Australian Securities and Investments Commission v Kaur

Federal Court of Australia|2024-06-27|Before: Jackson J

Background 3 In Kaur (No 1) I found that between at least 1 March 2017 and 16 December 2020, Monica Kaur and a company she controlled, the second defendant, MKS Property Investments Developments Pty Ltd, operated an unregistered managed investment scheme in contravention of s 601ED(5) and s 601ED(8) of the Corporations Act 2001 (Cth) (the Scheme). The Scheme involved Ms Kaur giving advice to investors that led them to give money to MKS on the basis that MKS would pool the funds to purchase, develop and sell real estate with a view to generating a profit, out of which investors would be paid interest payments. As part of this, Ms Kaur gave advice to around 300 investors to establish self-managed superannuation funds (SMSFs) and advised them to invest in property investments and developments set up by MKS. 4 The money provided by investors was in fact pooled in bank accounts from which Ms Kaur distributed some funds to MKS to invest in property development, and some funds to herself and her husband, the fourth defendant, Sadu Singh, for personal use. Ms Kaur also distributed some of the funds to the sixth defendant, her daughter Stephanie Poh Kim Lee, the fifth defendant, Ms Kaur's son Melvin Singh, and the third defendant, Paradise Property Group Pty Ltd, a company controlled by Melvin Singh. 5 Relevantly, the orders I made in Kaur (No 1) had the following effect: (1) the appointment of Mr Hodgson and Mr Hewitt as the joint and several receivers, without security, of all property of Ms Kaur, Sadu Singh and the Scheme, including a property of Melvin Singh in Wanneroo and specified bank accounts of Melvin Singh and Stephanie Lee (together, the Property); (2) the winding up of the Scheme and of MKS, with the winding up of the Scheme to be conducted as if the Scheme were a 'company' or 'corporation' for the purposes of the Corporations Act and Parts 5.4B, 5.6, 5.7B and 5.9 of the Corporations Act and the Insolvency Practice Schedule (Corporations) (forming Schedule 2 to the Corporations Act) applied; and (3) the appointment of Mr Hodgson and Mr Hewitt as the joint and several liquidators of the Scheme and of MKS. 6 Mr Hodgson and Mr Hewitt filed the present application on 23 April 2024 seeking orders to determine and approve their remuneration in specified amounts and for specified periods as both receivers and liquidators. The remuneration application was supported by an affidavit of Mr Hodgson which, among other things, deposed to the work carried out by Grant Thornton from the date of their appointment to 22 April 2024 when the affidavit was sworn, alongside projections of their future work. 7 The orders made in Kaur (No 1) provided for the remuneration of the liquidators and receivers, specifically for: (1) their entitlement to reasonable remuneration properly incurred in the performance of their duties arising in connection with their appointment and in the exercise of their powers as may be approved by the Court on their application, together with all costs, expenses and disbursements; (2) to be calculated on the basis of time reasonably spent by them and any partner or employee of their firm, at the standard rates of the firm from time to time for work of that nature; (3) with the costs, expenses and disbursements: (a) of the liquidators to be paid out of the assets of the Scheme and/or MKS; and (b) of the receivers to be paid from the Property; and (4) it being said, for the avoidance of doubt, that: (a) the entitlement of the receivers to be paid from the Property is not restricted or limited by whether they are acting as receivers of property specifically of Ms Kaur, Sadu Singh or the Scheme, and they are entitled to treat the Property as a single combined pool of property for those purposes; and (b) the entitlement of the liquidators to be paid from the assets of the Scheme is not restricted or in any way limited by whether they are acting as liquidators of the Scheme or MKS and they are entitled to treat the assets of the Scheme as a single combined pool of assets for those purposes.

Remuneration application 8 The receivers applied pursuant to the orders described above and r 14.24 of the Federal Court Rules 2011 (Cth) for orders to determine and approve their remuneration in the following amounts: (1) for the period 7 June 2023 to 14 April 2024, the amount of $184,642.50 (exclusive of GST); and (2) estimated remuneration for the period 15 April 2024 to 31 December 2024 in the amount of $150,000 (exclusive of GST). 9 Rule 14.24 of the Federal Court Rules relevantly provides that a 'receiver may apply to the Court to have the Court fix the receiver's remuneration'. 10 The liquidators applied pursuant to the orders described above and s 60-10 of the Insolvency Practice Schedule for orders that determine and approve their remuneration in the following amounts: (1) for the period 7 June 2023 to 14 April 2024, the amount of $375,311 (exclusive of GST); and (2) estimated remuneration for the period 15 April 2024 to 31 December 2024 in the amount of $250,000 (exclusive of GST). 11 Section s 60-10(1) of the Insolvency Practice Schedule provides that the Court may make a determination specifying the remuneration that an external administrator of a company (other than in a members' voluntary winding up) is entitled to receive for necessary work properly performed by them in relation to the external administration, where such a determination is not made by resolution of the creditors or committee of inspection. There has been no meeting of creditors and there is no committee of inspection in the liquidation of the Scheme and MKS. 12 No party to this proceeding has contested the remuneration application or sought to make submissions. ASIC indicated that it neither consented to nor opposed the orders sought.

Notification of creditors 13 The remuneration application also sought orders excusing the liquidators from compliance with r 9.2 of the Federal Court (Corporations) Rules 2000 (Cth) (Corporations Rules). To comply with r 9.2(2)(c) of the Corporations Rules, the liquidators would have needed to notify the five largest creditors of the Scheme and MKS (measured by amount of debt) of their intention to apply for a remuneration determination in a prescribed manner and form, 21 days before filing the remuneration application. Those creditors would have then had a further 21 days to give the liquidators any notice of objection to the remuneration claimed, stating the grounds of objection: r 9.2(3) of the Corporations Rules. 14 The affidavit of Mr Hodgson filed alongside the remuneration application deposed to the steps taken by the liquidators as at 22 April 2024 to identify the five largest creditors of the Scheme and MKS. The affidavit also deposed to the difficulty of doing so, largely because of the state of the books and records, which were described as follows: … The documents evidencing the affairs of [MKS], and of the conduct of the Scheme, appear to be comprised of: 20.1 disparate hard copy, and in many cases partly or wholly handwritten, documents; and 20.2 some electronic documents such as emails, bank statements and property transaction documents that have not been saved or organised in any coherent way. 15 Also, a large number of documents were seized by ASIC and, as at the date of Mr Hodgson's first affidavit, remained in its possession. 16 Mr Hodgson said that in the circumstances, it was not possible at this stage of the liquidation for the liquidators to identify reliably the five largest creditors of the Scheme or of MKS. 17 However, after communications with my Chambers, the liquidators gave notice of their application for remuneration to those whom they believed had the five largest claims, based on the information available to them. All five of those claimants responded indicating support for the remuneration application and no notices of objection were provided. 18 I decided on that basis that it was appropriate to dispense with compliance with r 9.2 of the Corporations Rules. I did so, in particular, because of the difficulties the liquidators had experienced in identifying the five largest creditors, and because those whom they believed (but could not confirm) met that description received notice and supported the application for remuneration.

Receivership of the Property 19 Mr Hodgson's first affidavit deposes to the work carried out by the receivers, the further work projected to be required by them, the receivers' rates, and a summary of the receipts taken and payments made by them as at 18 April 2024 in the course of their appointment. The scope of the work undertaken as at 22 April 2024 is summarised as: … primarily to identify, secure, preserve and maintain the Property. This has included liaising with the banks re control of the bank accounts, securing the real property including any steps for cleaning up/maintaining the properties, dealing with [Sadu and Melvin Singh] regarding vacating [MKS's principal place of business], engaging a valuer and marketing agent for the purpose of realising the properties and engaging legal to, amongst other matter, prepare contracts of sale and prepare for settlement. 20 The affidavit annexed a summary document said to set out the total work undertaken by the receivers or under their supervision, in the performance of the duties arising from their appointment and in the exercise of their powers. The summary showed that between 7 June 2023 and 14 April 2024 the receivers and their staff: (1) expended a total of 152.06 hours, incurring a total of $73,181.15 (exclusive of GST) in fees on a time-cost basis for the work done in respect of the Property of Ms Kaur; (2) expended a total of 140.76 hours, incurring a total of $68,317.65 (exclusive of GST) in fees on a time-cost basis for the work done in respect of the Property of Sadu Singh; and (3) expended a total of 90.18 hours, incurring a total of $43,143.70 (exclusive of GST) in fees on a time-cost basis for the work done in respect of the Property of Melvin Singh. 21 These add up to the sum the receivers sought to have approved as their remuneration for this period, being $184,642.50 (exclusive of GST). Mr Hodgson further deposed to the types of tasks undertaken in this period. He provided an appropriate level of detail in that regard; that detail need not be given here. Broadly, the work done has involved securing and realising the assets covered by the receivership, keeping creditors updated, and dealing with legal, administrative and statutory tasks necessary to the receivership. 22 Finally, Mr Hodgson deposed to the basis of the receivers' application for approval of their estimated remuneration for the period 15 April 2024 to 31 December 2024, which is sought to be recovered on a time-cost basis in the amounts of: (1) $50,000 (exclusive of GST) in respect of the Property of Ms Kaur; (2) $50,000 (exclusive of GST) in respect of the Property of Sadu Singh; and (3) $50,000 (exclusive of GST) in respect of the Property of Melvin Singh. 23 Details of the further and ongoing work (and respective fees forecasted) are deposed to, which include investigative tasks as well as tasks relating to the realisation and ongoing maintenance of the Property.

Winding up of the Scheme and of MKS 24 Mr Hodgson's first affidavit deposes that 'the majority of the work undertaken to date has been undertaken by the Liquidators in respect of investigating the Scheme'. Mr Hodgson deposed the following relevant matters in this regard: (1) The books and records of the Scheme and of MKS are deficient, as described above. (2) ASIC originally seized and collected all available records of MKS and the Scheme, and still holds about 35,000 documents. For reasons deposed to, ASIC considers that it cannot provide these documents to the receivers, in many cases without an order of the Court or without redaction of individual tax file numbers. (3) The liquidators' staff have, however, obtained some 507,888 'files / documents' relating to MKS and the Scheme from ASIC, and have reviewed approximately 25,000 of these as at 22 April 2024. (4) A great deal of work has been done, and will be required in the future, to review those records and to attempt to reconstruct the bank accounts of MKS and of the Scheme, which comprise some 92 accounts across six banking institutions. The liquidators consider that reconstruction of the accounts over a seven-year period is necessary in order to trace the operation of the Scheme and investor funds. Mr Hodgson describes that work in some detail, which need not be set out here. It is highly complex, especially in view of the state of the records. 25 Mr Hodgson said that, assuming that funds from later investors are not used to pay out earlier investors, the liquidators will file with the Court a report when the above work is completed. This will detail the findings of the investigations into the Scheme, and, amongst other things, the estimated return to creditors of the Scheme (and of MKS if there ultimately is any distinction between the two). Notice of the filing of this report will also be given to creditors. 26 Mr Hodgson's first affidavit annexed a summary document setting out the total work completed by the liquidators and the staff under their supervision in the performance of the duties arising from the liquidators' appointment and in the exercise of their powers. This summary indicated that between 7 June 2023 and 14 April 2024, a total of 823.10 hours were expended, which incurred a total of $375,311 (exclusive of GST) in fees on a time-cost basis. This reflects the amount sought by the liquidators for this period in the remuneration application. 27 Mr Hodgson further deposed to the basis of the liquidators' application for approval of their estimated remuneration for the period of 15 April 2024 to 31 December 2024 in the amount of $250,000 (exclusive of GST), which was sought to be recovered on a time-cost basis. An estimate of nine months was given to conclude the future work required in the liquidation of the Scheme and of MKS. The nature of this work is set out, along with the forecasted fees.

Remuneration of receivers 28 As an officer of the court, a receiver must apply for court orders approving remuneration before they may draw their remuneration from the funds of the receivership: Cape v Redarb Pty Ltd (Receiver and Manager appointed) (1991) 32 FCR 407 at 417, applied by O'Callaghan J at [13] in Deppeler, in the matter of Moulamein Grain Co-Operative Limited (in liquidation) [2024] FCA 65. The exercise of the Court's power to fix a receiver's remuneration in r 14.24 of the Federal Court Rules 'is governed by the general principle that the court should only allow remuneration which is fair and reasonable': Deppeler at [13]. 29 Justice Brereton summarised the principles relevant to the exercise of the discretion to give or withhold approval in Re Say Enterprises Pty Ltd [2018] NSWSC 396 at [6] (original emphasis, citations omitted). Relevant to the present matter are the following: 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. … 30 It is appropriate to consider the same or similar matters to those the Court would take into account in determining whether remuneration is reasonable under s 425(8) of the Corporations Act, which applies to a receiver appointed under an instrument as receiver of the property of a corporation: see for example, Re Say Enterprises at [6] (Brereton J); Australian Securities and Investments Commission v A One Multi Services Pty Ltd (No 2) [2022] FCA 1100 at [20] (Downes J); Australian Securities and Investments Commission v Marco (No 11) [2022] FCA 704 at [22] (Feutrill J). Section 425(8) states: In exercising its powers under this section, the Court must have regard to whether the remuneration is reasonable, taking into account any or all of the following matters: (a) the extent to which the work performed by the receiver was reasonably necessary; (b) the extent to which the work likely to be performed by the receiver is likely to be reasonably necessary; (c) the period during which the work was, or is likely to be, performed by the receiver; (d) the quality of the work performed, or likely to be performed, by the receiver; (e) the complexity (or otherwise) of the work performed, or likely to be performed, by the receiver; (f) the extent (if any) to which the receiver was, or is likely to be, required to deal with extraordinary issues; (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; (h) the value and nature of any property dealt with, or likely to be dealt with, by the receiver; (i) whether the receiver was, or is likely to be, required to deal with: (i) one or more other receivers; or (ii) one or more receivers and managers; or (iii) one or more liquidators; or (iv) one or more administrators; or (v) one or more administrators of deeds of company arrangement; or (vi) one or more restructuring practitioners; or (vii) one or more restructuring practitioners for restructuring plans; (j) the number, attributes and behaviour, or the likely number, attributes and behaviour, of the company's creditors; (k) if the remuneration is ascertained, in whole or in part, on a time basis: (i) the time properly taken, or likely to be properly taken, by the receiver in performing the work; and (ii) whether the total remuneration payable to the receiver is capped; (l) any other relevant matters. 31 In A One Multi Services, Downes J further added to the above principles (at [22], citations removed): A receiver will not be disentitled to remuneration for work done which does not lead to augmentation of the funds in the receivership (for example, to meet statutory obligations), or which involves an unsuccessful attempt to recover assets, if the work was reasonable to be carried out and reasonably charged. 32 Downes J also accepted the Court's power to fix a receivers' future remuneration and helpfully summarised the principles as follows: [24] The receivers, Defendants and ASIC all accepted that the Court has power to approve prospective remuneration for work not yet performed, which is consistent with the authorities: see e.g. Cape v Redarb; Lucantonio v Benscrape Pty Ltd (No 2) [2020] NSWSC 1114. [25] In Cape v Redarb, the Full Court stated at 421: A further option is for the court to authorise the receiver to draw moneys as required to meet remuneration and out-of-pocket expenses, on the footing that the receiver will account for those drawings from time to time when his accounts are prepared. Such a course was adopted by Young CJ in Waldron v MG Securities (Australasia) Ltd [(1979) CLC 40-541] where the accounting was ordered to occur every six months. [26] Such an approach may be justified where the work done by the receiver to date has been undertaken in a reasonable and proper manner, the receiver has identified future tasks needed to be undertaken with reasonable specificity, estimates are given for the likely cost associated with each of the identified future tasks, the amount of prospective remuneration will be capped, the likely duration of the remainder of the receivership is identified, the assets of the company which have been or are likely to be recovered are identified (along with their value) so that there is an assurance that the assets will not be depleted by payments made to the receiver, there will be a review by the Court of the amounts charged by the receivers for future work either periodically or at the conclusion of the receivership, any amounts charged which are found not to be fair and reasonable will be repaid by the receiver, the risk that the receiver will not be able to repay any such amount is low, and the receivership is of such a magnitude that it would be unrealistic to expect the receiver to be kept out of remuneration for professional services for periods of months at a time. 33 To be clear, I proceeded on the basis that this helpful passage does not list a number of requirements which must all be satisfied; it collects matters that can be, and often will be, relevant to the exercise of the discretion: see e.g. Staatz v Berry, in the matter of Wollumbin Horizons Pty Ltd (in liq) (No 4) [2023] FCA 103 at [32]-[33] (Derrington J). 34 The question of proportionality is important in considering the reasonableness of the remuneration claimed. In Templeton v Australian Securities and Investments Commission [2015] FCAFC 137 at [52], Besanko, Middleton and Beach JJ observed (original emphasis): [52] More generally, in considering the question of proportionality one also has to bear in mind two other points that may be overlooked. First, in performing some work, it may not be entirely clear ex ante what the precise benefit might be. A situation where work was being performed to preserve property of known value is quite different to the situation where work was being performed to achieve a return to creditors that was unclear. In the latter case, it might be inappropriate to use a hindsight analysis of known returns after the event to assess whether the work performed was proportional to the task; in such a situation one would look at the expected realistic return at the time the work was performed rather than actual outcomes. Second, some work may be sufficiently complex and labour intensive such as to justify a cost/benefit ratio of 6/10. After all, if the duty of the receivers is to maximise returns and it is necessary to spend $0.60 to achieve $1.00, then proportionality is satisfied even if the ratio might be high. 35 I respectfully adopt the above principles.

Remuneration of liquidators 36 Section 60-5 of the Insolvency Practice Schedule provides: Remuneration in accordance with remuneration determinations (1) An external administrator of a company is entitled to receive remuneration for necessary work properly performed by the external administrator in relation to the external administration, in accordance with the remuneration determinations (if any) for the external administrator (see section 60‑10). Remuneration for external administrators if no remuneration determination made (2) If no remuneration determination is made in relation to necessary work properly performed by the external administrator of a company in relation to the external administration, the administrator is entitled to receive reasonable remuneration for the work. However, that remuneration must not exceed the maximum default amount [in s 60-15]. 37 A remuneration determination made under s 60-10(1) of the Insolvency Practice Schedule may specify an amount of remuneration and/or a method for working out an amount: s 60-10(3). If the determination specifies that the external administrator is entitled to receive remuneration worked out wholly or partly on a time‑cost basis, the determination must include a cap on the amount of remuneration worked out on that basis: s 60-10(4) of the Insolvency Practice Schedule. More than one determination under s 60-10 may be made in relation to a particular external administrator of a company and a particular external administration of a company: s 60-10(5) of the Insolvency Practice Schedule. 38 Section 60-12 of the Insolvency Practice Schedule provides that in making a remuneration determination under s 60-10(1)(c), the Court must have regard to whether the remuneration is reasonable, taking into account any or all of a list of matters that are, for present purposes, substantially similar to those listed in s 425(8) of the Corporations Act above. 39 Justice Cheeseman summarised the general principles to be applied on a liquidators' remuneration determination in Phoenix Institute of Australia Pty Ltd (in liq), in the matter of Phoenix Institute of Australia Pty Ltd (in liq) [2021] FCA 1203: [27] In the absence of a determination by members, creditors, or a committee of inspection, the burden lies with the liquidator to establish that the remuneration claimed is fair and reasonable: Re Sallway, Mossgreen Pty Ltd (in liq) (remuneration of liquidators) [2019] FCA 1771; (2019) 140 ACSR 331, [9] (Perram J); Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38; (2017) 93 NSWLR 459, [54] (Bathurst CJ). The court's function is to determine that remuneration by reviewing the relevant material and bringing an independent mind to bear on the relevant issues: Sanderson, [54]. [28] In determining an application, it is not necessary for the court to undertake an item by item assessment, but the court may have regard to the rates of charge put forward by an external administrator, the times taken by employees and that external administrator in undertaking the administration and the total remuneration claimed: Re Owen; RiverCity Motorway Pty Ltd (admins apptd) (recs and mgrs apptd) v Madden (No 2) [2012] FCA 312 , [22]-[23] (Logan J). [29] Each of the relevant factors in subsection 60-12 of the [Insolvency Practice Schedule] must be considered: Sanderson, [53]… … [30] The work done must be proportionate to the difficulty and importance of the task in the context in which it needs to be performed: Sanderson, [55]. Even where work is undertaken in an unsuccessful attempt to recover assets, provided it was reasonable to carry out the work and the amount charged is reasonable, a liquidator is entitled to remuneration for that work: Sanderson, [58]. [31] As explained in In the matter of Fearndale Holdings Pty Ltd (admin apptd) (recs & mgrs apptd) [2020] NSWSC 901 at [38], Black J stated: It is not the Court's role… to undertake a line by line review of the relevant narratives in an insolvency practitioner's billing record, but the Court will generally review the relevant narratives in a broad way in order to satisfy itself that they support the other evidence led in respect of the claimed remuneration. 40 I respectfully adopt that summary of principle as well. 41 As with receivers, the Court may approve the prospective remuneration of a liquidator for work not yet performed: see for example, Cathro (liquidator), in the matter of Petsamo No 14 Pty Ltd (in liq) v Thomassian [2022] FCA 399 at [100] (Markovic J); Lawrence, in the matter of Ozifin Tech Pty Ltd (in liq) v AGM Markets Pty Ltd (in liq) [2022] FCA 1478 at [50], [55] (Beach J); Mansfield v Thousand Angeles Island Pty Ltd (in liq), in the matter of Thousand Angeles Island Pty Ltd (in liq) (No 2) [2021] FCA 283 at [61]-[63] (Farrell J); Re Idylic Solutions Pty Ltd as trustee for Super Save Superannuation Fund and others [2016] NSWSC 1292 at [81]-[82] (Black J). The authorities demonstrate that the presence of some or all of the following factors may make such a course appropriate: the prospective remuneration is for work likely to finalise the winding up; the remuneration is capped; the amount may not be drawn on unless that remuneration is earned by work that is actually required to be done; the identified tasks are appropriate; the sums claimed are modest; and doing so will avoid the legal costs involved in making a further application in respect of the remuneration.

Recording of work for which remuneration is claimed 42 Mr Hodgson deposed to having reviewed all of the past work undertaken by the receivers and the liquidators in detail. In respect of the related remuneration claimed, Mr Hodgson deposed based on his experience as a registered liquidator and insolvency practitioner, that the remuneration was fair and reasonable and that the work performed was 'reasonably, properly, prudently and appropriately undertaken in the due course of the receivership or the liquidations (as the case may be) and in the discharge of the duties of the receivers and the liquidators'. Mr Hodgson further deposed that the work had been accurately accounted for on a time-charge basis on Grant Thornton's standard charge-out rates. 43 The sums claimed were reflected in evidence of time entries electronically recorded by the liquidators and receivers and their staff at their respective hourly rates. Staff members' levels of experience and qualifications were said to dictate their charge out rates and the nature of the tasks they perform. I accepted that the rates charged (as explained in the liquidators' Initial Circular to Creditors, which is annexed to the first affidavit of Mr Hodgson) were appropriate and that the time entries had sufficient detail to enable an assessment of the work that has been undertaken. 44 I reviewed the time entries in a broad-brush way in accordance with the principles above and found that the work detailed in them was necessary to the liquidations and the receivership and properly performed and done in reasonable amounts of time, taking into account the nature and complexity of the liquidations and the receivership, as relevant.

Remuneration claimed by the receivers 45 Considering the factors and principles outlined above and on a review of the uncontested materials before me, I was satisfied that the remuneration claimed by the receivers for the period of 7 June 2023 to 14 April 2024 was reasonable. 46 As Mr Hodgson deposed, the majority of the work undertaken to date has been to identify, secure, preserve and maintain the Property the subject of the receivership. In view of the importance of proportionality, I took into account the nature and scope of the Property, which includes six residential properties with various loans and mortgages. Mr Hodgson deposed that the total value of the real property and bank accounts to which the receivers were appointed was just over $8 million (noting that some of those assets have been transferred into the liquidations, because they were partly or wholly purchased with investor monies). 47 Because of incomplete realisation of assets by the receivers to date, a straightforward mathematical cost-benefit analysis was not open to assess proportionality. That was especially so in light of the interaction between the receivership and the liquidations as just noted. But in view of the complexity of the receivership and the disarray of the records, I accepted that the total amount of $184,642.50 (exclusive of GST) claimed by the receivers for the period of 7 June 2023 to 14 April 2024 was reasonable. It was work performed over a significant period of time, of over ten months, and was proportionate to the nature and complexity of the Property under the receivership and the issues it raised. Also relevant, as increasing the complexity of the receivership, is that the appointment was over the assets of two individuals (Ms Kaur and Sadu Singh), the Scheme, and bank accounts and property held by two other individuals (Melvin Singh and Stephanie Lee). 48 As discussed below, I have also assessed the question of proportionality in light of the assets and creditors of the defendants to whose property the receivers were appointed, and of MKS and of the Scheme, as a whole. I did not consider that it would be straightforward or helpful to try to filter out the creditors of the relevant defendants for the purpose of considering proportionality in respect of the receivership alone.

Remuneration claimed by the liquidators 49 For the liquidators, considering the factors and principles outlined above (including each of the relevant factors in s 60-12) and on a review of the uncontested materials before me, I was satisfied that the remuneration for the period of 7 June 2023 to 14 April 2024 in the amount of $375,311 (exclusive of GST) was reasonable. 50 Because the liquidators have not yet identified the creditors with certainty, it is hard to discern whether the remuneration claimed is proportionate to the value of creditors' claims. On the evidence as it stood on 16 May 2024, the liquidators have identified 38 individuals who may be creditors of the Scheme and/or MKS. Assuming the liquidators determine that all of those are valid creditor claims, the total value of identified claims on the evidence provided by the liquidators at that time was $1,893,924.01. But that list was incomplete and claim amounts had not been assigned to many of the creditors. Since then, on 24 June 2024, Mr Hodgson provided an updated estimate for total creditor claims of approximately $6.3 million. 51 I accepted that the liquidators faced significant difficulty in reconstructing the books and records of the Scheme and MKS and relatedly, in tracing the relevant funds, from which a significant amount of the remuneration claimed arises. In circumstances of an unregistered managed investment scheme involving some 300 investors which has been administered with scant regard to proper record keeping, both the necessity for and complexity of that reconstruction process may be accepted. This involved complexity (s 60-12(e)) and extraordinary issues (s 60-12(f)). 52 Once again, a straightforward assessment of proportionality was not possible. But bearing in mind the complexity of the task, the disarray of the records, the value of the property under administration (s 60-12(h)), including that the assets of the receivership have been transferred to the liquidations, I considered that the amounts claimed were likely to stand in reasonable proportion to the assets under administration. Once again, the work done was over a significant period of more than ten months (s 60-12(c)) and, as has been said, involved creditor claims of over $6.3 million and some 38 creditors (s 60-12(i)). For those reasons, I determined that the past remuneration claimed by the liquidators was reasonable.

Claims for future remuneration 53 Mr Hodgson also deposed to his belief that the future remuneration claimed by both the liquidators and the receivers was fair and reasonable and that the projected work would be reasonably necessary based on the facts and circumstances known to him of the receivership and the liquidations. He further deposed that the estimates had been calculated in accordance with Grant Thornton's standard charge out rates and that the receivership and related liquidations were of such a magnitude that it would be unrealistic to expect a receiver or liquidator in the position of the receivers and liquidators to be kept out of remuneration for professional services for periods of months at a time. 54 The receivers claim $150,000 (exclusive of GST) for the period 15 April 2024 to 31 December 2024. The liquidators claim for $250,000 (exclusive of GST) for the period 15 April 2024 to 31 December 2024. In each case, Mr Hodgson has deposed to a specific list of likely tasks. The complexity of the administrations and the work yet to be done made it likely that those tasks will need to be performed. A list of identified assets from which the remuneration will be drawn has been provided. Mr Hodgson, an experienced insolvency practitioner acting as an officer of the Court, has deposed to his belief that the magnitude of each of the receivership and the liquidations is such that it would be unrealistic to expect the receivers and liquidators to be kept out of remuneration for months at a time. The period covered will be over nine months, to the end of 2024. The receivers and liquidators will be required to report (by way of affidavit) to the Court and the parties at the end of that period providing an account of the amounts they have charged. Any concern about overcharging can be raised after that and, if any amounts are required to be repaid, there is no reason to think that Grant Thornton will be unable to repay them. 55 I also took into account the claims for approval of both past and future remuneration as a whole, and the overlap between the receivership and liquidations. To a large extent, it appeared that the pool of assets for each will prove to be the same. Therefore, I considered it appropriate to assess the question of proportionality, not only administration by administration and claim by claim, but as a whole. Again, eschewing any attempt at a fictitious accuracy, it appeared to me that the complexity of the administrations and the disarray of the records meant that the total amounts claimed by the liquidators and receivers, both past and future, were proportionate to the value of the assets and creditor claims.

Costs 56 Mr Hodgson and Mr Hewitt applied for the receivers' costs in respect of and incidental to the remuneration application to be costs of the receivership and for the liquidators' costs in respect of and incidental to this application be costs of the liquidations. 57 The orders made in Kaur (No 1) provide that the receivers' costs, expenses and disbursements are to be paid from the Property and the liquidators' costs, expenses and disbursements are to be paid from the Scheme and/or MKS, to be treated as a combined pool. 58 In the circumstances, I made costs orders in the terms sought. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackson.

Corporations Act 2001(Cth)ss 425, 601ED, Schedule

JACKSON J: 1 On 7 June 2023, I delivered judgment in Australian Securities and Investments Commission v Kaur [2023] FCA 599 (Kaur (No 1)). One outcome of the judgment was that David Hodgson and Andrew Hewitt of the firm Grant Thornton were appointed both as receivers and managers of certain property, and as liquidators of an unregistered managed investment scheme and a particular company. 2 On 27 June 2024 I made orders approving the remuneration of both the receivers and the liquidators. These are my reasons for making those orders.

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