Keypoint Law Successful in Remuneration Application
Keypoint Law’s Michael Rozdal acted for Ferrier Hodgson in a recent application to the Supreme Court for the approval of the remuneration of John Melluish and Morgan Kelly, and their staff at Ferrier Hodgson, for work performed during the liquidation of two companies.
Remuneration applications were, in the past, relatively routine matters. However, a number of recent decisions of Justice Brereton of the Supreme Court of New South Wales, in which part of all of the remuneration sought was refused, have left insolvency practitioners and their legal advisors nervous. The primary reason for the failure of those applications was that in the view of the Court the time-based method of calculating remuneration resulted in a lack of proportionality between the remuneration sought and the value of the assets realised during the liquidation.
Justice Brereton was allocated to hear this matter and, after an anxious wait, judgment was delivered approving the liquidators’ remuneration in full.
In the decision, In the matter of GPJ Investments Pty Limited and in the matter of Angelides Investments Pty Limited  NSWSC 1173, Justice Brereton found that, despite the remuneration being calculated on a time basis, it was reasonable and that, at 5% of total realisations in the case of one of the companies and 2% of total realisations for the other, the remuneration claimed was well within the proportions described in the recent cases. He also noted with approval that the liquidators had provided detailed summaries of the work done and deposed that the work performed was reasonable and necessary.
The decision provides confirmation that time based costing remains an acceptable method for liquidators to calculate their remuneration and that such remuneration will be approved by the Court if there sufficiently detailed evidence of the work performed, the work was reasonable and necessary and the amount claimed represents a reasonable proportion of the assets realised.