In the matter of VPlus Superstores Pty Ltd (in liquidation); Southern Pacific Import and Export Pty Ltd (in liquidation); VPlus Supermarket (Gosford) Pty Ltd (in liquidation); VPlus Supermarket (Liverpool) Pty Ltd (in liquidation); VPlus Supermarket (Campsie) Pty Ltd (in liquidation) [2013] NSWSC 662 (29 May 2013)

Last Updated: 12 June 2013

Supreme Court New South Wales

Case Title:	In the matter of VPlus Superstores Pty Ltd (in liquidation); Southern Pacific Import and Export Pty Ltd (in liquidation); VPlus Supermarket (Gosford) Pty Ltd (in liquidation); VPlus Supermarket (Liverpool) Pty Ltd (in liquidation); VPlus Supermarket (Campsie) Pty Ltd (in liquidation)
Medium Neutral Citation:	[2013] NSWSC 662
Hearing Date(s):	13 May 2013
Decision Date:	29 May 2013
Jurisdiction:	Equity Division - Corporations List
Before:	Black J
Decision:	Matter referred to Registrar to determine amount of remuneration properly payable.
Catchwords:	CORPORATIONS - winding up - liquidators - liquidators' remuneration - whether allegations of unsatisfactory conduct by the liquidators impact on calculation of appropriate remuneration
Legislation Cited:	Corporations Act 2001 (Cth) ss 449E, 49E(1)(c), 473, 473(3)(b), 473(3)(b)(ii) Uniform Civil Procedure Rules 2005 (NSW) r 20.14
Cases Cited:	- Re Anderson Group [2002] NSWSC 764; (2002) 20 ACLC 1607 - Leslie v Hennessy [2000] FCA 1532 - Onefone Australia Pty Ltd v One.Tel Ltd (in liq) [2012] NSWSC 404 - Paul's Retail Pty Ltd v Morgan [2009] NSWSC 1222; (2009) 76 ACSR 26 - Re Addstone Pty Ltd; Ex parte Macks (1998) 30 ACSR 177 - Re Kal Assay Southern Cross Pty Ltd (1992) 9 ACSR 245
Category:	Interlocutory applications
Parties:	Trevor Mark Pogroske in his capacity as Liquidator of VPlus Superstores Pty Ltd (in liq); Southern Pacific Import and Export Pty Ltd (in liq); VPlus Supermarket (Gosford) Pty Ltd (in liq); VPlus Supermarket Liverpool Pty Ltd (in liq); VPlus Supermarket (Campsie) Pty Ltd (in liq) (First Applicant) Said Jahani in his capacity as liquidator of VPlus Superstores Pty Ltd (in liq); Southern Pacific Import and Export Pty Ltd (in liq); VPlus Supermarket (Gosford) Pty Ltd (in liq); VPlus Supermarket Liverpool Pty Ltd (in liq); VPlus Supermarket (Campsie) Pty Ltd (in liq) (Second Applicant) VPlus Holdings Pty Limited (Respondent)
Representation
- Counsel:	Counsel: D.L. Cook (Applicants) S. Velik (Respondent)
- Solicitors:	Solicitors: Norton Rose Australia (Applicants) SV Law (Respondent)
File Number(s):	2012/187399

JUDGMENT

1. The Applicants, Mr Trevor Pogroske and Mr Said Jahani as liquidators of VPlus Superstores Pty Limited (in liquidation) and several other companies (together, "Companies") applied, by interlocutory application filed on 21 February 2013, for orders under s 449E(1)(c) and 473(3)(b)(ii) of the Corporations Act 2001 (Cth) that their remuneration in specified amounts in respect of the voluntary administration and creditors' voluntary liquidation of the Companies respectively be paid out of the Companies' assets. In the alternative, the Liquidators sought an order that they be remunerated for a reasonable amount as determined by the Court in respect of the voluntary administration and the creditors' voluntary liquidation. The respondent, VPlus Holdings Pty Limited ("VPlus Holdings") has served a notice of objection to the fees claimed by the Applicants.

2. The Applicants were initially appointed as voluntary administrators of the Companies on 6 June 2012 by a secured creditor and, on 12 July 2012, were appointed liquidators at the second meeting of creditors in the voluntary administration. A majority in value of creditors but not a majority in number subsequently approved the administrators' remuneration.

3. On 5 March 2013, the Registrar made directions that VPlus Holdings file evidence to indicate which of the items in an Excel spreadsheet on which the Applicants relied claim their remuneration were objected to and the reasons for those objections. VPlus Holdings filed an affidavit of its solicitor, Mr Velik, which referred to evidence filed in other proceedings brought by VPlus Holdings and a director, Mr Nyuk-Min Yong, against the secured creditor that appointed the Applicants and against the Applicants. It appears that VPlus Holdings contends, in those proceedings, that the secured creditor was not entitled to appoint the Applicants as administrators of the Companies and that the Applicants' conduct, after their appointment, in causing the Companies to cease trading was detrimental to the value of the Companies. Those proceedings are presently at an early stage, with a Statement of Claim filed by the Plaintiffs in those proceedings having been struck out on 31 October 2012 and leave having been granted for an amended pleading to be filed.

4. When the matter was relisted before the Registrar on 24 March 2013, the Applicants noted that the primary basis for VPlus Holdings' objection to their fees was the matters raised in the other proceedings. Mr Velik, who appears for VPlus Holdings in this application, has accepted that the Court should proceed on the basis that the only objection to the claim for remuneration are either the identified objections to the quantum or appropriateness of particular charges, and such other matters as are raised and determined in the other proceedings; and, specifically, VPlus Holdings has no objections to the Administrators' claim which fall outside those two categories and would need to be determined other than by (1) the Registrar's consideration of specific charges and (2) the determination other proceedings. In the absence of that confirmation, I would have set down VPlus Holdings' objections to remuneration for an early hearing in their entirety.

5. The Applicants' primary position before the Registrar was that she should assess the fees without reference to the objections raised which were the subject of the other proceedings and did not go to the reasonableness of the fees claimed, or should otherwise follow the course referred to by Barrett J in Re Anderson Group [2002] NSWSC 764; (2002) 20 ACLC 1607 at [28]- [32]. The Applicants similarly sought an order before me directing the Registrar to determine the application without reference to the objections based upon matters the subject of the other proceedings, or alternatively to refer the fees claimed to the Registrar for assessment as contemplated by Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") Part 20 r 14, on the basis that the Registrar should not have regard to any objections relying upon the matters raised in the other proceedings. The Applicants press for that latter approach on the basis of an indication from the Registrar that, in any event, the assessment of their claim for fees will take some time since there are also other assessments pending before the Registrar. The Applicants, reasonably, have indicated that they wish to avoid a further delay if assessment is not commenced until after the determination of the other proceedings. Given the fact that the other proceedings commenced in August 2012, some nine months ago and are still at an early stage, and that the pace at which they proceed will in part be affected by the approach adopted by VPlus Holdings in conducting them, it is foreseeable that such a delay could be of some length.

6. On the other hand, VPlus Holdings seeks an order that the remuneration application be determined in the other proceedings and be referred to the Registrar for assessment of any matters remaining for determination following the determination of the other proceedings. It appears that VPlus Holdings contemplates that the substantive objections to remuneration (on the basis of the challenge to the Applicants' appointment or to their conduct of the sale process) would first be determined by the other proceedings, and any remaining matters then determined by the Registrar. The difference between the parties' respective approaches seems to be, in substance, whether the Registrar's review of the Applicants' claim for remuneration should proceed now, subject to the outcome of the other proceedings, or be deferred until after the other proceedings have been determined.

The evidence

7. The Applicants rely on an affidavit of Trevor Pogroske dated 18 December 2012, which outlines the circumstances of the Administrators' appointment, the resolutions to approve remuneration put at the second meeting, and the work performed in respect of the Administrators' appointment. A further affidavit of Mr Pogroske dated 20 February 2013 exhibits a lengthy notice of objection to the remuneration claim made by VPlus Holdings, which in turn relies, inter alia, on an affidavit of Mr Yong dated 21 June 2012 filed in these proceedings.

8. VPlus Holdings in turn relies on an affidavit of Mr Yong dated 16 April 2013, which exhibits several affidavits sworn by Mr Yong in the Other Proceedings. Sensibly, the Applicants took no objection to that approach, on the basis that those affidavits were admitted subject to relevance. VPlus Holdings relies on a valuation apparently obtained by BankWest at 30 June 2009, in the amount of $6,844,317. I have difficulty in seeing that a valuation of the Group prepared 3 years prior to the appointment of the Applicants could have any real probative value in respect of the value of the Companies at the time of that appointment. That affidavit also contains an assertion by Mr Yong that the value of the VPlus Group as at June 2012 was $7,500,000, but it is not established that Mr Yong has any qualifications in share valuation so as to express that view. Mr Yong also gives evidence, in a hearsay form, as to the circumstances of preparation of accounts of companies within the Group by external and management accountants.

9. By a further affidavit dated 18 March 2013, Mr Yong gives further evidence of dealings between the Companies and BankWest. He also expresses the view that it would have taken about 6 months to sell the relevant businesses on a going concern basis with the stock, plant and equipment and achieving gross sale proceeds of about $7.6 million. He also expresses the view that gross sale proceeds of about $5.5 million could be achieved if the fitout, stock and equipment of the supermarket businesses were sold on a quick sale basis. It is not entirely clear whether these views are expressed on the assumption that any issues as to the tenure of the supermarkets in the relevant premises were in some way resolved. Mr Yong also expresses views as to the likely proceeds of sale on a fire sale basis. There is a question whether Mr Yong's experience in the management of Asian supermarkets would qualify him to express such a view, which it is not necessary to determine for the purposes of this application.

10. VPlus also relies on an affidavit of its solicitor, Mr Velik, dated 22 April 2013 which attaches a schedule identifying VPlus Holdings's position in respect of costs claimed by the Administrators. VPlus Holding's primary position is that nothing should be allowed in respect of all, or substantially all, of the work done by the Applicants. An alternative position that 50% of the amounts claimed by the Applicants should be allowed, appeared, on its face, to be wholly arbitrary and was not pressed in submissions before me. The position that nothing should be allowed was supported by reference to the evidence relied on the other proceedings, and particularly Mr Yong's affidavit, and referred to allegations as to the value of the Companies prior to the appointment of the Administrators and the alleged failures to take steps to sell their assets or to realise substantial amounts for creditors, which are said to have contributed to the subsequent liquidations of the Companies. Specific objections are also raised to a small number of items, on the basis that they are purely administrative work of the Applicants. These are matters which could readily be determined by the Registrar.

The preferable approach

11. Section 449E of the Corporations Act relevantly provides that the administrator of a company under administration is entitled to receive such remuneration as is determined by agreement between the administrator and any committee of creditors; by resolution of the company's creditors; or, if there is no such agreement or resolution, by the Court. A liquidator is also entitled to have his or her remuneration fixed by the Court under s 473(3)(b) of the Corporations Act if other methods of remuneration do not result in it being fixed. The process of the Court fixing such remuneration will ordinarily be directed to ensuring that the work done and undertaken in the course of the administration or liquidation and that the amount claimed is a fair and reasonable award for it: Re Anderson Group above at [12]. The Court's role under s 449E and s 473 is, failing determination of remuneration by creditors or the committee of creditors or committee of inspection, to quantify the amount to be paid in satisfaction of an independently existing statutory entitlement to the administrator or liquidator to remuneration, in circumstances that there is no expectation that he or she should act gratuitously: Re Anderson Group above at [21].

12. It is well-established, and it was not contested in the application before me, that a finding of unsatisfactory conduct by the Applicants, in the sense of conduct in breach of duty or involving serious failures or misconduct on their part, may affect their entitlement to remuneration: Re Kal Assay Southern Cross Pty Ltd (1992) 9 ACSR 245; Re Addstone Pty Ltd; Ex parte Macks (1998) 30 ACSR 177; Re Anderson Group above at [15]ff; Paul's Retail Pty Ltd v Morgan [2009] NSWSC 1222; (2009) 76 ACSR 26. VPlus Holdings seeks to establish such unsatisfactory conduct, relying on the evidence served in the other proceedings to which I have referred above, and contending that the Applicants' conduct brought about the destruction of substantially all of the value of the Companies' businesses and, by the end of the period of voluntary administration, their insolvency. In Re Anderson Group, where allegations of this kind were made, Barrett J adopted the course of referring the matter to a Registrar first to determine the amount of reasonable remuneration in the usual way, ignoring the merits or otherwise of the allegations of unsatisfactory conduct against the Liquidator.

13. It seems to me that the preferable course in this case, in order to bring about the most expeditious and efficient resolution of the Applicants' claim to remuneration, is similarly now to refer the matter to the Registrar to determine the amount of remuneration properly payable, without reference to the objections raised by VPlus Holdings in the other proceedings. If the other proceedings are ultimately unsuccessful, they will then have no impact upon the amount of the remuneration as determined by the Registrar. If they are ultimately successful, in whole or in substantial part, then the Court may need to adjust the amount of remuneration payable by the Applicants, having regard to the determination between the parties in the other proceedings. Following the Registrar's report, the matter will be returned to the Corporations List, at which time a Judge may make a further determination whether then to fix the Applicants' remuneration on a final basis; or to order an interim payment in the manner adopted in One.Tel; or to further defer the matter pending the progress of the Other Proceedings.

14. I recognise, of course, that it is unlikely that the Court would proceed to fixing the Applicants' remuneration until the allegations as to the propriety of the work done have been determined in the other proceedings, given the limits to the circumstances in which the Court may review such a determination after it is made: Leslie v Hennessy [2000] FCA 1532; Anderson Group at [23]. However, it does not follow that the Court could not then make an interim order of the kind made in Onefone Australia Pty Ltd v One.Tel Ltd (in liq) [2012] NSWSC 404, namely to order that the Applicants be paid their remuneration or a substantial portion of it on an undertaking to repay any amount which is properly repayable as a result of the determination of the other proceedings. That course seems to me to have real attraction, where the alternative is otherwise to deprive the Applicants of such payment for a potential lengthy period, in circumstances where it is not readily practical to compensate them for such deprivation by, for example, an order for interest.

15. I direct the parties to bring in agreed Short Minutes of Order within 7 days, to give effect to this judgment; or, if there is no agreement between them, their respective draft Short Minutes of Order and short submissions in respect of the matters as to which they disagree.

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