Vince v Hurley Transport Pty Ltd [2008] VSC 637
On a former administrator's application under the Corporations Act 2001 (Cth), the Supreme Court of Victoria fixed his remuneration, less disallowed items and a ten per cent reduction, allowed his legal fees to 30 June 2008 and sent later fees to taxation, over objections.
What the court decided
The directors of Hurley Transport Pty Ltd appointed Mr Vince as administrator on 26 May 2008 [2]. Creditors replaced him on 5 June 2008 [3]. He applied under sections 447A and 449E of the Corporations Act 2001 (Cth) (the Act) to have his remuneration fixed at $37,635.45 and legal fees at $4,131.86 [1].
A person who claimed to be a creditor objected, among other things, that many of the items of work claimed could have been done by junior members of Mr Vince's practice and that Mr Vince, as an experienced practitioner, ought not to have been given legal advice [7].
Efthim AsJ set out authority placing the onus on a liquidator to show that the remuneration claimed was fair and reasonable [9]. His Honour noted that the Act, as amended, took into account an approach under which hours reasonably spent at a reasonable hourly rate were adjusted up or down for other factors [10]–[11]. Under section 449E(4), the Court "must have regard to whether the remuneration is reasonable", taking into account any or all of the listed matters [12].
On a reading of every item, his Honour considered that most of the work was reasonably necessary and did not accept the objections [18].
His Honour found the rates charged by Mr Vince and his staff reasonable when compared with those of other Victorian liquidators [14]–[15]. Items totalling $1,188.00 for work before the appointment or without description were disallowed [19]. The work of preparing the claim and answering objections was allowed by analogy with a solicitor's costs of preparing a bill in taxable form [20]. Work after Mr Vince's removal was allowed as reasonably incurred [20]. Finding nothing in the time sheets and description of work to indicate that work done by Mr Vince belonged with more junior staff, his Honour rejected that objection, noting that the bulk of the work was not done by him [21].
Weighing the factors he was required to consider, including a short administration that was not complex and the sum collected, against reasonable rates, his Honour made the adjustment he said the legislation called for and, on these facts, reduced the remuneration by ten per cent [22]–[23]. Remuneration was assessed at $32,802.80 [24].
His Honour held that Mr Vince, as administrator, was entitled to legal advice and rejected the objection based on Mr Vince's experience [25]. Satisfied from the solicitors' time records that the rates were not excessive and the fees reasonable, his Honour allowed $4,131.86 to 30 June 2008 [26]. Mr Vince also claimed legal fees of $6,055.39 for July and $9,178.99 for August 2008; his Honour said they were incurred because of the objections and outweighed the small reduction [27]. His Honour did not assess them, saying they would be ordered to be taxed by the Taxing Master, with the parties to be heard on who was to bear them [27].
Why it matters
Efthim AsJ considered that being "absolutely sure" each item was necessary, by cross-examining the administrator and his staff and checking every letter and file note, would take about two weeks for "a very small administration" and make the section unworkable; his Honour asked instead whether the work was reasonably necessary [17]–[18]. The July and August fees claimed exceeded the reduction; their amount was left to taxation and who bears them remained open [27]. This was one Associate Justice applying the Act as then in force; readers are referred to the current text.
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.