Remuneration and proportionality: Appeal of the decision of Justice Brereton in the matter of Sakr Nominees Pty Ltd

12 July 2016

In previous editions of our Insolvency Quarterly on 27 April 2015 and 18 April 2016, we covered a line of decisions of Justice Brereton in the Supreme Court of New South Wales (among others) concerning remuneration claims by insolvency practitioners. A link to those articles is here and here.

Those decisions were handed down in the following proceedings In the matter of AAA Financial Intelligence Ltd (in liquidation)(No 2)1, In the matter of On Q Group Limited (in liquidation) (subject to deed of company arrangement)2 and In the matter of Independent Contractor Services (Aust) Pty Limited (in liquidation) (No 2)3.

In each of those decisions, Justice Brereton favoured assessing practitioners’ remuneration as a percentage of realisations and/or distributions, as opposed to, on a time-costing basis. The rationale for doing so being proportionality, particularly in respect of smaller administrations.

Recently, Justice Brereton has published reasons for his decision on 22 February 2016 In the matter of Sakr Nominees Pty Ltd4 (Sakr Nominees) in which he similarly determined a liquidator’s remuneration on a commission basis as opposed to a time-costed basis. In that case, the liquidator had realised the Company’s primary asset and returned 100 cents in the dollar to all creditors but was required to approach the Court for approval of his remuneration as it related to the determination of contributories and the distribution of surplus funds in the liquidation. The remuneration claimed was $63,577.80 although Justice Brereton approved the sum of $20,000 only. That sum appears to have been calculated by reference to what Justice Brereton considered appropriate rates of commission, being 2.5% on realisations and 3% on distributions or a scale of 10% on the first $100,000 of realisations, and 5% thereafter. In doing so, Justice Brereton adopted the reasoning in his prior decisions concerning the lack of proportionality associated with time-costed remuneration.

The liquidator has sought to appeal the Sakr Nominees decision which may involve the Court also considering Justice Brereton’s prior decisions on remuneration and proportionality. We are following this matter with interest.

This article was written by Jonathan Kramersh, Partner and Neil Perl, Associate.

1. [2014] NSWSC 1270
2. [2014] NSWSC 1428
3. [2016] NSWSC 106
4. [2016] NSWSC 709

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