Palmer v Palmer[2023] QSC 278

SUPREME COURT OF QUEENSLAND

1. [1]
   By orders made by this Court, a partnership between Keith and Garry Palmer, known as Lindsay Palmer & Sons, was to be wound up and Rajendra Khatri and Christopher Cook were appointed as receivers and managers of the partnership property for that purpose.
2. [2]
   The appointment of the receivers was necessary because the relationship between the partners had broken down and become hostile.
3. [3]
   Mr Cook and Mr Khatri were also appointed as statutory trustees for the sale of a residential property in which each of the applicants and the respondents were interested parties. The property has been sold, and no part of this application concerns that appointment.
4. [4]
   The partnership owned and operated a significant cattle property west of Mundubbera and the Royal Hotel at Mundubbera. It also owned residential property and some shares. The receivers have realised each of these assets since their appointment.
5. [5]
   The receivership is nearly complete. Gross realisations have exceeded $26 million and more than $19 million has already been distributed to the partners. The receivers now apply for orders to finalise the receivership, including an order approving their remuneration for acting as receivers of the property of the partnership in the amount of $1,152,396.26.
6. [6]
   As the receivers were appointed by the Court, it is the Court that must fix the receivers’ remuneration for the work they have undertaken in performing their roles.
7. [7]
   Keith Palmer does not oppose the application. However, Garry Palmer challenges the receivers’ remuneration claim on two bases. First, he says the receivers have not provided sufficient information and material to enable the Court to assess their claim. Second, he raises a number of specific concerns about the necessity of particular work undertaken by the receivers and the reasonableness of the charges incurred.
8. [8]
   Three central issues arise for determination on this application. They are:

   1. Have the receivers provided sufficient information and material to enable the Court to assess their claim?
   2. Was the work undertaken by the receivers necessary and are the charges incurred reasonable?
   3. What amount should the Court fix for the receivers’ remuneration?

Have the receivers provided sufficient information and material to enable the Court to assess their claim?

9. [9]
   Before considering the substance of the information and material provided in support of the remuneration claim, it is necessary to first outline the background to the circumstances in which the present application is made.

Appointment of the receivers and the basis for their remuneration claim

10. [10]
    Mr Khatri and Mr Cook are partners at Worrells Solvency & Forensic Accountants. They are each registered liquidators, registered trustees and experienced insolvency practitioners. On 8 August 2019 they were appointed by the Court as receivers and managers of the partnership, including its assets, to conduct the winding up of the partnership.
11. [11]
    The orders provided that the receivers shall have all of the equivalent powers prescribed by s 420 of the Corporations Act 2001 (Cth). The powers included the power to sell the assets of the partnership and the power to carry on any business of the partnership.
12. [12]
    The orders further provided that the receivers’ reasonable costs and expenses were to be paid from the assets of the partnership.
13. [13]
    On 10 February 2020, the receivers filed an application seeking a variation of the original orders, to clarify certain matters with respect to the property of the partnership and the receivers’ powers and to provide for their reasonable remuneration to be paid from the assets of the partnership.
14. [14]
    They also sought orders for payment of their remuneration for the work they had already done and authorising them to make further deductions and payments from the assets of the partnership for their future remuneration, in amounts to be agreed with the partners or approved by the Court.
15. [15]
    Upon the hearing of that application on 24 February 2020, the original orders were varied as sought.
16. [16]
    As to the orders sought in respect of their remuneration, upon the receivers giving certain undertakings to make any necessary repayments, further orders were made to the effect that:

    1. the receivers were authorised to be paid an amount of $403,178.24 (including GST) from the assets of the partnership, as interim remuneration for the period from 8 August 2020 to 22 January 2020; and
    2. a certification procedure was established, authorising the receivers to be paid further interim remuneration amounts in the future.
17. [17]
    The certification procedure permitted the receivers to file an ‘Interim Certificate’ with the Court, setting out the remuneration claimed for the relevant period. Upon filing the certificate, the receivers were authorised to deduct and pay from the assets of the partnership up to 80% of their certified claim. The orders required the receivers to give the partners seven days’ written notice of their intention to file an Interim Certificate and to provide a copy of the proposed certificate to be filed.
18. [18]
    The receivers’ application was otherwise adjourned to a date to be fixed.
19. [19]
    Between 17 March 2020 and 29 April 2022, the receivers filed 22 Interim Certificates. They have been paid amounts in respect of their remuneration in accordance with those certificates.
20. [20]
    The present application is the final claim to be made by the receivers for their remuneration.

Realisation of partnership assets

21. [21]
    Aside from cash balances, the principal assets of the partnership were:

    1. a 40-year rolling term lease over a working cattle station known as ‘Deearne Station’;
    2. cattle at Deearne Station;
    3. a hotel business known as the Royal Hotel, Mundubbera, which included gaming activities;
    4. the land on which the Royal Hotel business was conducted;
    5. a residential property located at Sinnamon Park; and
    6. shares, including a portfolio of shares in a CommSec Share Trading Account held in the names of Keith Palmer and Garry Palmer.
22. [22]
    Deearne Station was sold at auction on 20 December 2019 for $22,500,000, exclusive of GST. The cattle were sold under a separate contract of sale. The settlement of both contracts completed in February 2020.
23. [23]
    The receivers initially carried on the business at the Royal Hotel. It was later sold as a going concern to an entity associated with Garry Palmer. The settlement of the sale of the Royal Hotel and the land on which the business was conducted took place in October 2020. The hotel itself was sold for an adjusted purchase price of $339,658.44 whilst the hotel land was sold for a purchase price of $577,500.
24. [24]
    The Sinnamon Park residential property was sold in August 2020 for a purchase price of $320,000. Settlement took place in September 2020.
25. [25]
    Save for a small quantity of shares that were sold, the majority of the shares were transferred in specie to Garry Palmer and Keith Palmer.
26. [26]
    Gross receipts from the sale of the principal assets of the partnership totalled $26,353,647.90.
27. [27]
    To date, two distributions of the sale proceeds, totalling $19,572,922, have been made to the partners.

The receivers’ work practices and procedures and basis for charging fees

28. [28]
    Mr Cook has had the general day to day conduct and supervision of all work undertaken in relation to the receivership. Various other staff members at Worrells have worked on the matter, performing a range of tasks under the direction of the receivers.
29. [29]
    The rates charged by Worrells were commensurate with competitors in the insolvency industry.
30. [30]
    The different kinds of tasks involved in the work performed for the receivership were each assigned to a particular work category or activity type for accounting and reporting purposes and were given a unique charge code to identify them.
31. [31]
    Worrells used an internal electronic file management system called ‘Workbench’ to record the details of tasks and activities undertaken as part of the receivership. Workbench is a proprietary software program that has been developed and maintained by Worrells.
32. [32]
    The details of work performed on the receivership were recorded by Worrells’ staff in contemporaneous file notes made in Workbench. Separate file notes were created and maintained for each coded work category or activity type. When work was performed by a staff member, the relevant electronic file note was created or updated in Workbench.
33. [33]
    The Workbench file notes enabled the staff member responsible for working on a particular task to update the status of the matter and to provide instructions or information to other staff members. Commentary could be added to the file notes to document any issues encountered and to ensure a thorough log was maintained of the progress of the matter.
34. [34]
    Workbench also contained a function which allowed time cost recording and reporting. The time cost function recorded completed work under the relevant charge code nominated for that type of work. A separate entry was created for each completed task. Each entry included a description of the work or activity completed. Time was recorded in one-minute intervals.
35. [35]
    The time cost function was able to generate a report known as an ‘All Entries Time Cost Report’ (‘AETCR’), which collated all the time cost entries recorded in relation to the receivership for any given period. The AETCR contains details of the following:

    1. a description of the work that has been undertaken;
    2. the person who undertook the work;
    3. a work type description and number in respect of the work performed (i.e. the category into which the work falls); and
    4. the date, time spent and cost of undertaking the work.
36. [36]
    Throughout the receivership, Worrells kept the partners informed and updated about the progress of the matter in two ways.
37. [37]
    First, Worrells established a website for the receivership and provided an access password to each of the partners. The website was updated twice daily, Monday to Friday. It contained a summary of the amounts of receipts and payments, details of the dollar amount of time spent working on the matter, the amount of any fees drawn, the amount of any fees written off and the dollar amount of the work in progress. The website also provided a summary of the time charged for work performed, including details of the name of the person who performed the work, their position, hourly rate, total hours and the total dollar amount for the work performed. Through the website, the partners could also access a summary of the total dollar amount for all work performed as well as a summary of the time charged by category of work.
38. [38]
    Second, Worrells provided regular written update reports to the partners. In total, ten such written reports were provided. These updates contained information about the work undertaken in respect of the receivership and an estimated statement of position.

Mr Palmer’s request to access Workbench

39. [39]
    Throughout the receivership, Garry Palmer has sought further clarification and information about the fees being charged by the receivers.
40. [40]
    Although various reports and copies of the AECTRs were provided to Mr Palmer in response to his requests, he was not entirely satisfied that the information provided contained sufficient details of the work being performed by the receivers to justify the necessity of that work and the basis of their charges for doing the work.
41. [41]
    As a result, Mr Palmer requested access to Worrells’ Workbench electronic file management system. He wished to have the consultancy firm KPMG access the system on his behalf, so they could interrogate it and report on their analysis. The receivers declined to provide access, claiming Workbench was proprietary software which contained information that was confidential, subject to legal professional privilege and otherwise commercially sensitive. Worrells was concerned that their intellectual property rights might be prejudiced if access was granted to a competitor.
42. [42]
    Mr Palmer made an application to the Court seeking orders permitting access to Workbench. On 7 May 2021, the Court dismissed that application.
43. [43]
    In lieu of granting access or disclosing the Workbench file notes in full, Worrells prepared a summary of the work undertaken, based on the information contained in the file notes within Workbench, supplemented with some further information to provide context in respect of the work undertaken. This document is referred to as the Workstream Summary Report.

The receivers’ information and material before the Court

44. [44]
    Mr Cook has sworn several affidavits in support of the receivers’ application. His first affidavit provides a high-level overview of the receivership and exhibits copies of relevant documents, including the Workstream Summary Report and a Master Staff Time Report.
45. [45]
    The Master Staff Time Report is a further report produced by Workbench. It shows each of the staff members who have worked on the receivership and includes details of their position, average hourly rate, total hours worked and the total dollar amount charged for the time they have worked on the matter.
46. [46]
    Mr Cook’s second and third affidavits respond to some of the particular issues identified by Mr David Clout, an expert insolvency practitioner who was retained by Mr Palmer to provide a report in respect of the remuneration claim.
47. [47]
    Mr Cook’s third affidavit also exhibits a copy of the complete AETCR from 8 August 2019 to 19 April 2023.
48. [48]
    Mr Cook has states that he believes the amount of remuneration sought is reasonable, having regard to the complexity of the receivership, the length of time the receivership has taken, the value and nature of the partnership assets, the various disputes raised by the partners and the quality of the work performed by Worrells, which he believes to be to a high standard. He further states that the rates charged by Worrells compare favourably to the rates charged by other insolvency firms.

Mr Clout’s report and evidence for Mr Palmer

49. [49]
    Mr David Clout is a registered liquidator and an experienced insolvency practitioner. He was engaged by Mr Palmer’s lawyers to provide a report setting out his opinion about the following matters:

    1. What would have been a reasonable timeframe for the receivers to complete the winding up of the partnership?
    2. What would have been a reasonable amount of remuneration charged by the receivers?
    3. Whether there are any issues which can be identified from the receivers’ invoices, having regard to relevant authority?
50. [50]
    For the purposes of providing his report, Mr Clout was briefed with material which included copies of the receivers’ remuneration claim application, Mr Cook’s first affidavit, and the ten update letters from Worrells to the partners. He was also later provided with an electronic, searchable copy of the complete AETCR.
51. [51]
    Mr Clout’s report, dated 17 July 2023, sets out his opinions with respect to each of the matters he was asked to address. He has also provided two affidavits. The first produces his report and summarises its conclusions and the second responds to matters raised by Mr Cook in his second affidavit.
52. [52]
    Mr Clout concludes:

    1. the winding up of the partnership by the receivers did not occur within a reasonable time;
    2. the work performed and the invoices rendered by the receivers have not been subject to adequate review and adjustment by the receivers prior to the invoices being submitted to and paid by the partnership;
    3. the invoices issued by the receivers include charges for work that was not necessary or not properly performed; and
    4. he is unable to form an opinion as to the precise value of the receivers’ work because of an absence of relevant supporting documents. Nevertheless, he considers the amount charged exceeds what is reasonable.
53. [53]
    With respect to point (c) above, Mr Clout has identified a number of specific matters which I will address further below when considering the issue of the necessity of the work performed and the reasonableness of the receivers’ claim.
54. [54]
    With respect to point (d), Mr Clout states that in order to provide an opinion as to what a reasonable amount of remuneration would be, he would need to have access to other evidence and records, such as contemporaneous file notes kept by Worrells throughout the period of the receivership and file notes relating to the decision to continue trading the Royal Hotel.  In other words, he would need to have access to the Workbench file notes.
55. [55]
    Although he examined the AETCR, Mr Clout states the information provided in that report does not provide sufficient detail to enable him to provide a definitive view of the reasonableness of the recorded charges.

Submissions

56. [56]
    Relying upon Mr Clout’s report and affidavits, Mr Palmer submits the receivers have not produced satisfactory evidence to demonstrate the reasonableness and prudence of the tasks undertaken by them for which they seek remuneration. He says they have failed to understand the nature and extent of the evidence which they must present to permit the Court to determine both the quantum of the reasonable remuneration to which they are entitled for the work done by them, and to demonstrate that the work was necessary and reasonable for the administration.
57. [57]
    In particular, Mr Palmer submits that the Workstream Summary Report and the AETCR fail to adequately disclose sufficient details to enable the Court to be satisfied that what is claimed by the receivers is reasonable.
58. [58]
    The receivers contend that they have provided sufficiently detailed evidence to demonstrate both the necessity of the work undertaken and the reasonableness of their remuneration claim. They submit that the material they have submitted to the Court amply justifies their claim.

Relevant legislation and legal principles

59. [59]
    The receivers are officers of the Court. They are authorised by the Court to act in accordance with the terms of their appointment.^[1] Their rights, powers and duties are solely determined by the terms of the orders appointing them.^[2]  In the performance of their roles, they owe a fiduciary duty to all persons interested in the subject property.^[3] They must act in the best interests of beneficiaries when discharging their duties and functions.^[4]
60. [60]
    Under r 269(1) of the Uniform Civil Procedure Rules 1999 (Qld) (‘UCPR’), a receiver is allowed the remuneration, if any, the Court sets.

61. [61]
    The Court is to construe and apply the terms of the appointment orders in fixing a receiver’s remuneration. The Court’s task is to fix the remuneration by applying and taking into account a broad range of evaluative factors, but ultimately fixing reasonable remuneration.^[5] In setting an amount of remuneration allowed, it is necessary for the Court to consider the basis on which the charges are made and whether that basis is reasonable.^[6]

62. [62]
    There is no dispute about the general principles that apply when the Court is required to consider the reasonableness of remuneration claimed by a receiver. They were relevantly summarised by Barrett J in Re Say Enterprises Pty Ltd:^[7]

1. A receiver is entitled to the costs, charges and expenses properly incurred in the discharge of the receiver’s ordinary duties, or in the performance of extraordinary services that have been sanctioned by the Court.
2. The ultimate question is what amount of remuneration is ‘reasonable’, and this involves considering whether the work in respect of which remuneration is claimed was reasonably undertaken in the due course of the receivership, and whether the amount claimed for it is a fair and reasonable reward for it. The objective is to award a sum or devise a formula which will reasonably and fairly compensate the receiver for the time and trouble expended in the execution of his or her duties and the responsibility he or she has assumed.
3. The receiver bears the onus of justifying the reasonableness and prudence of the tasks undertaken for which remuneration is sought, and the reasonableness of the remuneration claimed for them.
4. Remuneration may be allowed on the basis of a fixed salary, a commission on receipts, or a quantum meruit having regard to the time, trouble and responsibility involved. It is a matter for the Court to determine what basis is appropriate in the particular case, having regard to the principle that the remuneration must be reasonable.
5. If a time-based approach is adopted, the Court is guided by professional scales of charges, with emphasis on the broad average or general rate charged by persons of the relevant status and qualifications who carry out the relevant type of work. The Court will usually act on time sheets created in the receiver’s office, provided that they do significantly more than merely detail the total number of hours spent by the receiver and officers of particular grades on his or her staff.
6. By analogy, the task involves consideration of the matters referred to in Corporations Act, s 425(8), which applies to receivers appointed under an instrument, namely:
   1. (a)
      the extent to which the work performed by the receiver was reasonably necessary;
   2. (b)
      the extent to which the work likely to be performed by the receiver is likely to be reasonably necessary;
   3. (c)
      the period during which the work was, or is likely to be, performed by the receiver;
   4. (d)
      the quality of the work performed, or likely to be performed, by the receiver;
   5. (e)
      the complexity (or otherwise) of the work performed, or likely to be performed, by the receiver;
   6. (f)
      the extent (if any) to which the receiver was, or is likely to be, required to deal with extraordinary issues;
   7. (g)
      the extent (if any) to which the receiver was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case;
   8. (h)
      the value and nature of any property dealt with, or likely to be dealt with, by the receiver;
   9. (i)
      whether the receiver was, or is likely to be, required to deal with:

1. one or more other receivers; or
2. one or more receivers and managers; or
3. one or more liquidators; or
4. one or more administrators; or
5. one or more administrators of deeds of company arrangement;
   1. (j)
      the number, attributes and behaviour, or the likely number, attributes and behaviour, of the company’s creditors;^[8]
   2. (k)
      if the remuneration is ascertained, in whole or in part, on a time basis:

1. the time properly taken, or likely to be properly taken, by the receiver in performing the work;
2. whether the total remuneration payable to the receiver is capped; and
   1. (l)
      any other relevant matters.

7. Many of those factors - in particular, pars (d)-(e) and (g)-(h) - have as their unifying theme the concept of proportionality (being the relationship of the work done and the remuneration claimed to the value of the assets of the partnership), which is an important consideration in determining reasonableness.
8. It will rarely be appropriate for a Judge to review a decision of a Registrar on remuneration on an item-by-item basis.^[9]

…

63. [63]
    There is also no real dispute that the following further general principles, which are established by various authorities in relation to fixing the remuneration of receivers, liquidators or administrators under relevant provisions of the Corporations Act may be adapted and applied by analogy to the Court’s assessment under r 269:

    1. a receiver is entitled to remuneration that is fair and reasonable and the receiver carries the onus of establishing that entitlement.^[10] The function of the Court is to determine the remuneration by considering the material provided and bringing an independent mind to bear on the relevant issues;^[11]
    2. the procedure of approving a receiver’s remuneration is a summary one in which the rules of evidence are ordinarily not strictly observed. The Court must determine for itself whether the remuneration claimed is fair and reasonable and the absence of a contradictor does not detract from the Court’s duty in this regard. Should the receiver fail to provide adequate material to enable the Court to decide whether or not the claim is reasonable, the Court should not make an order;^[12]
    3. the Court does not usually undertake a ‘line by line’ analysis of the receiver’s time sheets - the essential purpose of the information to be provided on the summary procedure is to enable a person interested in the fund from which fees will be drawn to ascertain whether there are matters to which objection should be taken;^[13]
    4. the receiver’s views as to what is reasonable are relevant but not determinative - one does not gainsay the considered oath of an officer of the court, but neither does one uncritically accept the opinion of a person interested in the outcome of the application.^[14] However, the self-serving nature of such a statement means that in the face of contention it cannot be afforded a high degree of weight;^[15] and
    5. the concept of proportionality (being the relationship of the work done and the remuneration claimed to the value of the property the subject of receivership), is an important consideration in determining reasonableness.^[16] It involves a consideration of the size of the estate, the nature, complexity and value of the work performed, the risk undertaken by the receiver and the benefit obtained.^[17] The question of proportionality is an anterior question to consider in order to determine whether time was reasonably spent. If the relevant work plan underpinning the actual time spent and the allocation of personnel at the requisite level of seniority was disproportionate to the nature, importance and complexity of the task and the benefit to be achieved from the task, then it might be said that the time spent on the task was not time reasonably spent.^[18]
64. [64]
    Whilst there was general agreement about the above principles, the parties disagreed about what the authorities require in respect of the nature and extent of the material that must be provided to the Court by a receiver when claiming remuneration for work undertaken by them for the receivership.
65. [65]
    In that respect, Mr Palmer relied upon the following statement by Shepherdson J in Re Solfire Pty Ltd (No 2), when reviewing a provisional liquidator’s claim for remuneration:^[19]

In my view, when a provisional liquidator seeks to have his remuneration determined by the court he should provide a document not dissimilar in form to the Bill of Costs in taxable form provided by a solicitor to his client... He should identify the person or persons and the grade or grades of the person or persons engaged in the particular task concerning the provisional liquidation, he should identify that task and dates on which time was spent on it, the amount of time spent on it and he should identify the relevant rate, according to the grade of the person or persons performing the work. I also consider that he should require the person performing the work to keep reasonably detailed diary notes and time sheets which documents should be open to inspection by persons entitled to see them.

66. [66]
    Mr Palmer also cited Lancet,^[20] where Shepherdson J reiterated what he had stated in Solfire and applied the same approach to a claim for remuneration sought by a court-appointed receiver.
67. [67]
    Senior counsel for Mr Palmer submitted that Solfire stated the law in Queensland and that I was obliged to follow it, and the decision in Lancet, unless I was convinced it was wrong.
68. [68]
    The receivers challenged this proposition. They submitted that I am not bound by what Shepherdson J stated in Solfire and Lancet. They argued that the correct statement of principle was articulated by the Full Court of the Supreme Court of Western Australia in Venetian, where after setting out the above excerpt from Shepherdson J’s judgment in Solfire, the Court stated:^[21]

In our opinion, however, it is, with respect, unnecessary to lay down an absolute rule, in such detailed terms, concerning the statement of account to be provided by a provisional liquidator. It may well be that in a particular case information particularised as suggested by Shepherdson J would be appropriate. In other cases less detailed information may be required. Every case depends on its own circumstances. But the overriding principle remains: sufficient information must be provided to the court to enable it to perform its function...

69. [69]
    I accept the receivers’ submissions on this point.
70. [70]
    The cases of Solfire and Lancet were decisions of a single judge of this Court. Whilst I of course treat each of Shepherdson J’s judgments with the greatest of respect, I am not bound by his Honour’s reasons for deciding those cases.
71. [71]
    I consider the correct statement of general principle is that identified by the Court in Venetian. That is not to say, however, that I consider Shepherdson J to be wrong. Rather, as the Court concluded in Venetian, whilst the particularity suggested by his Honour may well be required in a particular case, it is not necessarily required in every case. What is required is sufficient information to enable the court to perform its function. The relevant function of the Court here is to allow such remuneration, if any, the Court fixes and in doing so to determine whether the remuneration sought by the receivers is fair and reasonable.

Consideration

72. [72]
    In my opinion, the material the receivers have provided to the Court is sufficient to enable me to generally determine the reasonableness of the remuneration they claim.
73. [73]
    I consider the combined contents of the affidavits of Mr Cook, the Workstream Summary Report, the AETCR and the Master Staff Time Report adequately disclose the nature and extent of the work undertaken, the identity of the staff member who did the work, when the work was done, the time taken to do the work, the rate at which that work was charged and the amount charged for doing the work.
74. [74]
    Whilst Mr Cook’s first affidavit only provides a general overview of the receivership and the tasks undertaken by the receivers and other Worrells staff under their supervision and direction, it exhibits the 105-page Workstream Summary Report, which provides greater detail. Although the primary file note records contained within Workbench have not been produced, as Mr Cook explains in his affidavit, the Workstream Summary Report and the information contained in it have been prepared from the information contained in the Workbench file notes.
75. [75]
    The Workstream Summary Report provides a comprehensive narrative summary of the work performed under the receivership, according to its allocated workstream category, together with an explanation of any significant issues or complexities encountered in performing that work. However, it does not identify the dates or times when tasks were done, nor does it detail who performed the task, at what rate the work was charged, how long the task took to complete or how much was charged for completing the work.
76. [76]
    By itself, the Workstream Summary Report does not provide sufficient information and details to assess the reasonableness of the receivers’ remuneration claim. However, the Workstream Summary Report is not to be considered in isolation.
77. [77]
    Mr Cook’s final affidavit exhibits a printout of the entire consolidated AETCR spreadsheet, covering 8 August 2019 to 19 April 2023.  The report is 1297 pages long. It contains thousands of entries, listed in chronological order. It records a short description of the work undertaken, together with the designated Worrells’ work category code for the work, identifies the person who did the work and notes the date the work was done, the time spent on the work and the cost of the work.
78. [78]
    An illustration of the details recorded in the AETCR appears in the following example taken from the report:

79. [79]
    I consider the information provided in the ‘Details’ column of the report in most instances provides sufficient information about the task undertaken.
80. [80]
    However, if there was any ambiguity or inadequacy, it is possible to cross-reference entries in the AETCR with the narrative description of the work undertaken recorded in the Workstream Summary Report. For instance, the example above corresponds with the details appearing on pages 67 to 70 of the Workstream Summary Report under the heading ‘360 Assets - Land & Buildings - Royal Hotel, Lyons St, Mundubbera – Sale of’.
81. [81]
    It also possible to confirm the rates of charge and total time spent working on tasks for the receivership by reference to the Master Staff Time Report exhibited to Mr Cook’s first affidavit. Using the example above, the Master Staff Time Report shows that Declan Lane held the position of ‘Executive Analyst’ and performed work at an average hourly rate of $410 per hour, excluding GST. The 36 minutes spent performing the task in the above example, when charged at $410 per hour, excluding GST, produces the total charge of $270.60, inclusive of GST, as recorded.
82. [82]
    When these reports are read together, there is, in my view, ample and adequate information to enable an assessment to be made of the work undertaken, the necessity and reasonableness of performing that work and the reasonableness of the charges incurred for performing that work.

Was the work undertaken by the receivers necessary and are the charges incurred reasonable?

83. [83]
    The conclusion I have reached about the adequacy of the material provided to the Court to justify the receivers’ remuneration claim does not mean that I accept, without more, that all the work done was necessary, nor that the fees charged were reasonable. It is necessary to further consider whether the material establishes those matters, in light of the specific concerns raised by Mr Palmer.

Specific concerns

84. [84]
    The specific concerns of Mr Palmer are largely those identified by Mr Clout in his report. They are in respect of delays adding to costs, the possible duplication of work, overservicing and overcharging for work, undertaking apparently unnecessary and unauthorised work and the receivers failing to properly review and adjust the fees they were charging. Mr Palmer also expresses concerns about the lack of proportionality in respect of some particular tasks as well as with respect to the overall claim itself.
85. [85]
    I note that aside from these specific concerns, no issue was taken with respect Mr Cook’s evidence about the nature and extent of the work undertaken for the receivership and the necessity and reasonableness of that work or the reasonableness generally of the rates charged by the receivers.

Trading on costs and delay in finalising the receivership

86. [86]
    On his analysis, Mr Clout identifies the category of work with the biggest value in the receivers’ remuneration claim is in respect of the trading on of the businesses.  He calculates the total remuneration claimed for tasks in that category as $426,186.26.
87. [87]
    Mr Clout notes that the decision to trade on a business in receivership is usually made shortly after a receiver’s appointment and will then be subject to ongoing review throughout the administration. He notes that it can be a difficult decision for a receiver to make and the decision is usually made on the basis of information available at the time and should not be judged with hindsight.
88. [88]
    He further notes that whilst a receiver will usually document the reasons for trading on a business at the time the decision is made, he was not provided with any contemporaneous evidence of the reasons why the receivers decided to continue to trade the businesses, particularly the business of the Royal Hotel.
89. [89]
    Accordingly, Mr Clout states that he is unable to form an opinion as to whether the receivers’ decision to trade on the businesses, and the costs associated with doing so, were necessary and properly performed.
90. [90]
    Mr Clout notes that the majority of the partnership assets were realised by 20 February 2020, over a period of 30 weeks from the appointment of the receivers. He identifies this as the initial ‘realisation phase’, which is an intensive time in any receivership. In this case, Mr Clout notes that the fees incurred up until the end of the realisation phase were $593,781, representing about 51% of the fees charged. He further notes that thereafter the further 49% of the fees were incurred in winding up the partnership over the next three years and it is likely the delay has led to unnecessarily increased costs.
91. [91]
    In response to these concerns, Mr Cook notes that of the total remuneration claim, $320,313.33 is attributable to the costs incurred for trading on the Royal Hotel business, representing 27.71% of the total work performed; and $105,136.54 is attributable for costs incurred for trading on Deearne Station, representing 9.09% of the work performed.
92. [92]
    Mr Cook states that he made the decision to continue to trade on Deearne Station at the time of appointment, because he formed the view that it would be preferable to sell the cattle and de-stock the station prior to sale of the property. The cattle were then sold over a period of several months. The period of trading on at Deearne Station was just over six months, during which the cattle sales yielded $2,110,772.58.
93. [93]
    As to the decision to trade on the business of the Royal Hotel, Mr Cook states that at the time of appointment, he did not have current financial information as to the profitability of the business, nor were there any accounts available to provide up to date information about the trading and profitability of the business. In the absence of that information, he believed that it was not possible to make a fully informed decision about whether it was best to shut the business or to sell it as a going concern. He decided to continue trading and sell the business as a going concern in order to maximise the value of the sale of the hotel and the land on which it was situated.
94. [94]
    The sales campaign commenced in October 2019. An entity associated with Mr Palmer submitted the highest offer to purchase the business. Mr Cook states that by November 2019 the receivers had two viable options - to either sell the hotel as a going concern to Mr Palmer or to close the hotel and sell the land and hotel gaming machine licences separately. He further states that they were advised by their selling agent that it was preferable to sell the hotel as a going concern. Various factors, such as a comparison between the purchase offer and the likely proceeds that would be realised from the separate sale of the land and gaming machine licenses, the poor state of the building and the likely need for repairs and the likelihood of significant employee entitlements being owed to the live-in hotel manager, Mr Gerry Byrnes,^[22] led Mr Cook to determine that it was preferable to sell the hotel to Mr Palmer as a going concern.  As a result, Mr Cook decided to accept Mr Palmer’s offer.
95. [95]
    Mr Cook states that after some further negotiations about the terms of the sale, the sale contract was entered into on 27 February 2020. Thereafter, there were delays due to COVID-19, the inability to transfer the liquor and gaming licences and various settlement extension requests made by Mr Palmer, resulting in the date for settlement being extended to 1 October 2020. As the sale contract was on a going concern basis, the receivers were obligated to continue trading during the seven-month period that the contract was on foot. Mr Cook states further fees were incurred as a result of the extended period the receivers were required to continue trading.
96. [96]
    Once settlement had completed, there was a further period, through until May 2022, where further fees were incurred in respect of the hotel as a result of the receivers continuing to be involved in Mr Byrnes’ employee entitlement claim.
97. [97]
    Mr Cook disagrees with Mr Clout’s assessment of the completion of the realisation phase. His view is that the realisation phase concluded in October 2020 with the settlement of the sale of the Royal Hotel and that by that stage the fees incurred totalled $885,422.24, inclusive of GST, representing 76.58% of the remuneration claim.
98. [98]
    In my view, no criticism can be made of Mr Cook’s decisions to continue to trade on the businesses. In respect of Deearne Station, Mr Cook’s decision was sensible and ultimately yielded sale proceeds for the cattle and the station far in excess of the associated trading on costs. In respect of the Royal Hotel, the decision to trade on was logical and supported by advice from the selling agent. Mr Cook assessed the benefits of each option and determined that it was preferable to continue trading as it was likely a higher return would be achieved for the partners. As to the subsequent period of delay and the further costs incurred, there were obvious external factors, including extension requests made by Mr Palmer himself, that led to the delay in settlement. During that period, the receivers were contractually obliged to continue to trade. Additional costs were necessarily incurred during this period.
99. [99]
    I accept Mr Cook’s opinion that the realisation phase of the receivership was completed in October 2020. Whilst it may be fair to say that many of the standard tasks which required the skill of the receivers had been completed by February 2020, when the contract for the sale of the Royal Hotel had been entered into, the simple fact is that the assets were not fully realised at that time.

Fee approval costs and delay in bringing the fee approval application

100. [100]
     Mr Clout states that there has been delay in bringing the fee approval application, which appears to be unreasonable and to have led to unnecessarily increased costs.
101. [101]
     Mr Clout identifies ‘fee approval’ costs as the category of work with the third largest value in the receivers’ remuneration claim. He calculates the total remuneration claimed for tasks in this category as $177,195. He notes that figure equates to approximately 15% of the total claim and as such it may warrant reduction on the basis of proportionality.
102. [102]
     Mr Palmer submits that the remuneration claimed for this category of work is manifestly excessive for a task which necessarily involved the receivers simply collecting, for their solicitors to incorporate into an affidavit, information that was stored and readily available on Workbench.
103. [103]
     With respect to the delay in bringing the fee approval application, Mr Cook notes that a substantial matter that required investigation and consideration was an employment claim made by the manager of the Royal Hotel, Mr Gerry Byrnes. The receivers were first notified of Mr Byrnes’ claim on 23 September 2020. The claim was only resolved on about 10 May 2022, after entry into a settlement deed.
104. [104]
     Following resolution of Mr Byrnes’ claim, there was an investigation into a dispute concerning drawings by the partners and on 15 June 2022, a second distribution was made to partners. The 2022 financial statements for the partnership were then finalised on 4 October 2022. The remuneration application was filed about 6 ½ months later.
105. [105]
     Mr Cook notes that the total amount of the remuneration claim attributable to the ‘fee approval’ work category is $178,879.60, representing 15.47% of the work performed. He accepts that a considerable amount of time was spent preparing the fee approval material but says that was largely due to putting together the information to support the application as well as to defend the application brought by Mr Palmer for access to Workbench. 
106. [106]
     Mr Cook states that the fee approval work was not simply in respect of those two applications. It also included responding to various requests for information made by Mr Palmer through his lawyers, including defending the application brought by Mr Palmer for access to Workbench.
107. [107]
     Mr Cook calculates the costs of preparing the fee approval application material alone as $120,310.15.
108. [108]
     In my view, there does seem to have been delay in the receivers bringing their remuneration claim. But the delay does not, of itself, seem to have produced other additional costs. Rather, it seems the majority of the fees incurred after 4 October 2022 were in respect of work done for the fee approval application filed on 21 April 2023.
109. [109]
     I do not consider the fees attributable to the work done by the receivers to defend Mr Palmer’s application for access to Workbench were unnecessary or unreasonable. The receivers had legitimate reasons for not granting access to Workbench and were entitled to maintain their position. Indeed, they succeeded in resisting the application.
110. [110]
     As to the costs associated with preparing the present application, I accept that there has been a substantial amount of work required to collate and prepare the application material. I do not consider the work done or the costs attributable for this work to be unreasonable. Quite aside from the need to present adequate information and material to enable the Court to perform its function to approve and fix reasonable costs, it is evident from Mr Palmer’s repeated requests for the receivers to provide further information about their work and their costs, the unsuccessful application to seek access to Workbench and the enduring acrimonious relationship between the partners, that it was necessary for the receivers to undertake substantial work to prepare the application.

Unnecessary and unauthorised work

111. [111]
     Mr Clout states that from his review of the AETCR it is evident that a significant amount of time was taken by staff to record in the Workbench system details of work undertaken, the purpose of the work and difficulties encountered in performing the work. Mr Clout formed that opinion by totalling all time entries in the AETCR that included the description ‘FN’, on the assumption that this entry was used by staff to record time they spent updating file notes in Workbench. On his calculations, there were 4,573 separate time entries which included time updating file notes, totalling $263,996.37 in time costs. He considers these costs were not necessary.
112. [112]
     Mr Clout further states that the preparation of the Workstream Summary Report does not appear to be authorised. He notes the Workstream Summary Report was created to support the remuneration claim and that this was an unnecessary duplication and charge, brought about by the receivers’ attitude to Mr Palmer’s request to access Workbench.

113. [113]
     In addition to these matters, Mr Palmer submits that the receivers have also charged fees in respect of a domestic violence order that was in place between the partners at the time of their appointment and in respect of the application made to vary the original appointment orders, so as to clarify their powers to deal with the shares held by the partnership.
114. [114]
     With respect to the work done in respect of the domestic violence order, Mr Palmer submits there is no evidence to show how the work was necessary to the administration of the partnership.
115. [115]
     With respect to the work done in respect of the application to vary the appointment orders, Mr Palmer submits that the receivers have themselves acknowledged that the work was unnecessary and that the variation of the appointment orders in this respect was sought at the behest of the Commonwealth Bank, yet the receivers have charged the partners for this work. Mr Palmer notes that the receivers have claimed fees of $17,306.56. He submits this amount is patently unreasonable.

116. [116]
     In response to Mr Clout’s concerns, Mr Cook states that he believes Mr Clout has taken the $263,996.37 figure ‘out of context’. He states that in most cases where the ‘FN’ notation appears, there was other work performed that was also included in the relevant entry and therefore the time charged was not just in respect of updating a file note.
117. [117]
     Mr Cook accepts that the creation of the Workstream Summary Report may have resulted in some duplication but says this was necessary because the Workbench file notes could not be provided for the confidentiality reasons stated in his first affidavit. He further states provision of the complete file notes would have required significant redactions to be made to the material and this would have taken a substantial amount of time to do. In any event, Mr Cook considers the Workstream Summary Report provides the necessary information to contextualise the narrations of the work done and recorded in Workbench.
118. [118]
     I accept Mr Cook’s explanation about the ‘FN’ entries. I do not consider they are indicative of unnecessary work or unreasonable costs.
119. [119]
     In my view, the creation of the Workstream Summary Report was not unauthorised. It was obviously necessary as part of the receivership that the receivers record the details of the work being performed and the charges being incurred for that work. I accept that because that information was primarily recorded within Workbench and Worrells did not wish to grant Mr Palmer access to its system for its own commercial and confidentiality reasons, there was some duplication of work and additional costs incurred through the creation of the Workstream Summary Report. However, it seems to me that this was necessary, in circumstances where Mr Palmer did not accept that the receivers had provided sufficient information about the work performed and basis for their charges. In short, Mr Palmer insisted on being provided with additional information, yet now complains about the associated costs for putting the receivers to the effort of producing that information. Whilst Mr Palmer maintains that the Workstream Summary Report does not actually provide the required information sought, as I have already concluded above, in my view, when the report is read together with the other reports produced by the receivers in support of their application there is adequate and ample material to enable Mr Palmer to assess the reasonableness of the work performed and the charges incurred.
120. [120]
     I do not consider there is any substance to Mr Palmer’s complaint about the fees incurred in respect of the work undertaken for considering the impact of the domestic violence order. The receivers became aware at the commencement of their appointment that there was a domestic violence order in place between the partners. It was obviously necessary that they obtain details of the order for the proper conduct of the receivership and to ensure that any dealings they had with the partners in respect of the partnership property and the discharge of their duties did not breach the order.  The Workstream Summary Report plainly sets out the work that was undertaken in respect of this matter and the reasons for doing so.
121. [121]
     I also do not accept Mr Palmer’s complaints about the work done in respect of the shares. CommSec had written to the receivers advising of concerns it held with respect to the original orders and advising that a new order would be required to enable it to disburse the shareholding. It seems CommSec did not consider the share trading account held in the names of Keith and Garry Palmer was actually property of the partnership. There is no evidence that the receivers considered the application for a variation of the appointment orders to be unnecessary. Rather, as Mr Cook explains in his first affidavit, the receivers considered CommSec had misunderstood the terms of the original orders but, in order to avoid a dispute with CommSec, the receivers sought a variation of the appointment orders.  In my view, this was an entirely reasonable commercial decision to make and the costs incurred were not unnecessary or unreasonable.

Other duplication of work

122. [122]
     Whilst he was unable to provide a definitive view about the matter because of the apparently limited descriptions of work in the AETCR and without being able to review the source file notes, Mr Clout considers the remuneration claim may contain unnecessary duplication of work and/or inefficiency.
123. [123]
     Other examples of apparent duplication identified by Mr Clout through a review of sample entries in the AETCR were: five staff members attending the Deearne Station auction; multiple staff members attending a briefing meeting with a new team member, with each recording and charging the same time; and numerous instances where charges were recorded for tasks ‘attempted’.
124. [124]
     Mr Cook accepts some of the entries identified by Mr Clout involved duplication and has agreed to deduct those costs, totalling $1,531.02, from the remuneration claim.
125. [125]
     With respect to entries that recorded tasks that were ‘attempted’, Mr Cook states that the work done was necessary and entries of this kind do not mean that work was preformed improperly or had to be redone. Further, Mr Cook states that often times, entries which included the word ‘attempt’ or ‘attempted’ also included other tasks which had been undertaken. 
126. [126]
     I do not consider the entries containing variations of the word ‘attempted’ are indicative of unproductive work or work that had to be repeated. I accept Mr Cook’s explanations in this regard. There are obviously many tasks in a receivership that are necessary to perform which may not be achieved at first, through no fault on the part of the receiver. In my view, it is entirely reasonable to charge for such work.

No review, adjustment or write-offs

127. [127]
     Mr Clout notes that it is generally appropriate for the receivers to calculate and charge their remuneration on a time basis. In his opinion, subject to appropriate review and approval processes to ensure time is charged for necessary work, properly performed, charging on a time basis would provide a reasonable basis for calculating the remuneration for work which was required to be completed.
128. [128]
     Mr Clout observes that the receivers have not commented on their process for reviewing the time costs entries that appear in the AETCR. In his opinion, it would be unusual in a receivership lasting four years for every single time cost entry made to be necessary and reasonable without any adjustment or write-offs.
129. [129]
     Mr Clout reviewed a sample of entries from the AETCR. He noted that one employee who worked on the matter, Ms Shiels, was promoted on a number of occasions and her rate of charge increased each time, yet the work she was performing stayed the same. No adjustment had been made to reduce the rate charged for that work.  He also determined that another employee, Nelson Chung, who had also been promoted, completed work that was charged at an incorrect rate.
130. [130]
     Mr Clout notes other instances where he believes work that appeared to be administrative in nature, such as ‘organising accommodation for travel’ or ‘saving invoices’, had been inappropriately charged at Executive Analyst rates of more than $400 per hour.
131. [131]
     In response to these concerns, Mr Cook states that the receivers did in fact review the remuneration they claimed before issuing Interim Certificates. Mr Cook outlines the process that was undertaken in each instance, which included a line-by-line review of each invoice by Ms Shiels in which she identified any unclear, duplicated, unnecessary or incorrect time recordings or narrations and brought those to the attention of Mr Cook. Mr Cook then considered those entries and deleted or amended them as appropriate.
132. [132]
     Mr Cook maintains that work has always been performed by staff at an appropriate level. He states that when a person was promoted within the team working on this matter, Worrells would bring on another lower-level staff member to complete the corresponding lower-level work. In relation to entries where tasks involved things like ‘saving invoices’, Mr Cook is unable to respond fully without knowing which specific items are being referred to by Mr Clout. Nevertheless, he states that it was his practice to have senior staff handle the invoice saving for the settlement of the Royal Hotel to ensure there was no error that would adversely affect the settlement and often times other tasks would also be completed at the same time by intermediate to senior level staff and the ‘invoice saving’ component of the work done would have taken minimal time.
133. [133]
     Because of the matters raised in Mr Clout’s report and affidavits, Mr Cook reviewed the charge out rate for work performed by Nelson Chung and discovered there was in fact an error made where for part of the relevant period of work the Worrells’ system had overcharged for work performed by Mr Chung. As a result of his review, Mr Cook recalculated the work performed by Mr Chung. He quantified the overcharged amount as $2,079.10 inclusive of GST. The receivers have agreed to reduce their claim by this amount.
134. [134]
     Mr Cook also reviewed the rates charged for all other staff over the entirety of the receivership and has found no other errors in respect of the hourly charge out rate for any other employee.
135. [135]
     I accept Mr Cook’s responses to the concerns raised by Mr Clout. It is clear that he did carry out a review process and that during the receivership he has deleted or amended inappropriate charges. It is also evident that Mr Cook has now reviewed the rates of charges for all staff who worked on the matter and accepts there was an error made in respect of Mr Chung and it is appropriate to reduce the remuneration claim accordingly.
136. [136]
     Whilst Mr Clout points out that he has not seen any contemporaneous notes recording how and when such reviews occurred, there is in my view no basis to doubt that they were done or to question the veracity of Mr Cook’s explanations.

Overservicing

137. [137]
     Mr Clout notes that approximately $72,275, or about 5%, of the remuneration claim is in respect of ‘reports, advices and communications’.  On his review, the work charged in this category appears to have comprised tasks associated with preparing the regular updates to partners. Mr Clout observes that while reporting to stakeholders in an insolvency administration is entirely appropriate, no specific power or duty was provided for this in the Court’s appointment orders.
138. [138]
     Mr Clout states that progress summaries provided in dividend distribution reports to the partners would have provided a sufficient update to the partners.
139. [139]
     Further, given that Worrells was also providing twice daily updates to its dedicated website for the receivership, Mr Clout suggests the partner updates may have exceeded what was necessary.
140. [140]
     In response to these concerns, Mr Cook notes that the amount of the remuneration claim attributable to partner updates is actually $69,628.52, representing 6.02% of the work performed. He disagrees with Mr Clout’s characterisation of partner updates. He states that he has always provided update reports in his experience as a court appointed receiver and believes it was entirely appropriate to provide them in this case, where there were two partners who each had a large financial interest in the outcome of the receivership.
141. [141]
     As for the website updates, Mr Cook states that this was an entirely automated process based on the information recorded in Workbench and no time was spent, and no costs were incurred, in this reporting. 
142. [142]
     I do not consider the partner updates were unauthorised. Under s 420(1) of the Corporations Act, a receiver of property has the power to do all things necessary or convenient to be done for or in connection with, or as incidental to, the attainment of the objectives for which the receiver was appointed. The receivers were given an equivalent power by the appointment orders made in the present case. Whilst reporting to the partners was not included in the Court’s orders and is not a specific statutory power within s 420(2), in my view it is an incidental activity that comes within s 420(1).
143. [143]
     I do not consider the partner updates were unnecessary, nor that the receivers incurred unnecessary or unreasonable costs in producing them. Given the potential value of the assets to be realised and the hostility between the partners, it was necessary that the receivers provide regular, detailed updates, including projections as to the likely returns to be received by them. Furthermore, it is apparent that not only did Mr Palmer not object to receiving the partner updates at the time, but there was at least one occasion, in January 2021, where he actively sought an update from the receivers. I cannot accept the belated suggestion now made by Mr Palmer that the progress summaries provided in dividend distribution reports would have sufficed.

Proportionality

144. [144]
     Mr Palmer submits the amount of time the receivers spent working on this matter and the extent of the fees they claim are not proportionate to the tasks they were required to undertake. Mr Palmer contends that the receivership was actually quite a simple and straightforward matter as it largely involved just two partners and a small number of assets that had to be sold or distributed.
145. [145]
     In challenging the overall claim, Mr Palmer relies on Mr Clout’s opinion that the majority of the partnership assets were realised by February 2020 and the remuneration charged up to that point was $593,781, which equates to about 51% of the remuneration claim. He also points to the advice provided by the receivers in their first partner update letter, dated 24 September 2019, where Mr Cook stated:

To date, I have incurred time cost of over $193,000 since the date of my appointment. Please note that the first few weeks of any new appointment is the most time consuming and costly exercise. This is amplified by the requirement for myself and staff to travel and attend various properties and meet with individuals involved. Considerable time has been spent in setting up proper accounting systems and procedures at the Royal Hotel. I have now put in place control systems and processes in managing this appointment. My involvement in this administration will now be reduced. My staff will continue with the carriage of this appointment and it should not be as costly going forward.

146. [146]
     Mr Palmer also submits that the fees claimed for the individual work involved in providing updates to partners, handling the sale of the Sinnamon Park property and trading on at the Royal Hotel demonstrate a lack of proportionality and thus show the fees incurred for those activities are unreasonable.
147. [147]
     I have already dealt with complaints raised in respect of the partner updates and the trading on of the Royal Hotel. For the reasons I have already given, I do not consider the fees incurred for this work are so excessive or disproportionate that they demonstrate unreasonableness.
148. [148]
     With respect to the sale of the Sinnamon Park property, Mr Palmer notes that the receivers claim $31,365.62 for fees relating to the sale and management of the property, which equates to about 10% of the $320,000 price for which it was sold. He notes that the sale was effected by an agent and the conveyance was performed by a solicitor. In those circumstances, he submits this shows the fees charged are out of all proportion to the amount of work and risk undertaken.
149. [149]
     Mr Palmer submits that the overall claim is manifestly excessive to the extent of about $450,000 and that the receivers’ claim should be discounted by a significant figure to reflect that the Court has been left to do the best it can on very unsatisfactory evidence.
150. [150]
     Although it might be said that that the receivership was simple as there were just two partners of the partnership and a few assets to be realised or distributed, in my view such a characterisation is not entirely accurate. As Mr Cook explains in his first affidavit, there were complexities and peculiarities involved with this receivership.
151. [151]
     Mr Cook identified the following complications in respect of the sale of Deearne Station and its cattle:

     1. the business records relating to the operations of Deearne Station being incomplete;
     2. there was an Administrative Advice (Conduct and Compensation Agreement) recorded on the title referring to an agreement between the partners and Australia Pacific LNG Gladstone Pipeline Pty Limited that required a deed of covenant to be signed by the Receivers as assignor, the buyers as assignee and Australia Pacific LNG Gladstone Pipeline Pty Limited as the continuing party;
     3. at the time of the receivers’ appointment, there were assets located at Deearne Station which appeared to be personal items of the partners or their spouses. Both partners asserted ownership of the items and the receivers were required to facilitate the removal and storage of the assets in order to allow the sale of Deearne Station to proceed;
     4. there were disputes as to the ownership of cattle and missing cattle;
     5. cattle troughs were stolen prior to settlement;
     6. there was a dispute regarding the location of cattle ear tags; and
     7. the branding iron was unable to be provided to the buyer as it was missing.
152. [152]
     As to the sale of the Royal Hotel, in addition to the impact of COVID-19 on the operations and management of the hotel, Mr Cook noted the following difficulties:

     1. the need to resolve bank account permission and security issues in relation to the bank accounts of the Royal Hotel;
     2. the need to investigate the business operations of the Royal Hotel;
     3. the need to implement proper accounting systems, procedures and management controls at the Royal Hotel;
     4. oversight of supplier invoices in respect of the Royal Hotel;
     5. issues relating to management of employees at the Royal Hotel; and
     6. regulatory compliance issues relating to the operation of the Royal Hotel.
153. [153]
     With respect to the receivership generally, Mr Cook described the following complications stemming from disputes between the partners:

     1. there was a dispute between the partners concerning the ownership of assets located at Deearne Station;
     2. the receivers were advised that assets of the partnership were stored at a property located at Croftby. Both partners asserted rights to those assets;
     3. there was a dispute between the partners in respect of the accounting for the drawings in the 2019 financial year’s partnership financial statements;
     4. the accounting for the drawings of the partners in respect of the period prior to the appointment of the receivers needed to be finalised. There was a dispute between the partners concerning the accounting of the drawings taken by each partner during the pre-receivership period;
     5. the receivers received a claim for alleged outstanding employee entitlements from Mr Byrnes, the former manager of the Royal Hotel. Based on the lack of information provided by Mr Byrnes, the receivers considered that the claim was unsubstantiated. The matter was disputed. The dispute was only settled in May 2022;
     6. the costs of the original application for appointment of the receivers, filed 29 July 2019, were to be agreed or assessed in accordance with order 1(d) of the original orders. Ultimately, agreement was reached by the partners where they agreed to each pay their own costs of the application; and
     7. on 29 April 2021 Garry Palmer filed the application seeking orders for access to Workbench. The application was contested by the receivers and dismissed.
154. [154]
     Mr Cook challenges Mr Clout’s opinion with respect to the realisation phase of the receivership. He considers it did not complete until settlement of the sale of the Royal Hotel in October 2020. On that basis, he calculates the total fees claimed for the realisation period are actually $885,422.24, inclusive of GST, representing 76.58% of the total remuneration claim.
155. [155]
     I do not accept any of Mr Palmer’s complaints with respect to an asserted lack of proportionality between the fees charged and the size, value and nature of the property the subject of the receivership, or the nature, value and complexity of the services provided.
156. [156]
     The receivers’ remuneration claim is for $1,152,396.26, whereas the total receipts for sale of the partnership assets are $26,353,647.90. The claimed remuneration therefore amounts to approximately 4.37% of the gross realisations of the receivership. Whilst it is a rough measure, it does not suggest excessive charging by the receivers, having regard to the nature and extent of the work they performed in discharging their roles.
157. [157]
     In my view, Mr Palmer unduly places far too much emphasis upon Mr Clout’s assessment of the realisation period and the opinions expressed by Mr Cook in the first partner update letter.
158. [158]
     With respect to the realisation phase of the receivership, as I have already concluded, I accept Mr Cook’s opinion that the period extended through until October 2020.
159. [159]
     As to the statements made by Mr Cook in the first partner update letter, it is patently obvious that further unanticipated events subsequently arose. In particular, there were the complications brought about by the extended settlement of the sale of the Royal Hotel and the necessary continuation of trading on by the receivers, the employee entitlement claim made by Mr Byrnes and the dispute about Mr Palmer’s access to Workbench, which eventually was resolved in favour of the receivers.
160. [160]
     I reject Mr Palmer’s submission that the overall claim is manifestly excessive to the extent of about $450,000 and a substantial discount should be applied to the amount claimed by the receivers for their remuneration.
161. [161]
     As to the discrete complaint about the fees incurred for the sale of the Sinnamon Park property, I do not consider they are out of proportion to size and value of the property, having regard to the nature and extent of the work undertaken. Whilst the sale was effected by an agent and the conveyance handled by a solicitor, the receivers necessarily carried out a wider range of tasks for which fees were incurred. Those tasks involved ascertaining the rental position of the property and receiving rents; obtaining a valuation of the property; obtaining marketing submissions from real estate agents; appointing a real estate agent to sell the property; communicating with the real estate agent about the progress of the sale and considering purchase offers and providing feedback to the real estate agents; and engaging solicitors to conduct settlement of the sale contract.  Further, as explained in the Workstream Summary Report, whilst an initial offer was received to purchase the property by private treaty after the initial marketing campaign, negotiations with the interested party did not lead to a concluded agreement. Consequently, the receivers obtained an updated valuation, reduced the sale price and appointed a new real estate agent to sell the property at auction.

What amount should the Court fix for the receivers’ remuneration?

162. [162]
     I am satisfied that the work done with respect to the receivership for which Mr Khatri and Mr Cook were appointed was necessary, performed properly and their claim for remuneration is supported by sufficient information and material. 
163. [163]
     Whilst I have not undertaken a line-by-line analysis of the AETCR, I am satisfied that the information and material provided by the receivers demonstrates that the remuneration claimed is reasonable and fair.
164. [164]
     Accordingly, I am satisfied that the appropriate remuneration to be allowed to the receivers is the amount of $1,152,396.26, as claimed by the receivers in their amended application.

Orders

165. [165]
     I make the following orders:

1. Pursuant to r 269 of the UCPR, the receivers’ remuneration for acting as receivers of the property of the partnership known as Lindsay Palmer & Sons is fixed in the sum of $1,152,396.26 and is to be paid from the assets of the partnership.
2. The receivers are discharged from any obligation pursuant to paragraph 13 of the orders made in this proceeding on 8 August 2019 to pay the parties’ costs of the application filed 29 July 2019.
3. Upon:
   1. a.
      the receivers filing in this Court an affidavit containing the final accounts for the partnership prepared pursuant to paragraph 11 of the orders made in this proceeding on 8 August 2019;
   2. b.
      the Court determining any objection that may be taken to the final accounts;
   3. c.
      the payment of the receivers’ remuneration and costs pursuant to these orders; and
   4. d.
      the distribution of any remnant surplus partnership assets to the partners;

the receivers are discharged.

166. [166]
     I will hear the parties as to costs.