An application approved, an application refused

Back to the drawing board was the message for Avior Consulting’s Dermott McVeigh after a judge refused the Perth-based practitioner’s application for approval of a lift in receivership fees.

For Hall Chadwick’s Sule Arnautovic however, who was also in the Corporations List queue on Monday applying for approval of remuneration earned whilst an administrator and receiver the reception was very different, with his application granted without demur.

“He’ll need to tell me why creditors approved $50,000 and not $90,000.” NSW Supreme Court Judge Ashley Black.

So what differentiated the two applications brought before Insolvency Practice Schedule (IPS) stickler Justice Ashley Black?

In a word, detail, particularly in respect of the detail needed to demonstrate what work was performed and what hours billed whilst appointed a receiver of trust assets underlying the assetless corporate trustees to which each practitioner had originally been appointed.

McVeigh already had creditor approval for remuneration incurred for work as liquidator of M & J Super Fund Pty Limited (M&J) while Arnautovic had a similar imprimatur for work undertaken as deed administrator of Wrapaway Transport Pty Limited (Wrapaway).

Having recovered trust assets as receiver of M&J McVeigh also had creditor approval for $50,000 of remuneration for the most recent period of the receivership.

He had however performed additional work for which he wanted to bill a further $48,000, which he discounted to $40,000.

The problem for Nicola Bailey, the barrister making the aplication on McVeigh’s behalf was that there were no materials she could take the judge to that showed exactly what had been done to justify $40,000 in additional billings.

“I will not approve on the basis that I do not know what I’m approving,” the judge told Bailey.

“Is it an increase being sought or is it approval for separate work,” he asked.

All Bailey could offer in response was that the $90,000 claimed for remuneration was incurred in circumstances where there was “significant overlap” in the receivership work and the liquidation work.

“Plainly, the court doesn’t approve an increase of $40,000 without knowing why,” the judge said, adding that McVeigh would need to reapply and that that would require “some reverse engineering by your client”.

“He’ll need to tell me why creditors approved $50,000 and not $90,000,” the judge said.

Bailey and her HWL Ebsworth instructors left the court knowing they had a week to get the detail the court required and present it in an acceptable form.

Taking Bailey’s place at the bar table was Piper Alderman partner Angelina Kozary who brought a similar application on behalf of Arnautovic.

According to the judge the difference was that Arnautovic had taken “the prudent course of separating time recording in respect of receivership of the trusts from time recorded for work undertaken as administrator”. Maybe McVeigh needs a second drawing board.