Following Mr Cliff Sanderson's successful appeal of the decision in first instance in Sakr Nominees Pty Ltd, today Justice Black handed down his decision in respect of the re-hearing of Mr Sanderson's remuneration application.
Mr Sanderson and the insolvency profession can breathe a collective sigh of relief as Mr Sanderson has been wholly successful in having his remuneration approved.
In saying this, it is clear that remuneration approvals in the future will not be plain sailing. The Court has confirmed that a liquidator is entitled to reasonable remuneration but he or she bears the onus of establishing that the amount sought is fair and reasonable.
Justice Black said that the Court must apply an independent mind in considering whether the remuneration sought is fair and reasonable, and that the liquidator must lead evidence in sufficient detail such that the Court can determine that question. The Court will generally need to be provided with an "account" in itemised form setting out at least:
- The details of the work done;
- The persons who did the work;
- The time taken to perform the work;
- The remuneration claimed; and
- To the extent relevant, the expenses incurred by the liquidator.
Interestingly, in allowing Mr Sanderson's additional remuneration on a time basis, Justice Black noted that in some cases the amount of remuneration ultimately recoverable by a liquidator on a time basis, after deducting the costs of leading adequate evidence to establish it, may be less than the amount which may have been allowed on a percentage basis. Liquidators may wish to consider whether, in appropriate matters, an application for remuneration on a percentage of recoveries basis may be more cost effective rather than prepare the evidence necessary to recover remuneration on a time basis.
Today's decision provides a timely reminder that remuneration applications are now more complex and that significant work will be required by insolvency practitioners before approaching the Court for remuneration approval regardless of the size of the liquidation or the remuneration sought. The better the data recorded at the time the work is done the easier the application will be.
Having said that, the Court's acceptance that remuneration should be approved for:
- Non-chargeable work;
- Work on a time basis (in the right matter); and
- Work that is properly performed even though it did not increase the size of the available assets,
justifies Mr Sanderson's decision to run this appeal and its benefit to the profession generally.
| Peter Harkin | Scott Hedge | Simone Farrugia |
| Restructuring and insolvency | ||
| Colin Biggers & Paisley |
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