Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) (No 2) [2019] FCA 93

Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) (No 2) [2019] FCA 93

Relief under s 1322(4)(a) to validate remuneration approvals refused: while the plaintiffs acted honestly in their contraventions, substantial injustice to persons likely has occurred (due to creditors being deprived of meaningful opportunity to scrutinise fees), and the departures from legal requirements were more than trivial. In the exercise of discretion, relief was also refused as remuneration claimed appeared excessive and disproportionate. Accordingly, the Court must itself determine or fix the plaintiffs' remuneration, with substantial reductions required for excessive charge rates, unnecessary work performed after stakeholders indicated opposition, work not reasonably necessary,...

Jurisdiction
Australia
Judgment Date
11 February 2019
Procedural Posture
Corporations – Remuneration and Validation Application / Judgment After Contested Hearing
Outcome
Application for validation of remuneration approvals refused. Remuneration fixing adjourned for Court determination subject to reductions.
Legal Topics
['remuneration of Administrators and Liquidators' 'validation of Acts Under S 1322 Corporations Act' 'procedural Compliance Under Corporations Act' "reasonableness of Liquidators' Remuneration" 'court Discretion in Remuneration and Validation' 'creditors Meetings and Resolutions' 'professional Standards for Insolvency Practitioners' 'duty to Augment Assets' 'applications Concerning Receivers' 'interaction With Proceeds of Crime Act']
['corporations Law' 'insolvency'] ['remuneration of Administrators and Liquidators' 'validation of Acts Under S 1322 Corporations Act' 'procedural Compliance Under Corporations Act' "reasonableness of Liquidators' Remuneration" 'court Discretion in Remuneration and Validation' 'creditors Meetings and Resolutions' 'professional Standards for Insolvency Practitioners' 'duty to Augment Assets' 'applications Concerning Receivers' 'interaction With Proceeds of Crime Act']

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Procedural Posture

Corporations – Remuneration and Validation Application / Judgment After Contested Hearing

Legal Issues

  1. 1 ['Whether plaintiffs contravened s 449E(7) and s 499(7) of the Corporations Act by failing to provide adequate remuneration reports to creditors' 'Whether orders should be made under s 1322(4)(a) of the Corporations Act to validate remuneration approvals despite procedural contraventions' 'Whether remuneration sought by plaintiffs as administrators and liquidators should be determined or fixed by the Court and in what amount' 'Extent to which remuneration claimed is reasonable regarding work performed, charge rates, and proportionality']

Ratio Decidendi

Relief under s 1322(4)(a) to validate remuneration approvals refused: while the plaintiffs acted honestly in their contraventions, substantial injustice to persons likely has occurred (due to creditors being deprived of meaningful opportunity to scrutinise fees), and the departures from legal requirements were more than trivial. In the exercise of discretion, relief was also refused as remuneration claimed appeared excessive and disproportionate. Accordingly, the Court must itself determine or fix the plaintiffs' remuneration, with substantial reductions required for excessive charge rates, unnecessary work performed after stakeholders indicated opposition, work not reasonably necessary,...

Court Disposition

Application for validation of remuneration approvals refused. Remuneration fixing adjourned for Court determination subject to reductions.

Orders

  • ["Plaintiffs' application under s 1322(4)(a) of the Corporations Act 2001 (Cth) refused." "Plaintiffs' application for determination or fixing of remuneration adjourned to a date to be fixed."]