitors’ costs, which is not necessarily subject to all the rules that would apply in an action;

(b)     The initial task of the Court is to consider whether the liquidator has made out a prima facie case on the evidence before the Court that the remuneration claimed is fair and reasonable. The Court must make that assessment “bringing an independent mind to bear on the relevant issues” even though at that point there is no objector.

(c)     There is no absolute rule regarding the amount of detail required to support a remuneration claim. But the evidence relied on should be sufficient to enable potential objectors to review the amounts claimed and ascertain whether there are matters to which objection should be taken. If there is inadequate evidence supporting the claim, no order should be made.

(d)     If the liquidator establishes a prima facie case, the Court should allow for an objection procedure to enable objections to be made;

(e)     If there are objectors to the claim or any part, the Court should then establish the validity of those objections.

Footnote omitted.

11    I bear in mind the distinction between remuneration and disbursements for the purposes of this provision, disbursements may not be determined although they may be challenged: see the discussion by Feutrill J in Australian Securities and Investments Commission v Marco (No 15) [2024] FCA 347 at [56]–[57].

12    It is not necessary to interrogate individual claims or to record my satisfaction seriatim as to each of the matters that must be taken into account pursuant to s 60-12. It is sufficient to state that I am satisfied based on the evidence of Mr Trimboli, that the applicants have established their entitlement to reasonable remuneration for their work, and that of their employees, undertaken in the course of the provisional liquidation of the companies in the Group and for the period of the claim. I am further satisfied that the claim is fair and reasonable in that the evidence adduced is sufficiently detailed to permit me to reach that conclusion. As I have noted, the Appointees have provided detailed accounts in itemised form that record all of the work undertaken, the time spent and the purpose of that work. Overall, I am satisfied that there is a reasonably proportionate relationship between the quantum of the claim for each of the companies and the work that was necessary to be undertaken in discharge of the duties of the Appointees. Although it was once considered that time-based costing methods might not be entirely satisfactory, claims formulated on that basis are common and may be allowed: Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr (2017) 93 NSW LR 459 if the claim is proportionate having regard to the work required to be done, the size and complexity of the administration and the outcome achieved.

13    In forming these views, I record that I am satisfied that the hourly rates charged by the Appointees and by their staff is in accordance with the hourly rates set out in the scale of fees charged by the Appointees’ firm effective as at 1 July 2023. Those hourly rates (excluding GST) are between $580 for the Appointees, $525 for senior managers, $350 for seniors, $250 for graduates and $150 for professional support. Despite the absence of a comparison between these rates and those of comparable registered liquidators in Melbourne, this Court is often appraised of those rates in other matters, and I am satisfied that there is broad correspondence with the market for registered liquidators. It is also the case that Beach J was satisfied as to the hourly basis for the Claim when he approved of the first remuneration application on 18 December 2023.

14    Therefore, pursuant to s 60-10(1)(c) of the IPS I determine the remuneration Claim in accordance with the orders sought in the interlocutory application and I make orders accordingly.

Associate:

Dated:    10 May 2024

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