Hamilton Murphy’s Richard Rohrt and Stephen Dixon have a Ferrari to sell now that they’ve been appointed receivers and managers over the property, assets and undertaking of The Rose Guerin and Partners Trust but getting paid for their labours won’t be straightforward after a judge ripped ’em a newie in respect of their “totally disproportionate” fees.
In Rohrt, in the matter of Rose Guerin and Partners Pty Ltd (in liq) v Princes Square W24NY Pty Ltd (No 2) [2021] FCA 547 delivered this week, Federal Court judge Stewart Anderson recounted his concern upon learning that Rohrt and Dixon, having been appointed liquidators of Potts Point accounting firm Rose Guerin and Partners Pty Ltd in late 2019, had by December 3, 2020 generated professional costs and liquidators’ costs of $540,583.04, plus what was described as an “uplift fee of 25 per cent for professional legal costs of $52,430.97”.
“Having reviewed that evidence, I had serious concerns about the scale of those costs” Federal Court judge Stewart Anderson.
According to his honour, this number didn’t include the fees of Mills Oakley, the liquidators’ previous solicitors, which had not been rendered at the time Guerin’s lawyers made their request for costs and disbursements.
The costs information was contained in one of several affidavits Rose Guerin filed in opposition to the liquidators’ application for an order appointing them receiver managers to the trust assets.
“Having reviewed that evidence, I had serious concerns about the scale of those costs,” his honour said.
“In these circumstances, I have concerns that the amount of the fees incurred to date by the liquidators is totally disproportionate to the complexity of this proceeding and the scope of work that has been completed.
“As a consequence, it is appropriate that there be an order that, without approval by court order, the liquidators are not to charge any fees in relation to the liquidation or administration of the Company or in relation to the liquidators’ appointment as receiver and manager over the property, assets and undertaking of the Trust.”
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Ironic, guy who sits on his backside all day and makes over half a millions dollars a year from tax payers pockets, complain about a business with multiple employees and business costs charging half a millions dollars for its services, when another business could have been chosen to do the job – can we pick our judges then? Perhaps the judge should stick to his lane, and not make comments about things that aren’t within his job description.
John M, judges are called on to review professional fees frequently.
Issues regarding remuneration can be the subject of review under Div 60 of the IPSC and also by Creditors.
These issues have been around since Mirror Newspapers and appear to be getting worse – but each administration has its own difficulties and that is why they are consider on the basis of fairness reasonableness and proportionality
Kudos to the Court, charging 500k for a gig with only 300k worth of assets is ridiculous. Somebody needs to hold some of the less IPs amongst us into line
No longer in the industry, but I am amazed that ARITA exists with all its spit & vigour, and yet..nothing changes. I mean, as for ASIC, has it euthanised itself?! Hello, corporate regulator, anyone home? Knock! Knock! The insolvency industry is in more disarray from regulatory and ethical standpoints than it was barely 15 years ago. I think things are worse, as attested by the two lead articles on this website.
St
Each matter is decided on its own unique facts. The decision to devote resources to a project is made by the insolvency practitioner involved. If they decide to devote more resources than necessary that practitioner will be responsible for the additional costs involved. Courts are reasonably flexible in considering remuneration applications, however, inefficient project management, over zealous staff, pandering to a creditor or creditor group, or ill-considered litigation often leads to concern being expressed.
I agree with Paul Evans
I understood the changes made in 1993 to the insolvency provisions and in particular by introduction of VA’s was to improve the whole end to end process. Creditors are still wearing the damage bill and not much has changed. There has to be a correlation between assets/debts relative to the practitioners fees, otherwise there will be ongoing “over servicing”. When a 30+ yr old manager can charge $550 per hour + GST, you know the system is terribly unfair and skewed. Agree with an earlier comment ARITA is asleep becz it has a vested interest and ASIC, less said.