Analysis
441 Generally, Habrok asserts that the prior dealings the administrators had with the GCY Group were not independent and therefore they could not as administrators investigate properly nor make appropriate recommendations about the GCY Group's future.
442 It may be accepted that the administrators had implied duties of independence and impartiality. But that does not entail that the administrators must have no prior involvement with the GCY Group; I should say here that the present context does not involve the suggestion of any connection between the administrators and any creditor of the GCY Group that may be disqualifying. The question is more whether the prior involvement with the GCY Group would likely impede them from acting independently and impartially. Further, in terms of impartiality, not only the reality but the perception of impartiality are important; an appearance of bias arising from prior involvement may be disqualifying. Now for the present context, I accept the "double might" test in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at [6] as per the plurality, but the context and nature of the office holder are all important in applying such a test. I am not here dealing with judges or administrative decision makers. Further, I accept that an appearance of partiality might arise from a conflict of interest.
443 Further, I should say that the situation faced by O'Callaghan J in Ten Network is not analogous to my context.
444 First, as he said (at [67]):
For the reasons I have given, a fair-minded lay observer might reasonably apprehend that the administrators might not bring an impartial mind to the resolution of two issues:
(1) the fact that the administrators were appointed by Gilbert + Tobin, have a referral relationship with that firm, were paid by that firm and may have to investigate it; and
(2) the fact that the administrators will have to consider, in the course of their investigations and reporting, whether their pre-appointment payments are voidable preferences in any subsequent liquidation.
445 That is not my case. FTI did not have any such conflicts.
446 Second, even in that case and even with such conflicts, it was considered that Mr Korda's removal would have been disproportionate. So, as his Honour said (at [68]):
ASIC did not suggest, in the circumstances of this case, that the two potential conflicts identified by ASIC should require the removal of the administrators. Removal would be disproportionate and, where an order of the type the Court has made here, handing responsibility to an experienced and wholly independent liquidator, is tailored to meet the circumstances of the case, it would be wholly unnecessary. It would also be disproportionate because Mr Korda and KordaMentha have obtained a considerable level of familiarity with the companies comprising the Ten Group, their operations, their financial circumstances and their financial arrangements, which would be lost if the administrators were removed. Mr Korda and KordaMentha have had dealings, and no doubt have established relationships with, major creditors, shareholders and advisers. They have also designed, during the pre-appointment engagement period, what ASIC agreed was "a well-developed and complex administration plan". That, after all, is the point of engaging a potential administrator.
447 In that case, a partner of Ferrier Hodgson was appointed to carry out a limited investigation of the matters the subject of the two conflicts of interest.
448 Third, in my case we are far removed from the scenario faced by O'Callaghan J. The administrators are now deed administrators. Further, I do not have the luxury of appointing another practitioner to carry out a separate investigation. I am here dealing with an application to terminate the DOCA. Further, there have been no such direct conflicts involving FTI of the type dealt with by O'Callaghan J.
449 Fourth, in Network Ten, O'Callaghan J accepted (at [20]) that KordaMentha had not, pre-appointment, "provided advice to the board, the directors or the management of the Ten Group … in relation to the management of the Ten Group, its affairs, its insolvency, or the obligations and duties of the board, individual directors and management". Contrastingly, Habrok contends that in the present case such advice was given.
450 But no detailed advice was given on such questions, as the 19 December 2018 FTI report makes clear. In any event there are no hard and fast rules. In my view, the involvement of FTI pre-appointment did not compromise its independence or objectivity on, inter-alia, any insolvency analysis, whether as a matter of reality or appearance by a hypothetical fair minded observer.
451 Before dealing with the arguments in detail, let me say something about some of the key witnesses.
452 In my view, Mr Ryan gave clear and reliable evidence that the prior work did not impair FTI's independence and ability to act as administrators. Mr Ryan described FTI's involvement as "arms and legs" assistance to the GCY Group. FTI did not provide advice on safe harbour, on a turnaround plan or restructuring, or on NRW. Further, the scope of engagement set out in the letter of engagement between FTI and GCY was not fully executed. I will discuss the scope of FTI's pre-appointment engagement in further detail shortly.
453 Further, the financial model prepared by FTI, which was not implemented by the GCY Group, was passed on to Macquarie Capital, who amended it for its own purposes.
454 Now it was put to Mr Ryan that he was deliberately diminishing the significance of FTI's work pre-appointment. But despite efforts by Habrok to elevate FTI's pre-appointment involvement to something that it was not, the work was not of such a nature so as to preclude FTI, or any reasonable administrator in their position, from acting as administrators.
455 As to NRW, FTI had nothing to do with NRW before the administration. And NRW's status, including as secured creditor, its PPSR registrations, and the rates it was charging, was not later uncritically accepted by the administrators. For example, despite NRW's position as the incumbent mining contractor, Mr Ryan considered replacing NRW. But this step was not practical. I accept Mr Ryan's evidence that there was no lack of effort by the administrators to investigate NRW. Further, the administrators were not looking to do favourable deals to benefit NRW.
456 Further, I agree with the defendants that Mr Ryan did not take shortcuts when he instructed HSF not to undertake a long insolvency analysis. HSF had already made clear to Mr Ryan that it could not act as to insolvent trading issues. The insolvency analysis had properly been undertaken by Mr Simon Skelton, an experienced practitioner. This was, in effect, Mr Skelton's sole function and he was brought in specifically to undertake this role. It is understandable that Mr Ryan would not want HSF to perform an expensive insolvency analysis, which had already been completed by Mr Skelton, when considering the legal issues as to the possible voidability of the NRW GSA. In my view, HSF was given proper and sufficient instructions to allow it to consider the legal position.
457 Further, Mr Ryan was taken through Habrok's amended DIRRI and asked to comment on which items he agreed were factually correct. Mr Ryan's evidence on these entries was not then challenged.
458 In my view, Mr Ryan was a seasoned insolvency practitioner who gave reliable evidence that accorded with the commercial realities.
459 Let me say something about Mr Francis. As to work done during the administration, Mr Francis gave me an accurate description of the respective roles of Mr Skelton and Mr Chivers in the insolvency investigations. Whilst Mr Skelton was the primary author of the insolvency analysis, Mr Chivers assisted Mr Skelton by acting as a liaison between Mr Skelton and the GCY Group. There was no sidelining as such of Mr Chivers within the administration of the GCY Group on matters relating to solvency.
460 Mr Francis was not involved in the pre-appointment engagement. Mr Francis' understanding of the scope and nature of FTI's pre-appointment engagement arose out of his involvement in the preparation of, and terms of, the DIRRI. In the light of that knowledge, he was not concerned that the administrators would be reviewing their own work.
461 Now Habrok attempted to suggest that Mr Chivers was excluded from the insolvency investigation because of his involvement in the prior engagement with the GCY Group. But Mr Francis explained, which explanation I accept, that there were no conflict issues limiting Mr Chivers' duties.
462 Mr Chivers was cross-examined as to his pre-appointment involvement with the GCY Group.
463 Pre-appointment, Mr Chivers assisted Mr Ball, who was otherwise busy. Mr Chivers accepted that the work involved FTI collating and reformatting two workbooks into one. This was consistent with Mr Ryan's evidence that Mr Ball required "arms and legs" to assist with matters at the GCY Group.
464 Mr Chivers was questioned on his role regarding solvency issues and developing reconstruction strategies. The evidence is that FTI did not give safe harbour advice, but provided some financial analysis. And characterising that analysis as advice does not entail that FTI had a conflict and was unable to accept appointment as voluntary administrators.
465 Mr Chivers knew that HSF had been retained to advise on safe harbour and that this was not FTI's role. Mr Chivers understood that FTI's role was to provide an overview of the GCY Group's financial position, restructuring options, cash flows and working capital and to provide an overview of the turnaround plan that had been prepared internally by GCY management.
466 Mr Chivers was also questioned as to an email from Mr Ball on 29 May 2020, sent in the hours before the formal request to FTI to act as administrators. Mr Chivers and Mr Ryan had earlier that day met with Mr Ball and Mr Hay to discuss, amongst other things, insolvency appointments. Mr Ball's email contained information which was provided to assist with preparing for a voluntary administration appointment and did not contain the work product of FTI's earlier work. This is consistent with the timing of the email. It suggests no disqualifying prior involvement with the GCY Group.
467 In my view, Mr Chivers generally speaking was a reliable witness, although at times he sought to re-characterise and diminish the significance of his pre-appointment work in a manner that was not wholly convincing.
468 Mr Skelton had limited involvement in the administration of the GCY Group. Mr Skelton had no pre-appointment involvement with the GCY Group. Mr Skelton was responsible during the administration for undertaking the insolvency analysis for the GCY Group. He undertook this analysis without any significant assistance from Mr Chivers.
469 Based on an analysis of the financial position of the GCY Group in the 12 months prior to the appointment of the administrators, Mr Skelton formed the view that the GCY Group was not insolvent. Mr Skelton was cross-examined at length on what was said to be a false dichotomy between a temporary lack of liquidity on the one hand, and insolvency on the other hand. Mr Skelton's analysis, on a cash flow basis, was that there was a liquidity issue (and therefore a potential question of insolvency) only in March and April 2019.
470 I am not persuaded that Mr Skelton's analysis is substantially inaccurate, save that it would seem to me that the position in March and April 2019 is better described as likely insolvency rather than a temporary liquidity problem.
471 Further, the suggestion that Mr Skelton did not consider all available information does not permit a conclusion that the administrators' view in the administrators' report was incorrect or materially incorrect. There was no challenge to the substance of Mr Skelton's insolvency analysis except the characterisation of the March and April 2019 period. Given that Mr Skelton had concluded that the GCY Group was not insolvent, except perhaps in March and April 2019, although he described this as a temporary liquidity problem, it was not necessary for him to then consider whether the NRW GSA was voidable by reason of the financial position at the time of grant.
472 Mr Skelton also investigated the use of the proceeds from the May 2019 capital raising. Mr Skelton's evidence on this was not challenged.
473 I have said something briefly about the witnesses. Let me now say something about the chronology.
474 The DIRRI shows that in November 2018, FTI was engaged by GCY to provide specific financial advisory services. The letter of engagement between FTI and GCY is dated 6 November 2018. The scope of FTI's services is set out in section 2 of that engagement letter.
475 One of the key aspects of that engagement was to rebuild GCY's financial model. However, as noted in the DIRRI, the financial model built by FTI was not implemented before the appointment of administrators.
476 Much was made by Habrok concerning the scope of FTI's letter of engagement of 6 November 2018 and in particular what was described as the scope of FTI's services.
477 So, section 2 was described in the following terms:
Scope of Our Services
FTI Consulting will undertake the following work under this Engagement:
1. Review the Company's current working capital position
2. Review the Company's economic modelling / cashflow forecasting systems and tools.
3. Rebuild the Company's financial model to reflect the transitioning in the Company's operations from mine exploration/development only to include the mining operations at Dalgaranga mine.
4 Provide advice regarding a turnaround plan which is to be developed by management, including: development and monitoring of milestones in achieving the plan; and liaising with the Company's legal adviser on the "Safe Harbour" regime, including providing the necessary information to the legal advisor for it to provide its advice.
5. Preparing reports for management to provide to the Company's two lenders, CBA and NAB, regarding the financial position of the Company and performance of the business as against management's turnaround plan.
6. Subject to the results of the above, assist with the implementation of the turnaround plan, including ongoing monitoring and adjustments of the plan (as required).
478 But the evidence demonstrates that only items 1 to 3 were carried out together with part of item 4. But the fact is that FTI did not give detailed advice on the safe harbour plan. And it only gave generic advice on restructuring options. So, in the 19 December 2018 FTI report, generalised restructuring options were set out on the section 7 slides for GCY to consider. And so far as the section 9 slide was concerned, this was stated in the following terms:
479 Clearly this was indicating that detailed advice concerning the safe harbour regime was being sought elsewhere. Further, it was indicating that GCY should formulate a turnaround plan, rather than that FTI was doing this detailed work for GCY.
480 It is well apparent that the section 9 slide does not greatly assist Habrok.
481 First, it states that "we understand that the Board is seeking independent legal advice with respect to whether Safe Harbour is available to the Company". Clearly, FTI was not giving that advice.
482 Second, steps 1 to 3 are merely advice as to the generic steps that GCY would need to take "Assuming the availability of Safe Harbour".
483 Third, FTI was not saying anything about the detailed elements of any "Turnaround planning". That was for GCY to develop. All that FTI was advising was as to the generic factors that should be considered and included. But the detail was for GCY. FTI was not giving such advice. What it was saying was that FTI had to engage in such planning.
484 Fourth, as part of the "Next steps", reference was made to "obtain independent legal and financial advice…". Clearly FTI was not giving such advice at the time.
485 Fifth, when one appreciates the slide in context, references to "should" and characterising the slide as "advice" do not really carry Habrok far in its case concerning demonstrating a lack of independence or objectivity or a reasonable perception of such a lack by a hypothetical fair minded observer.
486 Now Habrok made the argument that FTI was doing financial work that amounted to insolvency work. Its next step was to argue that this was integral to any safe harbour advice and any turnaround plan. Therefore, indirectly if not directly, FTI was involved in giving safe harbour advice and should have been disqualified from taking a subsequent appointment as administrators.
487 The theoretical logic of this reasoning is attractive. But the difficulty is that when one considers what was done at the earlier time, it could hardly be described as a substantial insolvency analysis. Mr Chivers was doing financial work but in the sense of setting up or suggesting systems for GCY to use to populate with financial information. Looking at the matter substantively, neither he nor FTI were giving solvency/insolvency advice let alone of a fashion to preclude subsequent appointment.
488 Let me continue with the chronology. The 19 December 2018 FTI report was provided to HSF in January 2019.
489 Further, since the commencement of these proceedings, Mr Ryan has identified three additional matters which were, by reason of oversight, omitted from the DIRRI. First, on 8 January 2019, Mr Chivers and Mr Bantock attended a meeting at GCY with attendees from Macquarie Capital. Second, on 22 February 2019, Mr Ryan had lunch with Ms Layman. He organised that lunch to mark the end of FTI's engagement. Nothing of relevance was discussed. Third, on 18 March 2019, Mr Ryan attended a meeting with Ms Layman and Mr Ball. Later that day, he provided the document entitled "Overview of Voluntary Administration" to Ms Layman and Mr Ball. This document was largely a generic document detailing aspects of the voluntary administration process under the Corporations Act. However, Mr Ryan tailored certain aspects and options that are available in the administration process having regard to his knowledge of the size and activities of the business of the GCY Group.
490 Subsequently, the May 2019 capital raising occurred by which GCY raised $24 million. FTI had no involvement in and provided no advice in relation to the May 2019 capital raising.
491 The final meeting held between FTI and representatives of the GCY Group that occurred prior to the appointment of administrators was on 29 May 2019. On that day, Mr Chivers and Mr Ryan met with Mr Hay and Mr Ball. One of the purposes of the meeting was to discuss the GCY Group's recent operating performance, cash flow and financial position. Further, having regard to the GCY Group's financial position, a purpose was to explain the various forms of insolvency appointments, potential options available to the GCY Group, and the consequences of the various types of insolvency appointments and to outline the process following an insolvency appointment.
492 Now the prior engagement between FTI and the GCY Group as disclosed in the DIRRI did not affect any ability as administrators to carry out their obligations under the Corporations Act.
493 FTI had not previously advised the GCY Group on what creditors to pay or how to manage its creditors during the period prior to appointment. Accordingly, the administrators did not have any concern about considering antecedent transactions, including preference payments, and whether the directors of the GCY Group had engaged in insolvent trading.
494 Further, FTI had not assisted the GCY Group in managing its day-to-day cash situation. Further, FTI did not provide safe harbour advice to the GCY Group.
495 Further, FTI's involvement ceased before the May 2019 capital raising.
496 Further, at all times the administrators took legal advice, including where necessary from lawyers other than HSF if they thought that HSF could not provide independent advice. Independent advice was taken from Lavan Legal as to a number of matters including as to potential insolvent trading claims and whether there were any potential misleading conduct claims against the directors or GCY.
497 Further, the administrators were not involved in the management of the GCY Group. And the administrators had no dealings with NRW.
498 Further, I have no doubt that FTI's prior dealings with the GCY Group were substantively and accurately described in the DIRRI.
499 In evidence were what I would describe as duelling DIRRIs. There was the administrators' original version, an amended version produced by Habrok that contained additional entries, particularly in terms of Appendix I, a defendants' updated DIRRI to accord with the evidence and a document described as a DIRRI marked up with the defendants' submissions on Habrok's amended version.
500 Without getting too bogged down in this low point of the trial, let me make several points. First, after Mr Ryan had given evidence it was apparent that approximately half of Habrok's additions to Appendix I were incorrect. Second, the defendants' updated DIRRI is more consistent with the evidence. Consequently, Habrok's criticisms of the administrators' original DIRRI, although showing some omissions, did not amount to very much at the end of the day.
501 Now s 436DA of the Corporations Act required the administrators to make a "declaration of relevant relationships". Section 60(1) of the Corporations Act sets out what this entails. What was required was a written declaration of a prior "relationship with" the GCY Group. That required a statement of the prior connection between the administrators and the GCY Group. This is not a requirement to state, in the minutiae, each and every occasion where the disclosed connection occurred.
502 In my view, the administrators disclosed their relationship or connection with the GCY Group. Mr Ryan candidly identified some meetings that were not disclosed in the DIRRI. Yet, what was required was no more than disclosure of the prior relationship or connection. The alleged omissions from the DIRRI do not show that there was non-disclosure of the prior relationship or connection. The disclosure was made in compliance with s 436DA.
503 Further, in my view, the nature of FTI's prior involvement would not have been sufficient to support the administrators' removal nor ground the assertion that they have not properly investigated the GCY Group's position. It is commonplace for a company to seek professional advice as to apprehended insolvency and for advice to be received as to voluntary administration; this does not preclude the advisor from becoming the administrator.
504 As I have said, FTI was not involved in the management of the GCY Group before the administrators' appointment. And FTI did not have any substantial involvement with the affairs of the GCY Group before the administrators' appointment such as to be disqualifying.
505 Let me at this point say something about industry standards.
506 On the question of the administrators' independence, Habrok placed much emphasis on publications of the Australian Restructuring Insolvency and Turnaround Association (ARITA), particularly its Code of Professional Practice: Insolvency Services, Practice Statement Insolvency 1, and Practice Statement Insolvency 2.
507 Now putting to one side that the versions of these documents in evidence were approved only on 16 September 2019, being after the date of the administrators' appointment, but accepting that prior versions were in similar terms, the fact is that industry codes with their precepts, guidance and aspirational verbiage cannot dictate the proper construction and application of the relevant statutory provisions.
508 But concerning the submissions of Mr Bret Walker SC for Habrok, there is one matter that I should briefly address. My attention was drawn to s 1.6.8 of the Practice Statement Insolvency 1 which discussed appointments following a safe harbour engagement. In essence s 1.6.8 suggested that if an insolvency practitioner had provided advice to a company or its directors which they intend to, or do rely upon, to avail themselves of the safe harbour provisions, the practitioner cannot take a subsequent appointment as administrator.
509 In elaboration under what was described as an "Independence example" it was stated:
If you were approached to act as an adviser in a restructuring plan and at your first meeting with the directors, before you provide any advice, you form the view that a restructure is highly unlikely and you recommend that the company enter into voluntary administration, you would be able to take the appointment as this would fit within the 'Pre-appointment Advice' exception.
However, if after three months of acting as the company's adviser and providing advice to the board, it became apparent that the restructure is not likely to succeed and the company has to enter into voluntary administration or liquidation, you would be unable to take the Appointment as you have a prior professional relationship with the company that does not fit within one of the exceptions.
510 But in my view, this guidance is not directly applicable to the circumstances I am considering.
511 In substance, FTI did not substantively undertake the work of a safe harbour engagement. Moreover, in substance it did not give advice on the elements of or the implementation of a restructuring plan. The substantive advice on safe harbour was given by HSF. And FTI only ever advised on generic elements of a restructuring plan or "turnaround planning" as described in the 19 December 2018 FTI report.
512 Further, putting aside what was meant by "advice" and such plans, in my view in substance the work carried out by FTI pre-administration did not so affect their independence or impartiality such as to preclude later appointment as administrators.
513 Now I accept that the witnesses called by the defendants resisted suggestions by Mr Walker SC in cross-examination suggesting that substantial work and advice on insolvency and safe harbour had been done by FTI pre-administration.
514 Accordingly, Habrok predictably says that FTI sought to minimise and devalue its pre-appointment work. But in my view this is an unfair criticism of the evidence of Mr Ryan and Mr Francis. But there is greater force in such a criticism concerning the evidence of Mr Chivers. But at the end of the day when one considers the documentary evidence showing what was done pre-appointment including the 19 December 2018 FTI report, it seems to me that the defendants' witnesses gave a largely accurate characterisation.
515 Now as I have indicated, Habrok says that FTI's pre-appointment work and in particular its pre-appointment modelling of cash flows and its engagement with GCY and HSF in the context of safe harbour, made it inappropriate for FTI to accept the appointment as voluntary administrators of GCY, because its post-appointment investigation of insolvency involved it revisiting its pre-appointment modelling and forecasting work. Further, for analogous reasons, it says that it was not appropriate for FTI to seek advice from HSF in relation to matters that involved HSF revisiting its pre-appointment advice on solvency and/or safe harbour.
516 But I do not consider that FTI's administration work on insolvency was compromised by the limited pre-appointment modelling work of Mr Chivers concerning financial data presentation. Moreover, Mr Chivers did not take an active and detailed role in the administration in assessing the question of insolvency.
517 And as to criticisms concerning FTI's engagement of HSF, where does this really go? HSF's advice concerning solvency questions involving NRW was up in the air. Indeed, it was for the administrators themselves to crunch the numbers, not lawyers. But perhaps it may have been more prudent for HSF not to have been engaged.
518 Let me note the following passages in the cross-examination of Mr Ryan by Mr Walker SC:
Those preference issues would include consideration of dealings - in particular, between NRW and the company - throwing light upon the status of insolvency and the status of NRW's knowledge concerning it. Is that right?---Yes.
And I suggest to you the connection that Freehills had in relation to the grant of that security in favour of NRW is as disqualifying of Freehills to give advice after appointment, regardless whether it was advice given to FTI, the company, or NRW. What do you say to that?---Well - do I say to that. Freehills said to me at the beginning of the matter that they couldn't add act in relation to the insolvent trading issues, which is why we engaged Lavan. They didn't say such a thing in relation to the preference claims.
So does it come down to this - that you relied upon Freehills telling you in which areas it was proper for them not to act, and in which areas it was proper for them to act. Is that correct?---Well, that and my - and my own thoughts on the matter.
…
And before you were appointed administrators, the advisory work you had done for the company had informed you of the significance of NRW as the provider of the mining work. Correct?---Correct.
And the significance of the fact that NRW was, by reason of its significant work for the company, the largest of the creditors apart from the banks. Correct?---Correct.
And that it was a creditor in the sense of being overdue for payment. Correct?---When?
Before your appointment - - -?---Yes.
- - - you became aware there was a history of late payment; correct?---Yes.
…
And you understood that by the end of December 2019, supposedly NRW had the benefit of a security for the moneys outstanding to it; correct?---Yes.
…
Did it ever occur to you that having been involved in the grant of the security back at the end of 2018, Freehills should not now be asked to advise on the legal validity or efficacy of that work?---No, it didn't occur to me, Mr Walker.
…
In any event - in any event, I want to draw to your attention your response to advice given concerning matters of NRW's security where in about line 7 or so, you say:
I don't want to turn this into a long insolvency analysis -
etcetera, etcetera. Do you see that?---Yes.
Now, first of all, you were there writing on your clear understanding that the relevant issues concerning NRW's security involved consideration of insolvency - correct?---Yes.
Second, you understood that that might be a matter which could take quite a long time?---Well, we had already done the insolvency analysis as part of our investigation.
That was, you say, an investigation superintended or supervised by Mr Francis - is that correct?---Yes, undertaken by Mr Skelton.
…
Well, now, it's clear - isn't it, that you were warning Mr John in that email that you weren't necessarily inviting him to go ahead with work that might involve a long insolvency analysis. Is that right?---Yes, yes.
But, you volunteered, there would be a need to consider the facts to some extent - in order to answer your question about risk to NRW. Do you see that?---Yes.
And you understood that that meant that the lawyers would need to look at facts concerning relevant insolvency. Is that right?---Yes.
…
It is clear, is it not, that you were offering through Mr Clowes, in mid-May 2020, to help Freehills with what they had to opine about insolvency and the effect on securities with material generated by FTI in the course of the administration. Is that correct?---Yes.
519 Overall, I do not consider that FTI or HSF were sufficiently compromised because of their pre-appointment work. And more generally as to the administrators, there is no evidence of actual bias. And even if there was apprehended bias, one would not necessarily have ordered that the administrators be replaced. One would do so only if satisfied that it would be for the better conduct of the administration. One would consider the stage of the administration, the remaining functions of the administrators, issues of cost and delay and the extent to which removal, or some other response such as an appointment of a special purpose administrator to attend to one or more discrete tasks, was more proportionate.
520 In summary, I would draw the following conclusions.
521 First, the DIRRI was substantially accurate.
522 Second, FTI only performed a limited role pre-appointment.
523 Third, Habrok's case concerning the role of Mr Chivers pre-appointment, and his role during the administration, was flawed. Pre-appointment, he did not do a detailed insolvency analysis. Post-appointment he was not principally engaged in any insolvency analysis. That was more the role of Mr Skelton and others.
524 Fourth, there was nothing in FTI's pre-appointment work that substantially compromised its independence or objectivity either in reality or appearance, or precluded it from having three of its principals appointed as administrators.
525 Fifth, and as I will now come to, none of FTI's pre-appointment work substantially contaminated the quality of the administrators' investigations or their disclosures to creditors in the administrators' report.