Dixon (Liquidator), in the matter of Victoria Project Pty Ltd v Austhome Group Pty Ltd

VICTORIA PROJECT PTY LTD (IN LIQUIDATION) (ACN 142 329 155)

VICTORIA PROJECT PTY LTD (IN LIQUIDATION) (ACN 142 329 155)

LING & YU PTY LTD (ACN 126 062 833) (and others named in the Schedule)

1. Pursuant to r 28.65 of the Federal Court Rules 2011 (Cth), the inquiry referred to a judicial registrar pursuant to the orders made on 1 March 2023 is to be conducted consistently with the construction of the declaration made on 1 February 2023 as set out in these reasons.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. Despite two judgments in this matter, some of the parties remain in dispute. On 1 February 2023, I published my primary judgment and made a number of orders including a declaration that upon a proper construction of the deed of settlement and release dated 29 August 2019, between various parties, that:

[T]he costs of the liquidation of Victoria Project Pty Ltd (the company) at clauses 2(j), (k) and (l) is limited to the remuneration, costs and expenses of the liquidator and the costs of any third party engaged by the liquidator whether for or on behalf of the company or in his capacity as liquidator incurred in consequence of the appointment of Mr Stephen Robert Dixon as liquidator of the company on 23 October 2019 and does not include expenses, costs or other liabilities that the company would have incurred in any event in the conduct of its business as a property developer and landlord if a liquidator not been appointed, even where such expenses are incurred during the period of the liquidation.

1. See Dixon (Liquidator), in the matter of Victoria Project Pty Ltd v Austhome Group Pty Ltd [2023] FCA 42 (PJ). On 1 March 2023, I made costs orders and I referred to a judicial registrar of this Court, pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) and rr 28.62 - 28.67 of the Federal Court Rules 2011 (Cth), for inquiry and report the following question:

In accordance with the proper construction of the deed of settlement and release dated 29 August 2019 (Deed) pursuant to paragraph 1 of the orders made on 1 February 2023, what are the costs of the liquidation of the second plaintiff that apply to cll 2(j), (k) and (l) of the Deed.

1. A judicial registrar has embarked on that task. It has not much progressed. The reason is that Austhome and Mr David Wu (Austhome Parties), as the indemnifiers, are in dispute with the third to seventh defendants (who are the Majority Shareholders) as to which categories of costs claimed by Mr Dixon as the liquidator of Victoria Project are within the indemnity. The inquiry before the judicial registrar has morphed into a protracted pantomime. Mr Derrick Zhang, a director of one of the corporations within the cohort of the Majority Shareholders, has filed an affidavit of 635 pages, inclusive of annexures. There are supporting legal submissions. Mr Wu has filed an affidavit comprising 462 pages inclusive of annexures, plus written submissions. The judicial registrar has conducted several case management conferences in an attempt to progress the inquiry. That has not been successful.
2. The delay was brought to my attention in June this year. I conducted a case management hearing on 18 July 2025. At that hearing, it was put to me by counsel for the Majority Shareholders that I should provide clarification of the meaning of the declaration that I made on 1 February 2023. I made it clear that I would not do that. The declaration speaks for itself and what was requested was an impermissible advisory opinion. I received further submissions whereupon it emerged that what the disputing parties seek is a direction pursuant to r 28.65 of the Rules as to how the inquiry should be conducted by the judicial registrar or as to any matter arising in the inquiry. Eventually it was agreed that I should proceed on the basis that the disputing parties had applied to me pursuant to that rule. It was also agreed that I would determine the matter on the papers, following the receipt of written submissions. Submissions have been filed: Majority Shareholders dated 1 August 2025; Austhome Parties dated 8 August 2025.
3. Rule 28.65 of the Rules provides:

Conduct of inquiry

(1) A party may apply to the Court, before or after an inquiry has started:

(i) how the inquiry should be conducted; or

(ii) any matter arising in the inquiry; or

(b) to authorise the referee to take evidence for the purpose of a subpoena issued under Division 24.2.

(2) A referee must conduct an inquiry in accordance with any directions made by the Court.

(3) However, if the Court has not made any directions about how the inquiry should be conducted, the referee may conduct the inquiry in any way the referee thinks fit.

(4) A referee is not bound in the inquiry by the rules of evidence but may be informed in any way that the referee thinks fit.

(5) Evidence before a referee in an inquiry:

(a) may be given orally or in writing; and

(b) must, if the Court requires, be given:

(i) on oath or by affirmation; or

(ii) by affidavit.

(6) A referee may administer an oath or affirmation to a witness giving evidence in an inquiry.

(7) Each party to an inquiry must, before the time fixed by the referee conducting the inquiry, give a brief statement of the findings of fact and law contended by the party to:

(a) the referee; and

(b) any other party to the inquiry.

(a) do all things required of the party by the referee to enable the referee to form an opinion about the matter; and

(b) not wilfully do, or cause to be done, any act to delay or prevent the referee forming an opinion.

1. A summary schedule of costs and disbursements prepared by the liquidator divides the various claims between liquidator's approved remuneration of $416,818.60 and total disbursements of $1,694,358.33, in total $2,111,176.93. Within the disbursements there are listed various payments including insurance, land tax, rates, legal fees, property maintenance expenses and accounting expenses.
2. The Majority Shareholders in written submissions contend for a direction pursuant to r 28.65 that the inquiry be conducted on the basis that the declaration has determined that all remuneration which the liquidator is entitled to receive in respect of the liquidation of Victoria Project constitutes costs of the liquidation within the meaning of the deed of settlement and release. In part the submission contends that the wording of the declaration reflects a "deliberate choice" that I made as the trial judge. Submissions are then made about the meaning of certain paragraphs in my primary reasons.
3. The Austhome Parties contend that the declaration is to be construed as determining that the costs indemnity applies to remuneration of the liquidator and costs and expenses incurred by the liquidator (including in respect of third parties engaged by the liquidator), arising other than by reason of conducting the business of Victoria Project as a property developer and landlord. The submission continues by dividing the declaration into inclusionary and exclusionary components linked to a causal requirement. In some respects, the submission contends that factual disputes identified in the affidavits of Mr Zhang and Mr Wu should be resolved by the making of findings.
4. The Austhome Parties submission continues that:

In determining to make the Declaration, the Court squarely and expressly rejected the Majority Shareholders' contention (raised at the earlier hearing, and now raised again) that all fair and reasonable remuneration which the Liquidator is entitled to receive in respect of the liquidation of [Victoria project] constitutes a 'cost of the liquidation' to which the Indemnity applies.

Rather, as is apparent from the terms of the Declaration and the Reasons underlying it, the remuneration of the Liquidator to which the Indemnity applies is limited to fair and reasonable remuneration 'incurred in consequence of the appointment' of the Liquidator, which does not include remuneration in relation to tasks performed by the Liquidator or his staff relating to the ongoing conduct of [Victoria Project's] business as a property developer and landlord.

1. Inherent in the application for directions is the risk that I may subconsciously subjectively revisit the meaning of the declaration, and with it, my primary reasons. Further, it is problematic, that representatives of the disputing parties have filed affidavits, which evidence has not been read or tested upon the present application before me. The declaration is to be construed objectively in the context of my primary reasons and the disputes then resolved, even absent ambiguity: Leviston v PQ Management Pty Ltd (No 3) [2023] FCA 986 at [19], Derrington J. Nonetheless, as that case demonstrates, there may be cases where it is appropriate for the primary judge to subsequently provide clarification where, after determination of liability, a matter is referred to a registrar for the purpose of, as in that case, undertaking a valuation of assets consistent with the liability findings.
2. With some hesitation, I have determined that the answer to the direction sought is clear from my primary reasons, requires no resolution of competing affidavit evidence or any impermissible excursion into my subjective reasoning process.
3. In my primary reasons, I rejected a similar submission of the Majority Shareholders which is now re-framed upon the inquiry reference: PJ [113] - [125]. My determination was clearly expressed at PJ [125]:

For these reasons, I reject the interpretation urged by Mr Segal and I generally accept the interpretation of Mr Currie which finds support in the alternative submission of Mr Brown. The phrase "costs of the liquidation" in clauses 2(j), (k) and (l) is limited to the remuneration, costs and expenses incurred as a consequence of the appointment of the liquidator and it excludes costs that VPPL would have incurred in any event. And it follows, by application of the established principles, that the remuneration costs and expenses of the liquidator are limited in the way summarised by Black J in RMGA.

1. The reference to Black J in Re RMGA Pty Ltd [2012] NSWSC 678 is the quotation at PJ [123]. In this case, the indemnity applies to fair and reasonable remuneration and disbursements for work performed that was reasonably necessary to conduct the voluntary liquidation and distribute assets in specie as provided for in the deed of settlement and release, and no more. The indemnity does not extend to the ordinary costs of the business of Victoria Project that would have been incurred if the company had not been placed into liquidation. In that regard, one must not lose sight of what was the business of Victoria Project. It was a property developer and landlord and where the purpose of placing it into voluntary liquidation was to resolve shareholder disputes and effect an in specie distribution of its assets: PJ [14] - [15] and [74]. The arguments for the Majority Shareholders clothe old arguments in a new suit when the mechanism for expressing disagreement with my primary orders was an appeal.
2. For these reasons, I accept the written submissions of Mr Snyder for the Austhome Parties at [18] - [24] and [25] - [26].
3. There are further matters of dispute raised in the respective submissions, concerning particular items of remuneration and disbursements. These are questions to be resolved by the judicial registrar upon the conduct of the inquiry.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McElwaine.