In a much anticipated judgment, the Court of Appeal of the
Supreme Court of NSW has delivered good news for insolvency
practitioners concerning their remuneration.
This news will be particularly welcome for those practitioners who
accept appointments over small to medium sized companies.
In the matter of Sanderson as Liquidator of Sakr Nominees
Pty Limited (In Liquidation) v Sakr  NSWCA 38, the Court
of Appeal has overturned the earlier decision of Justice Brereton
in which His Honour restricted the liquidator's remuneration to
an amount that he believed was proportionate to the recovery made
based upon the size of the company, the available assets, and the
In arriving at this conclusion, Justice Brereton considered
that, in smaller liquidations, liquidators could not be expected to
be rewarded for their time at hourly rates as would be justifiable
if more property was available. This was because, in the case
of smaller liquidations, liquidators took on less risk and achieved
a lesser outcome in absolute terms compared to larger
Justice Brereton expressed a preference for an ad
valorem assessment of remuneration for reasons including that
such an assessment incentivises the creation of value rather than
the disproportionate expenditure of time.
In a win for practitioners a five member bench of the NSW Court
of Appeal disagreed.
The Court of Appeal found that Justice Brereton had focused too
heavily on the concept of proportionality in the context of the
dollar outcome achieved. Whilst the concept of
proportionality does exist amongst the shopping list of factors the
Courts are required by s 473(10) of the Corporations Act 2001
(Cth) to take into account when considering whether the
remuneration is reasonable, it ought not be adopted as the
The Court of Appeal found that a court still needs to give
consideration to the other factors listed in s473(10), such as the
work actually done and the difficulty and complexity of the tasks
performed. These tasks and the complexities of the
administration can be, and often are, the same in both small and
The Court of Appeal has remitted the proceedings back to the
Equity Division of the Supreme Court where the question of the
liquidator's remuneration will be determined having regard to
the Court of Appeal's findings.
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