Judge slashes liquidator’s fees over delay

It doesn’t matter if you have 25 years in the insolvency game and sit on the national board of ARITA.

If a judge thinks you’ve delayed a winding up inappropriately and failed to show why fees claimed were reasonably incurred then you’re going to get clipped.

This at least seems to be the message from NSW Supreme Court judge Kate Williams who last week slashed a Sydney liquidator’s claim for remuneration by 25 per cent.

The liquidator in question had sought court approval for almost $100,000 in present and future remuneration after creditors, who’d initially approved payment for the original fee quoted of $25,000 for the winding up, baulked at approving further amounts as costs spiralled.

As is disclosed In the matter of Wealth Street Pty Ltd (in liquidation) [2023] NSWSC 1482 this gruelling administration was brought to SV Partners executive director Jason Porter in September 2019 by Macpherson Kelly and Quinn Lawyers, which were acting in proceedings for the directors of four related entities – Wealth Street Pty Ltd, Belladina Holdings Pty Ltd, Property Drive Pty Ltd and Mortgage Lane Pty Ltd.

In his DIRRI Porter explained that the four administrations should be conducted by one practitioner as it would lead to “efficiencies in the orderly winding up of each administration and would be in the best interest of creditors”.

That seems a hollow boast in light of the fact that the claim for remuneration the subject of Justice Williams’ judgment comprises an amount in excess of what remains in the liquidation bank account.

Porter’s problem was that he couldn’t convince the judge that the additional amounts sought – $89,585 for work performed, plus $10,000 for work to be performed to finalise the liquidation – were and would be reasonably incurred.

A particular bee in her honour’s bonnet related to delay, both in respect of the time it took to commence proceedings related to a particular proof of debt and the time between Porter telling creditors he would apply to the courts for approval of his fees in January 2022 and the commencement of those proceedings in June this year.

Her honour in fact couldn’t understand, on the evidence before her, “why Wealth Street’s claim in the winding up of Property Drive would not have been paid in full promptly after the end of February 2021, and why the winding up – including any contested remuneration application – could not have been completed by no later than December 2021”.

“The Liquidator has given evidence that he “elected to delay the commencement of these proceedings pending the assessment and payment of Mortgage Lane’s taxation liability “due to the interrelated nature of the liquidations … and to save on incurring additional costs in the administration of the three companies”, she said.

“The Liquidator’s evidence does not explain why the interrelated nature of the liquidations rendered it appropriate to delay the commencement of these proceedings, and to therefore delay the completion of the winding up of Wealth Street.

“Nor does the Liquidator’s evidence identify any costs that were saved by doing so. Counsel for the Liquidator was unable to identify any cogent reasons for the delay when I raised this question at the hearing.”

Also harming Porter’s case were the two reasons he provided to the court for why he would be charging more than the original $25,000 he quoted.

As the judge pointed out, the two reasons Porter identified “as causing him to realise that his fees would exceed his $25,000 estimate are also mentioned in his list of the matters that he took into account in arriving at the $25,000 estimate”.

Porter’s counsel on the application Karen Petch tried hard to make much of the burden her client and his team at SV shouldered dealing with related party requests for information but the judge said many of the requests were reasonable and in any case, relying on such excuses doesn’t actually assist the court in determining whether or not the additional fees were incurred reasonably.

Such were the issues the judge identified that she calculated Porter should receive a further $70,346 for past remuneration and just $3,500 to cover his fees for the rest of the job.