Debnam v Stonehaus Pty Ltd [2021] QSC 306

SUPREME COURT OF QUEENSLAND CITATION: Stephen Ross Debnam v Stonehaus Pty Ltd [2021] QSC 306 PARTIES: STEPHEN ROSS DEBNAM (applicant) v STONEHAUS PTY LTD ACN 624 326 263 (respondent) FILE NO/S: BS 3192 of 21 DIVISION: Trial Division PROCEEDING: Application on the papers ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: On the papers (26 November 2021) DELIVERED AT: Brisbane HEARING DATE: On the papers JUDGE: Brown J ORDER: The order of the Court is that: 1. Pursuant to section 60-16 of the Insolvency Practice Schedule (Corporations), the remuneration of Mr Leon Lee as the former provisional liquidator of Stonehaus Pty Ltd (in Liquidation) ACN 624 326 263 is fixed in the sum of $14,960.00 plus GST. 2. Mr Leon Lee’s costs of this application form part of the costs and expenses in the provisional liquidation of Stonehaus Pty Ltd (in Liquidation) ACN 624 326 263. CATCHWORDS: CORPORATIONS – WINDING UP – LIQUIDATORS – REMUNERATION – where a provisional liquidator was appointed – where the provision liquidator applies for approval of his remuneration Corporations Act 2001 (Cth) sch 2 and s 473(10) Uniform Civil Procedure Rules 1999 (Qld) sch 1A Re: Barokes Pty Ltd (in Liquidation) [2020] VSC 555, considered Venetian Nominees Pty Ltd v Conlon (1998) 20 WAR 96, cited -- 1 of 4 -- 2 SOLICITORS: Rose Litigation Lawyers for the applicant [1] Mr Leon Lee, a provisional liquidator, was appointed by this Court pursuant to an order made on 22 April 2021. [2] Mr Lee seeks approval of his remuneration in the sum of $14,960.00 plus GST. The affidavit material supports compliance with r 9.3 of the Corporations Proceedings Rules.1 That rule provides for an application being made by a provisional liquidator of a company for a determination under section 60-16(1) of the Insolvency Practice Schedule (Corporations),2 of the remuneration the provisional liquidator is entitled to receive. [3] The affidavit material demonstrates that the interlocutory affidavit has been served more than 21 days before the filing of the interlocutory application on the five largest creditors of the company and each member of the company whose shareholder represents at least 10 per cent of the issued capital of the company. No objections were made by any of those served.3 [4] The Court is to have regard to whether the remuneration is reasonable taking into account any or all of the matters set out in r 60–12 of the Insolvency Practice Schedule (Corporations). [5] Given the provisional liquidator (now the liquidator)4 did not receive any notice of objection, the provisional liquidator, pursuant to r 9.3(5)(b) of the Corporations Proceedings Rules, endorsed the interlocutory application with a request that the application be dealt with in the absence of the public and without any attendance by or on behalf of the provisional liquidator and that the application may be so dealt with. [6] In support of the remuneration sought, Mr Lee has sworn an affidavit. In addition to providing the work-in-progress report, listing the work carried out in the provisional liquidation of Stonehaus Pty Ltd by which member of staff, together with the hourly rates charged by the staff members of Mr Lee’s firm, he sets out in his affidavit the work performed by him as provisional liquidator from 22 April 2021 to 29 April 2021. He deposes to the fact that the work undertaken by Mr Lee and his staff was necessary and properly performed because it was necessary to: (a) take control of Stonehaus Pty Ltd’s assets and books and records, so that they could be preserved pending the determination of the winding up hearing;5 (b) communicate with the parties and their legal representation who were involved in the winding up proceedings; (c) communicate with various financial institutions and open a liquidation bank account for Stonehaus Pty Ltd; 1 Schedule 1A of the Uniform Civil Procedure Rules 1999 (Qld). 2 Schedule 2 to the Corporations Act 2001 (Cth). 3 CFI 17 at [36] and [37]. 4 Pursuant to an order of 30 April 2021. 5 Affidavit of Leon Lee filed 9 November 2021 at [13]. -- 2 of 4 -- 3 (d) obtaining a completed ROCAP and Stonehaus Pty Ltd’s books and records from Mr North-Coombes; (e) conduct searches in respect of Stonehaus Pty Ltd to identify secured creditors including a review of the Personal Properties Security Register (PPSR) registrations as against Stonehaus Pty Ltd; and (f) review and consider Stonehaus Pty Ltd’s available books and records including its: (i) accounting records; and (ii) bank statements. [7] He states that the work was of a high quality as the books and records of Stonehaus Pty Ltd were secured efficiently and the preliminary asset and liability of Stonehaus Pty Ltd was ascertained. According to Mr Lee, the work was of moderate complexity and involved some extraordinary issues. In that regard, he refers to the fact that it involved dealing with competing directors and shareholders, one of whom had commenced a winding up on a just and equitable basis. Mr Lee also subsequently identified during the provisional liquidation that the business operated by Stonehaus Pty Ltd ceased trading in late March 2021 and a related entity, House Collective Pty Ltd had resumed operating the business in the business premises. The property of Stonehaus Pty Ltd was said to consist of a large quantity of stock at the business premises of approximately $1.6 million. [8] The work-in-progress schedule shows that the work carried out was carried out on 22, 27, 28 and 29 April by Mr Lee, a manager and a staff member described as “intermediate” as well as some work by junior staff members, which is relatively minor, showing Mr Lee did utilise more junior members of staff where appropriate. [9] While the amount of work done is significant and the remuneration sought is for work done over a relatively short period of time, it does appear that a significant amount of work was carried out intensively. The approach to be adopted by the Court, as was discussed by his Honour Associate Judge Hetyey in Re: Barokes Pty Ltd (in Liquidation),6 referring to the well-established principles in Venetian Nominees Pty Ltd v Conlon,7 in respect of liquidator’s remuneration under s 473(10) of the Corporations Act 2001 (Cth), referred to the matters to be considered by the Court which are largely mirrored in s 60-12 of the Insolvency Practice Schedule (Corporations). Mr Lee has established a prima facie case entitling him to the remuneration sought for the work he states was necessary and properly performed. Having reviewed the affidavit material there is no basis for me to form a contrary view to that expressed by Mr Lee and I consider that the amount of remuneration claimed is reasonable given the tasks outlined. [10] I will make an order in accordance with paragraph 1 of the draft order. A further order is sought that Mr Lee’s costs of the application form part of the costs and expenses that the administration in Bulkbilled Pty Ltd (in Liquidation) ACN 136 952 102. That is not reflected in the application, nor the submissions made. The order sought in the application is that the costs of Mr Lee of and incidental to the application 6 [2020] VSC 555. 7 (1998) 20 WAR 96. -- 3 of 4 -- 4 be costs in the provisional liquidation of Stonehaus Pty Ltd (in Liquidation) ACN 624 326 263. It appears to me that the draft order in paragraph 2 must be an error. I will therefore make an order in paragraph 2 that Mr Leon Lee’s costs of this application form part of the costs and expenses in the provisional liquidation of Stonehaus Pty Ltd (in Liquidation) ACN 624 326 263. -- 4 of 4 --