The Supreme Court has settled a dispute relating to administration costs over the property company owned by former City of Perth Lord Mayor Lisa Scaffidi and her husband.
The Supreme Court has settled a dispute relating to administration costs over the property company owned by former City of Perth Lord Mayor Lisa Scaffidi and her husband.
A judgment delivered in the Supreme Court of Western Australia revealed that the administrators of Central City Pty Ltd claimed a remuneration of almost $355,000 for their work, which was initially opposed by Ms Scaffidi.
KordaMentha restructuring partners Richard Tucker and John Bumbak were appointed as administrators of Central City in mid-2023.
The company owned properties in the Perth CBD being Adina Apartment Hotel Perth Barrack Plaza, Akara Hotel, and the Drunken Elephant Bar and Bistro.
Central City is owned by Ms Scaffidi, her husband Giuseppe ‘Joe’ Scaffidi, and Anthony Scaffidi, Australian Securities and Investments Commission documents show.
According to the judgment, Central City had debts of about $4.23 million with its properties having a total value of more than $27 million at the time of the administrators’ appointment.
In his judgment, WA Supreme Court Justice Gary Cobby approved the administrators’ remuneration to be $333,685, reducing the amount they originally claimed.
The administrators sought approval of their remuneration, which was higher than their estimates, at the second meeting of creditors in late 2023.
Ms Scaffidi opposed the amount claimed by the administrators, the judgment shows.
However, Ms Scaffidi eventually withdrew her opposition on the condition that the administrators would limit their remuneration to $310,000.
“The court is nonetheless required to determine the plaintiff's application, notwithstanding that it is no longer opposed by any person and the agreement reached between the plaintiffs and Ms Scaffidi,” Justice Gobby said in his judgment.
The administrators claimed the remuneration amount proposed was higher than what was initially estimated because significant time was incurred dealing with the director’s and Ms Scaffidi’s requests to be consulted on all matters relating to the sale of the properties, according to the judgment.
“The company's financial records and bank accounts were commingled with other entities controlled by the director and Ms Scaffidi, leading to difficulties taking control of the company's bank account and obtaining financial information, including general ledgers and trial balances,” the judgment reads.
Justice Gobby said, in his judgment, that he accepted the amounts incurred over dealing with the company’s creditors and other tasks to be reasonable given the work required.
However, Justice Gobby said he was not satisfied that charging $395 an hour was reasonable.
“There was also no explanation as to why the plaintiffs determined it to be appropriate to take what they appear to accept to have been an unusual level of involvement in relation to the valuation and sale of the properties,” his judgment reads.
“That is particularly so when the plaintiffs have claimed that the costs incurred in the administration were otherwise increased by their dealing with the director and Ms Scaffidi in relation to the sale of the company's assets, a matter which was within the control of the plaintiffs to a degree.
“In all the circumstances, I am not satisfied that the plaintiffs have established that the whole of the remuneration claimed is fair and reasonable.
“Doing the best that I can with the information available, I would reduce the amount claimed in respect of dealing with the company's properties by 25 hours, being equivalent to $21,250.
“Taking into account that reduction and the reduction referred to above in respect of the charging for administrative tasks, I approve the plaintiffs' remuneration in the amount of $333,685.”
The administrators were appointed as liquidators of Central City at the second meeting of creditors, the judgment said.
Sydney-based boutique fund manager Serene Capital acquired Adina Hotel, on the corner of Barrack and Wellington streets, for $23 million in early 2024, as reported by Business News.
In mid-2024, local investor Dale Windus bought Akara Hotel for $4.6 million.
