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Remuneration applications by office holders of corporations

 
Currency: March 2006
 

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).      

    SCCR provides checklist procedure

    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:

    Are there preliminary events before remuneration can be claimed?

    Check the SCCR to see if there are any preliminary events that must occur before the remuneration can be claimed. For example, an administrator must not apply for remuneration until after the date of the meeting of creditors mentioned in paragraph s 449E(1)(a) (refer SCCR 9.2(2)). Similarly, a liquidator must not apply for remuneration until after the date of the meeting of creditors mentioned in subsection 473(4) (refer SCCR 9.4(2)(b)).

    Notice and copy of affidavit to relevant parties

    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.

    What parties must be notified of the application?

    The list of relevant parties (eg certain creditors) who must be notified for each remuneration application is set out in the SCCR as follows:

    Which form to use: an interlocutory process or an originating process?

    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.

    Affidavit on which office-holder relies

    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.

    Affidavit of service on relevant parties

    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.

    Objections

    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 for directions in the Registrar's Corporations list. Alternatively, it will be sent to the registrar in chambers who will requisition the objector, and the office-holder and resolve the matter.

    Where there a no objections

    Where there are no objections to the application for remuneration, the application can be dealt with by a registrar in chambers.

    Disbursements and future remuneration amounts are not "remuneration"

    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. Similarly future amounts or estimates of remuneration to complete the application are not to be claimed.

    Case law

    The following is a list of recent relevant Supreme Court case law concerning contested applications for remuneration: