Applications for the remuneration of liquidators, provisional liquidators, administrators, and receivers are governed by the
Corporations Act 2001 (CA), and the
Supreme Court (Corporation) Rules 1999 (SCCR).
The SCCR provide a checklist of steps to be followed before a registrar can approve the remuneration of an office-holder. The following sub-rules of the SCCR and sections of the CA are relevant for each particular application:
Check the SCCR to see if there are any preliminary events that must occur before the remuneration can be claimed.
The requirement that notice of the application for remuneration be given to all the relevant parties is of particular importance. This notice (
SCCR Form 16) must be given at least 21 days before the filing of the application. The parties must also be given a copy of any affidavit on which the office-holder intends to rely in making the application.
The list of relevant parties (e.g. certain creditors) who must be notified for each remuneration application is set out in the SCCR as follows:
The application for remuneration is made by interlocutory process in the case of a provisional liquidator, liquidator, or special manger. A receiver's or an administrator's application is usually made by originating process.
The original affidavit of the office-holder must be filed with the application. (A copy of this affidavit should have already been sent with the form 16 Notice to all relevant parties; see above.)
It is important that each of the items specified in the SCCR is covered in the affidavit.
The items to be covered are set out in the SCCR as follows:
In the affidavit the information about the "amount of remuneration" should include the name of the employee, their job description (eg manager 1), their hourly rate and the cumulative hours of work performed. (If a unit of work is not an hour, its value should be stated.) It is helpful if this information is set out in a table. The affidavit should include a spreadsheet setting out the work in progress.
The office-holder should also provide an affidavit of service on the relevant parties in support of the application for remuneration. It is in this affidavit that the office-holder details any objections that have been received from the notified parties regarding the application for remuneration.
The office-holder must state the particulars of any objections that have been received in response to notice of the claim for remuneration. Particulars of the objection will normally form part of the affidavit of service (see above). If the office-holder receives an objection they must serve a copy of the application for remuneration (ie the interlocutory process or originating process) on each objector.
Where there are objections the application will be listed before the Corporations List Registrar at 11am on a Wednesday. The Registrar will give directions to the following effect:
Direct the office-holder to serve the objector with a copy of the work in progress in an excel format with additional columns for objections, response and registrars remarks.
Direct the objector to serve the office-holder with an updated version of the work in progress spreadsheet containing their line by line objections.
Direct the office-holder to file and serve on the objector an updated version of the work in progress spreadsheet containing their response to the objections.
List the remuneration application for determination before the Registrar at a date and time to be determined by the Registrar.
Where there are no objections to the application for remuneration, the application will be given a listing before the Corporations List Registrar at 11am on a Wednesday and in most cases will be determined at this first listing.
(see Insolvency Practice Schedule (Corporations) s 60–12
In making a remuneration determination under paragraph 60-10(1)(c) or (2)(b), or reviewing a remuneration determination under section 60- 11,the Court must have regard to whether the remuneration is reasonable, taking into account a number of matters including:
(a) the extent to which the work was necessary and properly performed;
(b) the extent to which the work likely to be performed is likely to be necessary and properly performed;
(c) the period during which the work was, or is likely to be, performed;
(d) the quality of the work performed, or likely to be performed;
(e) the complexity (or otherwise) of the work performed, or likely to be performed;
(f) the extent (if any) to which extraordinary issues may be required to be dealt with;
(g) the extent (if any) to which a higher level of risk or responsibility may be required
(h) the value and nature of any property dealt with, or likely to be dealt with:
(i) the number, attributes and conduct, or the likely number, attributes and conduct, of the creditors;
(j) if the remuneration is worked out wholly or partly on a time-cost basis--the time properly taken, or likely to be properly taken, in performing the work;
Disbursements (including legal disbursements) are not
to be claimed under these rules, as they do not form part of the remuneration
of the office-holder.
The following is a list of relevant case law concerning contested applications for remuneration: