Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) (No 2) [2019] FCA 93

The Evidence 13 Both the plaintiffs gave evidence. Mr Lock swore three affidavits which were received as his evidence-in-chief and he was cross-examined by counsel for ASIC. Mr Sheahan swore two affidavits which were received as his evidence-in-chief and he was cross-examined at length by counsel for ASIC. My assessment of the plaintiffs as witnesses appears later in these reasons (at [104]-[113] Mr Sheahan and at [167] Mr Lock). 14 ASIC tendered an affidavit of Mr Adrian James Saggers who is a senior manager in the Insolvency Practitioners Stakeholder Team of ASIC. He was not required for cross-examination. Mr Saggers deposed to the fact that ASIC keeps records of reports it receives pursuant to s 533 of the Act on its confidential internal public company database. Section 533 requires a liquidator to lodge a report with ASIC in certain circumstances, including if it appears to the liquidator that a past or present officer or employee or a member or contributory of the company may have been guilty of an offence under a law of the Commonwealth or a State or Territory in relation to the company, or a person who has taken part in the formation, promotion, administration, management or winding up of the company may have misapplied or retained or may have become liable or accountable for any money or property of the company, or may have been guilty of any negligence, breach of duty or breach of trust in relation to the company. Mr Saggers has reviewed that database and states that there is no record of the plaintiffs as joint and several liquidators lodging any reports with ASIC under s 533 of the Act in relation to SKFA, CJVA or SSFA. 15 ASIC tendered an affidavit of Ms Rachael Elizabeth King. Ms King is a solicitor employed by the firm of solicitors acting for ASIC. She was not required for cross-examination. Ms King's affidavit refers to correspondence which has passed between ASIC's solicitors and DMAW Lawyers (DMAW). DMAW acted for the plaintiffs during the relevant period. Annexed to Ms King's affidavit are engagement letters between the plaintiffs and DMAW and schedules of invoices for legal services provided by DMAW to the plaintiffs. 16 ASIC tendered affidavits of 10 insolvency practitioners who deposed to their hourly rates during the relevant period and whether they generally charged for the time spent travelling in respect of formal appointments. These practitioners were as follows: (1) Mr James Michael White, partner in the firm, BDO, in the "Business Restructuring" practice group. Mr White works in Sydney where the group has two partners and 12 employees; (2) Mr Alan Geoffrey Scott, partner in the firm, BRI Ferrier (SA). Mr Scott works in Adelaide where there are 2-3 partners, 2-3 directors, and between 20 and 34 employees; (3) Mr Michael John Morris Smith, partner of Smith Hancock. Mr Smith works in Parramatta where there are two partners and 16 employees; (4) Mr Austin Robert Meerten Taylor, partner in the firm, Meertens Chartered Accountants. Mr Taylor works in Adelaide where there are three registered and official liquidators and 17 employees; (5) Mr Mark Anthony Korda, partner in the firm, KordaMentha. Mr Korda works in Melbourne. The firm has offices in four capital cities, more than 20 registered liquidators in Australia and about 370 employees; (6) Mr Daniel Bryant, chief executive officer in the firm, PPB Advisory. Mr Bryant works in Sydney. The firm has offices in four capital cities and about 20 partners in the restructuring, turnaround and insolvency practice group. The firm has a set of rates for general matters and a different set for large and complex matters; (7) Mr Alan John Hayes, founding principal of the firm, Hayes Advisory. Mr Hayes works in Sydney. The firm has one office in Sydney with nine employees; (8) Ms Robyn Beverley McKern, partner of the firm, McGrathNicol. Ms McKern works in Melbourne. The firm has offices in five capital cities and during the period between 2010 and 2015, it had about 20-25 partners active in the restructuring and insolvency area; (9) Mr Matthew James Byrnes, national head of the restructuring practice of Grant Thornton Australia. Mr Byrnes works in Melbourne. The firm has offices in five capital cities and about 15 registered liquidators; and (10) Mr Brian Raymond Silvia, principal of the firm, BRI Ferrier (NSW). Mr Silvia works in Sydney. Between 2010 and 2015, the Sydney practice had up to 60 employees, 5-6 principals, 2-3 consultants and, at any given time, 7-8 registered liquidators. None of these insolvency practitioners were required for cross-examination. ASIC provided a schedule for each of the years from 2010 to 2014 which it said reflected the evidence of the hourly rates of the insolvency practitioners. I have checked the schedules against the evidence and I am satisfied that they are accurate. The schedules are annexed to these reasons as Annexure A. 17 ASIC adduced evidence from Mr Peter Gothard who is the managing partner at Ferrier Hodgson in Sydney. Mr Gothard has expertise in insolvency administrations and, by reference to a standard described by him as that of a competent and prudent insolvency practitioner (CPIP), he addresses questions relevant to the work carried out by the plaintiffs and in respect of which they claim remuneration. Mr Gothard prepared a detailed report dated 27 October 2016 and a report in reply to Mr Sheahan's affidavit affirmed on 28 March 2017. The plaintiffs objected to Mr Gothard's evidence on the ground that it was not relevant and on the ground that he lacked the qualifications necessary to give the expert opinion evidence which he purports to give. I overruled those objections and received Mr Gothard's reports. My reasons for that ruling are as follows. Mr Gothard's principal report addresses two questions. Those questions are as follows: 1. In the circumstances known to the Practitioners would a competent and prudent insolvency practitioner [CPIP] have carried out the work in respect of which the Practitioners claim remuneration? 2. If so: (a) to what extent would a CPIP have carried out the work? (b) would a CPIP have carried out the work deploying persons of the apparent seniority as deployed by the Practitioners? (In answering this question please consider the hourly rates charged by the Practitioners' firm for the relevant personnel). 18 Mr Gothard described a CPIP as an insolvency practitioner who acts materially in compliance with the law and applicable professional standards (both mandatory requirements and recommended behaviours) and acts with due regard to the interests of parties to whom he or she owes duties. The applicable professional standards to which Mr Gothard referred are the APES 330 issued by the Accounting Professional and Ethical Standards Board and the Insolvency Practitioners Association of Australia (IPAA) Code of Professional Practice (COPP) (current versions are now known as the Australian Restructuring Insolvency & Turnaround Association (ARITA) Code of Professional Practices). 19 Mr Gothard addresses the four work streams of Debt and Equity Issues; potential claims against directors and ANZ; issues arising under the POC Act, and applications relating to the receivers. He summarises his opinions on the questions he is asked in a table which I annexe to these reasons as Annexure B. 20 In his report in response, Mr Gothard sets out the extent to which he modifies his opinions, having regard to the matters set out in Mr Sheahan's second affidavit. 21 As to the first ground of objection, the plaintiffs submitted that Mr Gothard had addressed an irrelevant question in that the issue in this case is not what work would be carried out by a CPIP. The issue in this case is in what amount the Court should fix or determine the plaintiffs' remuneration and, in determining that issue, the Court must have regard to whether the remuneration is reasonable, taking into account the matters identified in ss 449E(4) and 473(10). I rejected this ground because it seemed to me that, having regard to the matters identified in ss 449E(4) and 473(10), particularly the issue of whether work was reasonably necessary, the evidence of what work a CPIP would do and in what circumstances was likely to be of assistance. As to the second ground of objection, the plaintiffs submitted that Mr Gothard did not have the expertise to provide an opinion as to what would be done by a CPIP. 22 The plaintiffs referred the Court to, among other cases, the decision of Brereton J in Lucantonio v Kleinert [2009] NSWSC 853 and, in particular, the summary of relevant principles at [8]. The following three are relevant: (1) In a professional negligence case, expert evidence is admissible of an accepted or standard professional practice, conduct or standard. Expert evidence is also admissible of what is commonly considered professional practice of competent and careful professionals in the field. (2) Expert evidence is not admissible of what the expert would himself or herself have done in the circumstances, at least if that evidence is tendered to support the inference that other careful and competent professionals would have done the same things professionally; nor is expert evidence admissible of what as a matter of law reasonable care is required; that is a question of law for the Court and not for an expert. (3) Expert evidence of what a competent and prudent practitioner would have done in the particular circumstances of the defendant is not admissible if, in effect, it is no more than one professional commenting on the conduct of another, at least in the absence of evidence that the expert has additional training, study or experience to demonstrate the acquisition of specialist knowledge of what a competent and prudent practitioner would do. However, expert evidence of what a competent and prudent practitioner would have done in certain circumstances may have been admissible if the witness has by training or experience such additional special qualifications or experience as to equip him or her to give evidence with competence of what the general body of competent and general practitioners would do. 23 The plaintiffs submitted that the evidence of Mr Gothard was no more than one professional commenting on the conduct of another, and that "there is no evidence that Mr Gothard has additional training, study or experience to demonstrate the acquisition of specialist knowledge of what a competent and prudent practitioner would do". I rejected this submission because I considered that Mr Gothard did have the necessary additional training, study or experience to demonstrate the acquisition of specialist knowledge of what a CPIP would do. 24 Mr Gothard started his career in 1987 and he has worked continuously in the field of insolvency since that time. That is a period of 30 years. He has worked in Australia, New Zealand, the United States, South East Asia and Japan. He has worked for and alongside a number of very experienced insolvency practitioners from his firm. He has also been involved in joint appointments and has had the opportunity to observe and note the conduct of insolvency practitioners from other firms. He has an undergraduate degree in business majoring in accounting and he completed the professional year of the Institute of Chartered Accountants. He is a registered company liquidator. He has completed a Masters of Business Administration and a global insolvency practice course which is conducted by INSOL International, an organisation which focusses on international insolvency and particularly cross-border issues with the model law and European Insolvency Regulations and resolution of disputes across borders. Mr Gothard is the managing partner of the Sydney office of Ferrier Hodgson. 25 Mr Gothard's practice deals with large and complex insolvencies. The complexity arises from the fact that the business and business structures are complex. He has often been involved in matters where the capital structure or the creditors' structure is complicated or where there are a number of difficulties or disputes associated with the particular matter. There is a need for particular expertise. The matters that he has been involved in often involve cross-border elements, international business and matters of that nature. Since becoming a registered liquidator, Mr Gothard has completed approximately 50 administrations, of which approximately 20 would qualify as large and complex. 26 Mr Gothard was cross-examined by counsel for the plaintiffs. He was a satisfactory witness, although I do not accept all of his expert opinions. 27 Finally, ASIC adduced evidence from Mr Bradley D Sharp. Mr Sharp is the President and Chief Executive Officer of Development Specialists Inc. At the relevant time, Mr Sharp was a senior managing director. Development Specialists Inc provides insolvency and restructuring services, among other services. Mr Sharp has worked in the bankruptcy and insolvency industry for more than 20 years and he has worked in the bankruptcy and insolvency industry for more than 20 years. On 14 May 2009, Mr Sharp was appointed the Chapter 11 Trustee in Bankruptcy of SK Foods, LP, and the United States Bankruptcy Court approved his appointment on 18 May 2009. He claimed that SK Foods, LP owned 100 of the 101 issued shares in SKFA. Mr Sharp swore an affidavit which was received as his evidence-in-chief and he was cross-examined by counsel for the plaintiffs. Mr Sharp was a satisfactory witness.

The Key Events in the Administrations and Liquidations 28 The facts in this matter are many and complex. It is convenient to start with a manageable chronology. Later in these reasons, it will be necessary for me to examine the facts in particular areas in a good deal more detail. 29 I will adopt the chronology of events which was annexed to the plaintiffs' written outline of opening submission with such changes as I consider necessary. (1) In early 2009, Mr Salyer was arrested and charged with racketeering. SK Foods, LP's financiers, led by the Bank of Montreal (BMO), moved against the assets of the company and the company sought Chapter 11 bankruptcy protection, resulting in the appointment of Mr Sharp as trustee in bankruptcy. (2) In about mid-2009, the New Zealand Companies, which companies shared common directors and management with the Companies and which were owned by interests associated with Mr Salyer, breached their banking covenants with ANZ NZ. (3) As a condition of the provision of continued banking support to the New Zealand Companies, the Companies and the New Zealand Companies entered into a guarantee in July 2009 by which they cross-guaranteed each other entities' debts. (4) In October 2009, the New Zealand Companies again defaulted on their banking covenants and failed to remedy such defaults. ANZ NZ appointed receivers in November 2009. (5) On 6 May 2010, the plaintiffs were appointed joint and several administrators of each of SKFA, CJVA and SSFA by reason of a resolution passed by the company's directors pursuant to s 436A of the Act. The plaintiffs were also appointed liquidators over the New Zealand Companies. (6) On or around 23 July 2010, the plaintiffs provided the Companies' creditors with reports for the purposes of s 439A of the Act. Those reports: (a) provided creditors with information as to the reasons for the financial difficulties of the Companies; (b) informed creditors that the identity of the shareholders of SKFA was a matter that may need to be determined in the liquidation of SKFA; (c) informed creditors of their investigations into the Companies' affairs, including their communications with the receivers, financier, directors and certain creditors; (d) provided creditors with a report of the Companies' financial position; (e) provided an overview of the plaintiffs' consideration of potential legal claims; and (f) provided creditors with a schedule of their firm's standard charge out rates and set out the remuneration for which the plaintiffs proposed to seek the approval of creditors. (7) On 23 July 2010, the plaintiffs learned from the receivers that the business assets of the Companies were to be sold for $91 million, resulting in a substantial surplus of funds after payment of the secured debt and receivers fees. The receivers provided warranties to the purchaser of the Companies' assets for a period of 6 months. (8) On or around 29 July 2010, the plaintiffs provided the Companies' creditors with a supplementary report for the purposes of s 439A of the Act. That report informed the Companies' creditors that: (a) the receivers had entered into an agreement to sell the business assets of the Companies for $91 million, meaning that there would be a substantial surplus following the payment of creditors; (b) the receivers had provided the purchaser with warranties for a period of 6 months following the anticipated completion of the sale on 30 July 2010; and (c) the sale of the business assets would likely lead to a capital gains tax liability being incurred by the company. (9) In or around August 2010, following the review of books and records of the Companies, the plaintiffs considered the existence and viability of potential claims against the former directors of the Companies and the Companies' financier, ANZ. They sought advice from solicitors and counsel. (10) On or around 3 August 2010, the plaintiffs became aware of the existence of a dispute concerning the ownership of the shares in SKFA and a debt owed by SKFA of approximately $17 million. (11) At meetings of the Companies' creditors held 11 August 2010: (a) Mr Sharp moved a resolution that the plaintiffs' fees (as administrators of SKFA and CJVA) be approved for the period from 6 May 2010 to 9 July 2010 in the amount of $205,788.79 plus GST. The creditors present at that meeting, including Mr Sharp, unanimously voted to carry that resolution; (b) Mr Sharp moved a resolution that the plaintiffs' fees (as administrators of SKFA and CJVA) be approved for the period from 10 July 2010 to 6 August 2010 in the amount of $168,539.20 plus GST. The creditors present at that meeting voted to carry that resolution, save for Mr Shepard for the receivers of SKFA and CJVA who abstained; (c) Mr Cary Collins, moved a resolution that the plaintiffs' fees (as administrators of SSFA) be approved for the period from 6 May 2010 to 9 July 2010 in the amount of $6,520.91 plus GST. The creditors present at that meeting unanimously voted to carry that resolution; and (d) Mr Collins moved a resolution that the plaintiffs' fees (as administrators of SSFA) be approved for the period from 10 July 2010 to 6 August 2010 in the amount of $12,633.32 plus GST. The creditors present at that meeting voted to carry that resolution, save for Mr Shepard for the receivers of SKFA, SSFA and ANZ, who abstained; (e) Mr Sharp moved a resolution that SKFA and CJVA be placed into liquidation and that the plaintiffs be appointed as joint and several liquidators of each. The creditors present at that meeting, including Mr Sharp, unanimously voted to carry that resolution; (f) Mr Neal Alexander, moved a resolution that SSFA be placed into liquidation and that the plaintiffs be appointed as joint and several liquidators of each. The creditors present at that meeting unanimously voted to carry that resolution; (g) Mr Sharp moved a resolution that the remuneration of the plaintiffs (as liquidators of SKFA and CJVA) for the period from the commencement of the liquidation to the completion of the liquidation shall be a sum equal to the cost of time spent by the plaintiffs, partners and staff, calculated at the rates detailed in the schedule of charge out rates as provided to creditors in the recent report. The creditors present at that meeting, including Mr Sharp, unanimously voted to carry that resolution; and (h) Mr Collins moved a resolution that the remuneration of the plaintiffs (as liquidators of SSFA) for the period from the commencement of the liquidation to the completion of the liquidation shall be a sum equal to the cost of time spent by the plaintiffs, partners and staff, calculated at the rates detailed in the schedule of charge out rates as provided to creditors in the recent report. The creditors present at that meeting unanimously voted to carry that resolution; (12) On or around 2 November 2010, the plaintiffs provided the Companies' creditors with reports on the progress of the liquidations. Those reports: (a) confirmed to creditors that the identity of the shareholders of SKFA was a matter that would need to be determined prior to any distribution being made to shareholders; (b) informed creditors of the efforts the plaintiffs had made to collect and review the Companies' books and records; (c) informed creditors of the plaintiffs' communications with the receivers, concerning their release of the proceeds of the sale of the business assets and their retirement; (d) informed creditors of the plaintiffs' efforts to quantify the Companies' capital gains tax liabilities following the sale of their business assets; (e) provided creditors with a report of the Companies' financial position; and (f) set out the remuneration for which the plaintiffs proposed to seek creditor approval. (13) At a joint meeting of the creditors of SKFA and CJVA held on 17 November 2010: (a) Mr Sharp moved a resolution that the plaintiffs' fees (as administrators of SKFA and CJVA) be approved for the period from 7 August 2010 to 10 August 2010 in the amount of $31,746.67 plus GST. The creditors present at that meeting, including Mr Sharp, voted to carry that resolution; (b) Mr Sharp moved a resolution that the plaintiffs' fees (as liquidators of SKFA and CJVA) be approved for the period from 11 August 2010 to 31 October 2010 in the amount of $550,000 plus GST, noting that this represented a write off of just under $100,000 from the work in progress (WIP) incurred and referred to in the report to creditors. The creditors present at that meeting, including Mr Sharp, voted to carry that resolution; and (c) Mr Sharp moved a resolution that the plaintiffs be authorised to draw down fees to a limit of $125,000 plus GST per month. The creditors present at that meeting, including Mr Sharp, voted to carry that resolution. (14) At a meeting of the creditors of SSFA held on 17 November 2010: (a) Mr Collins moved a resolution that the plaintiffs' fees (as administrators of SSFA) be approved for the period from 7 August 2010 to 10 August 2010 in the amount of $217.50 plus GST. The creditors present at that meeting voted to carry that resolution; and (b) Mr Collins moved a resolution that the plaintiffs' fees (as liquidators of SSFA) be approved for the period from 11 August 2010 to 31 October 2010 in the amount of $93,061.83 plus GST. The creditors present at that meeting voted to carry that resolution. (15) In November and December 2010, the plaintiffs met with stakeholders regarding the Debt and Equity Issues. (16) In February 2011, the warranty period in the sale and purchase agreement under which the receivers sold the assets of the Companies expired. The plaintiffs called for the receivers to retire, however, the receivers refused. (17) In March 2011, settlement discussions between Mr Sharp and the Salyer interests took place in an effort to resolve the dispute surrounding the Debt and Equity Issues. (18) On 4 May 2011, Mr Sharp commenced proceedings in the United States Bankruptcy Court in relation to, inter alia, the Debt and Equity Issues. Those proceedings were stayed, along with all other proceedings against Mr Salyer and his interests, whilst the criminal indictments against Mr Salyer were on foot. (19) On or around 28 June 2011, the plaintiffs provided the creditors of SSFA with a report on the progress of the liquidation. That report: (a) informed creditors of the efforts the plaintiffs had made to collect and review the books and records of SSFA and their consideration of the cross-guarantees; (b) informed creditors of the plaintiffs' communications with the receivers concerning their release of the proceeds of the sale of the business assets and their retirement; (c) informed creditors of the declaration of a first dividend on 26 December 2010; (d) informed creditors of the plaintiffs' efforts to quantify the Companies' capital gains tax liabilities following the sale of their business assets; (e) provided creditors with a report of the financial position of SSFA; and (f) set out the remuneration for which the plaintiffs proposed to seek creditor approval. (20) At a meeting of the creditors of SSFA held on 15 July 2011: (a) Mr Michael DuBourg moved a resolution that the plaintiffs' fees (as liquidators of SSFA) be approved for the period from 1 November 2010 to 20 June 2011 in the amount of $226,945.83 plus GST. The creditors present at that meeting voted to carry that resolution; (b) Mr DuBourg moved a resolution that the plaintiffs' fees (as liquidators of SSFA) be approved for the period from 21 June 2011 to 30 June 2011 in the amount of $16,420.84 plus GST. The creditors present at that meeting voted to carry that resolution; and (c) Mr DuBourg moved a resolution that the plaintiffs' fees (as liquidators of SSFA) be approved prospectively at up to $50,000 plus GST per month, form 1 July 2011 to 30 June 2012, with any amount above that requiring further approval by creditors, a committee of inspection or the Court in due course. The creditors present at that meeting voted to carry that resolution. (21) In July and October 2011, the plaintiffs undertook examinations in New Zealand of former directors and executives of the Companies, the Companies' former solicitor and the relationship manager from ANZ. (22) The plaintiffs undertook depositions in the United States in August 2011 of former executives of SK Foods, LP and the auditors of SK Foods, LP. (23) In September 2011, the plaintiffs conducted examinations of former directors of the Companies, Mr Harry Heath and Mr Richard Lawrence, in the Federal Court of Australia and obtained production from the Companies' former solicitors along with ANZ and ANZ's solicitors. (24) In October 2011, the plaintiffs engaged in further correspondence with the receivers regarding the finalisation of the receivership. The plaintiffs were advised by the receivers that they were seeking a tax ruling from the Australian Taxation Office (ATO). (25) In November 2011, the plaintiffs engaged in further correspondence with the receivers seeking that they retire or resign as receivers of the Companies. (26) On 30 November 2011, the receivers brought an application in the Supreme Court of Victoria seeking directions that they were justified in not retiring. On 23 December 2011, the plaintiffs commenced proceedings seeking orders that the receivers be removed. (27) In November 2011, the plaintiffs obtained advice regarding the debt issue from their solicitors. (28) On or around 5 December 2011, the plaintiffs provided the creditors of SKFA and CJVA with a joint report on the progress of the liquidations. That report: (a) informed creditors of the efforts the plaintiffs had made to collect and review the books and records of SKFA and CJVA; (b) provided creditors with an update on the plaintiffs' investigations into the Debt and Equity Issues and explained what further investigations they proposed to undertake; (c) provided creditors with an update on their investigations into the cross-guarantees; (d) explained the events leading up to the receivers applying to the Court for directions that they were justified in not retiring; (e) informed creditors of the plaintiffs' consideration of taxation matters effecting SKFA and CJVA; (f) informed creditors that the plaintiffs were keeping the US Department of Justice informed of any significant developments in the winding up of SKFA and CJVA and their related investigations; (g) informed creditors of the declaration of a first and final dividend on 22 December 2010 in the winding ups of SKFA and CJVA; (h) provided creditors with a report of the financial position of SKFA and CJVA; (i) set out the remuneration for which the plaintiffs proposed to seek creditor approval; and (j) informed the creditors of SKFA and CJVA of a meeting proposed to be held on 21 December 2011 (that meeting was ultimately adjourned to 9 March 2012). (29) In December 2011, the plaintiffs obtained advice from senior counsel to the effect that the Disputed Debt had not been validly assigned. On the basis of counsel's advice, the plaintiffs proceeded to admit the proof of debt lodged by Mr Sharp in relation to the Disputed Debt subject to set-off. The plaintiffs thereafter proceeded to admit proof of debt of Mr Sharp subject to set-off. Mr Sharp appealed against the set-off and the Salyer interests appealed against the rejection of their proofs of debt. (30) In December 2011, the plaintiffs received proofs of debt in relation to the shares in SKFA, and thereby claims in respect of funds, from Mr Sharp and the Salyer interests. (31) By January 2012, further information had come to light that caused the plaintiffs to doubt their adjudication on the Disputed Debt. As a result, the plaintiffs sought alternative advice in February 2012 from senior counsel, which advice suggested the Disputed Debt had been validly assigned and thereby the plaintiffs' adjudication was incorrect. (32) In early 2012, the plaintiffs informed Mr Sharp that their present view was that the "Spin Off" was a legitimate transaction. (33) On or around 17 February 2012, the plaintiffs provided the creditors of SKFA and CJVA with a further joint report on the progress of the liquidations. That report: (a) provided the creditors of SKFA and CJVA with a further update on the plaintiffs' investigations into both companies' affairs; (b) provided creditors with an update on the plaintiffs' investigations into the Debt and Equity Issues and explained that they had sought further advice as to the effect of the material collected through their investigations; (c) informed creditors of the application brought by the plaintiffs for the removal of the receivers; (d) provided creditors with an update on the plaintiffs' consideration of taxation matters effecting SKFA and CJVA; (e) provided creditors with an update on the adjudication of outstanding creditor claims; (f) informed creditors of an expected surplus payable to shareholders of SKFA of approximately $35 million; and (g) set out the remuneration for which the plaintiffs proposed to seek creditor approval. (34) On 20 February 2012, Mr Sharp commenced proceedings in the New South Wales District Registry of the Federal Court seeking declarations as to the ownership of the shares in SKFA (Equity Proceedings) along with other orders, including a review of the plaintiffs' remuneration. The plaintiffs defended themselves in those proceedings and sought their transfer to the South Australia District Registry. Mr Sharp abandoned his application for review of the plaintiffs' remuneration on 28 March 2012. (35) At a meeting of the creditors of SKFA held on 9 March 2012: (a) SK Foods, LP was admitted to vote with respect to its claim to the Disputed Debt (subject to a set-off), which claim had been formally admitted by the plaintiffs, but which claims they doubted at the time given the receipt of further information as referred to above; (b) the entities associated with Mr Salyer were admitted to vote with respect to their claims to the Disputed Equity, which claims were still to be formally admitted but which the plaintiffs believed to be valid at the time; (c) Mr Sharp objected to the admission of the claims of the entities associated with Mr Salyer for voting purposes, and his solicitor, Ms Jill Milburn, informed the meeting that Mr Sharp would seek to challenge the admission in the courts; (d) Mr Stephen Polczynski, the solicitor for the entities associated with Mr Salyer, moved a resolution that the plaintiffs' fees (as liquidators of SKFA) which the plaintiffs were authorised by resolution of creditors on 17 November 2010 to draw down in the sum of $125,000 plus GST per month, being the total sum of $1,875,000 plus GST covering the period from 1 November 2010 to 31 January 2012, be fixed and approved in that amount. The creditors present at that meeting voted to carry that resolution save for Mr Sharp who voted against; (e) Mr Kevin Smith, the representative of the Deputy Commissioner of Taxation, moved a resolution that the plaintiffs' fees (as liquidators of SKFA) be fixed and approved for the period from 1 November 2010 to 31 January 2012 in the amount of $346,384.43 plus GST. The creditors present at that meeting voted to carry that resolution save for Mr Sharp who voted against; and (f) Mr Smith, moved a resolution that the plaintiffs' fees (as liquidators of SKFA) be fixed and approved for the period from 1 February 2012 to 29 February 2012 in the amount of $137,323.41 plus GST. The creditors present at that meeting voted to carry that resolution save for Mr Sharp who voted against; and (g) Mr Polczynski, moved a resolution that the plaintiffs' fees (as liquidators of SKFA) in a sum not exceeding $125,000 plus GST per month, be approved and paid out of the liquidation of SKFA for the period 1 March 2012 to 31 October 2012, with any fees exceeding that capped sum requiring separate approval. The creditors present at that meeting voted to carry that resolution save for Mr Sharp who voted against and Mr Smith who abstained. (36) By April 2012, it had become clear to the plaintiffs that Mr Sharp did not want the plaintiffs to continue to investigate the Potential Claims against the Directors and ANZ. The plaintiffs sought the input from the Salyer interests who agreed the plaintiffs should cease incurring fees in relation to such investigations. On the basis of the communications from the interested parties, the plaintiffs suspended their investigations. (37) In June 2012, the stay of proceedings against Mr Salyer was lifted in the United States of America. Accordingly, Mr Sharp was free to pursue proceedings against the Salyer interests. (38) On 4 June 2012, Emmett J in the Equity Proceedings indicated that he would be assisted if the plaintiffs acted as contradictors on Mr Sharp's applications and to file a notice of contentions. (39) In August 2012, the plaintiffs were advised that Mr Sharp was pursuing summary judgment against the Salyer interests in relation to the Debt and Equity Issues in the United States. The plaintiffs proposed that there be no further action in the Equity Proceedings. Mr Sharp insisted that the plaintiffs proceed to prepare their notice of contentions. The plaintiffs' notice of contentions was filed on 10 September 2012. (40) In early September 2012, the plaintiffs first considered that the funds held by them in the liquidation may be the proceeds of crime. Following the receipt of advice, the plaintiffs referred the matter to ASIC. The plaintiffs then met with ASIC and representatives of the Australian Federal Police (AFP), to whom the plaintiffs understood ASIC had referred the matter. The plaintiffs provided documents and information to the AFP as requested and in response to a formal notice issued by the Magistrates Court of Western Australia on the application of the AFP in October 2012. (41) On or around 16 October 2012, the plaintiffs provided the Companies' creditors with reports on the progress of the liquidations. Those reports: (a) provided the creditors of SKFA and CJVA with an update on the plaintiffs' efforts to obtain the production of documents relevant to their affairs in the United States; (b) provided the creditors of SKFA and CJVA with an update on the plaintiffs' investigations into the ownership of the Disputed Debt, explained why they had revoked their initial adjudication and provided an overview of the Court proceedings concerning the identity of the correct owner(s); (c) provided the creditors of SKFA and CJVA with an update on the plaintiffs' investigations into the ownership of the Debt and Equity Issues and provided an overview of the Court proceedings concerning the identity of the correct owner(s); (d) provided creditors with an update on the proceedings concerning the removal of the receivers; (e) provided creditors with an update on the plaintiffs' adjudication and payment of remaining claims in the winding up of the Companies; (f) informed creditors of an expected surplus payable to the shareholders of SKFA of approximately $40 million; and (g) set out the remuneration for which the plaintiffs proposed to seek creditor approval. (42) At the meeting of the creditors of SKFA held on 1 November 2012: (a) SK Foods, LP was admitted to vote with respect to its claim to the Disputed Debt (subject to a set-off), which claim had been formally admitted by the plaintiffs but which they doubted at the time, given the receipt of further information as referred to above; (b) the entities associated with Mr Salyer were admitted to vote with respect to their claims to the Disputed Equity, which claims were still to be formally admitted but which the plaintiffs believed at the time to be valid; and (c) Mr Polczynski, the solicitor for the entities associated with Mr Salyer, moved a resolution that the plaintiffs' fees (as liquidators of SKFA) in a sum not exceeding $50,000 plus GST per month, be approved and paid out of the liquidation of SKFA for the period from 1 November 2012 to 31 October 2013, with any fees exceeding that capped sum requiring separate approval. The creditors present at that meeting voted to carry that resolution save for Mr Michael Rose, the solicitor for SK Foods, LP, who voted against it. (43) At the meeting of the creditors of SSFA held on 1 November 2012: (a) Mr Polczynski, moved a resolution that the plaintiff' fees (as liquidators of SSFA) for the period 1 July 2012 to 30 September 2012 be fixed and approved in the sum of $7,895.01 plus GST. The creditors present at that meeting voted to carry that resolution; and (b) Mr Polczynski, moved a resolution that the plaintiffs' fees (as liquidators of SSFA) in a sum not exceeding $10,000 plus GST per month, be approved and paid out of the liquidation of SSFA for the period from 1 October 2012 to 31 October 2013, with any fees exceeding that capped sum requiring separate approval. The creditors present at that meeting voted to carry that resolution. (44) In late November 2012, Mr Sharp obtained summary judgment against the Salyer interests in the United States in relation to, inter alia, the Disputed Debt and the Disputed Equity, and he then applied for recognition of that judgment in the proceedings before Emmett J. In relation to the application for recognition, Emmett J requested that the plaintiffs act as contradictors. Mr Sharp did not speak against the plaintiffs acting as contradictors and his Honour made an order to that effect. (45) Following a hearing, Mr Sharp's application for recognition was refused by Emmett J on 19 December 2012. Mr Sharp amended the relief sought in the Equity Proceedings to cure the defect underlying Emmett J's refusal to grant recognition, including the joinder of all of the Salyer interests. Mr Sharp subsequently sought summary judgment in the Equity Proceedings and a trial proceeded before Flick J in March 2013. The plaintiffs were not involved in the trial. (46) In April 2013, the plaintiffs participated in further meetings with the AFP and provided further information as requested. (47) On 15 May 2013, the AFP commenced proceedings in the Supreme Court of Victoria pursuant to the POC Act seeking, inter alia, forfeiture of the surplus assets held by the plaintiffs to the Commonwealth (the POC Act Proceedings). (48) On 30 May 2013, Flick J gave judgment in the Equity Proceedings in Mr Sharp's favour, in effect granting summary judgment in relation to the Disputed Debt and the Disputed Equity (SK Foods LP v SK Foods Australia Pty Ltd (in liq) (No 3) [2013] FCA 526; (2013) 214 FCR 543). In other words, the application by SK Foods, LP and Mr Sharp was successful. (49) On 10 July 2013, Mr Sharp brought an application in the New South Wales District Registry of the Federal Court seeking orders for the removal of the plaintiffs and for a review of their remuneration. Mr Sharp nominated two of Mr Gothard's business partners at Ferrier Hodgson as replacement liquidators. The application was opposed by the AFP. (50) In November 2013, a resolution of all of the outstanding issues in the liquidations was reached with the various stakeholders. Specifically, the settlement resolved the POC Act proceedings, the proceedings relating to the receivers and the application to remove and replace the plaintiffs and review their remuneration. A Deed of Settlement was entered into that provided for: (a) according to the plaintiffs, a release in favour of the plaintiffs in relation to their conduct and remuneration claimed to date; (b) remuneration for the plaintiffs up to an amount of $750,000; and (c) the submission of a consent order to the Supreme Court of Victoria that the entirety of the surplus funds held by the plaintiffs be forfeited to the Commonwealth and then on forwarded to: (i) Mr Robert Greeley (as receiver appointed by the United States Bankruptcy Court) with respect to 90% of 1 of 101 shares in SKFA, less an amount $100,000; and (ii) SK Foods, LP and Mr Sharp with respect to 90% of 100 of 101 shares in SKFA. (iii) The 10% balance of the surplus funds was retained by the Commonwealth. (51) The plaintiffs proceeded to draw remuneration up to the $750,000 cap. Mr Sharp objected to the drawing of such remuneration, asserting that the deed did not operate as approval of remuneration. In consequence, the plaintiffs repaid the amounts drawn. On 29 August 2014, the plaintiffs entered into a subsequent Deed of Settlement with Mr Sharp which, according to the plaintiffs, resolved all issues, including the remuneration after November 2013. (52) On or about 24 September 2014, the plaintiffs provided the Companies' creditors with a joint report on the progress of the liquidations. That report: (a) informed creditors of the retirement of the receivers; (b) informed creditors of the deed of release entered into on 9 September 2014; (c) explained to creditors how the Companies' taxation affairs had been finalised; (d) informed creditors of a personal injury claim made against SKFA and CJVA, which claim was covered by their insurers; and (e) set out the remuneration for which the plaintiffs proposed to seek creditor approval. (53) At the meeting of the creditors of the Companies held on 21 October 2014, Mr David Porter, the solicitor for Mr Sharp and SK Foods, LP, moved a resolution that the plaintiffs' remuneration for the period from 19 November 2013 to 12 September 2014 for the liquidations of the Companies be approved in the total amount of $100,000 inclusive of GST. The only creditor present at that meeting, SK Foods, LP, voted to carry that resolution. 30 The Deeds of Settlement identified in (50) and (51) above are discussed in detail in my reasons for judgment on an interlocutory application in this proceeding (Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) [2017] FCA 1306 at [28]-[48]). 31 There are essentially three issues which are the subject of the balance of these reasons. They are as follows: (1) Have the plaintiffs contravened s 449(7) (administration) and s 499(7) (liquidation) of the Act? (2) If so, should there be an order under s 1322(4)(a) in relation to such contraventions? (3) If no to (2), in what amount should the plaintiffs' remuneration be fixed?

The Contraventions of s 449E(7) (Administration) and s 499(7) (Liquidation) 32 In one sense, it is not necessary to spend a great deal of time on this issue because the plaintiffs admit contraventions. However, it is important to identify the nature of those contraventions as precisely as possible. 33 The facts give rise to four possible categories of contraventions of s 449E(7) (administration) and s 499(7) (liquidation) of the Act. They are as follows: (1) Creditors' resolutions preceded by "inadequate" remuneration reports. Inadequate is not the statutory term, but it is a convenient way of describing reports which fail to comply with the requirements of the subsections; (2) Creditors' resolutions where there was no remuneration report for the whole period. Mr Lock used the term, "stub period" to describe a period between the provision to creditors of a remuneration report and the holding of a creditors' meeting. There was no remuneration report for this period; (3) Creditors' resolutions granting approval for fees to be incurred up to a certain limit which, sometime later, were followed by a remuneration report which covered most, but not all, of the subsequent period; and (4) One period - 19 November 2013 to 12 September 2014 - for which, according to the plaintiffs' application and Mr Lock's first affidavit, there was no creditors' resolution. I have reached the conclusion that s 1322(4)(a) of the Act is not engaged in this case in respect of all periods. An additional reason it is not engaged in the case of the period between 19 November 2013 to 12 September 2014 is that, absent a creditors' resolution, there is no act, matter or thing or proceeding instituted or taken within s 1322(4)(a). It appears that there was a resolution about remuneration for the period presently under consideration at the meeting of creditors of the Companies on 21 October 2014 and it is not clear what position the plaintiffs take with respect to this resolution. In any event, it does not matter because it was preceded by an inadequate remuneration report and, for reasons I will give, s 1322(4)(a) was not engaged as to any of the periods. 34 I turn to consider the circumstances relating to the above periods. 35 On 29 April 2015, ASIC wrote to the plaintiffs advising them that it considered that they had failed to comply with the requirements of s 449E(7) and s 499(7) of the Act. ASIC identified various failures which it characterised in three ways. First, there were cases where resolutions were not preceded by a remuneration report. These were as follows: (1) with respect to SKFA and CJVA for 10 July 2010 to 6 August 2010, and 1 February 2010 to 29 February 2012; and (2) with respect to SSFA for 10 July 2010 to 6 August 2010, and 21 June 2011 to 30 June 2011. As I understand it, these are the stub periods to which Mr Lock referred. The total amount for these periods is $334,916.77. Secondly, there were cases where the resolutions were passed in circumstances in which the remuneration report did not cover the period of the creditors' remuneration resolution. These were: (1) with respect to SKFA and CJVA for 1 March 2012 to 31 October 2012, and 1 November 2012 to 31 October 2013; and (2) with respect to SSFA for 1 July 2011 to 30 June 2012, and 1 October 2012 to 31 October 2013. The total amount for these periods is $2,018,077.03. Thirdly, there were cases where the remuneration reports were inadequate. 36 On 29 May 2015, the plaintiffs wrote to ASIC acknowledging the alleged failures, but also offering some comments seeking to explain why they had acted in the way in which they had. 37 ASIC's case was that the total amount for cases in which the plaintiffs failed to provide to creditors a remuneration report in respect of the relevant period before they voted upon remuneration resolutions is $2,352,993.80 and the total amount for cases in which inadequate remuneration reports were provided is $3,328,927.55. 38 At one level, ASIC's submission is correct and was accepted by Mr Lock in Schedule A of his first affidavit. However, the plaintiffs submit that periods for which there was no remuneration report before or after the relevant resolution are limited to the stub periods which, as I have said, involve a total amount of $334,916.77. One example will suffice to illustrate the point. The creditors of SKFA and CJVA met on 9 March 2012 and passed the following resolution: The liquidators' fees, in a sum not exceeding $125,000 plus GST per month, be approved and paid out of the liquidation of SKFA for the period 1 March 2012 to 31 October 2012, with any fees exceeding that capped sum requiring separate approval. The creditors were not given a remuneration report for that period prior to that resolution. 39 On or about 16 October 2012, the creditors of SKFA and CJVA were provided with a remuneration report for the period 1 March 2012 to 30 September 2012. At the creditors' meeting of SKFA on 1 November 2012, it was considered that there was no need for a resolution with respect to remuneration for the period from 1 March 2012 to 31 October 2012 in light of the resolution passed on 9 March 2012. The following appears in the minutes of the meeting of 1 November 2012: The chairman noted that the liquidators' fees for the period from 1 March 2012 to 30 September 2012 were $814,080.29 plus GST and therefore did not exceed the capped sum, and that once October fees were added the total fees incurred for the period would still remain less than the amount approved for the period and hence the liquidators were not seeking approval for any excess fees. 40 For reasons I will give, I have decided that the remuneration reports provided to the creditors by the plaintiffs were inadequate so, to this extent, this difference between the parties does not matter. However, what the plaintiffs actually did will be relevant when I come to consider the application of s 1322 of the Act. 41 Returning to ASIC's letter dated 29 April 2015 and the cases where it is contended that the remuneration reports were inadequate. With respect to these cases, ASIC makes general remarks with respect to all reports and then particular comments with respect to particular reports. Its general remarks may be summarised as follows. The remuneration reports allocated times between a number of categories of work and provided generic descriptions of the work undertaken. This has occurred despite the fact that in most cases the amount of remuneration claimed is substantial and the number of hours apparently spent by the practitioners is significant. ASIC also states that creditors would not have been able to assess from the information provided in the reports which staff member completed each task, at what hourly rate, and whether it was appropriate that the person in question complete the task. Nor would creditors have been able to assess whether a task when delegated, had been appropriately delegated. ASIC also makes the comment that the reports are inaccurate. Descriptions of the work apparently undertaken were clearly copied from earlier or other reports and, in some instances, comprised work that was not undertaken during the relevant period. For example, throughout the liquidators' remuneration reports, there is continued reference to an application to extend the convening period and tasks that may have been undertaken by the plaintiffs as administrators. With respect to ASIC's comments on particular remuneration reports, an example will suffice. At the creditors' meeting of SKFA and CJVA held on 9 March 2012, remuneration of $1,875,000 for the period 1 November 2010 to 30 November 2011, and remuneration of $346,384.43 for the period 1 December 2011 to 30 January 2012 were approved. The total amount is approximately $2,220,000 for in excess of 3,800 hours of work over a 15 month period. It is apparent from the reports that much of that time was charged by the plaintiffs as the appointees personally. The two remuneration reports which are relevant to these periods are dated 5 December 2011 and 17 February 2012 respectively. ASIC's letter identifies the following inadequacies in the reports: (a) There is a one page summary of hours spent and the corresponding charges for each time period; (b) the substantive part of each remuneration report is slightly less than 2 pages; (c) the time and charges are divided between broad categories with generic descriptions which are largely identical to the descriptions in the earlier remuneration reports; (d) the resolution was for a different amount ($1,875,000) to that claimed in the report ($2,745,945.30); and (e) the report again contains descriptions of work which could not have been undertaken during this period, such as "preparing s 439A report and related tasks" and "liaising with solicitors regarding applications to court for extension of convening period. Application to court for remedy of defect in appointment". Again, it seems the descriptions were simply copied from the earlier reports. 42 I turn now to examine the creditors' meetings in more detail and the documents provided to creditors before and at each meeting. Before dealing with each meeting, it is convenient to identify the general nature of the documents which are relevant to some or all of the meetings. 43 The first type of document is an administrators' or liquidators' report to creditors. The practice was to have one report dealing with SKFA and CJVA, and one report dealing with SSFA. The reports provide details of the progress of the administration or liquidation, as the case may be, and major events in the administration or liquidation. The reports provide some details of the activities of the administrators and liquidators. They also provide details of the administrators' or liquidators' professional fees for which the creditors will be asked to provide their approval. The second type of document is the notice of meeting, formal proof of debt or claim (general form) and, in some cases, a proxy form. The third type of document is a summary of fees and disbursements for a particular period of time. The fourth type of document is the remuneration report which, described generally, sets out a description of work, a calculation of remuneration and general supporting information. The fifth type of document is a schedule of the hourly rates of the administrators or liquidators and staff members of their firm as at a particular date. Finally, there are the minutes of the creditors' meetings. 44 The first creditors' meeting for each of the companies was held on 18 May 2010. As part of an initial remuneration advice to creditors prior to the meeting, the plaintiffs advised the creditors of their hourly rates for partners, senior associates, associates, secretaries, junior staff and administration/clerical. The partner's rate at that time was $525 per hour, the rate for senior associates was $450 per hour and the rate for an associate was $320 per hour. 45 The second creditors' meeting during the administration was held on 11 August 2010. The plaintiffs as administrators arranged for a joint meeting of SKFA and CJVA, and a separate meeting of SSFA. They provided an administrators' report to creditors dated 23 July 2010 which included a statement of their opinion that it would be in the creditors' interests for the Companies to be placed into liquidation as there was no proposal for a deed of company arrangement and the receivers had disposed of the Companies' tangible assets and operations. The plaintiffs also provided a remuneration report covering work done during the period from 6 May 2010 to 9 July 2010. The report divides the tasks into seven categories of which three, "Creditors", "Investigation" and "Administration", were relevant. In the case of each category, they provided a generic description of tasks and the number of hours and amount of remuneration claimed with respect to each task. The total number of hours in the case of SKFA and CJVA was 396.46 hours, and remuneration claimed was $205,788.79. Creditors were advised that disbursements were divided into three types. 46 The administrators addressed their professional fees in the joint report to creditors. They also provided the creditors with a summary of fees and disbursements for the period from 6 May 2010 to 9 July 2010. This document set out some details of the composition of the claim for remuneration of $205,788.79 in that it identifies the number of hours spent by the plaintiffs and three members of their staff and the total charges for those hours. For example, Mr Lock spent 98.46 hours on tasks associated with the administration leading to a charge of $54,716.68, and Mr Sheahan spent 218.28 hours leading to a charge of $127,443.78. There are similar documents in relation to SSFA. 47 There is a document which is a schedule of firm charge out rates from 1 July 2010. That shows an hourly rate for each of the plaintiffs of $700 per hour, an hourly rate for a senior manager of $500 per hour and an hourly rate for a manager of $450 per hour. I should mention that in Mr Lock's second affidavit at paragraph 98, he identifies an hourly rate for a senior manager applicable as at 1 July 2010 of $550 per hour. 48 Mr Lock said, and I accept, that documents which he described as detailed work in progress ledgers for the period 10 July 2010 to 6 August 2010 were tabled by Mr Sheahan at the meeting on 11 August 2010. That occurred both in relation to the joint meeting of creditors of SKFA and CJVA, and the separate meeting of SSFA. Mr Lock said, and I accept, that copies of those ledgers were not retained. However, he produced printouts from the plaintiffs' work in progress (WIP) records applicable to the same period and which he believed were in the same form as the ledgers tabled at the meeting. These WIP reports provide details of each partner or employee involved in the administration on a day-by-day basis with the period spent on a particular task and the charge made. In most cases, there is a brief description of the task carried out. 49 At the joint meeting of creditors of SKFA and CJVA, Mr Sharp, representing SK Foods, LP, proposed that the administrators' fees be approved for the period from 6 May 2010 to 9 July 2010 in the amount of $205,788.79 plus GST. A resolution to that effect was carried. Mr Sharp also proposed that the administrators' fees be approved for the period from 10 July 2010 to 6 August 2010 in the amount of $168,539.20 plus GST. A resolution to that effect was carried. A resolution was also carried to the effect that: the remuneration of the liquidators for the period from the commencement of the liquidation to the completion of the liquidation shall be a sum equal to the cost of time spent by the liquidators, partners and staff, calculated at the rates detailed in the schedule of charge out rates as provided to creditors in the recent report. At the creditors' meeting of SSFA on the same day, resolutions were carried that the administrators' fees be approved for the period from 6 May 2010 to 9 July 2010 in the amounts of $6,520.91 plus GST and $1,417.10 plus GST respectively, and for the period from 10 July 2010 to 6 August 2010 in the amounts of $12,633.32 and $1,323 plus GST respectively. 50 On 2 November 2010, the plaintiffs sent a liquidators' joint report to creditors to the creditors of SKFA and CJVA. It is worth noting that it contained the following: As discussed at the meeting of creditors on 11 August 2010, the public announcement was made on 23 July 2010 that Kagome Co Ltd (a Japanese company) ("Kagome") had acquired the assets and operation of Cedenco JV Australia Pty Ltd ("Cedenco JV"), SK Foods Australia Pty Ltd ("SK Foods Australia") and SS Farms Australia Pty Ltd for a combined price of $91m, with settlement to take place on 30 July 2010. The amount of the sale price allocated (by Kagome) to Cedenco JV and SK Foods Australia was $72.8m and the amount allocated to SS Farms was $18.2m. We anticipated that the receivers would, after discharging the debt due to the secured creditor, the ANZ, be holding a substantial surplus which could be promptly passed to us, as liquidators of the Australian companies. This would be more than sufficient to meet all creditor claims of which we were aware, pay statutory post-liquidation interest on such claims, and provide adequate funds to allow proper investigation into the company's affairs, including a review of any legal remedies available, whilst still ensuring a substantial initial return of capital to shareholders. 51 The joint report also contained a summary of fees from 7 August 2010 to 31 October 2010 and a schedule of the hourly rates. The hourly rate for a senior manager in the schedule is shown as $550 per hour. The plaintiffs also sent to creditors a remuneration report dated 3 November 2010 and covering the period from 7 August 2010 to 31 October 2010. WIP reports for the period from 7 August 2010 to 31 October 2010 were tabled at the meeting. A resolution was carried at the joint meeting of creditors held on 17 November 2010, that the administrators' fees be approved for the period from 7 August 2010 to 10 August 2010 in the amount of $31,746.67 plus GST, and that the liquidators' fees be approved for the period from 11 August 2010 to 31 October 2010 in the amount of $550,000 plus GST. The resolution was proposed by Mr Sharp. Mr Sharp proposed a resolution that the liquidators be authorised to draw down fees to a limit of $125,000 plus GST per month with all fees, including any excess over the $125,000 per month to be approved at the next meeting of creditors. That resolution was carried. 52 There are similar documents for SSFA. Again, WIP reports were tabled at the meeting and in the case of SSFA, a resolution was carried that the liquidators' fees be approved for the period from 11 August 2010 to 31 October 2010 in the amount of $93,061.83 plus GST. 53 There was a meeting of the creditors of SSFA on 15 July 2011. A similar pattern in terms of the documents is followed in the case of this meeting, including a report to creditors, remuneration report for the period 1 November 2010 to 20 June 2011 and summary of fees and WIP reports for the period from 1 November 2010 to 20 June 2011. 54 In terms of the resolutions carried at the meeting, a resolution was carried that the liquidators' fees for the period 1 November 2010 to 20 June 2011 in the amount of $226,945.83 plus GST be approved. A resolution was carried approving the liquidators' fees for the period from 21 June 2011 to 30 June 2011 in the amount of $16,420.84 plus GST. Finally, a resolution was carried that the liquidators' fees be approved prospectively at up to $50,000 plus GST per month from 1 July 2011 to 30 June 2012. 55 There was a joint meeting of creditors of SKFA and CJVA on 9 March 2012. There is a similar pattern with respect to the documents. There were two reports to creditors dated 5 December 2011 and 17 February 2012 respectively. There were two remuneration reports, both dated the same dates as the respective reports to creditors. WIP reports for the period from 1 November 2010 to 29 February 2012 were tabled at the meeting. A resolution was carried that the liquidators' fees which the liquidators were authorised by resolution of creditors on 17 November 2010 to draw down in the sum of $125,000 plus GST per month, being the total sum of $1.875 million plus GST covering the period from 1 November 2010 to 31 January 2012, be fixed and approved in that amount. All creditors, except for Mr Sharp for SK Foods, LP, voted in favour of the resolution. Mr Sharp voted against the resolution. A resolution was carried that the liquidators' fees from 1 November 2010 to 31 January 2012 in addition to those, the subject of the previous resolution, be fixed and approved in the sum of $346,384.43 plus GST was passed. All creditors, other than Mr Sharp who voted against the resolution, voted in favour of the resolution. A resolution was carried that the liquidators' fees for the period from 1 February 2012 to 29 February 2012 be fixed and approved in the sum of $137,323.41 plus GST (and paid out of the liquidation of SKFA) was carried with Mr Sharp voting against the resolution. A resolution was carried that the liquidators' fees in an amount not exceeding $125,000 plus GST per month be approved and paid out of the liquidation of SKFA for the period 1 March 2012 to 31 October 2012. Mr Sharp voted against the resolution. 56 There was a meeting of the creditors of SKFA on 1 November 2012. Again, there is a joint report to creditors of SKFA and CJVA dated 16 October 2012 and a remuneration report of the same date. There are similar documents for SSFA which also held a meeting on 1 November 2012. At the meeting of creditors of SKFA, a resolution was carried that the liquidators' fees in a sum not exceeding $50,000 plus GST per month be approved and paid out of the liquidation of SKFA for the period from 1 November 2012 to 31 October 2013. All creditors present at the meeting, save for Mr Michael Rose for SK Foods, LP, voted in favour of the resolution. Mr Rose voted against the resolution. At the meeting of SSFA, the resolution was carried that the liquidators' fees in a sum not exceeding $10,000 plus GST be approved and be paid out of the liquidation of SSFA for the period from 1 October 2012 to 31 October 2013. 57 There was a joint meeting of the Companies on 21 October 2014. On 24 September 2014, the plaintiffs provided a joint report to the creditors of the Companies and a remuneration request approval report of the same date. The joint report noted that the unincorporated partnership of Cedenco Australia was the sole creditor of SSFA. SKFA was the sole creditor of CJVA. SKFA, through Mr Sharp in respect of 100 of the 101 shares in SKFA, and Mr Salyer (in respect of 1 of the 101 shares in SKFA whose interest was payable to Mr Greeley as receiver of the amount that would otherwise have been distributed to Mr Salyer as the owner of the shares) were the sole creditors of SKFA. 58 The report to creditors dated 24 September 2014, was provided to SK Foods, LP, through its solicitors, Norton Rose Fulbright (Norton Rose), and to Mr Salyer. A resolution was carried that the liquidators' remuneration for the period from 19 November 2013 to 12 September 2014 for the liquidations of SKFA, CJVA and SSFA be approved in the total amount of $100,000 inclusive of GST. That resolution was proposed and approved by Mr Porter, a partner of Norton Rose, in attendance at the meeting for SK Foods, LP. 59 An administrator of a company under administration is entitled to receive such remuneration as is determined by resolution of the company's creditors (ss 449E(1)(b)). Before remuneration is determined under this section, the administrator must prepare a report and give a copy of the report to each of the company's creditors at the same time as the creditor is notified of the relevant meeting of creditors (s 449E(7)). Section 449E(7) (liquidation) is set out above. 60 In the case of a creditors' voluntary winding up, a liquidator of a company in liquidation is entitled to be paid the remuneration fixed by a resolution of the company's creditors (s 499(3)). As I have said, the requirement that the liquidator prepare a report and that a copy be given to each of the company's creditors at the same time as the creditor is notified of the relevant meeting of creditors is materially the same as in the case of a company under administration as set out above (s 499(7)). Sections 449E(7) and 499(7) were inserted into the Act by the Corporations Amendment (Insolvency) Act 2007 (Cth). The Explanatory Memorandum for the Bill contained the following statements: 4.93 The Bill will amend the Corporations Act such that an external administrator must provide sufficient information to enable the approving party to assess remuneration as reasonable, including a summary description of the major tasks and the costs associated with each of them. This requirement will apply where the approving party is a committee of inspection, a committee of creditors or a meeting of creditors. This requirement will apply where remuneration is being set under sections 449E and 473, 495 and 499 of the Corporations Act. 4.94 The requirements are expressed in general terms, as the matters that will need to be addressed and the amount of detail required to appropriately inform creditors will vary with the size and nature of the proceeding and the amount of remuneration sought. It is intended that the new requirements would provide practitioners with maximum flexibility and avoid the imposition of unwarranted costs (which ultimately are borne by creditors). To maximise the usefulness of the report to creditors (including creditors who may be unfamiliar with insolvency proceedings) the report should be expressed in simple language. It should be no more than two pages in length for routine matters. 4.95 It should not be taken that the creditors' report should address each of the matters that a court must consider in setting remuneration, or even a given subset of these matters. This would be unduly onerous and inflexible. Rather, the report should focus on explaining the main bases for the remuneration proposal, noting that further elucidation may be provided at the meeting of creditors or the meeting of the committee. 61 In Australian Securities and Investments Commission v Dunner [2013] FCA 872; (2013) 303 ALR 98 (ASIC v Dunner), Middleton J considered the operation of s 499(6) of the Act, which except for the fact that it deals with remuneration fixed by the committee of inspection as distinct from a creditors' resolution, is in materially the same terms as s 499(7). His Honour addressed the obligations imposed by s 499(6) and expressed the conclusion that an approval given in circumstances in which the information is seriously deficient is invalid. His Honour said (at [160]): The obligations of a liquidator under s 499(6) primarily relate to the contents of the reports required to be provided to the committee of inspection or creditors at the time of notification of a committee of inspection or creditors' meeting, rather than what additional information may be provided to creditors by a liquidator at a subsequent time. There is a clear legislative intention that this report effectively be self-contained and comprehensive, to enable the committee of inspection or creditors to make an informed decision in all the circumstances. On the basis of the foregoing, I find that Mr Dunner breached his duties as a liquidator by giving deficient written reports to the committee of inspection. Even if the reports were in fact orally supplemented by Mr Dunner at or shortly before each meeting, this does not necessarily overcome the breach. A creditor cannot make an informed decision about whether to attend and vote at a meeting if the report provided upon notice of the meeting being issued is deficient in material particulars, such as how much work has actually been undertaken (or is likely to be undertaken) in a liquidation. Approval of remuneration given in circumstances where the necessary information is seriously deficient (for example, in the manner demonstrated here) is invalid. Any approval given at such a meeting is diminished because, as explained by Dodds-Streeton J in Edge (2007) 211 FLR 137; [2007] VSC 170 at 177 [189], in the absence of meaningful reports and accounts which would permit scrutiny of Mr Dunner's conduct, the existence and extent of any dissatisfaction, loss or prejudice (on the part of the committee of inspection or creditors) cannot be readily ascertained. 62 I turn now to consider whether the remuneration reports provided by the plaintiffs met the requirements of s 449E(7) (administration) and s 499(7) (liquidation). There was limited debate before me about the deficiencies probably because there was a concession by the plaintiffs that the reports were deficient. That concession was made in the correspondence with ASIC in May 2015, in Mr Lock's first affidavit in Schedules A and B, and in paragraph 54 of Mr Sheahan's second affidavit. There were some suggestions that the matter was not conceded and I refer to paragraph 10 of Mr Lock's first affidavit, and paragraph 65 of the Plaintiffs' Outline of Opening Submission. Nevertheless, in my opinion, the concession was made. Despite the concession, it is necessary to identify, at least in general terms, the deficiencies in the remuneration reports. 63 Before doing that, it is convenient to note that in his second affidavit, Mr Lock produces a number of remuneration reports he and Mr Sheahan prepared, "so that the Court has available to it, information that would be available to creditors prior to considering whether to approve [the plaintiffs'] remuneration in respect of the sums [the plaintiffs] seek the Court to fix". In addition, the plaintiffs prepared a narrative of the tasks undertaken within each period which could be read in conjunction with the related remuneration reports. In the reports, the plaintiffs refer to their earlier remuneration reports as being reports which "may not have met the standard of best practice". Mr Lock said that the remuneration reports were based on the form recommended by the Australian Restructuring Insolvency & Turnaround Association (ARITA) in Part 23.2 of the Code of Professional Practice (3rd edition) and set out in detail the category of tasks performed by the plaintiffs and their staff; the specific tasks undertaken within each category; the total time spent within each category and related fees for tasks carried out in that category; and the time spent by each practitioner in the firm within each category both hour and fee amount calculated on the plaintiffs' set charge out rates. Mr Lock said, and I accept, that the remuneration reports have been settled by Mr Steve Barnett, director of Insolvency Practitioners Support Services Pty Ltd, a consultant engaged by the plaintiffs to provide advice about their compliance with their statutory obligations, specifically in relation to compliance with reporting on remuneration. 64 The following features of subsections 449E(7) and 499(7) are to be noted: (1) there is an element of flexibility in paragraph (a)(i) in referring to such matters as will produce a particular result; (2) the result to be achieved is that the creditors who study the report will be in a position to make an assessment as to whether the proposed remuneration is reasonable which assessment is an informed one; (3) even though the subsection is to be given a beneficial effect because its purpose is to enable creditors to be better informed, paragraph (a)(ii) reflects the fact that there are limits to the information to be provided by the insolvency practitioner in that the description is to be a summary description of the major tasks; and (4) a copy of the report is to be provided with the notice of meeting. 65 The requirements of the subsections may be met in a variety of ways and it is clear enough that it is not possible to lay down in advance detailed sub-rules or requirements. A deficiency in one area may be overcome in another by additional information presented in a different way. At the same time, there is no notion of deference to the judgment of the administrator or a liquidator and the subsection must be complied with according to its terms. It may be that a minor deficiency in the information provided (assuming that there can be such a thing having regard to the terms of the subsection) will not lead to the invalidity of the creditors' resolution (a matter not debated in this proceeding) or it may lead to an increased willingness on the part of the Court to make an order under s 1322(4)(a). 66 I have considered all the remuneration reports. Two reports represent an accurate sample of the reports. They are both joint reports for SKFA and CJVA. 67 The first report is the joint report for SKFA and CJVA dated 23 July 2010, that is during the administration. It addresses the period from 6 May 2010 to 9 July 2010. 68 The schedule of hourly rates informs creditors of the hourly rates of the plaintiffs and members of their firm and the summary of fees and disbursements informs creditors of the hours spent by each plaintiff and staff member on the administration and the overall charge for that person. 69 The tasks carried out are described in the remuneration report in a general way. Seven broad categories are identified of which three are said to be applicable. They are "Creditors", "Investigation" and "Administration". 70 The plaintiffs and their staff are said to have spent 142.26 hours with respect to creditors at a cost of $65,176.78. The category of creditors is divided into six sub-categories of "Creditor Enquiries", "Secured creditor", "Creditor reports", "Dealing with proofs of debt", "Meeting of Creditors" and "Shareholder enquiries". There are then general descriptions made in point form with respect to each category. For example, for secured creditor, the following appears: Communicating with the secured creditor Communicating with the receivers Meeting with the receivers For Shareholder Enquiries, the following appears: Responding to any shareholder enquiries 71 The plaintiffs and their staff are said to have spent 163.63 hours with respect to investigations at a cost of $92,454.94. The category of investigations is divided into seven sub-categories of "Review Records", "Litigation", "ASIC reporting", "Overseas and interstate meetings", "Correspondence", "Status meetings" and "Processing proofs of debt". For overseas and interstate meetings, the following appears: Travel and meetings with overseas trustee Travel and meetings with overseas director Travel and meetings with overseas and interstate receivers Related communications 72 The plaintiffs and their staff are said to have spent 90.57 hours with respect to administration at a cost of $48,157.07. The category of administration is divided into six sub-categories of "Document maintenance/file review/checklist", "Insurance", "ASIC Form 524 and other forms", "ATO & other statutory reporting", "Planning/Review" and "Book and records/storage". A number of the general tasks described in each category appear to be administrative tasks capable of being performed by staff below, perhaps well below, partner. 73 The Summary of Fees and Disbursements informs the creditors that over 75% of the time spent related to work carried out by the plaintiffs. 74 It seems to me that ordinarily, at least, the two matters which would be of principal concern to creditors in assessing the reasonableness of the administrators' proposed remuneration are that the tasks being carried out are necessary and proper and that the tasks being carried out are being carried out at an appropriate level of seniority. In other words, a creditor will want to guard against unnecessary work or work being carried out at a higher rate than is required by the nature of the work. 75 The present question is not whether unnecessary work has been carried out in this case or work done at an inappropriate level of seniority. The question is whether the creditors were given sufficient information to make an informed assessment about the reasonableness of the proposed remuneration. In my opinion, the remuneration report, schedule of hourly rates and summary of fees and disbursements, describes the work at such a high level of generality that it falls well short of meeting this requirement. 76 The second report is a joint report for SKFA and CJVA dated 5 December 2011, that is during the liquidation. It addresses the period from 1 November 2010 to 30 November 2011. 77 The second report includes an hourly rate said to be effective from 1 July 2011 and a table showing the hours spent by each plaintiff and members of their firm and the total charge for each person. As with the first report, the tasks carried out are described in a general way. The tasks carried out are divided into seven categories of which five are said to be applicable. In fact, only four categories are dealt with in the report. They are "Creditors", "Investigation", "Dividend" and "Administration". 78 The plaintiffs and their staff are said to have spent 182.7 hours with respect to creditors at a cost of $228,597.84. The sub-categories and description of tasks for each sub-category are identical to the equivalent section in the first report, including a reference (which must be erroneous) to preparing a s 439A report. 79 The plaintiffs and their staff are said to have spent 2,460.56 hours with respect to investigations at a cost of $1,385,896.55. The sub-categories are the same as they were in the first report, with the exception that the sub-category of processing proofs of debt has been moved into the category of dividends. The description of tasks for each sub-category in investigations are identical to the equivalent section in the first report, including a reference (which must be erroneous) to liaising with solicitors regarding application to court for extension of convening period and application to court for remedy of defect in appointment. 80 The plaintiffs and their staff are said to have spent 142.43 hours with respect to administration at a cost of $48,544.17. The sub-categories and the description of tasks for each sub-category are identical to what they were in the first report. 81 The second remuneration report claims a total of 3,241.07 hours were spent on the liquidations of SKFA and CJVA by the plaintiffs and their staff at a total cost of $1,745,945.30. Work done by the plaintiffs themselves accounts for over half the hours spent. 82 My conclusions with respect to the second report are the same as they are with respect to the first report with the added observation that some tasks, such as liaising with solicitors regarding application to court for extension of convening period, could not have been carried out a second time. Their inclusion is not only wrong, but adds to the impression of a lack of care in describing in a meaningful way the actual tasks carried out during the particular period which is the subject of the report. Of course, routine and mundane tasks may be described in the same way from report to report, but the deficiencies in the second report go well beyond this observation. 83 As I have said, I have considered all of the remuneration reports and I am of the opinion that none of them meet the requirements of s 449E(7) or s 499(7) as the case may be. The creditors' resolutions fixing or determining the plaintiffs' remuneration are invalid, subject to any relief that might be granted under s 1322(4)(a) of the Act.

Relief Under s 1322 of the Act 84 Section 1322 of the Act relevantly provides: 1322 Irregularities (1) In this section, unless the contrary intention appears: (a) a reference to a proceeding under this Act is a reference to any proceeding whether a legal proceeding or not; and (b) a reference to a procedural irregularity includes a reference to: (i) the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation, at a joint meeting of creditors and members of a corporation or at a meeting of members of a registered scheme; and (ii) a defect, irregularity or deficiency of notice or time. … (4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes: (a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation; (b) an order directing the rectification of any register kept by ASIC under this Act; (c) an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a); (d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding; and may make such consequential or ancillary orders as the Court thinks fit. (5) An order may be made under paragraph (4)(a) or (c) notwithstanding that the contravention or failure referred to in the paragraph concerned resulted in the commission of an offence. (6) The Court must not make an order under this section unless it is satisfied: (a) in the case of an order referred to in paragraph (4)(a): (i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature; (ii) that the person or persons concerned in or party to the contravention or failure acted honestly; or (iii) that it is just and equitable that the order be made; and (b) in the case of an order referred to in paragraph (4)(c) - that the person subject to the civil liability concerned acted honestly; and (c) in every case - that no substantial injustice has been or is likely to be caused to any person. 85 ASIC did not suggest that the applicants were not "interested persons" within s 1322(4). 86 The creditors' resolutions will be invalid by reason of the non-compliance by the applicants with ss 449E(7) (administration) and 499(7) (liquidation) of the Act unless a declaration is made under s 1322(4)(a). Is that a "contravention" of a provision of the Act within s 1322(4)(a)? The word "contravention" is to be construed broadly. In Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 (Weinstock), the High Court considered the proper construction of ss 1322(4)(a), (6)(a) and (c), including the meaning of the word "contravention". French CJ said (at [41] and [42]): The term "contravention" is defined in the Macquarie Dictionary as: "the act of contravening; action counter to something." It defines "contravene" as "1. to come or be in conflict with; go or act counter to; oppose. 2. to violate, infringe, or transgress." The notions of "conflict", "counter to" and "oppose" are broad. It is not only the evident purpose of s 1322(4)(a) but its field of operation which requires the broadest available construction of "contravention"… It was submitted on behalf of Tamar that the ordinary meaning of contravention is an "infringement", "violation" or "transgression" of some negative prohibition or positive requirement. Section 1322(4)(c) was said to reinforce that construction. That proposition should not be accepted. Section 1322(4)(c) empowers the Court to relieve a person from civil liability by reason of a contravention or failure of a kind referred to in s 1322(4)(a) … (Footnotes omitted.) 87 Hayne, Crennan and Kiefel JJ (as her Honour then was) said (at [53] and [55]): Section 1322(4)(a) of the Act was cast in very broad terms. It dealt with "any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken", whether done, instituted or taken under the Act or in relation to a corporation. The power given to the Court was to declare the act, matter or thing, or the proceeding, not invalid. The Court could do that either unconditionally or subject to such conditions as the Court imposed. The Court was given (s 1322(4)) power to "make such consequential or ancillary orders as the Court thinks fit". Section 1322(6) prescribed pre-conditions to making an order under s 1322(4)(a) but the detail of those pre-conditions need not be examined. Only if s 1322(4)(a) is to be read otherwise than according to its terms could it be said that the Court did not have power in these proceedings to make an order under that provision. But the power given to the Court by s 1322(4)(a) is not to be hedged about by any implied limitation. As this Court said in Owners of Shin Kobe Maru v Empire Shipping Co Inc, "[i]t is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words". (Citations omitted.) 88 Gageler J said (at [64]-[65]): The specification in s 1322(6)(a) of s 1322(6)(a)(i) as one of three alternative means of fulfilling a precondition to the making of an order under s 1322(4)(a) shows that an act, matter, thing or proceeding declared not invalid by reason of a contravention need not be "essentially of a procedural nature". The repeated references (in s 1322(4)(c), (5) and (6)(a)(ii)) to a "contravention or failure" referred to in s 1322(4)(a) also show that "contravention" is used in s 1322(4)(a) in a sense interchangeable with "failure": as connoting an absence of compliance with a requirement necessary for validity. An order under s 1322(4)(a) goes no further than to declare an act, matter, thing or proceeding not invalid by reason of a relevant contravention. The order does no more than to remove the invalidating effect of contravention so as to make valid what would have been valid without contravention. It is therefore true that s 1322(4)(a) cannot assist to achieve a result that could never be attained under the constitution of a corporation. However, s 1322(4)(a) can assist in achieving a result that could in some circumstances be attained under the constitution of a corporation by removing the invalidating effect of any absence of compliance with a requirement necessary for validity in the circumstances that in fact occurred. 89 Section 1322(6) provides that a court must not make an order under the section unless it is satisfied of certain conditions. The authorities make it clear that satisfaction of any one of the three matters identified in paragraph (a)(i), (ii) and (iii) is sufficient to satisfy paragraph (a). In other words, it is not necessary for the Court to be satisfied of all three (Weinstock at [10] per French CJ; at [64] per Gageler J). 90 As to the meaning of acting "honestly" within s 1322(6)(a)(ii), the parties were content to rely on the approach taken by Palmer J in Hall & Ors v Poolman & Ors [2007] NSWSC 1330; (2007) 215 FLR 243 (Hall v Poolman). His Honour said (at [325]): In my view, when considering whether a person has acted honestly for the purposes of a defence under CA s.1317S(2)(b)(i) or s.1318, the Court should be concerned only with the question whether the person has acted honestly in the ordinary meaning of that term, i.e., whether the person has acted without deceit or conscious impropriety, without intent to gain improper benefit or advantage for himself, herself or for another, and without carelessness or imprudence to such a degree as to demonstrate that no genuine attempt at all has been to carry out the duties and obligations of his or her office imposed by the Corporations Act or the general law. A failure to consider the interests of the company as a whole, or more particularly the interests of creditors, may be of such a high degree as to demonstrate failure to act honestly in this sense. However, if failure to consider the interests of the company as a whole, including the interests of its creditors, does not rise to such a high degree but is the result of error of judgment, no finding of failure to act honestly should be made, but the failure must be taken into account as one of the circumstances of the case to which the Court must have regard under CA s.1317S(2)(b)(ii) and s.1318. 91 If I may respectfully say, that is a sufficient statement of the relevant principles for the purposes of this case. 92 The plaintiffs made passing reference to the just and equitable ground in s 1322(6)(a)(iii) of the Act. However, they did not identify any authorities relevant to this ground and did not develop any argument relating to its engagement. 93 It is a mandatory pre-condition to the making of an order in all cases that the Court be satisfied that no substantial injustice has been or is likely to be caused to any person. 94 An earlier section in companies legislation covering at least part of the field now covered by s 1322 was s 366 of the Uniform Companies Acts 1961. 95 In Re Compaction Systems Pty Ltd [1976] 2 NSWLR 477; (1976) 2 ACLR 135, Bowen CJ in Eq considered the notion of injustice in s 366(3) of the Uniform Companies Acts. His Honour said (at 493): In my view, the word "injustice" in this provision requires the Court to consider any real, and not merely insubstantial or theoretical, prejudice which will be suffered by, for example, a member by the making of an order, and to weigh this in the scales against the prejudice to the company, other members and creditors, if an order be not made. In other words, it is insufficient to show that there may be some prejudice to a member if, on a consideration of the whole matter, the overwhelming weight of justice, as it were, is in favour of making the order: see Re Australian Continental Resources Ltd., per Blackburn J.; see also Re Castlereagh Securities Ltd. and the Companies Act. (Citations omitted.) 96 In Weinstock, French CJ said (at [11]) that this approach applied to the notion of substantial injustice in s 1322(6)(c) subject to recognition of the fact that s 1322(6)(c) refers to substantial injustice to any person whereas s 366(3) referred to injustice to the company or any member or creditor. 97 In an earlier case, and sitting as a judge of this Court, French J said: That broad policy does not authorise the Court lightly to set aside the requirements of the Act where they have not been observed. Each application for the exercise of the Court's relieving power will require consideration of all the circumstances of the case to ensure that the indulgence sought is appropriate and does not undermine the requirements of the Act. Like the discretion to validate invalid share issues under s 254E, the power conferred by s 1322 must be exercised having regard to the requirements of the purposes of the Corporations Act and any other relevant statutes whose application may be in issue. It must also be exercised having regard to the interests of all parties affected and the public interest in ensuring compliance with statute law and company constitutions. Evidence of a blatant disregard of the provisions of the Act or the constitution of the company may lead to refusal of relief - Re Onslow Salt Pty Ltd (2003) 198 ALR 344 and cases there cited. The provision is however remedial in character and should be given a liberal construction - In the Matter of Insurance Australia Group Ltd [2003] FCA 581 at [27] per Lindgren J citing Re Australian Koyo Ltd (1984) 8 ACLR 928 at 930 and Elderslie Finance Corporation Ltd v Australian Securities Commission (1999) 11 ACSR 157 at 160. (Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418 (Re Wave Capital) at [29].) 98 There is a question in this case as to whether the Court has a discretion to refuse to make an order under s 1322(4)(a) even though there is an act, matter or thing or proceeding within s 1322(4)(a) and the conditions in s 1322(6) are satisfied. The use of the word "may" in the opening paragraph in s 1322(4) and the words of s 1322(6) "must not make an order under this section unless it is satisfied" strongly suggests to my mind that there is a residual discretion to be exercised judicially to refuse to make an order. The fact that there may be limited, perhaps quite limited, circumstances where there would be other relevant matters besides those in s 1322(6) leading to a court not making an order is not a reason to depart from the words of the subsection. The plaintiffs submit that there is no residual discretion under s 1322(4)(a) and that once one of the conditions in s 1322(6)(a) is established and the Court is satisfied as to the no substantial injustice limb, then an order should be made. The plaintiff suggests that a previous amendment to s 1322(6)(a) to delete a public interest test and substitute a just and equitable test is significant in terms of whether there is a residual discretion which involves a consideration of the public interest. I reject that submission. It is one thing to have a public interest test as a pre-condition to the exercise of a power, it is another to have it as a relevant consideration in the exercise of a discretion. The public interest may be a relevant consideration in the exercise of many discretions this Court exercises, such as the power to make a security for costs order or to extend time within which to appeal. 99 The matters in s 1322(6) are expressed in terms of pre-conditions and no more. Although this point was not in issue in Weinstock, the language used by French CJ (at [10]) supports the construction that there is a residual discretion which includes a consideration of the public interest, as does his Honour's observations in Re Wave Capital set out above. Such an approach was taken by Gilmour J in Re Helios Energy Ltd [2017] FCA 840; (2017) 122 ACSR 174 at [20]. 100 The plaintiffs rely on the honesty limb in s 1322(6)(a)(ii) and submit that they, being the persons concerned in or parties to the contraventions or failures, have acted honestly. They further submit (as they must) that no substantial injustice has been or is likely to be caused to any person if the orders they seek are made. For its part, ASIC submits that the plaintiffs have not established that they have acted honestly; ASIC does not have to establish dishonesty as the plaintiffs bear the onus. ASIC submits that the plaintiffs have not discharged the onus. ASIC submits that it did not cross-examine the plaintiffs as to the reasons there were deficiencies in the remuneration reports "because we rest solely on onus". Furthermore, ASIC submits that the circumstances are such that a substantial injustice will be caused should an order be made. Finally, ASIC submits that the Court should refuse to make an order in the exercise of the residual discretion it has under s 1322(4). 101 In summary, the issues that arise in connection with the application under s 1322(4)(a) are as follows. First, did the plaintiffs, being the persons concerned in or party to the contraventions, act honestly? Secondly, can the Court be satisfied that no substantial injustice has been or is likely to be caused to any person? Finally, is there any other reason not to make an order under s 1322(4)(a) in the exercise of the Court's discretion? 102 I turn now to the evidence which is primarily relevant to the application under s 1322(4)(a). That evidence was given by each of the plaintiffs and Mr Sharp.

Mr Sheahan 103 I will express my conclusions about my assessment of Mr Sheahan as a witness, then identify his evidence-in-chief relevant to the present issue and then summarise all of the matters raised with Mr Sheahan in cross-examination and his evidence as to those matters. 104 ASIC submits that Mr Sheahan was cavalier in his approach to giving evidence and that aspects of his evidence were implausible and should not be accepted. ASIC submits that Mr Sheahan's affidavit evidence ought to be accepted where it is supported by the documentary record. Otherwise, the various reconstructed attempts to justify the remuneration as claimed are suspect and ought to be treated with caution. 105 Neither Mr Sheahan nor Mr Lock have gone through the WIP reports in detail. They did not do that at the time they prepared the remuneration reports. Nor have they done that since. Mr Lock gave some evidence that a member of the firm did that, but that person did not give evidence and it is not clear what they did and with a view to what outcome. As the authorities discussed below make clear (see [282]-[283] below), this is a task which should have been carried out. It seems to me that it is an exercise one would have expected to see carried out, if not before ASIC's objection, then certainly after. 106 A feature of Mr Sheahan's evidence was the extent to which he relied on others to carry out tasks or perform exercises, the results of which he then deposed to in his affidavits. It transpired that some of the results are inaccurate or it became clear that he himself had little involvement in the task or exercise, or there is at least a doubt about the extent of his involvement. 107 A further feature of Mr Sheahan's evidence was that he made a number of general statements which later needed to be qualified, or at least there was doubt, having regard to other evidence as to whether the statement was wholly correct. I attributed this to lack of care and attention to proper detail on his part. 108 The following are examples of these features. 109 Mr Sheahan gave evidence estimating an appropriate allocation of the plaintiffs' remuneration to the major tasks in the administrations and liquidations. He said that it was impossible for him to do this accurately, but nevertheless, with a view to providing as much assistance to the Court as possible, he and Mr Lock had undertaken the exercise of estimating the time recorded and, therefore, remuneration claimed in relation to major tasks in the administrations. He said that they had done that by examining a sample of the individual time entries at various periods in light of the events occurring in various periods, and by that means, they had estimated the fraction of the total time spent in each remuneration period on particular major tasks in the administrations. Mr Sheahan emphasised that the allocations were necessarily approximate. In cross-examination, Mr Sheahan said that the exercise was not performed by him, but was performed by the plaintiffs' staff. He said that the work had been done by Mr Sam Gurner under Mr Lock's supervision. He said that he himself had not looked at a sample of time entries. Mr Lock did not give evidence of this exercise. Mr Gurner was not called as a witness. An example of the general nature or uncertainty attaching to these allocations may be seen with the remuneration claimed by the plaintiffs for work done in connection with the issues arising under the POC Act where Mr Sheahan's estimate of $250,000 was well short of the amount of $354,809.99 established by ASIC's analysis. 110 In his second affidavit, Mr Sheahan addressed ASIC's challenge to the plaintiffs' claim for travel time. Mr Sheahan said that, based on his recollection of the tasks completed by the plaintiffs in the administrations and liquidations and in consultation with Mr Lock and with the assistance of his staff, he had cross-referenced the time entries with his firm's email records, file correspondence, court dates, third party invoices, calendar/meeting reminders; and had compiled a schedule of the time entries, including a more detailed description of the work to which the entries related. The schedule was Schedule B to his affidavit. Mr Sheahan said in cross-examination that he gave instructions to Mr Samuel Rees in relation to the schedule. Mr Rees asked him to explain the purpose of each trip and preparation, destination and who he was going to see. He did not go back to source entries after the schedule was printed and he did not spend a lot of time on it. In fact, he estimated the time that he spent on the schedule after it had been printed as "a few minutes". 111 Mr Sheahan said in his second affidavit that the plaintiffs had gained specialised knowledge and experience in respect of the effective identification and management of investigations, the pursuit of legal claims, and in assessing the potential benefit to creditors. He said that in many liquidations in which the plaintiffs had been involved, the companies were without any assets of substance and the possibility of any return to creditors was dependent on the plaintiffs effecting recoveries through investigation and pursuit of legal claims. He added that that was their expectation when they were appointed as administrators and liquidators of the Companies. That cannot be completely correct as at the date of the plaintiffs' appointment as liquidators, that is, 11 August 2010. As at that date, the plaintiffs had enough information to know that the creditors would be paid in full. Mr Sheahan admitted in cross-examination that the plaintiffs knew from 30 June 2010 onwards that there would be a surplus. 112 In his first affidavit, Mr Sheahan gave evidence that on 20 September 2012, the plaintiffs produced documents to the AFP pursuant to an order for production under s 202 of the POC Act, which order also required the plaintiffs to keep confidential the existence of the AFP's investigations and all related communications. On 3 October 2012, the plaintiffs sent further documents to the AFP which related to the potential claims. Mr Sheahan produced a copy of a production order issued to him under s 202 of the POC Act dated 15 October 2012. No other order for production was put before the Court. It would seem that an internal memorandum within the plaintiffs' firm was sent to the AFP who prepared their production order on the basis of the memorandum. It would seem that the sequence of events is that the plaintiffs sent documents to the AFP on 20 September 2012 and 3 October 2012. They did so without a production order. The plaintiffs sent a file note to the AFP on 20 September 2012 and the AFP used that file note, at least in part, as a basis for their production order dated 15 October 2012. Mr Sheahan said in cross-examination that he would be very surprised if documents were sent to the AFP without a production order, but was not able to assist any further. 113 Mr Sheahan referred to a process called a "write-up" of fees. Mr Sheahan said that from time to time it was necessary for the plaintiffs' staff to complete a manual timesheet or instruct the administrative staff to manually record their time. He said that time entered in this way appeared in the plaintiffs' system as "time written up". There is a further circumstance in which time may be written up. That may occur where the system has not been updated to include an increase in the hourly rate charged for a staff member. Time can be written up as a result of a review of relevant time entries. That occurred in the case of Mr Oliver Sheahan and Mr Rees. In the remuneration report for SKFA and CJVA for the period 7 August 2010 to 10 August 2010 prepared in September 2015 and discussed below, there is a claim for $7,765 described as follows: Write up of Oliver Sheahan's uncharged fees during the period due to his manual recording of timesheet entries. This is not writing up fees because, as stated in Mr Sheahan's second affidavit, time entries were erroneously entered at a rate below Mr Oliver Sheahan's standard charge out rate and the write-up was performed to apply the applicable hourly rate to that work. 114 ASIC submits that no reliance could be placed on the evidence Mr Sheahan gave that all of the remuneration sought was properly chargeable and claimable when he himself had not gone through detailed WIP reports to look at the various entries making up the remuneration claim, and he himself in cross-examination admitted that there were mistakes in the claims. In my opinion, that submission is correct. 115 In his first affidavit, Mr Sheahan provides information concerning the time recording and charging system used by the plaintiffs' firm. Since the commencement of the administrations of the Companies, the plaintiffs' firm has used two software packages. At the time of their appointment on 6 May 2010, the plaintiffs' firm used an MYOB System Services (System Services). System Services was an updated version of an earlier package called Solution 6 Practice Management Accounting (PMA). At the time of the plaintiffs' appointment, the firm had used PMA and System Services for more than 15 years. Mr Sheahan described how information as to the relevant company billing code, numerical code and a brief narrative description of the task undertaken was recorded on System Services. Mr Sheahan said that System Services was established prior to the introduction of the ARITA Code of Professional Practice. The Code of Practice was introduced in 2008 and it included a template remuneration report which divided the tasks into seven main categories. They are the seven categories used in the plaintiffs' remuneration reports. 116 Mr Sheahan said that the allocation of System Services tasks did not correspond with the categories referred to in the Code of Professional Practice. He gave examples of the reasons why that was the case. Furthermore, the allocation of System Services tasks does not identify the time spent on specific issues in the administration. 117 Mr Sheahan said that in preparing the remuneration reports for the Court, and with respect to those periods during which Systems Services was the relevant software, members of the plaintiffs' firm reviewed each line of the recorded time entries and assigned each task to one of the seven categories referred to in the Code of Professional Practice. Mr Sheahan said that in performing that task, a degree of judgment was necessary to determine to which of the seven categories each entry ought most appropriately be allocated. Mr Sheahan said that he was aware that the information recorded is not sufficient to allow the precise identification of every time entry to specific issues or pieces of litigation. Such a precise allocation was not then, nor is it now, required by any legalisation or code of practice. 118 From 7 August 2012, the plaintiffs' firm started using MYOB Accountants Enterprise (MYOB AE). The MYOB AE system allows a staff member to record their time for each task on any given administration with a two tier description and a written narrative. The first tier is titled "Assignment" and requires the staff member to allocate each task to one of the seven categories referred to in the Code of Professional Practice. The second tier requires the staff member within each assignment area to enter a "Task Code". Mr Sheahan identifies the task codes for each of the seven categories. 119 Mr Sheahan said that the recording of time in this manner mirrors the suggested remuneration approval request report guidelines in part 23.2 of the ARITA Code of Professional Practice. He said that the use of time recording systems that implement this form of recording is in line with standard industry practice. He said that the above codes were set up on the plaintiffs' system by MYOB when the system was installed. 120 Mr Sheahan said that as with System Services, the allocation of tasks to particular categories in MYOB AE does not permit the ready identification of the time spent on specific issues in the administration. He gave the following example: Once again, for example, time recorded under the assignment heading "Investigations" and the task code "Litigation/Recoveries" might relate to one or more separate pieces of litigation either on foot or in preparation. Only by inspection of each line of the narrative is it possible, in some cases, to identify which piece of litigation might have been under consideration at the time. In many, perhaps most, cases it is not possible to identify with certainty the precise matter under discussion. Again, no legislation or professional code requires recording of time to that level of detail or reporting such detail to creditors when seeking approval of fees. 121 Mr Sheahan states that the remuneration reports which the plaintiffs had prepared for the Court for the period after 7 August 2012 have been prepared by generating detailed WIP printouts from the MYOB AE system with all tasks listed and converting that into the required format. 122 As I have said, Mr Sheahan provides an estimate of the allocation of the claimed remuneration with respect to particular issues in the administrations and liquidations. His estimate is as follows: Issue Approximate Remuneration Claim $ Debt & Equity $2.3 million Potential Claims $1.3 million POCA $0.25 million Receivership $0.25 million Taxation issues $0.1 million Other matters $1.6 million Total $5.8 million

123 Mr Sheahan states that this is only an estimate of the time recorded and, therefore, the remuneration claimed in relation to major tasks in the administrations. Mr Sheahan indicated that by examining a sample of the individual time entries at various periods in light of the events occurring in various periods "we" have estimated the fraction of the total time spent in each remuneration period on particular major tasks in the administration. Mr Sheahan emphasises that the amounts are necessarily approximate. 124 In his second affidavit, Mr Sheahan addresses each of ASIC's objections to work performed by the plaintiffs and their staff, or remuneration claimed in respect of certain categories of work, or both. One such category is remuneration reports. 125 Mr Sheahan states that with respect to work undertaken and remuneration claimed for the preparation of remuneration reports, the practice of the plaintiffs' firm in the liquidations of the Companies was for such reports to be prepared by the manager appointed to oversee the completion of the standard tasks to be undertaken in the administration. The reports were then settled by Mr Lock or Mr Sheahan, or by both of them, having regard to their respective roles in the administration. This was consistent with their usual practice. Mr Sheahan said that the preparation of remuneration reports generally involves the following steps:

• reviewing the WIP in the period under consideration;
• considering what WIP should be included, including determining whether there should be any WIP written off or some global discount to the WIP;
• converting the relating time sheet narrations into descriptions in the report;
• considering any previous estimate of fees or prospective approval given at a meeting of creditors, necessitating a review of previous fee approvals and minutes of meetings; and
• reviewing any creditor correspondence concerning fees, including any commitments given by the plaintiffs as to the level of remuneration that may be expected. 126 Mr Sheahan said that in complex liquidations such as those of the Companies, the plaintiffs' firm considered it prudent for senior staff to carefully review draft remuneration reports to ensure that they did not disclose material which may be confidential, privileged or otherwise prejudicial to those investigations or legal proceedings. Mr Sheahan said that once a draft report was settled by Mr Lock or by him, or both, the document was finalised with any changes, signed, scanned into the firm's document management system and thereafter sent to creditors by email or by post, together with a report to creditors. 127 Mr Sheahan said that following the firm's receipt of the letter from ASIC dated 29 April 2015, the plaintiffs undertook the steps set out in their letter to ASIC dated 29 May 2015. On 13 July 2015, the plaintiffs retained Mr Barnett as an external consultant to assist in the preparation of remuneration reports for complex liquidations which would allow the plaintiffs to create a model to follow for future such reports. Mr Barnett had formerly been a member of ASIC's Insolvency Practitioners & Liquidators Stakeholder Team. The plaintiffs' firm has maintained its relationship with Mr Barnett who, according to Mr Sheahan, has frequently provided the plaintiffs with resources and information that helps ensure that the firm's policies and procedures remain fully compliant. Mr Sheahan gives an example. In June 2016, the plaintiffs, with the assistance of Mr Barnett, updated the firm's comprehensive register of checklists for each of the key activities in corporate and personal insolvency, such as remuneration reports, reports to creditors etc., and continue to work with Mr Barnett to maintain the checklists as changes occur. 128 Mr Sheahan states that during the course of a review of the firm's files done in conjunction with Mr Barnett, the plaintiffs identified apparent deficiencies in relation to remuneration reports in a number of other appointments. The plaintiffs commenced proceedings in this Court in 2015 in relation to 9 current and 14 former appointments in which apparent deficiencies existed and for which the plaintiffs sought relief regarding the plaintiffs' remuneration in those appointments. In respect of the 9 current appointments, fresh meetings of creditors were convened in late 2015 with new remuneration reports provided to creditors that were compliant with the statutory requirements in ss 473(12) and 499(7) of the Act. The plaintiffs' remuneration was approved in full by creditors at each of those meetings. 129 With respect to the 14 former appointments, Mr Sheahan states that 13 related to companies that had been deregistered and one which had been returned to the control of the directors (Atsikbasis Nominees Pty Ltd). The plaintiffs sought and obtained orders for the reinstatement of each of the deregistered companies for the purposes of convening fresh meetings of the creditors of those companies to consider the plaintiffs' claim for remuneration based on new remuneration reports. Mr Sheahan states that meetings were subsequently convened in all 13 companies and the plaintiffs' remuneration approved in full at 11 of those meetings. 130 With respect to the remaining three appointments, Mr Lock sought orders from the Court under ss 474(3) and 511 of the Act fixing the plaintiffs' remuneration and, in addition, in relation to Atsikbasis Nominees Pty Ltd, orders under s 1322(4) of the Act. In all three matters, the Court fixed the plaintiffs' remuneration in the full amount claimed and, in the Atsikbasis matter, the Court granted declarations to the effect that pursuant to s 1322(4), the resolutions of creditors approving the plaintiffs' remuneration were not invalidated by any non-compliance with s 473(12) by virtue of insufficient information regarding remuneration being provided to creditors when the resolution was passed. 131 I turn now to Mr Sheahan's evidence in cross-examination. As I have said, it is convenient for me to deal with all the matters raised with Mr Sheahan in cross-examination in the one place. 132 Mr Sheahan said that the plaintiffs' practice was to recover as remuneration all charges that appeared on the firm's time recording system for a particular matter providing the time was correctly recorded and that it was deemed appropriate to recover the remuneration. Mr Sheahan said that it was not his practice to go through the WIP reports line by line in the case of the three administrations. Nevertheless, he was prepared to say that all of the remuneration which the plaintiffs seek is properly chargeable and claimable. 133 As I have said, Mr Sheahan said that the approximate allocation of the remuneration which is claimed to the six categories identified by the plaintiffs (see [122] above) was carried out by Mr Sam Gurner under the supervision of Mr Lock and that he had no personal involvement in that exercise. For example, the estimate of $0.25 million for the POC Act stream is that of Mr Lock and Mr Gurner. Mr Sheahan was taken to ASIC's Notice of Objection which indicates that ASIC's analysis shows that the remuneration claimed with respect to the POC Act stream was in the order of $354,809.99 which is well in excess of the estimate of $250,000. 134 It was put to Mr Sheahan that the allocation of $1.6 million for "Other matters" (dealing with proofs of debt, adjudicating on claims, dividends, clerical and administrative tasks, reporting to creditors and statutory compliance) was simply a balancing exercise, having regard to the items which had been allocated to the other work streams. I think the effect of Mr Sheahan's evidence is that he did not have sufficient involvement to be able to answer the question one way or the other. 135 Mr Sheahan said that in the whole group there were less than 200 proofs of debt of which six to eight were disputed. He agreed that the payment of dividends was, in essence, a mechanical administrative task. Statutory compliance was principally filing forms with ASIC and other statutory compliance would be filing tax returns. 136 Mr Sheahan was taken to one of the remuneration reports prepared for the Court, and in particular, to claims made for internal disbursements. The claims include, as part of the remuneration, items of facsimile, scanning, photocopying and printing. 137 Mr Sheahan was asked about the plaintiffs' circular to creditors dated 12 May 2010 wherein the plaintiffs gave an estimate for their remuneration to the completion of voluntary administrations in relation to SKFA and CJVA of $25,000 plus GST per company. Mr Sheahan said that that would have been Mr Lock's estimate, that he would have probably discussed it with Mr Lock, but that he could not remember. Mr Sheahan was also asked about the estimates in relation to the liquidations of $500,000 and in the case of SSFA, $100,000. 138 Mr Sheahan agreed that it would be fair to say that the firm's hourly rates are higher than others because they take on jobs with more risk. He agreed that he had been advised by the receivers on 30 June 2010 that a good price had been achieved for the sale of the Companies' assets. He knew from that point that there was going to be a surplus in the Companies and he reported that matter to Mr Sharp. He agreed that post-settlement, it was not going to be the case that the Companies would be without assets. 139 In his affidavit affirmed on 8 February 2017, Mr Sheahan said the following: During the course of such liquidations we have gained specialised knowledge and experience in respect of the effective identification and management of investigations, the pursuit of legal claims and in assessing the potential benefit to creditors. In many of the liquidations in which we have been involved, the companies were without any assets of substance and the possibility of any return to creditors was dependent upon us effecting recoveries through investigation and pursuit of legal claims (as was our expectation when appointed as administrators and liquidators to SKFA, CJVA and SSFA). 140 Mr Sheahan was asked about the statement which appears in parenthesis. He agreed that it was not correct and should have referred only to the plaintiffs' appointment as administrators. He agreed that he knew when the plaintiffs were appointed as liquidators that there was no expectation that recovery was dependent upon the plaintiffs successfully pursuing action through the investigation and pursuit of legal claims. 141 Mr Sheahan was asked about whether he had compared the charge out rate for one of the plaintiffs' staff members, Mr Gregory Jones, with comparable rates for solicitors in Adelaide. Mr Jones was a solicitor who was of two and-a-half years standing and in respect of whom the plaintiffs applied an hourly charge out rate of $500 per hour. He agreed that he was aware that external lawyers charged considerably less than $500 per hour for a lawyer of two and-a-half-years standing. Mr Sheahan was asked about the hourly charge out rate for another staff member, Mr Michael Nelson, who was an insolvency practitioner of just over two years standing. 142 Mr Sheahan said that Mr Samuel Rees of the plaintiffs' firm prepared Schedule B. Mr Sheahan and Mr Rees spent time together so that Mr Sheahan could provide information to Mr Rees as to his travel. Mr Sheahan thought that the schedule had been prepared in response to ASIC's Notice of Objection. In the preparation of the document, Mr Sheahan did not go back to the source records and he did not spend a lot of time checking the document after it had been printed. 143 In his second affidavit, Mr Sheahan said that he had reviewed the time entries identified by ASIC in relation to the seniority of staff undertaking the work. He said that he had noted that there were a number of time entries that contain no narration, including time entries submitted by him. He said that he had reviewed those entries in the context of other time entries on the same days that do contain narrations. He then provided evidence, having regard to the narrations in the surrounding entries, of the work being undertaken at the relevant times, the task code and practitioner who undertook the work. Mr Rees assisted Mr Sheahan in obtaining information concerning blank entries. Mr Sheahan said he reviewed the time entries referred to in paragraph 85 of his second affidavit. 144 Mr Sheahan was asked about the plaintiffs' investigations into the Debt and Equity Issues. The debt was in the amount of $18 million approximately and the value of the equity was $40 million approximately. Mr Sheahan agreed that from about August 2010, the plaintiffs were telling the Salyer interests and the Sharp interests that they would be undertaking investigations into the Debt and Equity Issues. Mr Sheahan agreed that on or about 23 December 2010, the plaintiffs filed an application in California seeking cross-border recognition of the liquidations. He agreed that he could see what shareholdings were recorded in the documents filed with ASIC. Mr Sheahan said that the plaintiffs did not locate the Companies' "corporate volume" until about the middle of 2011. Mr Sheahan agreed that he did not prepare a work plan as to the investigations to be carried out in relation to the Debt and Equity Issues, nor did he prepare a budget in relation to those issues. 145 Mr Sheahan said that the plaintiffs first sought advice concerning the extent of their obligations investigating the Debt and Equity Issues in December 2010. It was put to Mr Sheahan that the advice received from DMAW dated 10 December 2010 was advice as to how to investigate the Debt and Equity Issues, rather than whether those issues should be investigated by the plaintiffs and the extent of those investigations. Mr Sheahan agreed that there was nothing in the advice to the effect that he was under a duty to take any particular steps and he agreed that that was dealt with in another advice. 146 Mr Sheahan received advice through Mr Davis of DMAW from counsel, Messrs R J Whitington QC and B Doyle about the seeking of directions under s 511 of the Act. In paragraphs 142 and 143 of his first affidavit, Mr Sheahan said the following: 142. On or about 4 July 2011, I had a conversation with Mr Davis in which he conveyed to me advice given in conference by Mr Whitington QC and Mr Doyle of counsel in respect of the matters the subject of DMAW Lawyers' letter of 26 May 2011 referred to in paragraph 127 above, the effect of which included that directions be sought under section 511 of the Act in relation to the matters the subject of the 26 May 2011 letter. 143. On 5 July 2011, DMAW Lawyers sent a letter to counsel, a copy of which appears at page 847 of JS-1, setting out the effect of significant reservations that I expressed to Mr Davis regarding making an application for directions under section 511 of the Act in relation to our investigations concerning the lntercompany Debt and Disputed Shares. Following this, Mr Lock and I gave further consideration to whether it was appropriate to seek directions under section 511 of the Act. In August 2011, preliminary work was commenced by members of our staff on such an application. However we ultimately did not proceed with that application having regard to the considerations set out in the 5 July 2011 DMAW letter referred to above and later developments in the liquidations referred to in paragraph 217 below in December 2011. 147 It was put to Mr Sheahan that there were three possibilities in terms of resolving the Debt and Equity Issues and they were settlement by the parties, a determination by a court or an adjudication by the plaintiffs. He agreed that a determination by the plaintiffs would involve assets worth in the region of $58 million and that there were two competing parties. Mr Sheahan reluctantly agreed that it was likely that whatever determination the plaintiffs made, the matter would ultimately be the subject of court proceedings. He said that Mr Salyer was under criminal indictment at the time and legal fees for a court case were likely to be significant. In the end, Mr Sheahan agreed that it was odds-on that a determination by the plaintiffs would not be a final determination. It was put to Mr Sheahan that he should have approached the Court under s 511 of the Act and that the Salyer interests and the Sharp interests could be joined as parties to those proceedings. It was put to him that that is ultimately what happened in the Equity Proceedings. It was put to him that investigations and an adjudication by the liquidators would reduce the fund available to the entity or entities entitled to it. By contrast, the costs of a legal action would be paid by the unsuccessful party. Mr Sheahan agreed that from August 2010 through to the commencement of the investigations in December 2010, he did not give consideration to approaching the Court and having the question of the ownership of the shares and the person entitled to the debt determined as questions arising in the liquidation. Nor did he prepare any formal cost benefit analysis between August 2010 and December 2010. Mr Sheahan said that the plaintiffs continued their investigations through the first half of 2011. 148 Mr Sheahan agreed that the plaintiffs obtained further advice from DMAW in September 2011. The advice received was that advice should be sought from counsel on the issues of the company debt and disputed shares and that "may be prudent to await counsel's advice before further investigations are conducted". Mr Sheahan said that on 21 September 2011, BMO produced a further tranche of documents. On 8 October 2011, the plaintiffs served a further subpoena on BMO for the production of documents. On 26 October 2011, the United States Bankruptcy Court issued a subpoena to Wells Fargo. On 15 November 2011, subpoenas were issued to two BMO employees, and on 28 November 2011, BMO lodged an objection to the subpoenas issued by the plaintiffs. 149 The plaintiffs took further advice from DMAW in or about November or December 2011 as to their duties and responsibilities in pursuing their investigations and, based on the information they had gathered to date, what steps they should take. On 1 December 2011, DMAW provided advice to the plaintiffs. That advice included advice that the plaintiffs should give consideration to seeking directions under s 511 of the Act. The plaintiffs took further advice from Messrs Whitington QC and Doyle in mid-December 2011 and that advice, among other things, made reference to a possible application to the Court for directions under s 511 of the Act and the possibility of the liquidators' interpleading. It was put to Mr Sheahan that it was not his concern to seek advice as to the position under United States law. It was also put to him that there was no need for the plaintiffs to obtain and review the supporting documents by which the temporary restraining order was obtained by the Sharp interests. 150 Mr Sheahan agreed that at some stage Mr Sharp told him that any decision reached by the plaintiffs was likely to be challenged by the aggrieved party. He agreed that from time to time he received requests from Mr Sharp or his advisers for costs estimates and timelines with respect to the plaintiffs' investigations into the Debt and Equity Issues. Those requests commenced in about mid-February 2011. Mr Sheahan agreed to provide a budget and timeline and started preparing a budget, but it was never finished because, according to Mr Sheahan, events were overtaking the plaintiffs "with the subpoenas and the depositions and the evidence". 151 With respect to the examinations and investigations undertaken with a view to a possible claim against the directors and ANZ, Mr Sheahan said that the decision to do that was taken in December 2010. Mr Sheahan said that the starting point was that the Australian assets were sold for $91 million to repay a debt of $21 million. The question was if the company was solvent, why the receivers had been appointed. Mr Sheahan said that the fact was that the loans of the Australian group and the New Zealand group were cross-guaranteed. Mr Sheahan said that it was around August 2010 that the plaintiffs first identified the possible claim. 152 It was put to Mr Sheahan that he discussed a possible claim with Mr Sharp and that Mr Sharp said that he did not support the pursuit of that claim using liquidation funds, but might support them being pursued with the benefit of liquidation funding. Mr Sheahan said that that was almost right. In fact, what Mr Sharp said, according to Mr Sheahan, was that he wanted to get the BMO off his back and then they could go after the claim. There was some discussion about looking at litigation funding. I will come back to this conversation when considering the evidence of Mr Sharp. 153 Mr Sheahan agreed that in August 2010, he knew that there were only two parties who were potentially interested in a successful prosecution of a claim against ANZ and they were the Sharp interests on the one hand, and the Salyer interests on the other. In April 2012 when the Salyer interests were consulted after some time had elapsed, their response was to the effect that no further investigations should be undertaken. 154 Mr Sheahan agreed that in relation to the examinations and investigations into a possible claim against the directors and ANZ, he did not prepare a work plan or a budget. 155 Preliminary legal advice was obtained from Professor O'Donovan in October and November 2010. Professor O'Donovan did not provide the plaintiffs with any written advice on the quantum of the claim. Mr Sheahan agreed that late in October 2010, Mr Sharp raised with him his concern as to whether the Companies in liquidation had suffered any loss by reason of ANZ's actions. Mr Sharp suggested that there may not have been a loss given the sale price which had been achieved. Mr Sheahan agreed that that was Mr Sharp's view, but he did not understand the logic. The plaintiffs never obtained an expert report or written advice as to the quantum of any potential claim. 156 With respect to the POC Act Proceedings, Mr Sheahan agreed that in late November 2012, the United States Bankruptcy Court had granted summary judgment in the United States proceedings in favour of Mr Sharp and SK Foods, LP against the Salyer interests in relation to the intercompany debt and disputed shares. 157 Mr Sheahan agreed that in September 2012, he started discussions concerning the operation of the POC Act. The plaintiffs sought advice from their lawyers and they were advised to go to ASIC. They were advised that they had no obligation to notify the Commonwealth Director of Public Prosecutions (CDPP). There was no advice as to the scope of any duty to assist the AFP. Mr Sheahan suggested that the plaintiffs obtained advice from a Mr Robert Wyld, but that it was not written advice. Mr Wyld was said to be a lawyer at Johnson Winter & Slattery with criminal expertise. When Mr Sheahan was asked why any work that he did in assisting the AFP was in the interests of the shareholders of SKFA, he said that he doubted that it was. He said that he never turned his mind to the question of whether what the plaintiffs were doing in assisting the AFP was in the interests of shareholders. He said that Mr Wyld had given the plaintiffs advice that they had an obligation to provide full cooperation to the authorities. Mr Sheahan attended meetings with the AFP and documents were provided to the AFP. Some documents were provided before a production order was made. The plaintiffs produced a file note and the AFP caused a production order to be issued based on the file note. I have already referred to this evidence. Whatever oral advice Mr Wyld may have given, I am not satisfied that it was directed to the particular issue of whether the plaintiffs should be claiming remuneration out of the Companies' assets to the extent they did for assisting the AFP. 158 Mr Sheahan agreed that he and Mr Lock attended a hearing before Pagone J in the POC Act Proceedings in late May 2013. The plaintiffs were represented by senior counsel and a partner from Johnson Winter & Slattery. Mr Sheahan said that he and Mr Lock attended because "some very serious allegations … had been levied against us by Mr Sharp's lawyer". The plaintiffs' counsel did not say anything substantial during the course of submissions. Mr Lock and Mr Oliver Sheahan attended a hearing on 23 September 2013. 159 With respect to the applications relating to the receivers, Mr Sheahan agreed that they brought an application seeking directions that they were acting properly and justifiably in remaining as receivers. Mr Sheahan agreed that in November 2011, the plaintiffs had been conducting investigations and examinations with respect to a possible claim against ANZ. There was an apprehension that litigation was possible. Mr Sheahan agreed that following the application for directions made by the receivers, he instructed his lawyers to bring an application for removal of the receivers. It was put to Mr Sheahan that the plaintiffs' application for removal was unnecessary in view of the directions sought by the receivers. He rejected that suggestion. 160 Mr Sheahan disagreed that the costs associated with an irregularly convened meeting, being costs for a creditors' report, advertisements and circulars were wasted. He was asked to explain why the plaintiffs should be remunerated for those costs when the meeting was irregularly convened. He said that Mr Sharp made a late claim that equity holders were entitled to vote at the meeting which he had not encountered before. He took advice and was told that could be correct. It was too late to go ahead with the meeting and it had to be reconvened. 161 Mr Sheahan was asked about a claim for remuneration of $8,000 for the completion of an ASIC Form 524 (6 monthly account by way of receipts and payments into the administration). Mr Sheahan agreed that that figure seemed unusually high. He agreed that it should not take anything like 11 hours of one of the plaintiffs' time to complete. 162 Mr Sheahan was asked about the charges for travelling time. He said that he had not done an exercise whereby the various charges associated with travel could be allocated to one of the work streams. He said that such a task would be "a time consuming and relatively complicated task". 163 Mr Sheahan agreed that his firm had made a large claim for remuneration based on travel time and he agreed that it was his firm's practice to charge for travel time. He said in his affidavit that while he could not recall the work he did whilst he travelled, he did use the time productively on the matter. He accepted that not all of the travel time could be used to work on the matter. Mr Sheahan was cross-examined about a number of entries for travel time. He was taken to various WIP reports. As I understand it, he said that various claims must be "a mistake" (see transcript p 123, line 28 to line 31, and p125 line 24 to line 29). He agreed that there were other issues with charges shown in the WIP reports. One such issue was an entry for 15 October 2010 indicating that the plaintiffs' claim for remuneration includes an amount of $187.50 for Mr Oliver Sheahan to drive Professor O'Donovan to the airport. Mr Sheahan agreed that if he had gone through the WIP reports, a number of entries of the type he had been taken to would have been picked up and not made the subject of a claim for remuneration. 164 It was put to Mr Sheahan that he should not have been charging the Australian liquidations for conducting examinations in the New Zealand liquidations. His answer about that topic was that it had never been suggested to him and was a legal question. 165 Mr Sheahan said that he would be surprised to see claims for remuneration for filing by him and further, he agreed that it was inappropriate for the plaintiffs to charge for billing. Mr Sheahan was asked about attendances at directions hearing on 28 and 29 February 2012, and attendance by both he and Mr Lock and Mr Oliver Sheahan. He accepted that it was "hard to justify three".

Mr Lock 166 I will take the same approach to Mr Lock's evidence as I have with Mr Sheahan. 167 ASIC submits that, although Mr Lock was uncomfortable and sometimes argumentative, generally speaking, he was attempting to assist the Court with an accurate recollection. I formed the impression that, although defensive at times, Mr Lock was a reliable witness. 168 In Mr Lock's first affidavit, he states in paragraph 10 that after conducting a review of each of the administrations, he and Mr Sheahan considered that they may not have fully complied with the Act and/or the ARITA code as alleged in the letter from ASIC dated 29 April 2015. I note that Mr Sheahan, in paragraph 54 of his second affidavit, states that he and Mr Lock accept that remuneration reports provided to creditors in the liquidations did not comply with the requirements of the Act. He went on to say the following: However, those reports did contain information relevant for creditors to consider our claims for remuneration and the nature of the work undertaken in the period under review and creditors voted on whether our remuneration should be approved without any assertion that the reports did not contain sufficient information. 169 In his second affidavit, Mr Lock addressed the topic of remuneration. He said that he and Mr Sheahan utilised a time basis for calculating the remuneration to be sought in respect of the Companies. He and Mr Sheahan and their staff recorded the time spent working on each specific appointment into the firm's practice management software. The amounts claimed in respect of the remuneration are calculated by multiplying the time spent by each practitioner on tasks in the appointment by their applicable charge out rate. Time is recorded in single minute increments expressed as a fraction of one hour. Mr Lock set out the standard charge out rates for the firm applicable as at 1 July 2010. He said that these rates were the maximum rate for a practitioner within each tier of experience. On 1 February 2012, the plaintiffs raised the maximum standard rate for an associate to $270 per hour. On 15 October 2013, the plaintiffs introduced a senior associate level with a maximum rate of $325 per hour. 170 Mr Lock said that the plaintiffs generally seek the recovery of the time charges recorded in their system in formulating a claim for remuneration. They will write off amounts if they consider that time is not properly charged or in order to accommodate what they referred to as "legitimate creditor concerns". Mr Lock provided details of the persons and their qualifications, both existing and former, who worked on the administrations or liquidations. 171 I turn now to Mr Lock's evidence in cross-examination. 172 In the course of his cross-examination, Mr Lock agreed with the proposition that there can be no WIP reports for a prospective fee resolution (i.e., for work to be done in the future) where the time period has not "occurred". He also said that that is the reason he did not provide a remuneration report, because the fee had not been incurred. Mr Lock realises now that he should have done that. He realises that he should have estimated what was going to be incurred, but at the time, he was of the same view, that is, it was impossible to provide a WIP report before the fees had been incurred. 173 Mr Lock said that he had a concern as to whether it was appropriate for the plaintiffs to charge for the remuneration reports. He said that the plaintiffs took legal advice and decided to include the amounts for the remuneration reports in their claim. 174 Mr Lock said that he and Mr Sheahan prepared the estimates for the administration of the Companies of $25,000 per company and, in the case of the liquidations, $500,000 in relation to SKFA and CJVA, and $100,000 in relation to SSFA. Mr Lock agreed that he did not prepare a budget at the time he made the estimate. He said that he assumed the liquidations were going to be very simple liquidations. At the time the reports went out, the receivers had been appointed and the plaintiffs knew that there was a big surplus and that the only work required from the liquidators would be identifying whether or not there were claims which the creditors might wish to pursue and the distribution of surplus funds. The plaintiffs became aware at or about 30 June 2010 that there was likely to be a substantial surplus in the administrations. Mr Lock agreed that one of the reasons the plaintiffs charged their standard hourly rates for both themselves and members of their firm is that the firm specialises in pursuing claims where there are no other assets and, therefore, there is additional risk. 175 As I will later explain, the plaintiffs knew from 30 June 2010 that these administrations did not involve additional risk. 176 The Equity Proceedings were commenced in the New South Wales District Registry of this Court in February 2012. Those proceedings included an application for review of the plaintiffs' remuneration. The plaintiffs made an application to transfer those proceedings to the South Australia District Registry of this Court. 177 As to the plaintiffs' hourly charge out rates as at 1 July 2010, Mr Lock agreed that those rates had increased as of that date. The hourly rate for a partner in May 2010 was $525 per hour, and as of 1 July 2010, it was $700 per hour. The hourly rate of a senior manager in May 2010 was $440 per hour, and as at 1 July 2010, it was $550 per hour. The hourly rate of an associate in May 2010 was $320 per hour, and as at 1 July 2010, it was $450 per hour. 178 Mr Lock was cross-examined about his suggestion that some of his staff were more qualified than insolvency practitioners in other firms. Mr Lock was asked about Mr Gregory Jones, a lawyer who had been qualified for two and-a-half years as at July 2010, but was being charged out at a rate of $550 per hour. That was later corrected to $500 per hour. Mr Lock was directed to a letter from DMAW to the plaintiffs dated 1 September 2010 wherein the hourly rate for a partner was $440 per hour, a senior associate $335 per hour, and a lawyer $180 to $290 per hour. Mr Lock was also cross-examined about Mr Michael Nelson who was being charged out as a manager and yet had only two years' experience as an insolvency practitioner. Mr Lock was asked about Ms Jane Sheahan who is described as the office manager. He was asked to explain the reasons Ms Sheahan was charged out at $400 per hour when she was not an insolvency practitioner. He said that the plaintiffs' staff was charged out at a relatively high rate which reflected the fact that the practice had a high risk profile and was a "very, sort of, top-heavy practice". Mr Lock said that it was a very qualified group of people working on matters. 179 Returning to Ms Sheahan, Mr Lock did not accept that it was appropriate to describe the work she carried out as predominantly administrative or clerical in nature. He could not recall what Ms Sheahan was doing at the time. Mr Lock did not go through the WIP reports and consider the various entries for employees before determining what amount was to be charged. He said that the person preparing the remuneration report goes through the WIP entries and then they prepare the report. He said that he would have an idea of the amounts that should be in the report. He said that ordinarily he would not go through the WIP reports to look at the individual entries, although he does sign off on the remuneration report. He said that it was not his usual practice to consider the WIP reports in detail before making a remuneration claim. 180 Mr Lock agreed that there were three types of disbursements and one of those was internal disbursements. Internal disbursements include the sending of a facsimile, scanning documents and creating PDFs. With respect to Ms Sheahan, Mr Lock was taken to an entry in the WIP reports which indicated that for scanning records for SSFA on 17 June 2011, she was being charged out at a rate of $300 per hour. By August 2011, for "check, approve, letter to bank, fax" she was being charged out at $400 per hour. Entries for Ms Sheahan for 2 and 3 November 2011 indicate that the plaintiffs charged for raising a tax invoice for a company in liquidation. That also follows from entries for 6 December 2011 and 12 January 2012. 181 Mr Lock could not recall any of the creditors reviewing any of the WIP reports which were tabled at creditors' meetings. 182 Mr Lock agreed that the WIP reports were not categorised with reference to the major tasks performed in the administration, but he said that those tasks were, in effect, formulated with the benefit of hindsight. 183 Mr Lock said that Mr Sheahan did most of the work in the liquidations as a matter of fact. 184 Mr Lock agreed that the investigations into the Debt and Equity Issues essentially involved two issues, that is to say, the identity of the shareholders and the person entitled to a particular receivable. There were ancillary matters, such as the application of a set-off to the receivable and tax consequences. Mr Lock agreed that the dispute as far as the equity and the debt were concerned was, in substance, a dispute between the Salyer interests on one hand, and the Sharp interests on the other. Mr Lock agreed that the application for United States recognition of the liquidations was only necessary to permit investigations in the United States as to the Debt and Equity Issues. He agreed that no written work plan or budget or formal cost benefit analysis as to the investigations into the Debt and Equity Issues was prepared by the plaintiffs. That is also true for the remainder of the liquidations. 185 Mr Lock agreed that in November 2011, he and Mr Sheahan sought advice from DMAW as to their duties and the appropriate steps to be taken with respect to the investigations into the Debt and Equity Issues. He agreed that the advice was that consideration should be given to seeking directions under s 511 of the Act. They did consider that course of action, but they did not take it. 186 Mr Lock agreed that in May 2011, the plaintiffs instructed DMAW to seek advice from Messrs Whitington QC and Doyle as to the steps that should be taken with respect to the investigations into the Debt and Equity Issues and that on 4 July 2011, DMAW told them that Messrs Whitington QC and Doyle advised that directions should be sought under s 511 of the Act. He said that the plaintiffs commenced drafting an application, but did not proceed with it. Mr Lock agreed that the plaintiffs did not seek advice as to the steps that should be taken until May 2011. He agreed that the size of the dispute as to the Debt and Equity Issues was approximately $55 million and essentially there were only two interested parties. Mr Lock agreed that as at August 2010, it was a reasonably likely outcome that any determination made by the plaintiffs as to the Debt and Equity Issues was going to be ultimately determined by a court. He was asked whether he gave any consideration at the time of other ways of bringing about an ultimate determination of the issue. He said that at the time the plaintiffs thought that it would be a short exercise that may end up on an appeal. 187 Mr Lock said that the plaintiffs commenced the recognition proceedings in the United States in December 2010 and that they considered that that was the sensible thing to do. Investigations commenced at about the time they were appointed liquidators in August 2010. 188 Mr Lock agreed that there were three ways the issue could be resolved. They were as follows: a determination by the plaintiffs; a determination by a court; or agreement between the parties. 189 It was put to Mr Lock that for the period between August 2010 to July 2011 when the plaintiffs first obtained advice from Messrs Whitington QC and Doyle, instead of investigating, the plaintiffs could have brought an application under s 511 of the Act for the Court to determine the question of the identity of the shareholders and the owner of the debt. Mr Lock said that his understanding of the advice that the liquidators received is that they should consider going to court under s 511 seeking directions as to the extent of the work which the plaintiffs should do, rather than asking for a decision on the issue. 190 It was put to Mr Lock that he should have sought advice before May 2011 because by then "the horse had bolted". It was put to him that the plaintiffs had already sought recognition of the liquidations in the United States. Mr Lock said that the plaintiffs had encouragement from the stakeholders to do that. Mr Lock also agreed that the plaintiffs obtained recognition in New Zealand of the liquidations in Australia. His recollection was that the New Zealand/Australia recognition was directed at investigations relating to ANZ and its appointment of receivers. 191 Mr Lock said that the Companies' business was sold for $91 million. The bank was owed $21 million and there had never been an event of default by the Companies. Mr Lock agreed that there was no work plan, budget or cost benefit analysis in relation to a possible claim against ANZ. He agreed that the plaintiffs obtained advice as to a possible claim against ANZ from Professor O'Donovan, but did not obtain advice from him as to the quantum of any potential claim. They did obtain some oral advice from senior counsel about the implications of capital gains tax. Mr Lock agreed that the persons who would benefit from a successful claim against ANZ were the shareholders. He agreed that he had discussions with Mr Sharp about pursuing a potential claim against ANZ. He said that those discussions took place in about August 2010. He did not agree that Mr Sharp only agreed to the pursuit of a claim against ANZ if that was done with the benefit of litigation funding. He said that Mr Sharp was keen to get the BMO out of the way first. 192 In re-examination, Mr Lock said that the hourly rate of $525 per hour for the plaintiffs had been in existence for about five years before 1 July 2010.

Mr Sharp 193 As I have said, Mr Sharp was a satisfactory witness. I accept his evidence. 194 Following his appointment as the Chapter 11 Trustee in Bankruptcy of SK Foods, LP, Mr Sharp made some preliminary inquiries and he formed the view that SK Foods, LP owned 100 of the 101 shares in SKFA. As a result of reviewing the books and records of SK Foods, LP and interviewing staff of the business, Mr Sharp learnt that SK Foods, LP had purported to transfer its interests in the 100 shares in SKFA and an intercompany debt to entities associated with Mr Frederick Scott Salyer. Mr Salyer was the ultimate owner of SK Foods, LP and a trustee of the Scott Salyer Revocable Trust and the SSCL 2007 Trust. In addition, he was a former director of SKFA and CJVA, and the chief executive officer of SK PM Corporation. Mr Sharp refers to the various companies with which Mr Salyer was associated as the "Salyer interests". 195 On 4 February 2010, Mr Salyer was indicted in relation to violations of the Rackateer Influenced and Corrupt Organizations Act (US), obstruction of justice, commercial bribery and other alleged crimes. 196 In the course of discharging his obligations as Chapter 11 Trustee in Bankruptcy of SK Foods, LP, Mr Sharp engaged lawyers. He engaged Schnader Attorneys in San Francisco and, in particular, Mr Greg Nuti and Mr Kevin Coleman. Through Mr Nuti, he communicated with Mr Sheahan on 3 August 2010. He asserted that SK Foods, LP owned 99.01% of SKFA and that the Scott Salyer Revocable Trust owned the other .99%. He referred to alleged share transfers having occurred on 1 November 2006 whereby ownership of the shares in SKFA would be as follows: SK PM Corporation as to 55 shares and Mr Salyer as to 46 shares. He referred to the fact that the ASIC Form 484 recording the change in share ownership was not signed until 1 July 2009. He referred to a preliminary injunction which had been issued by the Bankruptcy Court in the United States on 20 March 2010. He referred to the fact that he disputed any claim by Mr Salyer or interests associated with him to ownership of the shares. 197 Mr Sharp attended a meeting with Mr Sheahan and his Australian solicitor, Mr Glenn Davis, at the offices of Mr Sharp's solicitor in San Francisco on 1 December 2010. Mr Sharp's solicitor gave Mr Sheahan a disc containing a number of documents relating to SK Foods, LP's claims against and interests in the three Australian companies. 198 On 23 December 2010, Mr Nuti again communicated with Mr Sheahan on Mr Sharp's behalf. Mr Nuti set out Mr Sharp's claims as follows: (1) a claim for trade receivables in the amount of US$1,243,880 (2) an intercompany claim for loan in the amount of UA$17,074,283 (sic); and (3) ownership of at least 99.01% in the equity of SK Foods. Mr Nuti put forward arguments in support of these claims and against the suggestion that there was a transfer of the shares in SKFA effective from September 2006. 199 I turn now to Mr Sharp's evidence as to the plaintiffs' investigations into the Debt and Equity Issues. 200 Mr Sharp met with Mr Sheahan in San Francisco, California in June 2010. Mr Sheahan said to Mr Sharp that he and Mr Lock intended to investigate the ownership of the intercompany debt and shares in SKFA. 201 In August 2010, Mr Sharp attended a creditors' meeting in Sydney. At that time, Mr Sheahan said to Mr Sharp words to the effect that he needed to investigate the equity issues to determine who to give the money to, and that he would need to review the share register for SKFA. 202 Mr Sharp and Mr Sheahan exchanged emails on 8 October 2010. Mr Sharp asked Mr Sheahan to indicate his "timing for the adjudication of the unsecured claims and the ownership claims?" 203 On 11 October 2010, Mr Oliver Sheahan sent an email to Ms Milburn of Duncan Cotterill, who were solicitors in Australia acting for Mr Sharp. Mr Oliver Sheahan said that the plaintiffs did not have the share register for the Australian companies. 204 Between 21 and 25 October 2010, Mr Sharp and Mr Sheahan exchanged emails. In the course of that exchange, Mr Sharp said that he was "very concerned" with the potential delay with respect to distributing funds to creditors. 205 Mr Sharp said that he learnt in about June 2011 that Deloitte, the client manager for SKFA, did not locate a copy of the share register for SKFA until in or around June 2011. 206 On 24 June 2011, Mr Kevin Coleman sent an email to the plaintiffs' attorney in the United States, Mr Davis, and Mr Sheahan wherein he set out the reasons why any purported transfer of shares was ineffective or liable to be set aside. 207 In the same month, Mr Sharp discussed the matter with Mr Sheahan over the telephone. Mr Sharp said to Mr Sheahan words to the effect that whichever decision the plaintiffs made in relation to the ownership of the debt and equity interests, the other party was likely to appeal that decision. Mr Sharp also said to Mr Sheahan that there was no point in the plaintiffs spending more time and money investigating the disputed debt and equity interests. 208 Mr Sharp said that in response to his request for the plaintiffs to make a decision in relation to the Debt and Equity Issues, Mr Sheahan said words to the effect that the plaintiffs needed more information in order to make a decision, and would then seek advice from counsel. 209 Mr Sharp said that throughout 2010 and 2011, he was concerned about the possibility of the Salyer interests undertaking further transactions in relation to assets which, in his view, were the property of SK Foods, LP. 210 On 1 September 2011, Mr Sharp obtained a temporary injunction against the Salyer interests from the United States Bankruptcy Court. On 15 September 2011, the Court ordered that the injunction be continued. On 16 September 2011, Ms Milburn sent a copy of the injunction to Mr Davis of DMAW asking him to bring it to the urgent attention of the plaintiffs and confirming that the plaintiffs would abide by the terms of the order. 211 From September 2011, Mr Sharp made repeated requests of the plaintiffs to convene another creditors' meeting because he wanted to act with respect to the plaintiffs' fees. He was concerned by the amount of their costs and the length of time they were taking to make a decision. 212 On 30 September 2011, Mr Sheahan advised Mr Sharp that he was waiting on information from BMO, that the plaintiffs hoped to determine the ownership of the intercompany debt by December 2011, and that they intended to convene the next creditors' meeting in December 2011. Mr Sharp advised Mr Sheahan that he would support a creditors' meeting as soon as possible. 213 On 7 October 2011, Ms Milburn wrote to Mr Davis setting out the reasons Mr Sharp and his beneficiaries were seeking an undertaking that until the United States Bankruptcy Court orders otherwise, no distribution would be made to Mr Salyer and his associates. 214 On 15 November 2011, Mr Sharp sent an email to Mr Sheahan asking him to advise as to when the remaining issues with respect to the intercompany claim and the ownership of the shares would be resolved. 215 On 16 November 2011, Mr Lock responded by saying that the plaintiffs anticipated making a decision concerning share ownership within two months of finalising their inquiries. Mr Lock further advised that BMO was currently resisting their attempts to obtain relevant information by subpoenas and depositions. Mr Sharp responded to Mr Lock's email saying that he was unaware that the plaintiffs were looking for information from BMO and that he would be willing "to reach out to BMO" to encourage them to respond. However, he was uncertain as to the information the plaintiffs hoped to receive and how it would impact upon their decision. He stated that any information the plaintiffs could provide would be helpful. Mr Sharp did not receive a response to his email. 216 On 2 December 2011, the plaintiffs decided that SK Foods, LP's proof of debt should be partially rejected due to an alleged set-off and should be admitted in the amount of $8,861,540 and that the proof of debt lodged by Fast Falcon LLC should be rejected in full. On 15 December 2011, Mr Salyer, as trustee for the SSC&L 2007 Trust, and Fast Falcon LLC filed an appeal in the Federal Court against the plaintiffs' adjudication on the intercompany debt. A week later, on 22 December 2011, Mr Sharp commenced proceedings in the Federal Court appealing the plaintiffs' adjudication on the intercompany debt. 217 The plaintiffs arranged for a meeting of creditors on 22 December 2011. However, on 19 December 2011, Mr Sharp received an email from a staff member at the plaintiffs' firm attaching a circular to creditors which stated that the meeting would not be held on 22 December 2011 and that the plaintiffs would reconvene the meeting probably in late February 2012. Mr Sharp was later contacted and asked whether it would be convenient to him if the creditors' meeting was reconvened for 8 March 2012 in San Francisco. Mr Sharp responded by saying that while he was available on that date, he had hoped that the meeting could be held sooner than that. 218 Mr Sharp said that by February 2012, he had lost patience with the plaintiffs because of the time they were taking in concluding their investigations and making a decision regarding the ownership of the shares in SKFA. He was also concerned about the time and cost incurred by the plaintiffs in conducting what he considered to be futile investigations into the Debt and Equity Issues. 219 On 20 February 2012, Mr Sharp commenced proceedings in the Federal Court against the Salyer interests and the plaintiffs seeking a declaration of ownership of 100 shares in SKFA, and an injunction restraining the plaintiffs from conducting investigations into the disputed debt and equity interests, and potential actions against ANZ or the receivers. 220 The next creditors' meeting was held concurrently in Sydney on 9 March 2012 and in San Francisco on 8 March 2012 via telephone link. Mr Sheahan and Mr Sharp were present in San Francisco. Mr Sheahan decided to admit the proofs of debt lodged by SSR Trust and SK PM Corporation and reject all other proofs of debt relating to the equity interests. That had the effect that Mr Sharp was only entitled to vote as a creditor to the value of $8,537,532 which was the value the plaintiffs had admitted in relation to the intercompany debt. Mr Sharp voted against the resolution approving the plaintiffs' remuneration because he felt that the costs incurred were "much too high" and because he did not feel that the plaintiffs were acting in the creditors' best interests. The Salyer interests voted in favour of the resolution and the resolution was carried. 221 Mr Sheahan said that he had a conversation with Mr Sharp following the meeting during which Mr Sharp said words to the following effect: BMO and I know that there is no lien. BMO have made these claims to assist me in recovering the assets in Australia. Mr Sharp denied that he said those words and he said that he did not tell Mr Sheahan words to the effect that BMO's lien was a sham. The significance of this aspect of the conversation was never made clear. Neither party linked it to any issue in the proceedings in their closing submissions, nor did they identify any surrounding circumstances that might throw light on the resolution of the conflict. Mr Sharp was the more satisfactory witness and I would be disposed to accept his account. Mr Sharp said that during the conversation he did discuss with Mr Sheahan the plaintiffs' investigation into the Debt and Equity Issues. Mr Sharp said that it appeared to him from the fact that Mr Sheahan was flying to the United States, that the plaintiffs were still undertaking investigations at this point, notwithstanding that the Equity Proceedings would determine the issues. Mr Sharp said to Mr Sheahan that the investigations were costing too much money. 222 On 21 December 2011, Mr Sharp applied for orders in the United States Bankruptcy Court appointing Mr Greeley as receiver over the assets held by SK PM Corporation Inc, SSC&L 2007 Trust, Frederick Scott Salyer as trustee of the SSC&L 2007 Trust, Scott Salyer Revocable Trust, Frederick Scott Salyer as trustee of the Scott Salyer Revocable Trust, Monterey Peninsula Farms LLC, SS Farms LLC, Fast Falcon LLC, SSC Farms 1 LLC and SKF Aviation LLC. 223 On 28 September 2011, DMAW sent a letter to Duncan Cotterill which indicated that the plaintiffs objected to the appointment of Mr Greeley as receiver and asked that Mr Sharp's solicitors bring the letter to the Court's attention. 224 On 10 May 2012, the United States Bankruptcy Court granted the motion to appoint Mr Greeley as receiver. 225 On 6 June 2012, a judge of this Court made orders to recognise the order of the United States Bankruptcy Court appointing Mr Greeley as receiver. 226 With respect to potential claims against the former directors of the Companies and ANZ, Mr Sharp gave the following evidence. On 11 August 2010, he attended a creditors' meeting in relation to the Companies in Sydney. He had a discussion with the plaintiffs at about the time of the meeting and they said to him that they wanted to investigate potential claims against ANZ and that the claims related to cross-guarantees given by the Companies for the benefit of the New Zealand companies. Mr Sharp said that he was initially interested in the potential claims against ANZ as the claims might generate money for the benefit of the estate of SK Foods, LP. However, he said to Mr Sheahan and Mr Lock words to the effect that his creditor constituents would only be interested in pursuing such claims if litigation funding was obtained. He did not support the plaintiffs using funds from the estate to pursue the claims. 227 On 30 June 2010, Mr Sheahan sent Mr Sharp an email saying that the sale of the Australian operations would be announced on that day and that the sale price was excellent and should result in a significant surplus for shareholders in both Australia and New Zealand. Mr Sharp said that the actual details of the amount of the sale were not disclosed until late July 2010. He was advised by Mr Lock of the details on 20 August 2010. The sale price allocation was AU$72.8 million in relation to Cedenco Australia and AU$18.2 million in relation to SS Farms Australia. 228 Mr Sharp said that once he became aware of these figures, he considered that even if the liquidators could establish liability on the part of ANZ, there would be issues as to whether they could establish any loss. He had a telephone conversation with the plaintiffs on 25 October 2010 and he said words to the effect that it would be difficult to establish that the Australian companies had suffered any loss or damage by reason of the conduct of ANZ or the receivers. Mr Sheahan said words to the effect that although a good sale price had been achieved, they needed an expert view on whether a higher price could have been obtained. Mr Sharp said that the plaintiffs should first determine ownership of the shares in SKFA before pursuing potential claims against ANZ. He said words to the effect that his creditor constituents did not support the plaintiffs using funds from the Australian companies to pursue these claims and that they may be interested in pursuing the claims if litigation funding was obtained. 229 On 8 November 2010, Mr Sharp received an email from Mr Sheahan which contained the following: Ian and I would like to convene a brief Committee of Inspection meeting immediately following the conclusion of the various creditors' meetings. You will appreciate that we will intend to provide members of that Committee (assuming one is appointed as is anticipated) with a more comprehensive update on the status of our investigations to date and related preliminary conclusions. As the trade creditors of the Australian companies will be paid in full we deemed it unnecessary and unwise to more widely circulate this information. 230 Mr Sharp attended a meeting of creditors on 17 November 2010 at the Four Seasons Hotel in San Francisco. Mr Sheahan was present. The meeting was held concurrently in Sydney, Echuca and San Francisco. Mr Sharp and Mr Sheahan had a discussion wherein Mr Sheahan said that he was travelling from San Francisco to London to meet with a litigation funder in relation to funding the potential claims against ANZ. Mr Sharp said words to the effect that he did not support funds from the Australian companies being used to pursue these claims. 231 The plaintiffs did not discuss the potential claims against ANZ at the creditors' meetings. Mr Sharp understood that the plaintiffs were concerned that if they discussed the claims at creditors' meetings, information might be disclosed to ANZ which could impact on the claims. 232 Mr Sharp said that the plaintiffs did not provide him with a report in relation to their consideration of the potential claims against ANZ or advice on the prospects of the potential claims until on or about 8 August 2013. 233 Mr Sharp said that by the time of the creditors' meeting on 17 November 2010, he was concerned about the remuneration and expenses the plaintiffs had incurred in relation to the Australian companies. They seemed to him to be very high. On 4 November 2010, he received an email from one of the plaintiffs' staff attaching the plaintiffs' report to creditors in respect to the Companies. The report included a section on remuneration. Mr Sharp had a telephone conversation with Mr Sheahan before the creditors' meeting wherein he advised Mr Sheahan that he had issues with the fees he and Mr Lock were seeking to have approved and that he would vote in favour of the resolution approving the remuneration if the plaintiffs wrote off certain fees; agreed to a monthly cap on remuneration; and provided a budget and reporting to creditors. 234 On or about 17 February 2011, Mr Sharp and Mr Sheahan exchanged emails. Mr Sharp was looking for an estimate of professional fees and costs. Mr Sheahan said that he and Mr Davis would prepare an estimated budget in relation to the Debt and Equity Issues once they had issued various subpoenas in California for the Australian and New Zealand Cedenco administrations and were able to sensibly assess the responses received. 235 On 11 March 2011, Mr Sharp had a two hour telephone conversation in relation to the Australian companies with (to the best of his recollection) Mr Sheahan, Mr Christmas, Mr Nuti and Mr Coleman. The purpose of this telephone conversation was to discuss information flow; expectations and a timeline in relation to the resolution of the undisputed portion of the intercompany debt claim and the equity interests; whether to pursue potential claims against former directors of the Australian companies and ANZ; and a budget for all the tasks the plaintiffs were undertaking. Mr Sharp said during this telephone conversation that he wanted to see a budget for the work the plaintiffs were doing, including legal costs. 236 Mr Sharp followed this conversation with an email to the plaintiffs on 17 March 2011. This email is in the following terms: John & Ian: Thank you for speaking with us last week. I appreciate you and your advisors taking the time to hear my concerns. I want to follow our conversation with this correspondence to summarize my concerns and to confirm the information I am requesting. First, my concerns. My creditors, both the secured lenders and the unsecured creditors, are very concerned as to the time and cost of all of the proceedings, including the proceedings in Australia. This concern is exacerbated by a perceived lack of transparency with respect to the actions in the Australian liquidation. To alleviate these concerns, I would request the following: 1. Frequent reporting regarding the actions being undertaken by the Liquidators 2. Frequent reporting regarding the ongoing costs of the process. 3. Professional fee budgets for each of the tasks undertaken by the Liquidators. 4. Timeline with respect to the anticipated resolution of the Liquidation. Finally, I would ask that you make the resolution of the disputed claims a higher priority than the investigation of potential causes of action. Although they would need to gather additional information, my creditor constituents may be supportive of having you aggressively pursue the ANZ bank litigation. Providing the timeline, budget, and otherwise increasing the level of transparency on the items noted above will give them a great deal more comfort with that course of action. Thank you again for taking the time to discuss these issues and please let me know if you would like to discuss these further. 237 On 18 March 2011, Mr Sharp received a copy of an email from Mr Van C Durrer II, United States counsel for the Salyer interests, to the plaintiffs. On 1 June 2011, he received a copy of an email from Mr Jim Spiotto of Chapman Cutler, lawyers for BMO, to Mr Sheahan. 238 The plaintiffs never provided to Mr Sharp a budget, timeline or the reporting he had requested at the creditors' meeting on 17 November 2010, in the telephone call on 11 March 2011, and in his emails dated 16 February 2011 and 17 March 2011. Mr Sharp said that to the best of his recollection, he raised his request for a budget, timeline and reporting in most of the discussions he had with the plaintiffs. Those discussions initially occurred once or twice per month, but did become less frequent. 239 With respect to the remuneration claimed by the plaintiffs, Mr Sharp states that he is aware that Mr Sheahan travelled to the United States to attend several meetings relating to the liquidation of the Australian companies, including the creditors' meeting on 17 November 2010 in San Francisco. Mr Sharp said that when Mr Sheahan attended creditors' meetings in the United States, he said to Mr Sharp words to the effect that he had other business in the United States and that it made sense for him to attend creditors' meetings in person as both Mr Salyer and Mr Sharp were based in the United States. 240 Mr Sharp said that he did not know how much the plaintiffs were claiming for their travel time as remuneration from the liquidations until in or around late 2012 when his solicitors at that time, Norton Rose, obtained information from the documents the liquidators had lodged with ASIC, and a copy of the WIP reports for the period from March to August 2012. He asked a colleague to undertake an analysis of the plaintiffs' time and expenses. Mr Sharp also learnt at some point that Mr Sheahan was charging the estate for the use of his privately owned plane for some of his domestic travel. This is recorded in the ASIC Forms 524 which the liquidators have lodged with ASIC and which show that a number of payments which was classified as "travel expenses" had been made to Mr Sheahan, his son Mr Oliver Sheahan, and to Adelaide Biplanes. Mr Sharp knew that Mr Sheahan and his son were both qualified pilots and owned a plane. 241 Mr Sharp refers to the remuneration reports provided to him. He notes that the reports do not provide a detailed breakdown of the time spent on tasks or who undertook the tasks. 242 On 29 February 2012, Ms Milburn wrote to Mr Davis of DMAW in the following terms: Our client wishes to put on record that it objects to the proposal by your client to have one of the liquidators fly to San Francisco in order to be physically present at the offices of their agents, Nixon Peabody LLP. As the only item for approval by creditors is the approval of the liquidators' fees, this is in our client's view a totally unnecessary and extravagant expense. The meeting in the United States we note is any event to be attended by creditors by way of telephone. The reasonable course of action in the circumstances would be to have the liquidators host the meeting in Australia by telephone, and if at all necessary have their agents Nixon Peabody LLP arrange the telephone conferencing in San Francisco. If our client's objection is not heeded, our client proposes to tender this letter to the Court in support its current application for the review of the liquidators' conduct and remuneration. 243 On 29 October 2012, Norton Rose on behalf of Mr Sharp, wrote to DMAW asking for a detailed breakdown of the fees for which approval was being sought at the creditors' meeting to be held on 2 November 2012. They sent a further letter on 31 October 2012 following up on the earlier letter. On 31 October 2012, Mr Sharp received an email from one of the plaintiffs' staff which attached a WIP report for the period from March 2012 to 7 August 2012. The email stated that the plaintiffs would provide the WIP report for the period from 8 August 2012 to 30 September 2012 as soon as they were able to, but no such report was provided to Mr Sharp. 244 Mr Sharp was cross-examined about the conversation he had with the plaintiffs at or about the time of the creditors' meeting on 11 August 2010. He agreed that he indicated support for the liquidators' investigating claims against ANZ, subject to certain restrictions. He made it clear in re-examination that the ownership of the shares and the debt needed to be considered first in order to know who would benefit from any such claims against ANZ. Furthermore, he made it clear that his creditors were not interested in using estate money to pursue those claims; if it could be done in a different way with a litigation funder, then the creditors would be interested in looking at those claims. 245 The significance of this conversation in August 2010 is not clear. On the one hand, ASIC's case as presented through Mr Gothard is that the plaintiffs were entitled to carry out some work in investigating potential claims against the directors and ANZ even in the absence of litigation funding. On the other hand, it could hardly be suggested, even on Mr Sheahan's version, that it was an approval to proceed throughout without litigation funding. Mr Sheahan himself said that there was a reference to litigation funding and there are the subsequent conversations about which Mr Sharp gave evidence. Mr Sharp's version is more likely to be the accurate one, but I think the conversation about potential claims against the directors and ANZ was carried out at a fairly general level at that stage. 246 Mr Sharp agreed that he discussed Debt and Equity Issues with Mr Sheahan at a meeting in California on 1 December 2010 and that Mr Sheahan told him that there was an issue as to the true position of the ownership in the Australian companies and that that issue would need to be investigated. He could not recall Mr Sheahan indicating at that meeting that those investigations would need to occur in the United States. 247 In cross-examination, Mr Sharp agreed that the compromise effected by the Deed of Settlement executed in November 2013 was supported by the creditors, and the United States Bankruptcy Court approved the relief sought by Mr Sharp. The same process occurred in relation to the second deed which was entered into in August 2014.

Did The Plaintiffs Act Honestly? 248 The Court must be satisfied that the persons concerned in or party to the contravention or failure acted honestly. The persons in this case are the plaintiffs. The honesty relates to the contravention or failure. In this case, that is the failure to provide any remuneration report at all in relation to the stub periods, the failure to provide remuneration reports before the prospective fee approvals, and the failure to provide adequate remuneration reports. 249 The plaintiffs have the onus of establishing honesty. ASIC made the point that the plaintiffs did not give any direct evidence of the reasons they proceeded in the way in which they did. There was indirect evidence about the reasons for the failures, but no direct evidence. There is force in this point. The plaintiffs did not say directly that they had acted as they did for particular reasons, other than evidence of Mr Lock which came out in cross-examination as to the reasons he proceeded in the way he did in relation to the prospective fee approvals. The plaintiffs did not say expressly that the remuneration reports were consistent with reports they had prepared in the past, although that might be inferred from Mr Sheahan's evidence of having to rectify inadequacies in other liquidations. 250 Despite the force of ASIC's submission, I am of the opinion that there is sufficient in the evidence to conclude that the plaintiffs acted honestly. Dishonesty in this context would be a knowing withholding of information to which creditors were entitled at the creditors' meeting. 251 Contrary to such a conclusion are the provision of WIP reports at the meetings, the problems with other liquidations which the plaintiffs have acted to rectify suggesting that what occurred in this case was part of the plaintiffs' practice and the difficulties caused by the plaintiffs' software system. 252 I am mindful of the fact that the choice is not necessarily a binary one between honesty and dishonesty and a lack of honesty may be shown by such a degree of carelessness as to demonstrate a complete lack of a genuine attempt to comply with one's obligations (see [90] above). That is not this case. It is true that there are mistakes and deficiencies in the remuneration reports (see [66]-[83] above), but I attribute that to a lack of care which does not rise to that level. 253 I find that the plaintiffs acted honestly with respect to the inadequate remuneration reports. With respect to the stub periods, I do not think there was any lack of honesty associated with the plaintiffs' conduct. With respect to the prospective fee approvals, I think that the views expressed by Mr Lock in cross-examination were genuinely held by him. 254 I am satisfied that the plaintiffs acted honestly with respect to the contraventions or failures.

Whether Substantial Injustice Has Been or Is Likely To Be Caused to Any Person 255 Section 1322(6)(c) provides that the Court must not make an order under the section unless it is satisfied that no substantial injustice has been, or is likely to be, caused to any person. 256 The plaintiffs submit (and ASIC does not suggest to the contrary) that the injustice referred to in s 1322(6)(c) is substantial and real and not merely insubstantial or theoretical prejudice. The area of dispute between the parties as to the application of this limb concerns whether injustice in the past is relevant, or whether, as the plaintiffs contend, the question is whether injustice will result from the making of the order. The plaintiffs submit that the approach they advance is the approach taken under s 366(3) of the Uniform Companies Acts and in Re Compaction Systems, and that the approach in Re Compaction Systems was endorsed by French CJ in Weinstock at [11]. 257 The plaintiffs submit that there are three groups of persons to be considered. 258 The first group are the creditors. As to this group, the creditors have been paid in full and will not receive anything further whether or not an order is made. In the circumstances, they will not suffer any injustice if the Court makes orders under s 1322(4)(a). The plaintiffs further submit that there is no evidence that any of the creditors questioned or complained about the level of remuneration being sought on each occasion a resolution was put forward for consideration, or questioned or complained about the rates used by the plaintiffs. The creditors were aware of the plaintiffs' hourly rates and on 11 August 2010, at both the joint meeting and the separate meeting, a resolution was carried that from the commencement of the liquidation to the conclusion of the liquidation, the remuneration of the liquidators shall be a sum equal to the cost of time spent by the liquidators, partners and staff, calculated at the rates detailed in the schedule of charge out rates as provided to the creditors in the recent report. Furthermore, the plaintiffs pointed out that at subsequent meetings, the creditors passed resolutions approving prospectively the charging of amounts up to a monthly limit and the plaintiffs charged in a way that was consistent with their prospective approvals and wrote off fees incurred in excess of those amounts. 259 The second group is Mr Sharp and the interests he represents. The plaintiffs submit that no substantial injustice will be caused to Mr Sharp or the interests he represents if an order under s 1322(4)(a) is made. Mr Sharp sought a review of the plaintiffs' remuneration in the Equity Proceedings, but abandoned that claim for relief. He re-agitated the same relief in the Removal Proceedings, but again, abandoned that claim for relief. He entered into two Deeds of Settlement that have the combined effect of, inter alia, finalising the question of the plaintiffs' remuneration. The execution of the deeds resulted in a write down of fees by the liquidators of $642,737 plus GST. In doing so, Mr Sharp compromised the Removal Proceedings. He subsequently entered into the second Deed of Settlement that provided specifically for the finalisation of liquidators' remuneration. Mr Sharp, according to the plaintiffs' submissions, has expressly released the plaintiffs in terms of any direct right he may have to pursue a review of remuneration. The creditors who he represents have approved the compromise embodied in each deed. The plaintiffs submit that Mr Sharp and the interests he represents will be no worse off if an order is made. 260 The third group is the Commonwealth of Australia. The plaintiffs submit that the Commonwealth has not and will not suffer substantial injustice if an order is made. It was not a creditor at any meeting at which remuneration was considered and it has not been deprived of the opportunity to exercise the rights of a creditor at any meeting. The Commonwealth's only interest as a creditor arises in the final period from 20 November 2013 to 14 September 2014, being the period after the orders were made in the POC Act Proceedings. There can be no substantial injustice in relation to that period because, on ASIC's own case, the remuneration drawn in that period was not unreasonable. Finally, the plaintiffs submit that any injustice to the Commonwealth is no more than a theoretical possibility based on "a technical and undeveloped argument" advanced by ASIC. 261 Other than an argument put in the alternative in relation to the Commonwealth, ASIC did not put its submission on the basis that substantial injustice related to the benefits of Mr Sharp and the interests he represents and others would receive if an order under s 1322(4)(a) is not made. 262 ASIC submits, correctly in my view, that it is important to note that the test is not limited to ascertaining whether any person will suffer substantial injustice by reason of an order under s 1322(4)(a) being made. It is whether substantial injustice has been, or is likely to be, caused to any person. It submits that substantial injustice has already been caused to creditors because they have been deprived of the opportunity of meaningful examinations of the plaintiffs' fees and meaningful discussions with fellow creditors about the fees before the resolutions were carried. 263 In this context, ASIC relies on the approach taken by Barrett J in Onefone (at [20]): I would add that the order sought under that section would, in my opinion, cause "substantial injustice" to the persons who were entitled to be in direct communication with one another for the purposes of discussion and debate on the remuneration question with a view to their then expressing, through votes, their respective decisions on the question. The procedure in fact adopted deprived them of the ability to consult together - to express views to one another and to hear one another's views - on the question whether the Alternative Resolution should be approved. 264 ASIC submits, again correctly in my view, that the tabling of WIP reports at some of the meetings does not overcome the prejudice. The sections envisage that the relevant information will be provided with the notice of meeting (see ASIC v Dunner at [160] per Middleton J referred to above). 265 Finally, ASIC submits even on the plaintiffs' approach, that it was not the case that Mr Sharp was or is the only person who could suffer prejudice were an order to be made. Even if that submission embodied the correct approach, it was not correct as a matter of fact. The Commonwealth has an interest in 10% of the surplus assets of the Companies. That is correct, and I refer to the orders made by the Supreme Court of Victoria in the POC Act Proceedings on 28 November 2013. 266 I am not satisfied, for the reasons advanced by ASIC, that no substantial injustice has been, or is likely to be, caused to any person within s 1322(6)(c). That conclusion is sufficient to dispose of the application under s 1322(4)(a) of the Act. For completeness, I will consider the discretion.

The Discretion as to Whether to Grant Relief 267 I have already concluded that there is a discretion to refuse relief and that the public interest may be a relevant consideration in the exercise of that discretion. It seems to me that there are two matters which are relevant in this case. They are the degree of departure from the legal requirements and the consequences of not making an order under s 1322(4)(a). I have already referred to the nature of the contraventions. They cannot be described as trivial or inconsequential. Furthermore, the consequences of not making an order under s 1322(4)(a) are that the Court will determine or fix the plaintiffs' remuneration having regard to what is reasonable in accordance with the Act. These matters are sufficient to persuade me that in the exercise of the discretion, relief should be refused. 268 Had it been necessary to rely on it, there is a further reason to exercise the discretion against granting relief. I consider that the Court is entitled to take into account whether, at least on a prima facie basis, the remuneration claimed appears reasonable or appears excessive. Having regard to the following matters, it cannot be said that the remuneration claimed appears reasonable: (1) The bare facts that the plaintiffs' overall remuneration of approximately $5.7 million was very high in circumstances where there were effectively no assets to get in (other than a tax refund), no business to carry on, no claims to defend and no proceedings brought and recoveries made; (2) The plaintiffs' hourly rates are high and accepted to be so. The justification for each high hourly rates - risk of non-recovery - was not present in the case of these administrations and liquidations; and (3) The "mistakes" admitted by Mr Sheahan in cross-examination. 269 This is not to say that these matters mean that plaintiffs' fees are unreasonable, but rather that there is a prima facie case for review and that is relevant to the exercise of the discretion.

Conclusion 270 The plaintiffs' application for orders under s 1322(4)(a) of the Act is refused.

Determining or Fixing the Plaintiffs' remuneration 271 The Court must determine or fix the plaintiffs' remuneration as administrators under s 449E(1) and as liquidators under s 511 of the Act. There is no objection by ASIC to the remuneration for the period from 10 July 2010 to 6 August 2010 in relation to SSFA ($12,633.32 (plus GST)) and to the remuneration for the period from 19 November 2013 to 12 September 2014 in relation to SKFA and CJVA ($64,766.42 (plus GST)), and in relation to SSFA ($26,142.75 (plus GST)).

Relevant Principles 272 I start with a statement of the relevant legal principles. 273 The Court may determine the remuneration to which the administrator of a company under administration is entitled in cases where there is no agreement between the administrator and the committee of creditors (if there is one), or a determination by resolution of the companies' creditors (s 449E(1)(c)). In doing so, the Court determines whether the remuneration is reasonable taking into account 12 matters, one of which is any other relevant matters. Section 449E(4) is as follows: (4) In exercising its powers under subsection (1), (1A) or (2), 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 administrator was reasonably necessary; (b) the extent to which the work likely to be performed by the administrator is likely to be reasonably necessary; (c) the period during which the work was, or is likely to be, performed by the administrator; (d) the quality of the work performed, or likely to be performed, by the administrator; (e) the complexity (or otherwise) of the work performed, or likely to be performed, by the administrator; (f) the extent (if any) to which the administrator was, or is likely to be, required to deal with extraordinary issues; (g) the extent (if any) to which the administrator 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 administrator; (i) whether the administrator was, or is likely to be, required to deal with: (i) one or more receivers; or (ii) one or more receivers and managers; (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 administrator in performing the work; and (ii) whether the total remuneration payable to the administrator is capped; (l) any other relevant matters. 274 This list of relevant factors was inserted into s 449E by the Corporations Amendment (Insolvency) Act 2007 (Cth) in order, according to the Explanatory Memorandum, to allow "a more effective role for the court in reviewing and setting remuneration for insolvency practitioners". 275 Prior to the amendments, Finkelstein J in Re Korda; in the matter of Stockford Ltd [2004] FCA 1682; (2004) 140 FCR 424 noted the absence of guidance from the legislature and formulated the following approach (at [47]): It seems to me that the proper approach is first to establish what in the United States cases fixing the fees of trustees and attorneys under the Bankruptcy Code is called the "lodestar" amount. This amount is reached by the number of hours reasonably spent by the insolvency practitioner multiplied by a reasonable hourly rate: In re Boston and Maine Corporation v Moore 776 F 2d 2, 7 (1st Circ 1985); Copeland v Marshall 641 F 2d 880, 891 (DC Circ 1980). This step will require the tribunal to decide whether the work performed was necessary to the administration, whether it was performed within a reasonable time and whether the rate is reasonable having regard to what the practitioner, and other practitioners, usually charge their clients. The "lodestar" amount should then be adjusted (up or down) to reflect other factors including the quality of the work performed, the complexity in the administration over and above the normal complexity of such work, the novelty and difficulty of the issues that confronted the administrator as well as the ultimate result obtained by him. 276 Both parties argued the case, correctly in my view, on the basis that in fixing or determining the plaintiffs' remuneration as liquidators in the exercise of the power in s 511 of the Act, the Court proceeds by analogy, having regard to the matters set out in s 473(10) of the Act. Those matters are the same as the matters listed in s 449E(4) (Onefone at [26]-[27] per Barrett J). 277 In Onefone, Barrett J said that he found certain observations of Young CJ in Eq in Ide v Ide [2004] NSWSC 751; (2004) 50 ACSR 324; (2004) 184 FLR 44 instructive. With respect, so do I and, although lengthy, I set them out in full: [37] I have consulted the standard works on receivers, particularly Kerr on Receivers; Picarda, The Law Relating to Receivers, Managers & Administrators 3rd ed (Butterworths, London, 2000); Lightman & Moss, The Law of Receivers and Administrators of Companies (Sweet & Maxwell, London 2000) and O'Donovan, Company Receivers and Managers (LBC, Sydney, 1981). [38] One can find in those works, broad, general statements about the principles on which a receiver's remuneration is fixed, but little on the specific problem with which I have to deal. It is, however, of some use to set out some of those general statements. [39] First, the court constituted by a judge, never considers a review of quantum, but only matters of principle: Re Catlin (1854) 52 ER 200; Australian Coal and Shale Employees' Federation v Commonwealth (1953) 94 CLR 621. [40] Secondly, as Kerr says at p 233, a receiver is entitled to have his costs, charges and expenses properly incurred in the discharge of his ordinary duties, or in the performance of extraordinary services which have been sanctioned by the court. It is important to note that Kerr at page 235 says that where a receiver has undertaken such extraordinary services without the approbation of the court, allowances for them will not generally be sanctioned: Bristowe v Needham (1847) 41 ER 914; Malcolm v O'Callaghan (1837) 40 ER 844 and Viola v Anglo-American Cold Storage Co [1912] 2 Ch 305 at 311. [41] Picarda elaborates at page 482, noting that a receiver who, without applying to the court for directions, performs extraordinary or extra services going beyond what it was his duty as a receiver and manager to perform may be allowed remuneration in addition to his salary or commission if what he has done has benefited the receivership assets. [42] Thirdly, as Lightman & Moss say at 22-029: The receiver must justify the reasonableness and prudence of the tasks undertaken for which remuneration is sought, in the same way as he must justify the reasonableness and prudence of incurring disbursements for which he seeks allowance and reimbursement. [43] Thus, as with a falsification of accounts, the relevant onus is on the receiver. [44] Fourthly, it must always be remembered that a receiver's remuneration is not in the same category as costs: Mirror Group Newspapers plc v Maxwell (No 2) [2001] BCC 488. The receiver is making application for a fair recompense for what he or she has properly done. The award is in the discretion of the court according to well known guidelines: Lindley on Partnership 18th ed (Sweet & Maxwell, London, 2002) [23-177]. [45] Fifthly, the court's objective is to award a sum or devise a formula which will reasonably compensate the receiver for the time and trouble expended in the execution of his duties and, to some extent, the responsibility he has assumed: Re Alexander McLean (1912) 14 GLR 561 at 562. As Dennison J said in that case the vital question is what is the value to the estate of the work done by the receiver. [46] This point was taken up by Ferris J in Mirror Group Newspapers plc v Maxwell (No 1) [1998] BCC 324 where His Lordship said that the court's task in assessing a receiver's remuneration is to reward value not indemnify against cost. His Lordship repeated this in Re Independent Insurance Co Ltd (No 2) [2003] 1 BCLC 640. This, of course, does not mean that the receiver is only remunerated if successful in adding value to the assets; see Waldron v MG Securities A/asia Ltd [1979] CLC 32,200 (40-541). [47] However, the mere fact that the work done is of value to the partnership is not enough if the work done is outside the receiver's remit. Thus in Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96, a provisional liquidator was not remunerated for preparing statutory returns which were the duty of the directors to prepare. [48] Sixthly, the court will usually work off 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. As Ferris J said in Mirror Group Newspapers plc v Maxwell (No 1) [1998] BCC 324: They must explain the nature of each main task undertaken, the considerations which led them to embark upon the task, and, if the task proved more difficult or expensive to perform than first expected, to persevere in it .... The amount of detail which needs to be provided will, however, be proportionate to the case. See also Re Solfire Pty Ltd (No 2) [1999] 2 Qd R 182 and Re Medforce Healthcare Services Ltd (in liq) [2001] 3 NZLR 145. [49] Seventhly, the court is guided by professional scales of charges: Re Queensland Forests Ltd (in liq) [1966] Qd R 180; Waldron v MG Securities A/asia Ltd [1979] CLC 32,200 (40-541) and see Picarda p 480. What is important is the broad average or general rate charged by persons of the relevant status and qualifications who carry out the relevant type of work: Mirror Group Newspapers plc v Maxwell (No 1) [1998] BCC 324. [50] There are few examples given in the cases and textbooks as to how taxing officers or the like apply these principles in practice. There are few examples as to what is reasonably included in billable hours and disbursements. [51] One example comes from a taxation of costs case, which, for reasons earlier, might not be the best source of material. In Corwest Management Pty Ltd v Deputy Commissioner of Taxation (WA) (1987) 18 ATR 823 at 826, Onley J in the Western Australian Supreme Court said in a dispute over costs that whilst all expenses reasonably necessary to get a case ready for trial were allowable, a party could not say that he would not have brought a document into the State were it not for the trial and thus should be allowed the stamp duty paid on it. Even though the duty was a necessary expense, it was really part of the payer's ordinary civic responsibilities to pay it. [52] In Mirror Group Newspapers plc v Maxwell (No 1) [1998] BCC 324, Ferris J considered the situation where the receiver had to spend some hours dealing with the enquiries being made by the Serious Fraud Office into the activities of Mr Maxwell, one of the directors of the relevant company. His Lordship allowed the initial conference with the Serious Fraud Office. However, he said he would not allow the time spent later on if it in any way was attributable to the receivers justifying their own conduct. However, he considered that, apart from this, time spent answering the inquiries of the Serious Fraud Office, though extraordinary, should be allowed. [53] His Lordship put some weight on the point that the inquiries were not initiated by the receivers and arose out of the activities of the companies of which they were presently in control. 278 In Templeton v Australian Securities and Investments Commission [2015] FCAFC 137; (2015) 108 ACSR 545 (Templeton), the Full Court of this Court considered an appeal from a judge of the Court in a case where the judge was conducting a de novo review of a registrar's decision fixing the remuneration of receivers and managers of unregistered management investment schemes under appointment orders made by the Court. Those orders referred to "reasonable remuneration … properly incurred". The orders fixed the hourly rates for the receivers and managers and their staff. The registrar had applied a 20% reduction to the receivers' remuneration for a particular category of work ("investors/distribution") having regard to five matters, one of which was proportionality. Proportionality, at least as the primary judge understood it, was the relationship between the claim for work done in relation to a particular category and the sum realised or available. 279 Although the appeal was allowed, the Full Court rejected the receivers' submission that the primary judge erred in considering proportionality. The receivers argued that the reasonableness of the remuneration was to be determined solely by the reasonableness of the time spent and the application of the fixed rates to that time. In considering proportionality, the Court first considered the terms of the appointment orders. I do not need to address those matters. The Court then said that proportionality is a well-recognised factor in considering the question of reasonableness. Sections such as ss 425(8), 449E(4), 473(10) and 504(2) all refer to the Court having regard to whether the remuneration is reasonable and taking into account the quality and complexity of the work, the value and nature of any property dealt with, and the question of time spent. The Court said (at [31]), that these factors have as their "unifying theme" the concept of proportionality. The Court said (at [32]), referring to a number of authorities, that an important consideration in determining overall reasonableness is proportionality between the work done compared with the size of the property or activity which is the subject of the insolvency administration, or the benefit or gain to be obtained from the work. Another way of expressing this point is to say that proportionality involves a consideration of the value of the services rendered. The Court said (at [34]) that even if not an expressed factor, a lack of proportionality may have some forensic significance because a lack of proportionality between the cost of work and the value of services may establish overcharging or an excessive claim for remuneration. 280 There are two other matters which emerge from Templeton which are important in the circumstances of this case. 281 The first matter is whether the Court is bound, before reaching a conclusion that the remuneration claimed is excessive, to conduct a line by line analysis using some building blocks or bottom-up approach of, for example, the work necessary and appropriate to be done and the appropriate level of seniority. This issue may arise in two situations. The first is where there is a lack of detail in the material provided by the insolvency practitioner and specific findings are not able to be made by the Court. The Court noted that it was clearly established by the authorities that the insolvency practitioner bears the onus of establishing the reasonableness and prudence of the tasks undertaken. In the first situation, an appropriate approach is "to take the broader claim and appropriately discount, without making specific findings" (at [60]). The second situation is where there is sufficiently detailed material. The Court said that even in this situation, it is not necessary for the Court "to take a line by line analysis or to drill down and make detailed findings on such matters" (at [60]). To require such an analysis is neither sensible nor cost effective and the Court is entitled "to take the practical course of looking at the matter more generally in assessing reasonableness and then applying, if thought necessary, any appropriate discounts" (at [60]). 282 The second matter concerns the use to be made of WIP reports where charges have been made on a time basis. The primary judge said that a review of such reports should always be made by the insolvency practitioner or a senior person within his or her firm with sufficient knowledge of the matter to identify, inter alia, work allocated to the wrong matter, work that took too long, work that should not be charged to a client and so on. The Full Court agreed. The Court said (at [78]-[79]): On the question of the significance of the 10% voluntary reduction made by the Receivers on the work charged on a time basis to the relevant files, her Honour at [55] to [57] observed the following: 55. The amount charged to a file number is not the "actual" claim. It reflects no more than the fact that people have allocated units of time to a particular matter. The Receivers appear to largely proceed from an assumption that they were entitled to every unit charged to the matter (reduced by their voluntary discount of 10%), without assessing whether the remuneration was reasonable and calculated on the basis of the time reasonably spent, and whether the costs and expenses were reasonable and properly incurred. That is wrong. A review of the work charged to a file is always necessary to identify, inter alia, work allocated to the wrong matter, work that took too long, work that should not be charged to a client and so on. The fact that this is a receivership does not alter that fact. Whether a review of that nature occurred in relation to these claims is unclear. Mr Templeton's evidence was that "comprehensive" reviews of the fee summaries and schedules of work were undertaken, the appropriateness of time charged was considered on an ongoing basis and that write offs were made when reviewing the bills for the purpose of this application. The nature and extent of those reviews, and the nature, extent of, and reasons for, those write offs, remained unclear. 56. Time charging is an historic measure of value and has been described as unfair: Re Korda at [26] and the authorities cited. Its use has become common place and comes at a cost to the claimant - review, identification of the real claim and then justification of the amount claimed by the claimant. Each step is important: cf Re Korda at [17]. The Receivers' solution appears to have been to apply a 10% discount across the board. The 10% reduction was said to have been provided "in recognition of the substantial nature of these receiverships, the significant hardship faced by investors and the significant amounts claimed by the Receivers". Discounts are not discouraged but should be made on informed basis after review, identification of the real claim and then justification of the amount claimed by the claimant. 57. As the IAC submitted, it was appropriate to take the 10% reduction into account when assessing the reasonableness of the Receivers' remuneration (see, by way of example, Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144 at [207]) and the Registrar said he did so: at [17] of his reasons. The further discounts identified by the Registrar (and the subject of this rehearing) were applied to the discounted (or net) amount rather than the gross amount of fees claimed. There is no identifiable error in that approach. If we may say so, we entirely agree with her Honour's approach. 283 The Court of Appeal of Western Australia made a similar point in Conlan v Adams [2008] WASCA 61; (2008) 65 ACSR 521 at [103] per McLure JA with whom Buss JA and Newnes AJA agreed. 284 In Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38; (2017) 93 NSWLR 459, the New South Wales Court of Appeal considered the application of s 473(3)(b)(ii), that is to say, the Court determining a liquidator's remuneration in the case of a company wound up in insolvency. Bathurst CJ (with whom Beazley P, Gleeson JA, Barrett AJA and Beach AJA agreed) accepted that a consideration of proportionality was part of the task undertaken by the Court in fixing a liquidator's remuneration. The Chief Justice said (at [55]): That is not to say that the question of proportionality has no bearing on the task to be undertaken by the court. As the Federal Court said in Templeton v ASIC (at [31]) the question of proportionality is a well-recognised factor in considering the question of reasonableness and the factors in s 425(8)(d)-(e) and (g)-(h) (the equivalent to s 473(10)(d)-(e) and (g)-(h)) have as their unifying theme the concept of proportionality. The court in that case recognised (at [32]) that the question of proportionality in terms of work done as compared with the size of the property the subject of the insolvency administration or the benefit to be obtained from the work, is an important consideration in determining reasonableness. The court also stated (at [33]), endorsing the observations of McLure JA in Conlan v Adams (at [47]), that the work done must be proportionate to the difficulty and importance of the task in the context in which it needs to be performed, stating that that is what is encompassed in assessing the value of the services rendered. 285 It is important to note two other matters addressed by the Chief Justice (at [57]-[58]). First, a liquidator is entitled to be remunerated for work he or she is required to carry out even though the work will not augment funds available to creditors and shareholders. An example is the need to comply with statutory obligations. Secondly, a liquidator who acts reasonably in pursuing recoveries is entitled to be remunerated for his or her work in connection thereto, even though the liquidator may ultimately fail in making any recoveries.

An Overview of ASIC's Objections 286 The total amount of remuneration claimed by the plaintiffs is $5,772,830.35 which is exclusive of GST. A slightly different figure of $5,772,092.60 is also identified in the material. The structure of ASIC's objections is as follows. First, ASIC claims that the plaintiffs' hourly rate for partners of $700 per hour, senior managers of $550 per hour and managers of $450 per hour is excessive and should be reduced by 25%, or by at least 15%. This should be done irrespective of whether other objections are allowed. Secondly, ASIC takes the four work streams and the application to validate the plaintiffs' appointment as voluntary administrators and submits that each of them should be discounted, in some cases substantially. Thirdly, ASIC identifies various work areas and submits that irrespective of whether its objections in relation to the first two matters are allowed, the remuneration claimed in relation to the work areas should be disallowed or discounted. These areas of work relate to minutes of meetings, remuneration reports, write-ups in relation to Mr Oliver Sheahan and Mr Samuel Rees' time, reports to creditors, the creditors' meeting fixed for 22 December 2011, and preparation of ASIC Forms 524. There is then a fourth category of objections which ASIC claims should be allowed if there is no discount in relation to the hourly rates and no substantial discounts in relation to the work streams. Areas of work within this category are travel arrangements, travel time, work said to have been performed by persons of inappropriate seniority, other administrative work and work described by ASIC as work of a legal nature. 287 Before turning to consider each of these matters, some general matters identified mainly by ASIC, but also some by the plaintiffs, should be addressed. 288 First, the fees for legal expenses in the administrations and liquidations were approximately $5.235 million. Plainly, that is a substantial amount. A number of complex issues arose in the course of the liquidations, but in considering the weight to be accorded to this factor, it is plainly relevant to take into account the fact that the plaintiffs had the benefit of skilled and expert legal advice. 289 Secondly, insofar as proportionality involves a consideration of fees incurred and assets recovered, the fees incurred, leaving aside legal expenses, of approximately $5.7 million are to be assessed against the fact that other than the funds paid to the plaintiffs by the receivers and interest, the only assets secured by the plaintiffs were tax related returns in the amount of $2,873,174.54. 290 Thirdly, the plaintiffs claim to have written off an amount of $855,507 in remuneration. The main write offs, so far as I discern from the 2015 remuneration reports, total $746,832.87. In their closing written submissions, the plaintiffs claimed that in connection with the two Deeds of Settlement, they wrote off a total of $642,737 plus GST. I will proceed on the basis that the correct figure is that deposed to by Mr Sheahan and Mr Lock of $855,507. The difficulty with write offs is the evidence is very general as to the basis of the write offs. Both Mr Lock and Mr Sheahan gave evidence about writing off a proportion of their fees. As I understand it, it is the fees as shown in the WIP reports. In his first affidavit, Mr Lock said that the plaintiffs had written off a total of $855,507 in respect of remuneration in the liquidations. He also states that for certain periods, the plaintiffs' WIP exceeded the amounts for which they had sought creditor approval. In his second affidavit, Mr Lock said that when formulating a claim for remuneration, the plaintiffs generally sought recovery of the time charges recorded on their system. WIP is written off if they consider that time is not properly charged, or in order to accommodate any legitimate creditor concerns that may be raised. In his first affidavit, Mr Sheahan confirmed the evidence of Mr Lock and added that the basis for the writing off of the amount of $855,507 was "the compromise reached between Mr Lock and me as liquidators of the companies and Mr Sharp with respect to his objections to our remuneration". In his second affidavit, Mr Sheahan referred to the plaintiffs' general practice in reviewing their WIP reports and determining whether any WIP should be written off or some global discount to the WIP should be made. It would seem that the write offs were done on a global basis. Certainly, there is no evidence that the write offs were done by a particular method related to particular items or areas of work. 291 On the significance of a write off, I refer to the observations of the Full Court of this Court in Templeton (set out above at [278]-[282]). The fact is that in this case there is no convincing evidence of a thorough review of the WIP reports. As I have said, neither of the plaintiffs have done that exercise. In the absence of that exercise and clear evidence of what the write offs represent, I do not allow any amount for write offs. 292 Fourthly, the periods where there was no objection to the plaintiffs' remuneration should not be overlooked (see [44]-[58] above). 293 Fifthly, ASIC submits that the plaintiffs' initial estimates of their fees for the administrations and liquidations are relevant (at [133] and [137] above). They are a matter to note, but they do not seem to lead to any particular conclusion about any particular claim. 294 Sixthly, ASIC submits that the remuneration reports prepared by the plaintiffs for the Court may not meet the requirements of the legislation in terms of remuneration reports provided to creditors. It submits that those reports still do not indicate who did the work, how much time they spent on the work, and it is difficult to link the work to particular tasks. There is considerable force in that submission, but the important point for present purposes is that they do not provide any substantial assistance in the task the Court is required to carry out of determining or fixing the plaintiffs' remuneration. 295 Finally, the following general points about the records the plaintiffs rely on for the purpose of their remuneration claim should be noted. Some of these points have been mentioned already. The primary records are the WIP reports. First, neither plaintiff has comprehensively reviewed the WIP reports. Secondly, Mr Sheahan accepted in cross-examination that there were matters in the WIP reports which he described as mistakes or matters which he would have excluded from the plaintiffs' claim for remuneration. These matters included claims for travel, claims for Mr Sheahan's remuneration for administrative work such as filing, charging for the preparation of the firm's own tax invoices to the Companies, and claiming for a number of people to attend at court hearings when it was not necessary for all of these persons to attend. Thirdly, there are a number of time entries in the WIP reports for which there are no narrations. Fourthly, accurate allocations of amounts to particular work streams would be of assistance in supporting the plaintiffs' claim for fees because a reference could be made to the work done in those work streams. However, the estimates provided by the plaintiffs are only approximations and were not done by Mr Sheahan personally and he was the witness called to give evidence in support of them. Furthermore, there is the obvious discrepancy in Mr Sheahan's estimate of work done in relation to the issues arising under the POC Act. As I will explain later in these reasons, Mr Sheahan estimates a figure of $1.6 million for other matters, which he said included investigation of matters not directly related to the four major work streams and taxation issues, such as dealing with proofs of debt, adjudicating on creditors' claims, payment of dividends, clerical and administrative tasks, reporting to creditors, and statutory compliance. ASIC submits that $1.6 million at a partner rate of $700 per hour is 2,285 hours or 285 8-hour days, and 57 working weeks. It submits that there is no basis for thinking that the $1.6 million was other than a balancing item when regard is had to the fact that the unsecured creditors were paid in full with money paid over to the plaintiffs by the receivers, putting to one side (the investigations into the Debt and Equity Issues), adjudicating proofs and creditors' claims was not complex as only a small number of somewhat contentious proofs of debt needed to be adjudicated. Four are identified in the affidavit material and Mr Sheahan considered that there may have been six to eight. Furthermore, ASIC submitted that the payment of dividends is essentially a mechanical administrative task and only three rounds were paid to 65 unsecured non-related creditors in the case of SKFA and CJVA, and 91 unsecured non-creditors in the case of SSFA. Finally, Mr Sheahan agreed that statutory compliance was principally filing forms with ASIC and filing taxation returns. Mr Sheahan said in response to a suggestion that he did not know how the $1.6 million was made up, that he accepted what he had been told. In my opinion, ASIC's submission about the allowance for other matters is correct.

Hourly Rates 296 ASIC claims that the hourly rates charged by the plaintiffs were excessive. It relies on the evidence of the insolvency practitioners who were not cross-examined. The rates charged by the firms of which the insolvency practitioners were members during the relevant periods are set out in Annexure A. The most important years are 2010, 2011, 2012 and 2013. The year 2014 is of lesser significance. ASIC defines "Medium to Large firms" as firms having more than five partners and "Boutique firms" as having five partners or less. ASIC's submission is that the plaintiffs' firm is a boutique firm and, by reference to the rates of the other firms, the plaintiffs' hourly rates should be reduced by 25%. In other words, reasonable remuneration in this case for the plaintiffs is partner $520 per hour, senior manager $412 per hour and manager $337 per hour. In the alternative, if the appropriate category is "Medium to Large firms", then the plaintiffs' hourly rates should be reduced by at least 15%. I do not think ASIC contended the appropriate discount turned only on the classification of the firm and it accepted that all the circumstances must be considered. Although ASIC referred to the plaintiffs' hourly rates generally, the positions upon which it gave the Court assistance were partner, senior manager and manager and I propose to restrict my consideration to those positions. I note that the partners, and Mr Sheahan in particular, carried out a good deal of work in these administrations. 297 Mr Sheahan has been a liquidator for approximately 35 years and Mr Lock for approximately 15 years. They have been in partnership since 1999. The plaintiffs conduct what Mr Sheahan described as a "specialist boutique practice" in the conduct of complex liquidations involving the investigation and pursuit of complex legal claims to recover funds to augment the assets of the Companies concerned. They have been involved in a number of complex liquidations and have considerable experience and expertise as insolvency practitioners, particularly in cases where recoveries are pursued by companies with no or few assets. 298 In his second affidavit, Mr Lock identified the staff at the plaintiffs' firm who worked on the administrations. As far as the positions in issue are concerned in addition to the plaintiffs, there was one senior manager and three managers. The rest of the staff who worked on the administrations were senior associates, associates, office managers or in administration. 299 Mr Sheahan said that the hourly rates were the firm's standard charge out rates and that it was open for the rates to be negotiated on appointment. In the past, the plaintiffs have agreed to discount their standard rates. None of the creditors in the administrations and liquidations in issue in this case raised an issue as to the rates. Mr Sheahan explained that the plaintiffs' standard rates were set "having regard to the specialist or boutique nature of our practice, which specialises in complex liquidations including the investigation and pursuit of legal claims (often in circumstances where there are no other assets of any substance) as referred to above". Mr Lock agreed in cross-examination that one of the reasons his firm charges the standard hourly rates it does is that it assumes additional risk insofar as it specialises in pursuing claims where there are no other assets. Mr Sheahan agreed with the description of the risk as "you're going into a company where the cupboard is bare". 300 The plaintiffs' hourly rates were high on any view of the matter. That was in a context where the administrations and liquidations were conducted primarily from Adelaide where generally rent and wages are lower than they are on the eastern seaboard. Mr Scott said that BRI Ferrier rates for the Adelaide practice between 2010 and 2015 were lower than the rates charged by the practice in Sydney because of the different cost profiles in those States as rent and wages are lower in Adelaide. The justification, or at least the major justification, for rates was the risk of not recovering fees and that was entirely absent in the case of these administrations and liquidations. The plaintiffs knew from an early stage that there would be a surplus of assets and not long after that, there was a substantial pool of funds from which they would be paid. Counsel for the plaintiffs submitted that there is always a risk of non-payment, or a risk of delayed payment. That is literally true, but these possibilities were either theoretical or remote. It is true that some complex issues arose in the course of the liquidations, but as against that, the plaintiffs had the benefit, on a regular basis, of expert legal advice. I have already referred to the fact that the legal fees in the administrations and liquidations were approximately $5.235 million. Furthermore, without diminishing the plaintiffs' role and their need to act in accordance with their professional obligations, it is likely the Debt and Equity Issues would be finally determined by a court. On the face of it, the plaintiffs' hourly charges were not within a band of reasonable remuneration for these administrations and liquidations. 301 The plaintiffs made a number of submissions in support of their case. 302 First, they submitted that the evidence of the insolvency practitioners was not expert evidence of a market rate. I have difficulty understanding this submission. There is clearly a market for insolvency services. The evidence of rates comes from insolvency practitioners representing a reasonable spread of firms in terms of size and location, and I think can be relied on by the Court when assessing reasonable remuneration. 303 Secondly, the plaintiffs submitted that when considering fees for different positions within a firm, one needed to take into account the description of the different positions and the potential link between different positions. As to the first point, it is true that a manager in one firm may have different tasks or some different tasks from a manager at a different firm, or there might be a division at one firm - manager level 1 and manager level 2 - not present at another. I have considered this matter and reached the conclusion that there is sufficient similarity for comparison purposes. As to the second point, the plaintiffs gave an example of a partner ($700 per hour) and administrator ($150 per hour) working on a task at Sheahan Lock being barely more expensive in total than a partner ($625 per hour) and administrator ($210 per hour) working on a task at Grant Thornton in New South Wales. The difficulty with that submission is that it is entirely theoretical. I was not taken to any tasks where a partner regularly combined with an administrator, nor was there any attempt at all to show that overall the fees could be viewed in this way because of the "lower" charges for other positions. As I have said, a good deal of the work in this administration was done by the partners and what I was taken to were entries showing Mr Sheahan charging for tasks such as filing. 304 Thirdly, Mr Lock said that the staff at the plaintiffs' firm were highly qualified and needed to be due to the work they carried out and the risks associated with that work. As far as senior managers and managers are concerned (as distinct from associates) that does not seem to be the case in terms of years in practice. 305 Fourthly, the plaintiffs rely on the fact that the creditors in the liquidations expressly approved time charging by the plaintiffs and the plaintiffs' scale of hourly charges. The plaintiffs submitted that the attitude of commercial persons in practice was highly relevant. Furthermore, the Deputy Commissioner of Taxation was a creditor who voted in favour of approving the plaintiffs' fees. Mr Sheahan gave evidence that both the Commonwealth and the Court has approved the plaintiffs' remuneration in other liquidations based on the plaintiffs' standard charge out rates. These matters may be accepted, but I am not aware of the precise circumstances of those other liquidations. In any event, I have to decide this matter on the basis of the evidence before the Court in this case. 306 Fifthly, the plaintiffs increased their fees as from 1 July 2010. The partners' hourly rate increased from $525 to $700, an increase of 33%. The senior associate's hourly rate increased from $450 to $550 (now known as senior manager), an increase of 22%, and the associate's hourly rate of $320 increased to $450 (now known as manager), an increase of 40%. Mr Lock agreed that these increases could not be justified by reference to inflation or a general change in economic conditions from May 2010 through to July 2010. Mr Lock said that the previous rates had existed for about five years and thereafter the new rates stayed in place for about another five years. I do not think these circumstances bear on the issue of reasonable remuneration. The issue is whether the remuneration is reasonable at the time the work is carried out, and not whether prior charges have been in place for some time. 307 Finally, the plaintiffs point out that whilst the partner's rate and senior manager's rate for them in 2010 and 2011 is the highest, it is the second highest in 2012, 2013 and 2014. In the case of a manager, the plaintiffs' rate is the second highest in 2010, equal second highest in 2011 and 2012, third equal highest in 2013, and fifth equal highest in 2014. 308 ASIC sought to reinforce the point that the plaintiffs' hourly rates were excessive by reference to the following matters which were established on the evidence. 309 Not only were the hourly rates high, but individual employees were charged out at high rates. For example, from June 2010, a lawyer with two and-a-half years' experience was charged out as a senior manager at $500 per hour. The evidence establishes that DMAW's general rates for partners and special counsel, senior associates, lawyers, law clerks/paralegal and clerical were below this figure. I note that Mr Davis' hourly charge out rate was above this figure. Another example is that in July 2010, a junior insolvency practitioner with two years' experience was being charged out as a manager at $450 per hour which was the same rate as another employee who was a registered liquidator. 310 The evidence before the Court establishes that for BRI Ferrier (SA) a Manager 1 charging at $380 per hour is a practitioner with more than seven years' insolvency experience, and a Manager 2 charging at $360 per hour is a person with six to seven years' experience; Meertens, a senior manager charging $425 per hour is a person who generally has more than seven years' relevant experience, and a manager charging at $386 per hour is a person who generally has five to seven years' experience; and BRI Ferrier (NSW) a senior manager charging at $415 per hour is a person with a minimum of eight years' experience, and a manager charging $390 per hour is a person with a minimum of six years' experience. 311 Mr Lock described Ms Jane Sheahan as holding the position of office manager with qualifications as a CPA. It is apparent from the WIP reports that in July/August 2011, she was being charged out at a rate of $400 per hour which was an increase from $300 per hour prior to that date. The work concerned included purely administrative work such as preparing fee invoices and the clerical task of scanning documents. 312 Finally, it is clear from the evidence that the liquidators charged remuneration for internal disbursements which include photocopying, scanning and printing. Mr Lock accepted that there was a profit element in the internal disbursements, and Mr Sheahan accepted that they formed part of his firm's remuneration. ASIC submits that the charging of such internal disbursements as and by way of additional remuneration should be taken into account in determining a reasonable hourly rate for the plaintiffs. 313 I have taken all these matters into account and I have reached the conclusion that the plaintiffs' hourly charges are excessive. They fall outside the band of reasonable remuneration. The amounts that should be allowed as reasonable remuneration is not capable of precise determination and cannot turn merely on the characterisation of the plaintiffs' firm as boutique or otherwise. 314 It seems to me that the discount for manager should be less than partner and senior manager because the differences with the other charges are less. I think a discount of 10% is appropriate in the case of manager. A discount of 20% is appropriate in the case of partner and senior manager. 315 A process will need to be put in place to recalculate the figures and I will hear from the parties as to how that is to be done.

Work Done in Connection with the Debt and Equity Issues 316 Before examining the objections by ASIC to this work stream, it is necessary to outline the facts in more detail. 317 The starting point is the alleged "Spin Off" transaction in 2006. This transaction was said to have involved the transfer of the Australian assets of SK Foods, LP to the Salyer interests. Those assets were the shares in SKFA, intercompany debts and a trade receivable. 318 It appears that a question arose at some stage as to whether BMO had a lien over the shares in SKFA and other trade receivables. 319 Soon after their appointment as administrators on 6 May 2010, the plaintiffs became aware of a dispute as to loans made to SKFA and the parties entitled to the surplus funds after creditors had been paid. 320 On 30 November 2010 and 1 December 2010, the plaintiffs met with representatives of SK Foods, LP and the Salyer interests and advised them of their intention to apply to have the liquidations of the Companies and the New Zealand Companies in the United States courts recognised. The plaintiffs' evidence was to the effect that both parties supported the proposal. In December 2010, the plaintiffs applied for the recognition of the winding up of the Companies as foreign main proceedings in the United States. 321 On 10 December 2010, the plaintiffs received advice from DMAW to the effect that the debt allegedly owed by SKFA to SK Foods, LP may have been transferred from SK Foods, LP to a trust controlled by the Salyer interests; the shares in SKFA may have been distributed to the partners of SK Foods, LP in 2006 in order to overcome accounting issues; and further information in relation to the Debt and Equity Issues in SKFA is "obviously required" and an indication of what those further investigations should involve is given. That indication includes a suggestion of examinations and production of documents in both the United States and in Australia. 322 On 7 February 2011, the United States Bankruptcy Court granted recognition of the liquidations of the Companies as foreign main proceedings under Chapter 15 of the United States Bankruptcy Code. The application for the recognition of the liquidations was supported by Mr Sharp. 323 Mr Sharp had filed proceedings in the United States Bankruptcy Court seeking the determination of the Debt and Equity Issues, but those proceedings were stayed by the United States District Court pending the completion of Mr Salyer's criminal trial. The stay remained in place until 24 June 2012. The stay was lifted on that day. On 10 August 2012, Mr Sharp applied for summary judgment in the proceedings, and summary judgment was granted in his favour on 29 November 2012. 324 On 26 May 2011, DMAW sought advice from Messrs Whitington QC and Doyle. The DMAW letter provides as follows: Introduction 1. We refer to the observations for counsel forwarded with the brief in this matter. In those observations, we refer to a number of issues for opinion including: 1.1 who owns the $16m debt owed by SKFA; and 1.2 who is entitled to what will be a substantial surplus in SKFA after payment of all creditors and the costs of the liquidation? 2. A final considered opinion on these questions is not yet possible on the current state of the evidence. What is possible, and requested, is for counsel to consider whether the approach and investigations being adopted by the liquidators are correct. The opinion can be given in conference. 325 With respect to the debt, the letter provides: 8. The liquidators take a contrary view. Against the background of the current state of the evidence and the possibility of an equitable assignment being made out they are seeking documents and conducting depositions in the United States of America to further investigate the competing claims. Those investigations may of course reveal a perfected legal assignment or facts and matters relevant to the maintenance of an equitable assignment. 9. Counsel are asked whether they agree with this approach or, if not, what alternative approach should be adopted. 326 With respect to the equity, the letter provides: 17. The liquidators are adopting a course of seeking discovery and undertaking depositions in the United States of America to consider the competing claims to the surplus and whether any facts give rise to an equity which warrants protection in terms of rectification of the register. 18. Again, counsel's view is sought as to whether this is the appropriate course or, if not, what alternative course ought to be adopted. 327 On 30 June 2011, the solicitors for BMO wrote to the solicitors for the plaintiffs stating that in their view the plaintiffs did not have a duty to settle the list of contributories under the Act, that Mr Sharp was likely to bring proceedings in the United States or in Australia to recover the shares in SKFA and, in the circumstances, "it would be unreasonable for your clients to duplicate the same work and expense by undertaking their own inquiries to resolve the dispute that will be brought before a United States' court". On 4 July 2011, Mr Davis of DMAW spoke to Mr Sheahan and Mr Davis advised Mr Sheahan that counsel (Messrs Whitington QC and Doyle) had given advice in conference, the effect of which included that directions be sought under s 511 in relation to the matters which were the subject of DMAW's letter dated 26 May 2011. 328 The plaintiffs had "significant" reservations about making an application for directions under s 511 of the Act in relation to their investigations concerning the intercompany debt and disputed shares. The plaintiffs' reservations were based on a previous experience they had had with an application under s 511 of the Act in the case of "Duke administration". Mr Sheahan agreed in cross-examination that in the case of the administration there were some 18,000 shareholders. They gave consideration to whether it was appropriate to seek directions under s 511. In August 2011, preliminary work was commenced by members of their staff on such an application. However, they did not ultimately proceed with that application, having regard to the reservations which they held and later developments in the liquidations in December 2011. 329 In August and September 2011, the plaintiffs continued to pursue their investigations, including depositions in the United States, examinations in Australia, and the review of a "significant" volume of documents produced under subpoena by BMO. 330 On 31 August 2011, the plaintiffs received a further letter from the solicitors acting for BMO expressing concern about the cost of the investigations being carried out by the plaintiffs. 331 On 8 September 2011, the plaintiffs were advised by DMAW that it would be appropriate to seek advice from counsel on the Debt and Equity Issues and to await counsel's advice before proceedings with further investigations. 332 On 16 September 2011, the plaintiffs were advised of a ruling of the United States Bankruptcy Court whereby the Court granted a preliminary injunction against the Salyer interests prohibiting any further transfer of interests in the assets of the Companies. The plaintiffs were not parties to those proceedings and they were not served with the proceedings. Before receiving notice of the preliminary injunction, they were not aware that an injunction had been sought. The plaintiffs were unsure of the basis or effect of the injunction and took what they considered to be appropriate steps to inform themselves and to understand how the preliminary injunction might affect their conduct as liquidators. The plaintiffs considered that the injunction appeared to restrain them from making any distribution in respect of the debt and equity. The plaintiffs obtained the documents lodged in support of the application for the injunction. There were statements in those documents which the plaintiffs considered were inadequate and warranted the provision of further relevant material to the Court. The plaintiffs took legal advice on the effect of the injunction. 333 On 28 September 2011, DMAW on behalf of the plaintiffs, wrote to Mr Sharp's Australian solicitors, Duncan Cotterill, regarding the preliminary injunction. The letter detailed the plaintiffs' concerns with respect to statements made in material filed in support of the injunction and confirmed that the plaintiffs had already given an undertaking to Mr Sharp that they would not make a distribution in relation to the debt and equity without first providing Mr Sharp with notice. 334 On 29 September 2011, Duncan Cotterill responded to DMAW's letter, and on 4 October 2011, DMAW responded to Duncan Cotterill's response. 335 Mr Sheahan described the course of events summarised above in his first affidavit as follows: 16 SEPTEMBER 2011 - US PRELIMINARY INJUNCTION ORDER 177. On 16 September 2011, we received notification of a ruling of Judge Bardwil in which he ordered a preliminary injunction against a number of Salyer Interests prohibiting further transfer of interests in the assets of the Companies. … 178. Mr Lock deposes at paragraphs 38 and 39 of the Second Lock Affidavit to having been notified on 28 September 2011 of this Preliminary Injunction granted by Justice Bardwil. On further review of our files, we have ascertained the injunction was first sent to my solicitors on 16 September 2011 by Ms Milburn, solicitor for Mr Sharp, as discussed above. 179. Prior to receiving notice of the temporary restraining order referred to in paragraph 168 above, Mr Lock and I had not understood that an injunction had been sought that could affect us in our position as liquidators, nor were we served with or joined to those proceedings. 180. We were unsure of the basis or effect of the injunction, and thus took what we considered were appropriate steps in order to inform ourselves and to understand how the preliminary injunction might affect our conduct as liquidators. For that purpose it was necessary to review the materials relied upon by Judge Bardwil in granting the preliminary injunction and we sought advice …, on the effect of the injunction in respect of our further investigations in the US and the progress of the administrations in Australia. 181. In the documents filed in support of the application for the injunction referred to in paragraph 177 above, Mr Sharp and attorneys acting on his behalf, in submissions and declarations put before the Court, made various statements and assertions to the effect that: 181.1 Mr Lock and I had been appointed liquidators to the Companies by Mr Salyer; 181.2 due to the nature of our appointment it was to be inferred that we were acting in the interests of Mr Salyer and the Salyer Interests; 181.3 there was an imminent risk of Mr Lock and me paying a dividend to the Salyer Interests in respect of the lntercompany Debt and surplus funds to be paid to the owner of the Disputed Shares. 182. The above statements were incorrect as: 182.1 whilst Cary Collins, a close associate of Mr Salyer, executed the requisite resolution appointing Mr Lock and me as administrators of the Companies, it was the creditors of each Company (including Mr Sharp) who voted at the relevant meetings to appoint Mr Lock and me as liquidators; 182.2 in accordance with our role as liquidators and the quasi-judicial nature of our functions in relation to adjudicating creditor claims and ascertaining the persons to whom surplus funds should be distributed, Mr Lock and I were acting impartially; 182.3 there was at the time no risk of any payment to the Salyer Interests as: 182.3.1 Mr Lock and I had informed Mr Sharp and representatives of the Salyer Interests in 2010 that we would give each of them notice of our intentions with respect to any adjudication on the lntercompany Debt and Disputed Shares; 182.3.2 on 15 July 2011, in correspondence from our solicitors to Norton Rose, who at that time acted for BMO, we confirmed that we had already informed Mr Sharp that we would give him notice before making any payment by way of dividend or surplus; and 182.3.3 on 5 August 2011, correspondence from our solicitors to Ms Milburn referred to us having informed Mr Sharp that "payments will not be made in relation to the debt or to the owner of the shares of SKFA without notice to your client and other interested parties." 183. On and after 16 September 2011, Mr Christmas provided Mr Lock and I with copies of various documents relating to the preliminary injunction, including a copy of the transcript of the hearing before Judge Bardwil. … CORRESPONDENCE RE MR SHARP'S ASSERTIONS IN US PROCEEDINGS 186. On 28 September 2011, our Australian solicitors DMAW Lawyers wrote to Mr Sharp's Australian solicitors Duncan Cotterill regarding the preliminary injunction referred to in paragraph 177 above. That letter detailed our concerns with respect to statements made in the material filed in support of that injunction and confirmed that Mr Lock and I had already given an undertaking to Mr Sharp that we would not make a distribution in relation to the lntercompany Debt or Disputed Shares without first providing Mr Sharp with notice. 187. On 29 September 2011, Duncan Cotterill responded to DMAW Lawyers' letter of 28 September 2011, and on 4 October 2011, DMAW Lawyers responded by further letter to Duncan Cotterill …. The important paragraph for present purposes is paragraph 180. 336 In November 2011, and in light of correspondence received from Mr Sharp, BMO and the Salyer interests with respect to adjudicating on the Debt and Equity Issues, and the opposition to the plaintiffs' investigations with respect to the potential claims against ANZ, the plaintiffs sought advice from their solicitors as to their duties and responsibilities in pursuing their investigations and, based on the information they had gathered to that point, what steps they should now take. 337 On 1 December 2011, the plaintiffs received advice from DMAW. The advice sought is described in the opening paragraphs of DMAW's letter as follows: 1. You have sought advice as to: 1.1 whether you have acted in accordance with your duties under Australian law in pursuing your investigations to date in these administrations; 1.2 having regard to the information gathered to date from those investigations, what steps you should now take. 2. You have undertaken inquiries by way of, inter alia, the compulsory production of documents, examinations and depositions of various persons, in Australia, the United States and New Zealand in connection with three principal issues, namely: 2.1 potential claims available to the companies against ANZ, ANZ NZ and the directors of the companies in connection with the granting of the June 2009 guarantee to the banks and the appointment of receivers (Claims Issues); 2.2 competing claims against the companies the subject of proofs of debt lodged by the trustee in bankruptcy of SKFLP and Fast Falcon LLC alleging liability for intercompany debt and associated rights of set off available to the companies (Debt Issues); 2.3 identifying the true owners of the shares in SKFA having regard to the disputed November 2006 transfer and thus the person or persons to whom the surplus remaining after payment of all valid creditor claims should be paid (Equity Issues). 338 DMAW advised as follows: 5. Before embarking on further investigations in relation to the Debt Issues and Equity Issues we recommend you: 5.1 review in detail the evidence now available in respect of those matters; 5.2 assess the prospects of obtaining additional material information through further inquiries; 5.3 form a view about the merits of undertaking further inquiries having regard to the relative associated costs and benefits; 5.4 consider whether it is now appropriate to adjudicate upon the Debt Issues. 6. We also recommend, as previously discussed, you give consideration to seeking the Court's directions pursuant to section 511 of the Corporations Act. 7. Acting in accordance with paragraphs 5 and 6 is in continued fulfilment of your duties and affords you protection in the further conduct of the liquidations. 339 The plaintiffs decided that an application to the Court for directions was not necessary in the circumstances. 340 On 2 December 2011, the plaintiffs adjudicated on the proofs of debt lodged with respect to the intercompany debt by: admitting in part the proof of debt lodged by Mr Sharp in the amount of $8,861,540 and rejecting the balance on the basis of a set-off pursuant to s 553C of the Act; and rejecting, in full, the proofs of debt lodged by Fast Falcon LLC (i.e., the Salyer interests). 341 On 15 December 2011, the Salyer interests lodged an appeal in this Court with respect to the rejection of their proof of debt. 342 On 22 December 2011, Mr Sharp lodged an appeal in this Court with respect to the partial rejection of his claim on the basis of a set-off. 343 In early 2012, the plaintiffs continued their investigations into the Debt and Equity Issues by reviewing documents produced by BMO and Wells Fargo, and contacting Mr Richard Lawrence, who was a director of the Cedenco Group of Companies and chief executive officer of the Cedenco Group, with respect to further queries they had regarding his knowledge of the Spin Off transaction. 344 By reason of their further inquiries, the plaintiffs considered that their adjudication with respect to the debt issue may have been incorrect. The plaintiffs obtained legal advice and in January 2012, Mr Sheahan conveyed to Mr Sharp that the plaintiffs then present view was, to use the words of Mr Sheahan, "having regard to our legal advice and our review of the evidence … the Spin Off was a bona fide transaction, not a fabrication designed to defeat the interests of Mr Sharp as Bankruptcy Trustee of SKFLP and that accordingly the Salyer interests to whom the disputed shares were assigned were entitled to any surplus funds in SKFA". 345 On 20 February 2012, Mr Sharp commenced proceedings in the New South Wales District Registry of this Court (i.e., the Equity Proceedings) wherein he sought against the Companies, the plaintiffs and the Salyer interests, a declaration that SK Foods, LP was the legal and beneficial owner of 100 shares in SKFA and orders for payment of the surplus referable to those shares to SK Foods, LP; orders that the surplus funds in SSFA were held by the plaintiffs on constructive trust for SKFA and CJVA; directions that the liquidations be finalised; a review of the plaintiffs' remuneration under s 504 of the Act; and injunctions restraining the plaintiffs from investigating various matters, including the shares, the debt, the existence or prospect of any cause of action against ANZ or any receiver appointed and the existence of any other cause of action against a third party. 346 The plaintiffs decided that it was necessary and reasonable for them to defend the Equity Proceedings insofar as allegations were made by Mr Sharp which impugned their conduct in the liquidations. They decided that they were otherwise "content" for the Court to decide the dispute about shares. The plaintiffs state that they only took such steps that were reasonably necessary to defend their conduct or as otherwise directed by the Court. 347 On 2 March 2012, the plaintiffs applied to transfer the Equity Proceedings to the South Australia District Registry of this Court. In Mr Lock's affidavit in support of the application, he said that the basis for the application was that South Australia was the proper place for the Equity Proceedings, having regard to the following: the subject matter of the Equity Proceedings; the cost, expense and inconvenience to the parties and witnesses to the Equity Proceedings; and the most efficient administration of the Court. 348 On 7 May 2012, the solicitors acting for the Salyer interests in the Equity Proceedings and in the appeal by the Salyer interests against the debt adjudication filed notices of ceasing to act in each of those proceedings. On 9 May 2012, Mr Sharp filed and served an interlocutory application in the Equity Proceedings seeking a direction that the plaintiffs admit Mr Sharp's proof of debt lodged in respect of the disputed shares. Mr Sheahan said in evidence that he understood that such a direction would, in effect, operate as a summary judgment in favour of Mr Sharp with respect to the shares owing to the withdrawal of the representation of the Salyer interests. Mr Sheahan said that by this stage, the plaintiffs had formed the view based on their investigations to that point that the disputed shares were owned by the Salyer interests and not SK Foods, LP. Mr Sheahan said that despite that, as the Court was to determine the issue in the Equity Proceedings, the plaintiffs had not and did not propose to adjudicate on that issue. 349 On 29 May 2012, Mr Sheahan filed an affidavit in the Equity Proceedings in which he set out the reasons why the plaintiffs did not consider that it was appropriate for the Debt and Equity Issues to be determined summarily and set out the conclusions they had reached in respect of their investigations into the Debt and Equity Issues and indicated a willingness to play such future role in the proceedings as the Court considered appropriate in light of the withdrawal of the representatives of the Salyer interests. 350 On 4 June 2012 at a hearing in the Equity Proceedings, the Court made an order that the plaintiffs file a notice of contentions of facts and law in response to contentions to be filed by Mr Sharp on the Debt and Equity Issues. 351 Mr Sheahan describes the relevant events in the Equity Proceedings as follows: BMO COMPLAINTS RE 29 MAY 2012 AFFIDAVIT 330. On 1 June 2012, Mr Lock and my solicitors received a letter from Norton Rose as solicitors for BMO … By that letter, inter alia, BMO took issue with the content of my affidavit of 29 May 2012 in the Equity Proceedings (NSD262,) ... 331. Given BMO was not a party to the proceedings, and in our view was misinformed about the effect of the orders previously made by Justice Emmett, we did not consider it necessary to incur the expense of responding and therefore did not instruct our solicitors to respond to that correspondence. 4 JUNE 2012 DIRECTIONS HEARING AND ORDERS RE LIQUIDATORS' INVOLVEMENT 332. On 4 June 2012, there was a directions hearing before the Honourable Justice Emmett that traversed the four sets of related proceedings; the Equity Proceedings, the Salyer and Sharp Debt Appeals and the Receiver Recognition Proceedings … 333. As can be seen from the transcript of the 4 June 2012 hearing …: 333.1 counsel for Mr Sharp handed up to Justice Emmett proposed orders that required Mr Lock and me to file a notice of contentions of facts and law; 333.2 notwithstanding that proceedings were on foot in the USA, Mr Sharp's counsel submitted that the proceedings before the Federal Court should proceed to be heard and determined first; 333.3 his Honour indicated that he would be assisted by the liquidators acting as contradictors (in the absence of Salyer Interests) to put before the Court any material contradictory to that advanced by Mr Sharp, effectively putting the contrary arguments in the form of the contentions; 333.4 Justice Emmett made orders that Mr Lock and I: 333.4.1 file a notice of contentions of facts and law in response to contentions to the field by Mr Sharp on the lntercompany Debt and Disputed Shares issues; 333.4.2 either pay a dividend on, or give notice of reversal of our adjudication on the lntercompany Debt, (and if the latter file an affidavit under Regulation 14.1(15) of the Corporations Regulations setting out the basis for the reversal and exhibiting relevant material). 352 On 13 August 2012, the plaintiffs were advised by solicitors acting for Mr Sharp that Mr Sharp was seeking summary judgment in the proceedings before the United States Bankruptcy Court and that as a result there was no need for the plaintiffs to act as contradictors in the Equity Proceedings. On 16 August 2012, the plaintiffs responded to this letter and they proposed that no further steps be taken in the Equity Proceedings prior to the determination of the proceedings in the United States Bankruptcy Court. However, in August and September 2012, Mr Sharp pressed the plaintiffs to file their notice of contentions and that was done on 10 September 2012. 353 As I have previously said, Mr Sharp obtained judgment in the United States Bankruptcy Court on 29 November 2012. On 6 December 2012, Mr Sharp applied for orders in the Equity Proceedings that the judgment of the United States Bankruptcy Court be recognised by the Federal Court of Australia. 354 In his first affidavit, Mr Sheahan adequately summarises events thereafter to the time of judgment as follows: 7 DECEMBER 2012 EQUITY PROCEEDINGS DIRECTIONS HEARING CONTRADICTOR DIRECTIONS 369. On 7 December 2012, there was a further directions hearing in the Equity Proceedings. In this regard, as summarised at paragraph 5.39 of the DMAW letter of 7 March 2013 …: 369.1 the Salyer Interests agitated for determination of their application for funding so that the Recognition Application could be defended; 369.2 in response to a question from Justice Emmett as to the liquidators' position on the Recognition Application, our counsel stated: "Your Honour, we were rather hoping that issue would be joined between the Salyer interests and the trustee, Mr Sharp, in which case we wouldn't have a defined position. If in fact the Salyer interests are not funded to oppose recognition, then the liquidator would wish to put for your Honour some further short evidence to correct some matters that have been put or said before Bardwell (sic) J and otherwise we would only seek to assist the court as far as your Honour thought appropriate." 369.3 Justice Emmett suggested that Mr Lock and I act as contradictors and queried if that was a possibility, to which our counsel responded, inter alia: "Your Honour, the liquidators are quite prepared to do that provided your Honour so directs." 369.4 Justice Emmett asked Mr Sharp's counsel if that course was opposed, to which Mr Sharp's counsel responded: "If your Honour decides that your Honour wants a contradictor, in my submission, it ought to be the liquidator. If I'm to choose, properly the liquidator." 369.5 Justice Emmett ordered that Mr Lock and I act as contradictors on the Recognition Application … 370. Mr Sharp filed an application on 10 December in the Equity Proceedings seeking recognition of Judge Bardwil's summary judgment order. 371. I affirmed an affidavit on 16 December 2012 in the Equity Proceedings in accordance with Justice Emmett's order that we act as contradictors. In that affidavit, in addition to other matters, I deposed to the investigation being undertaken by the AFP. 372. I understand from communications sent to me that on around 18 December 2012, Judge Bardwil refused the request by the Salyer Interests for a stay of the summary judgment order pending the hearing of an appeal to be filed by the Salyer Interests. 373. On 18 December 2012, Mr Lock's and my solicitors filed written submissions in respect of the Recognition Application in the Equity Proceedings … 19 DECEMBER 2012 EQUITY PROCEEDINGS HEARING 374. On 19 December 2012, the Recognition Application came on before Justice Emmett for hearing. In that regard: 374.1 our counsel Messrs Whitington QC and Mr Doyle prepared detailed written submissions for the assistance of the Court which were filed in advance of the hearing ...; 37 4.2 I refer to paragraph 5.36 of the DMAW Lawyers letter of 7 March 2013 … 374.3 during the course of the hearing, Justice Emmett identified that the orders sought by Mr Sharp could not be made by him as they pre-empted proceedings raising an estoppel argument …; 374.4 Justice Emmett went on to identify the absence of relevant parties to the proceedings as a basis not to grant the relief sought; 374.5 His Honour directed Mr Sharp to file an amended application and a statement of claim and to join SSC&L 2007 Trust to the Equity Proceedings; 374.6 Justice Emmett said that: 374.6.1 the purpose of his order that we act as contradictors on this application had now been effectuated; 374.6.2 "I have had the assistance I hoped for from the liquidators"; 374.6.3 if he required further assistance he would raise it at the appropriate time; 374.6.4 Mr Lock and I understood therefore that we were relieved of our obligation to act as contradictors in the Equity Proceedings. … 375. The nature and extent of the participation of Mr Lock and me as contradictors in the in the (sic) Equity Proceedings pursuant to Justice Emmett's 7 December order is summarised in paragraphs 369 to 374 above. MR SHARP FILES AMENDED STATEMENT OF CLAIM IN THE EQUITY PROCEEDINGS REQUIRING OUR CONTINUED INVOLVEMENT DUE TO APPEAL AGAINST ADJUDICATION ON VOTING ENTITLEMENTS 376. On 8 January 2013, Mr Sharp and SKFLP filed a third further amended originating process and a statement of claim in the Equity Proceedings … The document included the prayer for relief referred to in paragraph 305 above, namely an appeal against Mr Lock's and my adjudication for voting purposes of proofs of debt lodged in advance of the meeting of creditors held on 9 March 2012. 377. Mr Lock and I considered that this may involve determination of matters affecting our interests and thus require our continued involvement in the Equity Proceedings. DMAW Lawyers wrote to Mr Sharp's solicitors on 6 February 2013 querying the inclusion of that relief and indicating that if it was pressed, our continuing involvement in the proceedings would likely be required … 378. On 8 February 2013, Mr Sharp's solicitors responded to our solicitor's letter of 6 February 2013 stating that Mr Sharp would not press prayer for relief 16 until the matters pleaded in the statement of claim had been determined by the Court (i.e., the ownership of the lntercompany Debt and Disputed Shares) ... 379. On 8 February 2013, there was a further directions hearing in the Equity Proceedings ... At this hearing our counsel Mr Doyle explained the continuing concern that if findings were made with respect to the ownership of the Disputed Shares and lntercompany Debt prior to consideration of the validity of our actions in adjudicating proofs of debt for voting purposes, then we could not avoid the need to participate, albeit in a limited way, in the resolution of the substantive controversies in the Equity Proceedings. 380. Having regard to the above, on 12 February 2013 DMAW Lawyers wrote to Norton Rose advising that as long as prayer for relief 16 remained on foot it would be necessary for Mr Lock and me to file a defence and participate in the proceedings because the Court's findings on the substantive issues would be material to the relief sought against us ... ABANDONMENT OF RELIEF RE ADJUDICATION ON VOTING RIGHTS 381. Following further correspondence from DMAW Lawyers to Norton Rose on 14 February 2013, Mr Sharp agreed to abandon prayer for relief 16 and gave an undertaking not to seek default judgment against the liquidators in the Equity Proceedings should we not file a defence, by correspondence from his solicitors dated 15 February 2013 ... 382. On 20 February 2013, at a directions hearing before Justice Jacobson in the Equity Proceedings, orders were made, inter alia, dismissing prayer for relief 16 in Mr Sharp's third amended originating process … 383. Following the 20 February 2013 hearing, and the dismissal of prayer for relief 16, it was no longer necessary for Mr Lock and me to take any further active steps in relation to the Equity Proceedings. FURTHER NORTON ROSE CORRESPONDENCE … HEARING AND 30 MAY 2013 JUDGMENT IN EQUITY PROCEEDINGS 385. Between 18 and 21 March 2013, Mr Sharp's summary judgment application was heard before Justice Flick. … Mr Lock and I were not represented at that hearing. His Honour delivered judgment on 30 May 2013 (as referred to further in paragraph 398 below), finding that Mr Sharp and SKFLP were entitled to summary judgment on the basis that the questions as to the legal or beneficial ownership of the Disputed Shares and lntercompany Debt had been finally resolved as between Mr Sharp and the Salyer Interests by Judge Bardwil in the US Proceedings. 355 In essence, ASIC's objections in relation to this work stream are based on Mr Gothard's evidence. 356 As can be seen from Mr Gothard's table (Annexure B), he divides the Debt and Equity Issues into three subtopics as follows: (1) investigations into the Debt and Equity Issues; (2) United States Bankruptcy Court proceedings; and (3) Equity Proceedings. 357 With respect to the first subtopic, Mr Gothard expresses the view that a CPIP would complete the preliminary work necessary to become familiar with the claims by SK Foods, LP and the Salyer interests in relation to the Debt and Equity Issues. He accepts that the claims are complex and that a CPIP would be justified in spending a reasonable amount of time in gaining a good understanding of the nature of the claims and the circumstances in which they arise. Once the CPIP had done that, then he or she would have considered and, if necessary, sought legal advice as to his or her duties as liquidator to determine the competing claims to the surplus funds, and consider the practical requirement to determine the parties entitled to the surplus funds so that the liquidation may be completed. 358 Mr Gothard is of the view that the preliminary work would have included work completed up to and including the receipt of advice from DMAW dated 10 December 2010. Mr Gothard expresses the view that such work was directly connected with the administration and one in furtherance of the exercise of powers and performance of the liquidator's duties required by the legislation and the professional standards of the relevant professional bodies. 359 Mr Gothard expresses the view that the CPIP would have applied his or her professional and commercial judgment to determine the Debt and Equity Issues in the most efficient and effective manner and in the best interests of the stakeholders concerned. The CPIP would consider the following: (1) to what extent the parties could be encouraged to reach an agreement between themselves; (2) to what extent could the US Bankruptcy proceedings already commenced by Mr Sharp serve to resolve the issues; (3) whether the parties could be encouraged to approach the Court to determine the issues between them; and (4) to what extent could a liquidator determine the issues independently and the level of information required to do so. 360 Mr Gothard addresses these courses of action in turn. 361 Mr Gothard expresses the opinion that a CPIP would initially take steps to encourage the resolution or determination of the dispute over the Debt and Equity Issues as between the parties themselves. Such an approach could result in a final determination of the Debt and Equity Issues without the need for court proceedings. In his principal report, Mr Gothard expresses the opinion that, based on the documents available to him, the plaintiffs did not undertake such action. He amends his opinion in his report in response, having regard to statements made by Mr Sheahan in his second affidavit. He expresses the opinion that the plaintiffs undertook two of the three steps he considered that a CPIP would undertake, namely, the plaintiffs encouraged the parties to discuss a compromise or arrangement and encouraged the parties to enter into an alternative dispute resolution process. The third step was not taken by the plaintiffs, that is to say, they did not ascertain whether the parties would be prepared to abide by the liquidators' determination of the dispute as an independent arbiter. 362 Mr Gothard then turns to consider the second course of action, namely, to await the outcome of the existing United States proceedings. Mr Gothard said that such an approach would avoid, or at least minimise, further costs to stakeholders of the liquidators attempting to independently determine the Debt and Equity Issues. He expresses the opinion that a CPIP would regard such an approach as efficient and effective and that it would result in minimal costs in the liquidation and result in a final and binding determination of the Debt and Equity Issues. In his principal report, Mr Gothard states that it does not appear that the plaintiffs took this course of action. In his report in response, Mr Gothard amends his opinion to the extent that he states that the plaintiffs appear to have given some consideration to whether awaiting the outcome of the United States proceedings would be likely to bring about a resolution of the dispute. 363 Mr Gothard then turns to consider the third course of action, namely, to encourage the parties to approach the Court for a determination of the issues between them. Mr Gothard expresses the opinion that, in the event no consensual agreement could be reached between the parties, a CPIP would discuss with the parties other ways of bringing the Debt and Equity Issues before a court of competent jurisdiction for a decision. A CPIP would regard such an approach as moderately efficient and effective in that while it may result in costs in the liquidation, it would result in a final and binding determination of the Debt and Equity Issues. In his principal report, Mr Gothard said that it did not appear that the plaintiffs undertook such action. In his report in response, Mr Gothard did not change his opinions. In fact, he expands on them in the following respect. He expresses the opinion that a CPIP would encourage the parties to bring their own fresh proceedings bearing their own costs, with respect to the Debt and Equity Issues. A CPIP would seek to avoid commencing proceedings himself or herself as such proceedings would not increase the return to the parties and funding the proceedings out of the liquidation would effectively result in the successful party bearing the costs of the unsuccessful party. In light of those matters, a CPIP, after taking legal advice, would consider approaching the Court for directions prior to commencing action himself or herself. 364 Mr Gothard then turns to consider the fourth course of action, namely, to consider the extent to which a liquidator could determine the issues independently and the level of information required to do so. Mr Gothard noted that under the Act, a liquidator has the power to adjudicate on the proofs of debt submitted by persons claiming to be creditors and to determine the parties entitled to share in the surplus available to shareholders. It is a matter for the liquidator's professional and commercial judgment to determine the extent of the investigation he or she would carry out prior to an adjudication. Mr Gothard noted that in the course of an adjudication, a liquidator may require advice from counsel and directions or a declaration from the Court. Mr Gothard expressed the opinion that a CPIP would consider whether the proofs of debt were determined before determining equity ownership as there exists "a more defined process" for adjudicating proofs of debt under the Act. Mr Gothard expressed the opinion that a CPIP would not consider such an approach as particularly efficient or effective in that it would involve substantial costs and the possibility of court proceedings. 365 In response to Mr Sheahan's statement that an application under s 511 of the Act may have been of little utility in terms of benefit to creditors or members insofar as it resulted in a direction of approving the plaintiffs' investigations, Mr Gothard said that the reason why a CPIP may require directions from the Court prior to commencing investigations to determine the Debt and Equity Issues is because such investigations were not necessarily in the best interests of both parties. That is the case because such investigations would not increase the return to the parties, it would effectively result in the successful party bearing the costs of the unsuccessful party, would involve substantial costs and time delay to the liquidation, would not be regarded as particularly efficient or effective, as far as a method of resolving the dispute is concerned, would be unlikely to result in the final determination of the Debt and Equity Issues, and would be likely to be the subject of an appeal to the Court by the parties and relates to disputes that are already the subject of stay proceedings in the United States. Mr Gothard expresses the opinion that with this in mind, a CPIP would attach significant utility to an application for directions under s 511 of the Act because directions would assist in determining whether the proposed course of action was warranted prior to substantial costs being incurred. Mr Gothard expresses the opinion that a CPIP would seek advice from his or her legal advisers as to whether court directions should be sought. The act of seeking directions from the Court was justified because such work would be directly connected with the administration; would be done in furtherance of the exercise of powers and performance of a liquidator's duties as recognised by the legislation and by the standards of the professional bodies. 366 Mr Gothard expresses the opinion that whatever course was adopted, a CPIP would keep the parties informed of the steps being taken and would seek to obtain their agreement to the course of action proposed. He expresses the view that the plaintiffs did obtain the agreement of the parties to the course of action they had chosen at the meetings in late 2010. 367 Mr Gothard was asked about the work done by the liquidators in investigating the lien claimed by BMO. He expresses the opinion that the work completed by the plaintiffs was part of their efforts to independently determine the Debt and Equity Issues. The investigation work was "specifically focused" on whether the Spin Off transaction was a genuine transaction known to BMO and others at the relevant time and, therefore, relevant to the Debt and Equity Issues. Mr Gothard expresses the opinion that such work would only be relevant in the event that a liquidator sought to independently determine the Debt and Equity Issues and, to a lesser degree, if a matter was brought before a court of competent jurisdiction. The work would not be required if the liquidator sought to determine the Debt and Equity Issues by consensual agreement between the parties, or by awaiting the outcome of the United States proceedings. 368 Mr Gothard expresses the following conclusions with respect to the first of the three subtopics, namely, investigations into the Debt and Equity Issues: 5.3.76 A CPIP in the position of the Practitioners would have acted in the best interests of the Parties by seeking to determine the debt and equity issues in a manner which was likely to most efficiently and effectively resolve the issues as follows: (a) by consensual agreement between the Parties or; if that was not possible, (b) by awaiting the outcome of the current US Proceedings or; if that was not possible, (c) by seeking agreement of the Parties to bring the matter before a Court of competent jurisdiction. 5.3.77 A CPIP would only seek to independently determine the ownership of the shares if the above options had failed or were not practically available as this method is not particularly efficient or effective in that it is likely to involve: (a) high costs to the liquidation; and (b) court proceedings in the form of appeals against a liquidator's adjudications and determinations. 5.3.78 Before pursuing investigations in an attempt to independently determine the ownership of the shares, a CPIP would obtain the stakeholders' agreement to such a course of action. 5.3.79 A CPIP would re-consider his or her approach to the issue should stakeholders object to the course being taken or should a preferred approach become available. 369 With respect to the second subtopic, namely, participation in the United States Bankruptcy Court proceedings, Mr Gothard expresses the view that a CPIP would not seek to review the material filed in support of the injunction application unless this was required for the purposes of understanding the effect of the orders. Mr Gothard said that based on his assessment of the material, that did not appear to be the case. He expresses the view that a CPIP would not have completed this work as it was not directly connected with the administration (the plaintiffs were not a party to the order), was not in furtherance of the exercise of powers and performance of his or her duties as required by the Act, other applicable legislation, or the standards of professional duties, and was not in the best interests of the parties to incur the costs of such work. 370 Mr Gothard does agree that if it had been necessary and proper to review the material supporting the injunction, then a CPIP would take steps to correct inaccurate information which he or she felt had been provided to the United States Bankruptcy Court. A CPIP would have done this by having his or her solicitors write to Mr Sharp to raise concerns about the information presented to the Court and requesting that any errors or omissions be corrected. A CPIP would have completed this work as it would have done in furtherance of the exercise of powers and performance of duties as required by the Act, other applicable legislation, or professional standards, and "in the general interests of avoiding any misleading information being put to the Court". This work was completed by the plaintiffs. Mr Gothard expands on his reasons in his report in response. It is unnecessary to refer to that report. 371 With respect to the plaintiffs' participation in the Equity Proceedings, Mr Gothard expresses the opinion that a CPIP acting in the best interests of the stakeholders would have sought to remain independent and minimise any role in the Equity Proceedings. He expresses the opinion that a CPIP would defend the proceedings insofar as allegations were made that he or she believed falsely impugned their conduct. Otherwise, a CPIP would take no part in the proceedings. A CPIP who did not believe that the allegations raised in relation to their conduct were false would appear at their own cost or not at all. A CPIP would only have sought to have the proceedings transferred to South Australia if there was a net benefit to the liquidation because of minimising costs was in the best interests of the stakeholders. A CPIP would not have filed affidavits in the proceedings opposing Mr Sharp's application for summary judgment or offered to assist the Court as contradictor in the absence of legal representation from the Salyer interests. Mr Gothard expresses the opinion that such work would not be in the best interests of both possible stakeholders and in recognition that the Court would do justice to the parties in any event. A CPIP would have acted as contradictor in the Equity Proceedings if requested to do so by the Court. Such work would be done in furtherance of the exercise of powers and performance of his or her duties as required by the Act and other applicable legislation, and in accordance with his or her duty to the Court. A CPIP would have acted as a contradictor on the recognition application if so directed by the Court. Again, such work would be done in furtherance of the exercise of powers and performance of his or her duties as required by the legislation, and in accordance with his or her duty to the Court. 372 I will deal with this work stream in the same way as Mr Gothard, that is to say, by dividing it into the three categories of investigations into the Debt and Equity Issues, the United States Bankruptcy Court Proceedings and the plaintiffs' involvement in the Equity Proceedings. This means that the investigations into the BMO lien are part of the Debt and Equity Issues. 373 Of the three categories, the largest in terms of the work done and remuneration claimed by the plaintiffs is the investigations into the Debt and Equity Issues. The other two categories - the United States Bankruptcy Court Proceedings and the plaintiffs' involvement in the Equity Proceedings - are relevantly confined. With respect to each category, the argument put by ASIC is, as I understand is, that the plaintiffs did work that was not reasonably necessary. I will need to explore this further, particularly in relation to the investigations into the Debt and Equity Issues. 374 With respect to the investigations into the Debt and Equity Issues, ASIC's objection as developed seemed to come down to the proposition that the plaintiffs should have brought an application under s 511 of the Act for directions from the Court with respect to the first course of action, the plaintiffs seemed to have followed the course a CPIP would follow, save for Mr Gothard's residual criticism that the plaintiffs should have asked the parties whether they would be prepared to abide by the liquidators' determination of the dispute as an independent arbiter. I do not think that this is of any consequence for two reasons. First, even if they had done that and the parties had agreed, it is not apparent what costs would have been avoided as the plaintiffs would still have been required to investigate the Debt and Equity Issues. Secondly, the strong emphasis of ASIC's case before me was (not unreasonably) that the plaintiffs knew that whatever they did would not stop with them, if I may use that expression, and that the issues would ultimately be resolved by a court. It is hardly to be supposed that, in those circumstances, the interested parties would agree that the plaintiffs' determination would be final. The second and third course of action suggested by Mr Gothard merge or, at the very least, overlap. As I understand it, Mr Sharp had instituted court proceedings, albeit in the United States, seeking a determination of the Debt and Equity Issues and that proceeding was stayed. He could have instituted proceedings in Australia earlier than he did, but it is not clear what effect, if any, the stay in the United States would have had on any proceedings in Australia. Insofar as the contention is that the plaintiffs should have delayed their investigations pending court proceedings, it is to be noted that the two interested parties did not object to at least some initial investigations and, in any event, Mr Gothard expresses the opinion that some initial investigations were appropriate. Furthermore, there was the prospect of evidence being lost and the plaintiffs being criticised if they did not proceed with their investigations. For these reasons, I am of the opinion that the issue with respect to the investigations into the Debt and Equity Issues comes down to whether the plaintiffs should have made an application for directions under s 511 of the Act. 375 As the statement of events indicates, the plaintiffs certainly had advice that such an application should be considered and their explanation for not doing so, insofar as it was based on their experience in the Duke administration, was very general and somewhat unconvincing. However, the failure to make an application under s 511 of the Act will only be relevant if one can be reasonably satisfied that the making of such an application would have altered the course of events. 376 Three questions arise and they are as follows: (1) What directions should the plaintiffs have sought? (2) When should the application have been made? (3) What is likely to have happened on the application? 377 There were two possibilities suggested in the submissions as to the directions which would be sought in an application under s 511 of the Act. The first was suggested by ASIC in the Aide Memoire it provided as part of its closing submissions and that was to bring "the Debt and Equity dispute before the Court for early determination". I take that to mean that the Court would be asked to determine the issue of entitlement. The difficulty with that suggestion is that that is not the purpose of an application under s 511. The interested parties would have to be served and then the proceedings converted into an ordinary civil action with the interested parties becoming the main protagonists (Australian Securities and Investments Commission v Rowena Nominees Pty Ltd [2003] WASC 112; (2003) 45 ACSR 424 at 441 per Pullen J; Editions Tom Thompson Pty Ltd v Pilley (1997) 77 FCR 141; Meadow Springs Fairway Resort Ltd (In Liq) v Balanced Securities Ltd [2007] FCA 1443; (2007) 25 ACLC 1433 at [50] per French J (as his Honour then was)). There are a number of steps in that process which, even if they were to occur, may well involve the lapse of some time. The second possibility is more in accordance with the evidence of Mr Gothard, that is, the directions sought would be as to the investigations the plaintiffs ought to carry out in the future, that is to say, from the date of the application. Directions about what the plaintiffs were or were not justified in doing would not resolve the dispute in a way which would bind the interested parties. Nevertheless, it seems to me that the Court hearing such an application would wish to have a good deal of information about the circumstances, particularly as the plaintiffs had the power (as Mr Gothard acknowledged) to resolve the Debt and Equity Issues. Furthermore, I am of the opinion that the Court is likely to have wished to hear from the interested parties as to their attitude to the directions sought. This could take some time and, in the circumstances, the plaintiffs may be permitted to continue their investigations in the meantime. 378 There is to my mind no clear indication as to when in the second half of 2011 the application under s 511 should have been brought on ASIC's case. Mr Sharp brought the Equity Proceedings on 20 February 2012. Leaving aside the matter of the preliminary injunction granted by the United States Bankruptcy Court which, like Mr Gothard, I will deal with separately, I am not satisfied that it is sufficiently clear that the plaintiffs should have brought an application under s 511 of the Act seeking the second type of directions I have identified sufficiently well before 20 February 2012 such as to conclude that they should be deprived of their remuneration for work done. 379 With respect to the preliminary injunction granted by the United States Bankruptcy Court, Mr Gothard's opinion was that a CPIP would not seek to review the material filed in support of the interlocutory application unless this was required for the purposes of understanding the effect of the orders and that, based on his assessments of the orders, that did not appear to be the case. I agree with Mr Gothard's opinion and the remuneration in relation to the review and the correspondence which followed should not be allowed as the work was not reasonably necessary. 380 With respect to the plaintiffs' involvement in the Equity Proceedings, I am not persuaded, having regard to the evidence I have identified, that the plaintiffs' involvement was such that they should be deprived of their remuneration. In my view, it was not inappropriate for the plaintiffs to act as contradictors in the Equity Proceedings to the extent necessary to address the allegations made by Mr Sharp impugning their conduct in the liquidations, particularly in light of the withdrawal of the representatives of the Salyer interests. I am satisfied based on Mr Sheahan's affidavit affirmed on 29 May 2012 filed in the Equity Proceedings that the plaintiffs otherwise sought to minimise their involvement in the Equity Proceedings by indicating to the Court their willingness to participate only to the extent considered by the Court to be appropriate. 381 With respect to the plaintiffs' application to transfer the Equity Proceedings to the South Australia District Registry of this Court, I am not persuaded, having regard to the evidence I have identified, that the plaintiffs should be deprived of their remuneration. I am satisfied based on Mr Lock's affidavit filed in support of the application to transfer the Equity Proceedings that the application to transfer was made by the plaintiffs in an attempt to minimise costs and achieve a net benefit to the liquidations. I am persuaded by the fact that no determination was made as to the merits of the application because it was ultimately dismissed by the plaintiffs on 28 March 2012 in exchange for Mr Sharp agreeing to abandon the relief sought against the plaintiffs in the Equity Proceedings regarding the review of their remuneration. 382 In conclusion, there must be reductions in relation to this work stream, having regard to my conclusions with respect to the hourly charges. Other than that, there must be what is likely to be a small reduction in relation to the area of work which I have identified. It seems to me that the parties should be able to provide the Court with assistance as to the extent of the reduction and I will hear further from the parties on that matter.

Work Done in Investigating Potential Claims Against the Directors of the Companies and ANZ 383 The bulk of the work done by the plaintiffs in relation to this work stream was done between August 2010 and April 2012. 384 The plaintiffs submitted that in the initial period following their appointment, there was an expectation that the only assets of the Companies that would be available to meet the claims of unsecured creditors was a potential claim against the directors and ANZ. They referred to Mr Sheahan's evidence that at the time he and Mr Lock reported to creditors on 23 July 2010, they were aware that the assets of the Companies had been sold by the receivers, but that settlement had not yet occurred. They were not aware of the total amount of the Companies' indebtedness to ANZ or the amounts which would be paid out of the sale proceeds to ANZ NZ under the guarantee, or what costs and remuneration would be payable to the receivers and their solicitors pursuant to the terms of their appointment, and what amount would then remain following the payment of those costs for distribution amongst unsecured creditors. They were aware at that time that the total debts of SKFA were approximately $21 million. The total debts of CJVA were approximately $8.1 million. The debts jointly owed by SKFA and CJVA incurred as Cedenco Australia were approximately $21.2 million, and that the total debts of SSFA were approximately $20.65 million. I have already addressed the issue of Mr Sheahan's knowledge at that time (at [111] and [227]). The fact is that from 30 June 2010 onwards, the plaintiffs knew that the sale price achieved in relation to the Companies' assets was excellent and should result in a significant surplus for shareholders in both Australia and New Zealand. 385 Therefore, the parties with an interest in any claim against the directors and ANZ were the shareholders, although as Mr Lock said in cross-examination, the identity of the shareholders had not at that stage been determined. Again, as I have previously said, Mr Sheahan admitted in cross-examination that, in August 2010, there were only two parties who were potentially interested in the successful prosecution of a claim against ANZ. He knew that those two parties were Mr Sharp and the interests he represented on the one hand, and the Salyer interests on the other (at [153]). 386 By about early August 2010, the plaintiffs had identified a number of matters as a result of their initial inquiries and review of the books and records of the Companies. Those matters related to the circumstances and basis for the appointment of receivers to the Companies and were the basis for their view that there may be claims against the directors of the Companies and ANZ (see at [151]). Those matters were as follows. 387 First, in or about October 2006, the directors of the Companies executed a guarantee under which the Companies cross-guaranteed the debts of any and all of them to ANZ NZ. I will refer to that guarantee as the 2006 Guarantee. 388 Secondly, in July 2009, the Companies entered into a deed of cross-guarantee with ANZ and ANZ NZ, the New Zealand Companies and SK Foods International. SK Foods International was the New Zealand parent company of the New Zealand Companies. I will refer to that guarantee as the 2009 Cross-Guarantee. The execution of the guarantee was a pre-condition for the extension of funding to the New Zealand Companies. Under the terms of the 2009 Cross-Guarantee, each company acknowledged and agreed that an event of default under the 2009 Cross-Guarantee by one company would be considered a default by all companies, in addition to guaranteeing the indebtedness of all the Companies to ANZ and ANZ NZ. The 2009 Cross-Guarantee was not accompanied by any cross-collateralisation of the debts and this meant that even though an event of default by one of the New Zealand Companies might trigger the appointment of a receiver to the Companies, there was no recourse by ANZ NZ to the assets of the Companies other than by calling on the guarantee. The effect of the 2009 Cross-Guarantee for the Companies was that they were exposed to a significant additional risk, as ANZ could and, as it happened, did, treat a breach by any one of the New Zealand Companies as a breach by each of the Companies, thereby allowing ANZ to enforce its rights under its security documents and appoint a receiver and manager. 389 Thirdly, in the 18 months prior to the 2009 Cross-Guarantee, one of the New Zealand Companies, Cedenco Foods, had been in continuous default of its banking covenants and continued to be in default from the first reporting period after entry into the 2009 Cross-Guarantee. The directors of Cedenco Foods, in the course of a later examination, gave evidence to the effect that there was no realistic prospect of the New Zealand Companies ever complying with their banking covenants in the months following entry into the 2009 Cross-Guarantee. 390 Fourthly, although cross-guarantees existed before the 2009 Cross-Guarantee, those prior cross-guarantees did not confer a right on ANZ or ANZ NZ to do other than call on the guarantee in the event of default by the principal borrower. Mr Sheahan described the effect of the 2009 Cross-Guarantee as being that either ANZ or ANZ NZ could appoint a receiver to the non-defaulting entity immediately upon default by the principal borrower notwithstanding that there might not ultimately be a shortfall requiring any payment under the guarantee, and notwithstanding that the guarantee was not supported by any charge over the guarantor's assets. 391 Fifthly, Mr Sheahan said that immediately prior to the appointment of receivers over the Companies and the New Zealand Companies, ANZ NZ rejected an offer to purchase the operations of the New Zealand Companies by Imanaka Ltd for NZ$28.7 million. This figure was the mid-range valuation of the operations according to a valuation by Grant Thornton which had been commissioned by ANZ NZ in August 2009. Imanaka Ltd eventually paid the New Zealand receivers NZ$26.5 million for the New Zealand operations. That occurred in August 2011. Mr Sheahan said that the offer of NZ$28.7 million by Imanaka Ltd, if accepted, would have discharged the debt owing to ANZ NZ in full and prevented ANZ or ANZ NZ from appointing receivers to the Companies because there would no longer have been any default by the parties to the 2009 Cross-Guarantee. 392 It was having regard to the above circumstances that the plaintiffs considered that the directors may have breached their statutory and fiduciary duties to the Companies given the apparent lack of consideration or benefit to the Companies on entering into the 2009 Cross-Guarantee and that the banks may have knowingly assisted or been involved in those breaches. The plaintiffs formed the view that it was appropriate to undertake further inquiries with a view to identifying the extent to which viable causes of action were available to the Companies. The plaintiffs considered that such causes of action may include a claim that entry into the 2009 Cross-Guarantee involved a breach by the then directors of the Companies of their fiduciary and statutory duties; a claim of knowing assistance in a breach of those duties by ANZ and ANZ NZ; and a claim of knowing receipt of the proceeds of such breaches by ANZ and ANZ NZ resulting in those entities being constructive trustees. 393 Mr Sheahan said that he and Mr Lock had discussions with the principal stakeholders in the Companies before the second meeting of creditors on 11 August 2010. They understood from those discussions that the Salyer interests wanted a possible claim against ANZ and ANZ NZ investigated and, if appropriate, pursued, and that those interests considered that this was best pursued by the plaintiffs as experienced liquidators. 394 Mr Sheahan said that Mr Sharp also expressed support to the plaintiffs for such investigations, subject to him first discharging his obligations to the syndicate of banks who were secured lenders to SK Foods, LP. Mr Sharp said that in August 2010, he told Mr Sheahan that he did not support the pursuit of the potential claims against the directors and ANZ using liquidation funds, but may support those claims being pursued with the benefit of litigation funding. I have already set out Mr Sharp's version of this conversation (at [226] and [244]) and that of Mr Sheahan (at [152]). As I have said, I think Mr Sharp, who had the resolution of the Debt and Equity Issues on his mind as a priority, expressed interest in the potential claims against the directors and ANZ and, on any view, during the conversation reference was made to litigation funding. I accept Mr Sharp's version of the conversation which he repeated in the conversation he had with Mr Sheahan on 25 October 2010 (at [228]). In any event, there was certainly no general approval to pursue whatever investigations were considered necessary for whatever period and at whatever cost. 395 The plaintiffs considered that it was prudent to obtain preliminary legal advice about the viability of the potential claims against the directors and ANZ and ANZ NZ and as to the appropriate investigations to be undertaken. On 3 September 2010, DMAW retained Professor James O'Donovan for this purpose. 396 On 11 October 2010, Professor O'Donovan provided an opinion with respect to the potential claims. Mr Sheahan's description of that opinion is sufficient for present purposes. It was that the opinion was to the effect that: (1) the directors of the Companies appeared to have breached their duties to the Companies and further evidence should be sought from company records or public examination; (2) ANZ and ANZ NZ may be liable as accessories to those breaches; (3) whilst it would be difficult to prove knowing assistance by the ANZ/ANZ NZ in a breach of fiduciary duty by the directors, the banks might be liable as constructive trustees for knowing receipt of trust property; (4) the 2009 Cross-Guarantee appeared to be an uncommercial transaction and an unreasonable director-related transaction and arguably an insolvent transaction; and (5) the damages recoverable by the Companies may include compensation for loss of the business and payment of CGT liability. 397 In October 2010, Mr Sheahan had a telephone conversation with Mr Shepard, who was one of the receivers. Mr Shepard said that the receivers would release $5 million of the surplus funds held by them if the plaintiffs agreed to provide a total release to the receivers and to ANZ. This conversation occurred at a time when the receivers had paid ANZ in full and had not yet remitted any funds to the plaintiffs. Mr Sheahan rejected Mr Shepard's proposal and indicated to him that the receivers were required to remit all of the surplus funds to the plaintiffs. The receivers refused to resign based on the apprehension of a claim against them and ANZ, and in the proceedings in the Supreme Court of Victoria which they instituted, they quantified defence costs of such a claim at a figure in excess of $10 million. These matters are referred to in more detail in the section dealing with the applications relating to the receivers. 398 On 25 October 2010, Mr Sharp expressed doubts to Mr Sheahan about whether the Companies could establish any loss in a claim against ANZ given the sale price which had been achieved. Mr Sheahan said that it would be necessary to obtain an expert view on whether the sale price was a proper price, but an expert opinion of that nature was never obtained. Mr Sheahan said that such an opinion would need to be obtained "if the matter had gone to trial". Further details of this conversation are set out above (at [228]). 399 On 17 November 2010, Professor O'Donovan provided a further opinion regarding the potential liability of ANZ and ANZ NZ, and the investigations that might be carried out in that regard. Again, Mr Sheahan's description of the effect of that further advice is sufficient for present purposes. It was that the effect of the advice was as follows: (1) the directors of the Companies appeared to have breached their duties in entering into the 2009 Cross-Guarantee; (2) ANZ and ANZ NZ may be liable as accessories to the breaches of duty by the directors of the Companies; (3) ANZ and ANZ NZ may be liable as constructive trustees for receiving property of the Companies with actual or constructive knowledge of the breach of fiduciary duties by the directors; (4) further investigations, in the form of public examinations, particularly of Ms Dekker, who was a relationship manager for the Cedenco Group based in New Zealand at ANZ NZ, should be pursued; and (5) examinations should be conducted in New Zealand and the United States pursuant to the model law on cross-border insolvency. 400 On 22 December 2010, the plaintiffs resolved to undertake examinations in Australia and New Zealand with respect to the circumstances surrounding the appointment of receivers to the Companies and to the New Zealand Companies, and the potential claims. Mr Sheahan said that in consultation with DMAW, the plaintiffs formulated a list of targets for examination summonses and orders for the production of documents. The plaintiffs did not at this time, or indeed at any time, prepare a work plan or budget or undertake a cost/benefit analysis in relation to their investigations concerning potential claims against the directors and ANZ. Nor did they obtain at any time written legal advice as to the quantum of the potential claims as against the directors and ANZ. These matters were admitted by Mr Sheahan in cross-examination. 401 As I have earlier said in dealing with Mr Sharp's evidence, in late 2010 and early 2011, he was seeking from the plaintiffs fee estimates and a timetable with respect to the investigations. Mr Nuti's agenda for a telephone discussion in the first half of March 2011 refers to information flow and a budget consistent with certain matters, including claims against ANZ. 402 I have already set out Mr Sharp's email to the plaintiffs dated 17 March 2011 (at [236]). On 18 March 2011, Mr Van C Durrer II, on behalf of the Salyer interests, wrote to the plaintiffs' United States lawyers in terms which included the following: My understanding is that the trustee in the SK Foods chapter 11 case has requested information regarding the expenses to date incurred by the liquidator in these chapter 15 cases, an explanation of what the liquidator is attempting to accomplish and a budget for completion for those tasks. As the only other significant constituency in these cases, we request the same information and join in the trustee's request for it. 403 Mr Sharp said that the plaintiffs never provided him with a budget or a timeline or reports as he had requested. Mr Sharp said that the plaintiffs did not provide him with a report in relation to their consideration of the potential claims against ANZ or advice on the prospects of the potential claims until on or about 8 August 2013. 404 Although the plaintiffs had no legal advice on the probable or possible quantum of the claims against the directors and ANZ, they believed that such claims could be very significant. Mr Sheahan said that he and Mr Lock quantified the potential claims against the directors and ANZ at a figure in excess of $30 million. This figure included, to quote from Mr Sheahan's first affidavit, the following: 59.1 damages arising from the fire sale nature of the asset sale which was likely to have had an adverse impact on the sums that were received when compared to the sales price that may have been achieved through an orderly sales process; 59.2 compensatory damages in equity for improperly taking possession of and selling a profitable privately owned business; 59.3 compensation for the capital gains tax paid. The sale of the assets crystallised a capital gains tax liability that would not otherwise have been incurred, in the sum of approximately $10.5 million for SKFA/CJVA and approximately $4.5 million for SSFA; 59.4 compensation for the brokers' fee of approximately $2.5 million paid to Goldman Sachs JB Were for their conduct of the sale process which may not otherwise have been incurred; and 59.5 the total fees and costs of the receiverships and the liquidations, which would not otherwise have been incurred. I estimated that such costs could be in excess of $10 million in total. 405 Mr Sheahan gave evidence of some of the work that he carried out as part of the plaintiffs' investigations. For example, the plaintiffs examined Mr Heath and Mr Lawrence in this Court on 6 September 2011 and, in general terms, those examinations dealt with matters relevant to the role of ANZ and the 2009 Cross-Guarantee, the Spin Off transaction, including the disputed shares and intercompany debt and a "trade receivable" allegedly owing to SK Foods, LP. On 12 and 13 October 2011, examinations were conducted in New Zealand of Reynolds, Geor, Chrisp, Hay and Frankish. Each of those persons produced at or prior to the examination, documents in their possession that related to the Companies and the New Zealand Companies. 406 On 5 August 2011, DMAW wrote to the United States lawyers for Mr Sharp and in the course of their letter said the following: 26. The liquidators conducted examinations of Ms Dekker and Mr Mayne in New Zealand in relation to the circumstances of the guarantee executed on 31 July 2009 by SKFA, CJVA and SSFA and the appointment of receivers. 27. The liquidators are proposing further examinations in New Zealand of David Mark Geor and Michael John Reynolds. They may also seek to re-examine Ms Dekker. 28. Your client has informed our clients that the senior creditor of SKFLP, BMO, does not favour funds in the liquidations being used to fund any potential action against the ANZ group and would prefer to see that handled in a different way. Our clients have held preliminary discussions with a litigation funder. (Emphasis added.) 407 In December 2011, the plaintiffs sought and obtained advice concerning their duties in investigating the claims and conducting further investigations. On 1 December 2011, DMAW provided advice to the plaintiffs. DMAW were asked whether the plaintiffs had acted in accordance with their duties under Australian law in pursuing their investigations to date in the administrations of the Companies, and having regard to the information gathered to date from those investigations, what steps the plaintiffs should now take. DMAW noted the inquiries that the plaintiffs had undertaken by way of the compulsory production of documents, examinations and depositions of various persons in Australia, the United States and New Zealand in connection with three principal issues (see [337] above). 408 DMAW expressed the view that the plaintiffs had acted in accordance with their duties to the Australian companies in pursuing investigations to date in relation to each of the three matters. Furthermore, they expressed the view that "further targeted investigations" with respect to the claims issues would be consistent with the liquidators' duties to augment the assets of the Australian companies. They indicated that they had in mind, in particular, seeking to examine ANZ and ANZ NZ personnel and seeking production from the banks for the purposes of those examinations. DMAW recommended "as previously discussed" that the plaintiffs give consideration to seeking the Court's directions pursuant to s 511 of the Act. Mr Sheahan's explanation in his first affidavit (paragraphs 217 and 235) of the reasons the plaintiffs did not make such an application relates wholly to the Debt and Equity Issues. 409 Mr Sheahan said in evidence that as soon as both Mr Sharp and the Salyer interests indicated that they opposed any further investigation into the potential claims against the directors and ANZ, the plaintiffs suspended their investigations. In around April 2012, the plaintiffs were aware of Mr Sharp's opposition to further investigations into potential claims against ANZ and, on 19 April 2012, the Salyer interests indicated that no further investigations should be undertaken into potential claims that SSFA may have against ANZ. Mr Sheahan said that the only work undertaken by the plaintiffs in relation to the potential claims in Australia after April 2012 was minor. It is instructive to set out what Mr Sheahan said in his first affidavit: 309. In around April 2012, Mr Lock and I were aware of Mr Sharp's opposition to further investigations into potential claims against ANZ, however we had not sought to ascertain the attitude of the Salyer Interests. Hence, on 3 April 2012, DMAW Lawyers wrote to Polczynski Lawyers, the solicitors acting for the Salyer Interests in Australia (Polczynski), seeking his clients' views of our foreshadowed investigations. A copy of that correspondence appears at page 917 A of JS-1. SALYER INTERESTS VIEWS ON INVESTIGATIONS 315. On 19 April 2012, Polczynski sent a letter to DMAW Lawyers responding to the correspondence referred to in paragraph 309 above. That correspondence was to the effect that in their clients' view no further investigations should be undertaken into Potential Claims that SSFA may have against ANZ. A copy of that correspondence appears at page 932A of JS-1. SUSPENSION OF INVESTIGATIONS INTO POTENTIAL CLAIMS 316. Having regard to the positions of Mr Sharp and the Salyer Interests (the two competing claimants to any surplus and the Disputed Shares), Mr Lock and I suspended our investigations into the Potential Claims in Australia. The only work undertaken by us on that issue following April 2012, which was minor, related to: 316.1 responding to any requests from, for example, Mr Sharp in relation to those investigations; 316.2 providing Mr Sharp with the details of the outcome of those investigations, including provision of a report on 9 August 2013 as deposed to at paragraph 52 of the Second Lock Affidavit below; 316.3 proceedings on foot in the New Zealand courts, as referred to in paragraph 148 above and discussed further below; 316.4 discharging the examination summonses of Mr Heath and Mr Lawrence, which occurred on 2 May 2012. 410 It seems that the plaintiffs consulted with the Salyer interests before their appointment as liquidators, but that after that, the plaintiffs did not consult with the Salyer interests until April 2012. 411 Mr Sheahan said in his second affidavit that in deciding to undertake investigations into the potential claims against the directors and ANZ following the receipt of advice from Professor O'Donovan, and in considering the nature and extent of those investigations, the plaintiffs gave consideration to "(amongst other things)": (1) the estimated quantum of the claim of $30 million; (2) the plaintiffs' experience to the effect that it would be necessary to demonstrate to a potential funder (through the results of investigations) that there was a sufficiently viable case before a funding commitment would be made; (3) the costs of investigating the potential claims to the point where a commercial funder would be prepared to fund the prosecution of the claims would be relatively low by comparison to the potential value of the claim and benefit to the creditors and shareholders; and (4) the information that would be required in order for an informed determination to be made as to the merits of the potential claims. Mr Sheahan said that he and Mr Lock were also conscious of the fact that there was an overlap between the investigations concerning the disputed Debt and Equity Issues, and the potential claims against the directors and ANZ which reduced the relative costs of the investigation of the potential claims. 412 The principal points made by the plaintiffs were as follows. First, Mr Sheahan gave evidence that in his experience litigation funders require significant information before they consider a grant of funding. Secondly, the plaintiffs submit that they had a duty to augment the assets of the Companies and it was a matter for the exercise of their commercial and professional judgment as to how they went about doing that. They referred to the decision of the Court of Appeal in Hall v Poolman [2009] NSWCA 64; (2009) NSWLR 99 in which the Court said (at [144] and [149]): The liquidator's duty to salvage the company's property for the benefit of creditors is an aspect of the broader duty to collect the assets of the company: A Keay, McPherson's Law of Company Liquidation, 4th ed (1999) Sydney, LBC Information Services, at 5. Wide powers are available to the liquidator to discharge this duty, including the power to bring any legal proceeding in the name of and on behalf of the company: s 477(2)(a) and s 506(1)(b); see Bacich v Australian Broadcasting Corporation (1992) 29 NSWLR 1 at 10. As Brownie J pointed out in that case (at 11), citing Gray v Bridgestone Australia Ltd (1986) 10 ACLR 677; 4 ACLC 330, a liquidator is not obliged to seek the authority of the court or creditors before instituting proceedings on behalf of the company, even though the proceedings will be, in effect, at the creditors' expense; but the liquidator is obliged to make the relevant decisions with the skill and care appropriate to his or her office, and the negligent exercise of the power to bring proceedings may lead to the liquidator being deprived of costs: see also Ford's Principles of Corporations Law (LexisNexis, looseleaf) at [27.171]-[27.172]. Generally speaking, liquidators seeking to discharge their duty to collect the assets of the company by recovery proceedings should do so with costs and benefits clearly in view, the relevant benefits primarily being benefits to creditors. The liquidator's statutory powers, including the exercise of statutory powers such as those conferred by s 477(2)(a) and s 506(1)(b), must be exercised bona fide for the purpose for which they were conferred; that is, for the purpose of collecting the assets of the corporation for, relevantly, the benefit of creditors. This is a principle of private law deriving from the doctrine of fraud on a power, which has a close analogy in public law: see, for example, General Assembly of the Free Church of Scotland v Lord Overtoun; Macalister v Young [1904] AC 515 at 695; Duke of Portland v Topham (1864) 11 HL Cas 32 at 52; 11 ER 1242 at 1251; Galloway v London Corporation (1866) LR 1 HL 34 at 43; Arthur Yates and Co Pty Ltd v Vegetable Seeds Committee (1945) 72 CLR 37 at 67-68, 82-83; The Queen v Toohey; Ex parte Northern Land Council (1982) 151 CLR 170 at 186-187; Whitehouse v Carlton Hotel Pty Ltd (1987) 162 CLR 285 at 288-294. 413 ASIC objects to the bulk, but not all of the fees claimed with respect to this work stream. As I understand it, ASIC's case is reflected in Mr Gothard's opinions which I now summarise. 414 Mr Gothard's opinions about the work done in investigating potential claims against the directors and ANZ were formulated by reference to the tasks carried out by the plaintiffs. I mean by that that he expressed the opinion that a CPIP would carry out certain tasks which he identified, but would only carry out other tasks which he identified with the agreement of the stakeholders or with litigation funding. That follows, as I understand Mr Gothard's opinions, because the stakeholders, or at least one of them depending on the resolution of the Debt and Equity Issues, would be the ultimate beneficiary of a successful claim for damages or compensation and would carry the costs burden of an unsuccessful claim. A CPIP would not carry out the second category of tasks identified by Mr Gothard without the agreement of the stakeholders or litigation funding. Litigation funding was not obtained in this matter and may be put to one side. 415 The tasks which are within Mr Gothard's first category are the following: (1) briefing solicitors and counsel to obtain legal advice on possible claims against the directors of the Companies and ANZ; (2) seeking updated advice from solicitors on potential claims; (3) initial inquiries regarding ANZ; (4) identification of potential causes of action against directors of the Companies and ANZ; (5) investigations, including meeting with the New Zealand receivers and New Zealand solicitors and former directors of the Companies; and (6) applying for recognition of the liquidations of the Companies in New Zealand. 416 In Mr Gothard's opinion, the tasks which the CPIP would not carry out without the acceptance or agreement of the stakeholders or litigation funding are as follows: (1) seeking legal advice on cross-border procedural issues; (2) seeking production of documents from ANZ and former solicitors of the Companies; (3) seeking advice on the adequacy of production by ANZ; (4) instructing solicitors in relation to correspondence about productions by ANZ; (5) applications in New Zealand and Australia for the issue of examination summonses and the production of documents; (6) examinations in Australia and New Zealand; (7) responding to application by ANZ to discharge orders for production in the Federal Court; (8) seeking further orders for production in New Zealand; (9) application in New Zealand proceedings to compel production of documents by ANZ; (10) seeking funding in respect of the investigations and potential claims; (11) reporting to creditors on investigations; (12) matters which the plaintiffs identified as requiring investigation in New Zealand and Australia and for which subpoenas were issued and examination summonses sought, including: (a) the interrelationship between the financing arrangements of the Companies and the New Zealand Companies; (b) the action of ANZ in enforcing its right under these security documents; (c) the legitimacy of the appointment of receivers; and (d) investigations into potential causes of action against directors of the New Zealand Companies. 417 A liquidator has a duty to collect the assets of a company and those assets may include rights of action. A liquidator does not need court approval or the approval of creditors before he or she begins proceedings, although it may be prudent for the liquidator to obtain the approval of creditors before beginning particular proceedings. A liquidator has wide powers to investigate transactions involving the company, including (but not limited to) the type of voidable transactions identified in Division 2 of Part 5.7B of the Act. The wide powers to which I have referred include those involving the examination of persons and the production of documents contained in Part 5.9 of the Act. There is also a public interest element in the liquidator's role. A liquidator who detects possible criminal conduct or the misapplication or retention of property or negligence, default, breach of duty or breach of trust in relation to the company, must lodge a report with respect to the matter with ASIC. Nevertheless, as I will explain in the context of work done in connection with the issues arising under the POC Act, there must be a nexus with the beneficial winding up of the company (see [442]). 418 In this case, it was clearly not inappropriate for the plaintiffs to carry out some investigations into the circumstances leading to the administrations and then liquidations. Those investigations included some investigations into the circumstances surrounding the cross-guarantee. Furthermore, in the case of a potentially large claim against a bank, there was certainly the possibility of litigation funding. To that end, the liquidator is ideally placed to gather information by the examination process and orders for the production of documents. It is undoubtedly the case that the more relevant information that is available, the more likely it is that an accurate assessment of the risk involved in bringing a claim can be determined. As I have said, Mr Sheahan referred in his evidence to the need to establish to a potential litigation funder that the proposed case is sufficiently viable. No doubt at a very general level that is true, but the proposition is not related to the specific circumstances of this case. Even if it was, in my opinion it does not provide the answer in this case. 419 The facts of this case are unusual. By December 2010, the ordinary unsecured creditors of SKFA and CJVA whose claims had been admitted, had been paid 100 cents in the dollar together with post liquidation interest. By January 2011, the ordinary unsecured creditors of SSFA whose claims had been admitted, had been paid 90 cents in the dollar with the balance of their debts and post liquidation interest paid by April 2012, save for the claim of Cedenco. At the time of liquidation, or shortly thereafter, there were only two parties - Mr Sharp and the Salyer interests - interested in the successful prosecution of a claim against ANZ. 420 One of those parties, Mr Sharp and the interests he represented, had made it clear that he would only be interested in pursuing a claim against ANZ with litigation funding, that he was concerned about whether any loss was caused by ANZ's conduct and that he wanted details of what was proposed and the costs of further investigations. The other party joined in the request for information in March 2011. That party had favoured investigations in August 2010, but when asked again in April 2012, did not favour further investigations. 421 I am of the opinion that the plaintiffs were entitled to proceed further with their investigations than the point identified by Mr Gothard. I have reached that view because a liquidator has a general duty to augment the assets of a company and because litigation funding had not been ruled out and some investigations towards securing litigation funding was not unjustifiable. 422 In my opinion, however, the turning point came in March 2011 when both parties potentially interested in the fund, which would be used to meet the cost of further investigations and possible legal proceedings, indicated that they wanted information as to proposed further investigations and the likely costs thereof. It was at or about that point that the plaintiffs were obliged to cease their investigations or provide the information sought by the only two parties interested in the fund and obtain their agreement to the plaintiffs continuing their investigation. Had there been any difficulties between the two parties, or some other element in the circumstances was relevant to the plaintiffs' proposed conduct in the plaintiffs' eyes, then they should have applied to the Court for directions under s 511 of the Act. It may be that had the plaintiffs provided information it might have been their recommendation that further investigations were needed before a decision could be made about litigation funding. It may also be that the act of providing information would have focused the attention of the plaintiffs and the parties to a far greater extent on the issue of the loss and damage which could be established. In a sense, both these matters are speculation because the information was not provided. In the absence of clear evidence that even with the information, the plaintiffs' investigations would have proceeded in the way in which they did (and there is no such evidence), it is not to point to speculate about what may have happened. In my opinion, the plaintiffs were bound to lay the requested information before the two interested parties. They cannot recover their subsequent remuneration in the absence of doing so. 423 I would allow some time after March 2011 for the information to be prepared and then considered by the interested parties and perhaps some discussions to take place. There might also be some uncompleted tasks that should be allowed, although I note that this is the very sort of thing that would have been considered had the relevant information been provided. 424 In my opinion, it is appropriate, in relation to this work stream, to allow the plaintiffs' remuneration up to 30 June 2011, but not thereafter. I am not satisfied that after 30 June 2011, the work in relation to this work stream was reasonably necessary. 425 The plaintiffs' estimate in relation to this work stream was $1.3 million. ASIC, whose case would have led to a greater reduction, submitted that there should be a broad, in the sense of a substantial, discount in relation to this work stream. I expect that now that they have a date, the parties will be able to provide the Court with a more accurate estimate of the appropriate discount of the figure of $1.3 million (after it has been reduced, having regard to my conclusions in relation to hourly charges) on the basis that remuneration before 30 June 2011 is allowed and remuneration thereafter is not.

Work Done in Connection with the Issues Arising under the POC Act 426 As I have said, the plaintiffs estimated that of their total remuneration, an amount of $250,000 related to issues concerning the POC Act. ASIC challenged this estimation. On ASIC's calculations of the remuneration claimed by the plaintiffs, at least $354,810.50 related to issues concerning the POC Act. The way in which this calculation is performed is set out in ASIC's Notice of Objection. Schedule 2, which relates to SKFA and CJVA, sets out entries at pp 152-192 which apparently relate to dealings with the AFP and issues concerning the POC Act. The total hours identified are 571.09 hours leading to fees totalling $308,795.40 for the period starting on 16 August 2012 and ending on 13 November 2013. Schedule 4, which relates to SSFA, sets out entries at pp 261-299 which apparently relate to dealings with the AFP and issues concerning the POC Act. The total hours identified are 82.83 hours leading to fees totalling $46,014.99 for period starting on 21 September 2012 and ending on 25 October 2013. 427 For the Companies considered together, the total figure for hours is 653.92 hours and the total figure for fees is $354,809.99. The period is from August 2012 to November 2013. I have considered the entries taken from the WIP reports and it seems to me that ASIC's analysis is correct. Mr Sheahan accepted that his estimate might be low. I accept that the figure to which ASIC contends a discount should be applied is at least $354,809.99. It indicates that the plaintiffs' approximations are very much approximations. 428 The relevant events are as follows. 429 The plaintiffs were undertaking work on the issues involving the POC Act from at least mid-August 2012. 430 I turn to September 2012. On 5 September, the plaintiffs received legal advice about the application of the POC Act and that advice was to the effect that there was an obligation to report the plaintiffs' concerns to ASIC, there was no obligation to report to the CDPP and the plaintiffs were reminded of their duties under s 533 of the Act. On or about 11 September, the plaintiffs notified ASIC that the surplus funds might be proceeds of crime. On 14 September, Mr Sheahan and the plaintiffs' solicitors attended a meeting at ASIC's offices in Sydney. Representatives of the AFP also attended the meeting. Mr Sheahan states that on 14 September, the plaintiffs notified ASIC that the surplus funds might be proceeds of crime. The notification produced by Mr Sheahan indicates that it was addressed to the AFP with a copy to ASIC. On 18 September, the plaintiffs had a meeting with representatives of the AFP in Adelaide. On 20 September, the plaintiffs produced documents to the AFP. I will come back to the issue of whether this was done voluntarily at that stage, or pursuant to a notice under s 202 of the POC Act. Also in September (and, it seems, August), the plaintiffs prepared a brief to ASIC, the CDPP and the AFP regarding the POC Act, prepared additional materials for a second meeting with ASIC and the AFP on 18 September, and compiled documents for the AFP investigation from about 20 September 2012 to 3 October 2012, including a brief regarding potential claims against ANZ. 431 I turn to October 2012. On 3 October, the plaintiffs produced further documents to the AFP. The plaintiffs liaised with the law enforcement agencies, attending meetings with the AFP involving issues concerning the POC Act on 4 October (in Sydney), 5 October and 29 October. The plaintiffs were served with a notice to produce documents on or about 15 October and spent time organising documents for the AFP between 16 October and 15 November. 432 One issue which arose in the course of the trial was whether there was more than one notice to produce under s 202 of the POC Act. Only one notice was produced by the plaintiffs and that was dated 15 October. When it was pointed out to Mr Sheahan that the plaintiffs had prepared a list of documents on or about 20 September which was reflected in part, at least in the notice dated 15 October, and that the plaintiffs had produced documents to the AFP on 20 September and further documents on 3 October, he said he thought there was another notice although, as I have said, no other notice was produced. I infer that there was no earlier notice than that dated 15 October and that, as ASIC submitted, the plaintiffs' actions indicate that they were voluntarily cooperating with the AFP. 433 On 15 May 2013, the AFP brought an application under the POC Act in the Supreme Court of Victoria and the plaintiffs were named as defendants and served with the proceedings. 434 On 24 May 2013, Mr Sharp, as Chapter 11 Trustee in Bankruptcy of SK Foods, LP filed a notice of opposition in the POC Act Proceedings. Mr Sharp made allegations of misconduct against the plaintiffs in the proceedings and issued subpoenas directed to the plaintiffs. 435 Before the institution of the proceedings, a summary of the work which the plaintiffs carried out is as follows: attending a meeting with the AFP on 10 April 2013; attending a teleconference with the AFP on 2 May 2013; travelling to Melbourne to attend a meeting with solicitors and the AFP on 19 April 2013; and collating documents for the AFP and preparing a brief to counsel and the AFP from 11 April 2013 to 3 May 2013. 436 Between the institution of the proceedings and their settlement in November 2013, a summary of the work carried out by the plaintiffs is as follows: attending a meeting with the AFP on 8 November 2013; travelling to Melbourne to attend a meeting with solicitors, counsel and the AFP on 28 August 2013 and 13 November 2013; preparing a memorandum to the AFP from 3 June 2013 to 11 July 2013; collating documents for the AFP from 7 August 2013 to 20 September 2013; and arranging for a number of staff members and legal representatives to attend hearings of the POC Act Proceedings, including travelling to Melbourne to attend hearings in the POC Act Proceedings on 28 May 2013, 2 August 2013, and 23 September 2013. There also seems to have been an attendance at a hearing in the POC Act Proceedings on 7 November 2013. 437 I have already referred to the evidence of Mr Saggers. At no time during the liquidations did the plaintiffs lodge a report under s 533 of the Act with ASIC. The plaintiffs did not at any time prepare a written or formal work plan, budget or cost/benefit analysis in relation to the POC Act issues. The plaintiffs have not provided costs estimates for the legal services they received and which relate to the issues concerning the POC Act. 438 Broadly speaking, ASIC submits that other than initial reporting and assistance, the plaintiffs have not shown that any of the other work was for the benefit of the liquidations. ASIC submits that the amount claimed should be discounted by 90%. I will come to ASIC's case in more detail shortly. 439 Mr Sheahan addressed the reasons he and Mr Lock performed the work they did in connection with the POC Act and the POC Act Proceedings. He said that he and Mr Lock considered that, in providing information to and attending meetings with the AFP, they were complying with their duties as liquidators and officers of the Court. Furthermore, in providing information and documents to the AFP and attending meetings with it, they may have avoided the need for the AFP to exercise compulsory powers which may in the long run have been a more costly exercise for the liquidations and the Commonwealth. With respect to a number of particular meetings identified by ASIC, Mr Sheahan said that although he could not recall with precision the content or purpose of the meetings, he and Mr Lock considered that they were complying with their respective duties and "the interests of the parties which might have a lawful interest in the assets of the companies". Mr Sheahan said that where possible they would schedule meetings with the AFP on dates while there were other matters to attend to in the other location and he gave an example. Overall, Mr Sheahan said that they carried out the work they did because they considered that they were obliged to and did not carry out any work over and above what they considered they were duty bound to carry out. With particular reference to the attendance of staff members at hearings in the POC Act Proceedings, Mr Sheahan pointed to the following justifications: (1) the proceedings concerned the subject matter and funds in the liquidations; (2) Mr Sharp's allegations concerning the conduct of the plaintiffs; and (3) the plaintiffs' duties to the Court. 440 There are two other matters which should be mentioned. First, Mr Sheahan said that the plaintiffs engaged a lawyer who had expertise in white collar crime, Mr Robert Wyld of the firm, Johnson Winter & Slattery, for the purposes of advising the plaintiffs on the proceeds of crime issues. He attended meetings with ASIC and the AFP. No doubt it is correct to say that he was advising the plaintiffs as to these issues, but there is nothing to suggest that he advised them about the particular matter of their obligations as liquidators of the Companies under administration to provide assistance to the AFP and their right to claim remuneration from the administrations for such assistance. There was no written advice about these matters and if Mr Sheahan suggested in cross-examination (at transcript 108-109) that there was oral advice about these matters (and it is not clear to me that he did), I do not accept the evidence. If there had been such advice, one would expect to see it referred "loud and clear" in his affidavits. Secondly, the plaintiffs rely on the fact that post resolution of the POC Act Proceedings at a workshop, an ASIC representative did not comment adversely on their conduct and that the AFP said that the plaintiffs had acted appropriately. This does not take the matter very far. 441 In my opinion, the following matters support ASIC's objection. 442 First, although a liquidator's functions and duties are not limited to their duties to realise and get in assets of the company and to distribute the assets to those persons entitled to them and extend to matters of public interest, such as reports under s 533 of the Act and investigations into possible civil or criminal proceedings arising out of the insolvency of corporations, there must be a nexus with the interests of creditors of the beneficial winding up of the company (Re HIH Insurance Ltd (in liq); McGrath (in his capacity as Liquidators of HIH Insurance Limited (in liq)) [2001] NSWSC 997; (2001) 39 ACSR 645 at [17]-[19] per Santow J). The plaintiffs cannot charge for work done merely on the basis that they were cooperating with the AFP. 443 Secondly, Mr Sheahan said in cross-examination in answer to a question as to whether he turned his mind to whether what he was doing was in the interests of shareholders that he did not think that it even crossed his mind and that he doubted that the work he did in assisting the AFP was in the interests of the SKFA shareholders. The relevant passage is as follows: MR VAUGHAN: Why was any work that you did in assisting the Australian Federal Police in the interests of the SKFA shareholders?---I doubt that it was. Why was any work that you did in assisting the Australian Federal Police in the interest of the beneficial winding up of the company?---I think it never - I think no one ever raised any suggestion that we should do anything other than cooperate fully with the lawyer authorities. We were clearly the custodians of the funds. We were clearly custodians of the records and of evidence concerning likely - concerning the equity and the debt, other assets, and they were - they were talking to us and our capacity as liquidators, as a party which controlled the moneys, in the same way that they were dealing with the receivers. Can you direct yourself to my question, please, Mr Sheahan?---I thought I had. Listen to the question. Why was the work that you did in assisting the Australian Federal Police in the interests of the beneficial winding up of the company?---Because it was a task that was asked of us. Assistance was requested by the AFP to us in our capacity as liquidators. Did you turn your mind at the time to the question of whether what you were doing was in the interests of the shareholders?---I don't think it even crossed my mind. 444 Thirdly, work carried out by the plaintiffs which was properly chargeable included initial work and some of the initial meetings. Compliance with orders for production and subpoenas issued by Mr Sharp are recoverable, although there was never any close analysis of the extent to which (if at all) costs incurred were recoverable from the issuing party. In the usual course, one would have expected that they would be recoverable. The plaintiffs were defendants to the POC Act Proceedings and some allowance should be made for this circumstance. Even this needs to be qualified to some extent. At a hearing of the POC Act Proceedings on 28 May 2013, both plaintiffs attended court with senior counsel and instructing solicitors even though they had decided not to take any active role in the proceedings. The reason they gave was that Mr Sharp had made allegations against them which they took personally. Mr Sheahan agreed in cross-examination that arguably the attendance of one of the plaintiffs would have been sufficient. In my opinion, the attendance of one of the plaintiffs would have been sufficient. This leaves a large pool of work, if I may use that expression, which is not properly chargeable, even though it relates to work done in assisting the AFP. 445 A substantial discount of the fees claimed is called for and I consider that a discount of 65% properly reflects the matters I have identified. 446 I should say before leaving this section that Mr Gothard addressed these issues. As I have already said, the Act requires the Court, in determining or fixing remuneration, to take into account the extent to which work is reasonably necessary. Mr Gothard made the point that the requirement that the work be necessary is part of the professional standards and codes of practice and that part of the concept of "necessary" is a connection, or direct connection, with the administration (APES 330; IPAA COPP). As to Mr Gothard's conclusions with respect to this work stream, it is not necessary for me to do other than to say that they are consistent with the conclusions I have reached. 447 The starting figure in relation to this work stream should be reduced, having regard to my conclusions in relation to hourly charges and then discounted by 65%.

Work Done in Connection with the Applications Relating to the Receivers 448 The receivers withheld funds from the plaintiffs after the discharge of the debt owed to ANZ. They later offered to provide limited funds in return for the provision of a release to themselves and ANZ. The receivers refused to resign because they apprehended that a claim would be made against them and ANZ by the plaintiffs. 449 On 24 November 2011, the plaintiffs' solicitors advised the receivers that their actions were not justified and that they should resign as receivers and that if they did not, the plaintiffs would issue an application against them. 450 On 30 November 2011, the receivers issued an application for directions in the Supreme Court of Victoria seeking a direction that they remain in office. The Companies were named as defendants to that application. The receivers also sought a direction that they were acting reasonably in retaining approximately $10 million as likely defence costs of an action against them by the plaintiffs. 451 The plaintiffs brought an interlocutory application in the receivers' application seeking the dismissal of the relief sought by ANZ. 452 The plaintiffs pointed out that there was a need for them to communicate with the receivers about finalisation of the sale of the business and related warranties, taxation matters, the allocation of sale proceeds issue and the conclusion of the receivership. They pointed out that the warranties given by the receivers in connection with the sale of the business of the Companies expired in January 2011 and that the receivers' personal exposure was limited to an amount of $5,000. Those matters may be accepted. 453 The plaintiffs were critical of the receivers' conduct in relation to the preparation of taxation lodgements, the determination of the allocation of the sale proceeds between the Companies and the lodging of an objection against a private ruling made by the ATO to the effect that a capital loss was not incurred during the 2012 taxation year at the behest of Mr Sharp for SK Foods, LP which stood to gain in excess of $2 million if the objection was successful. The evidence does not permit me to make findings about whether those criticisms are justified. 454 At all events, the plaintiffs considered that the receivers' application was unreasonable. They held that view because they considered that the receivers remaining in office would increase costs (eroding funds otherwise available to creditors) and because proceedings against the receivers were not contemplated. 455 The plaintiffs sought legal advice from DMAW about the removal of the receivers in early 2011 and were advised on or about 11 February 2011 that there was a real prospect that such an application would not succeed. As I have said, on or about 24 November 2011, DMAW wrote to the receivers asking them to confirm that they would resign. 456 Mr Sheahan explained the reasons for doing that included avoiding further costs and expenses being incurred by receivers and delay in paying a final dividend to the creditors of SSFA. He considered the costs of obtaining legal advice was outweighed by the potential benefit of avoiding the further costs and expenses which could be incurred by the receivers. Broadly speaking, similar considerations motivated their participation in the receivers' application for directions which involvement they described as only to the extent reasonably required and the issuing of their own application for the removal of the receivers. In relation to their own application, they also considered that the costs were relatively insubstantial and there was a prospect that even if the receivers' application was unsuccessful, the receivers would remain in office. 457 The plaintiffs' application for the removal of the receivers was brought on 23 December 2011 and the relief was ultimately not pressed because, according to the plaintiffs, "consideration of the Liquidators' application properly arose only subject to the outcome of the Receivers' application". The plaintiffs submit that the remuneration claimed on their own application was negligible. 458 In May 2012, both the receivers' application and the plaintiffs' application were stayed pending the outcome of the Equity Proceedings. 459 In summary, the plaintiffs submit: (1) ASIC's objection is limited to the plaintiffs' application for the removal of the receivers; (2) the plaintiffs acted in accordance with the advice they received; and (3) the remuneration associated with the plaintiffs' application was minimal. 460 Before considering ASIC's objection, it is convenient to identify the precise nature and extent of the objection as finally formulated. 461 ASIC submits that there should be a discount in the order of 20% of the amount allocated by the plaintiffs for their remuneration in relation to the receivers ($250,000) for unnecessary work done by the plaintiffs. That unnecessary work was work done in relation to the receivers' application and all the work done in relation to their application. ASIC advanced a discount in the order of 20% because it was not possible to be more precise on the records. 462 It is not entirely clear to me that the first aspect of unnecessary work was finally pressed by ASIC. In its closing written submissions, ASIC submitted: The involvement of the plaintiffs in the proceedings was unnecessary in circumstances where the issues were already before the Court and the directions sought would effectively resolve the question of whether the receivers should remain in office. 463 Later, ASIC submitted as follows: Mr Gothard suggests that the liquidators should not have brought proceedings to remove the receivers in light of the receivers' application for directions. 464 Two matters relied on by ASIC are clearly established on the evidence. First, the plaintiffs received legal advice in November 2010 that receivers are entitled to retain a fighting fund to cover their legal costs until claims against them are released and they are entitled to refuse to resign until that position is secured. Professor O'Donovan in his advice in November 2010 said: 26.4 Receivers are entitled to retain some of the funds they collect to cover the cost of defending actual claims that are made against them but not claims that are merely contingent claims with no substantial foundation: Korda v Silkchime (2010) 78 ACSR 675; [2010] WASC 155; Arnautovic v Crowe-Maxwell [2010] NSWSC 817. 26.5 They are entitled to retain a fighting fund to cover their legal costs until the claims against them are released: Bowesco v Cronin [2008] WASC 296. 26.6 As French J put it at [28]: 'Unless and until they are satisfied that safeguards against their potential liability for legal costs have been put in place they are acting reasonably in refusing to resign'. 26.7 The amount the receivers are entitled to retain depends upon the complexity of the claim against them and the likely costs of their defence. In Bowesco v Cronin [2008] WASC 296 French J (as he then was) allowed receivers to retain $650,000 to meet the anticipated costs of defending proceedings. Generally, the court will not second-guess the receivers' legal advisers' reasonable estimate of the defence costs. But the Court appeared reluctant to accept a rather extravagant preliminary estimate of $4 million in Korda v Silkchime (2010) 78 ACSR 675; [2010] WASC 155. 465 Secondly, Mr Sheahan said in cross-examination that as at November 2011, there was a reasonable apprehension that litigation against ANZ was possible. I refer also to the report to creditors of SKFA and CJVA dated 17 February 2012. 466 Mr Gothard addressed the issues, both in his main report and in his reply. 467 In his main report, he said that it is not possible for a liquidator to finalise a liquidation without the resignation of receivers as ASIC will not process a deregistration request whilst another external administrator role exists. However, in his opinion, there was no point in the circumstances of these liquidations of pressing for the retirement of the receivers and seeking legal advice about their retirement and an application for their removal because the liquidations were likely to continue for some time due to the debt and equity dispute and the fact that the plaintiffs were considering the possibility of pursuing claims. In his report in response, Mr Gothard said that a cost/benefit analysis of obtaining legal advice should include the cost of acting on the advice and such cost could not be justified because, for reasons previously explained, it would not hasten the end of the liquidations. 468 Mr Gothard said that a CPIP would satisfy himself or herself that an application such as that brought by the receivers, properly presented the issues to the Court and understood and agreed with the receivers that the directions being sought would effectively resolve the question over the receivers remaining in office, but would not otherwise become directly involved. He said that a CPIP would not issue a removal application because he or she would "hold a reasonable expectation that the receivers would retire promptly if the Court directed that they were not justified in remaining in office". 469 Irrespective of Mr Gothard's opinion, I do not think the plaintiffs' application for the removal of the receivers was work which was reasonably necessary. Nor was the plaintiffs' interlocutory application in the receivers' application seeking dismissal of the relief sought by ANZ. Doing the best I can, I consider a discount of 15% is a proper discount to reflect these matters. Again, the starting figure will need to be reduced, having regard to my conclusions in relation to hourly charges and then discounted by 15%.

Application to Validate Appointment as Voluntary Administrators 470 ASIC submits that the claim here should be reduced by the remuneration claimed by Mr Lock for travel time in the amount of $2,625. Mr Lock accepted that if the application had been brought in Adelaide, it would not have been necessary for him to travel to Sydney. The application was brought in the Supreme Court of New South Wales in conjunction with an application to extend the period for convening the second creditors' meeting. Mr Lock's evidence was that he believed it necessary to bring the application in New South Wales as that was where the first creditors' meeting was held. He later gave evidence that he had no independent recollection of turning his mind to the question of where the application ought to have been brought. There was no need for the application to have been brought in New South Wales. It could have been brought in the Supreme Court of South Australia or the South Australia District Registry of the Federal Court. 471 ASIC's submission and this objection should be upheld.

Minutes of Meetings 472 The subject matter of this objection is the preparation by the plaintiffs of the minutes of joint creditors' meetings of SKFA and CJVA on 18 May 2010 ($2,316.68), 11 August 2010 ($5,120), 17 November 2010 ($4,784.17), 9 March 2012 ($3,207.50) and 1 November 2012 ($4,288.34). ASIC's submission is that examination of the minutes suggests that the amounts claimed are excessive on their face. It submits that a broad discount of 50% should be applied to the remuneration claimed for this work. The details of the particular objections are set out in ASIC's Notice of Objection at [108]-[111] for the meeting on 18 May 2010, and [166]-[179] for the other meetings. In Schedule 1 to the Notice of Objection, ASIC sets out the entries in the WIP reports which relate to the preparation of minutes of the relevant meetings. The plaintiffs have not suggested that the entries and amounts identified by ASIC are incorrect. 473 ASIC's objection is that some entries relate to work done after the minutes were lodged, the entries do not reveal the reasons why the work was of such complexity as to require the involvement of senior insolvency practitioners and that the involvement of Mr Lock as a partner and Mr Nelson as manager to the extent they were involved, was not necessary. 474 The plaintiffs' response was essentially that set out by Mr Sheahan in his second affidavit where he describes the practice of the plaintiffs' firm in relation to the preparation of minutes of creditors' meetings. 475 I do not propose to go through each meeting. I have read the minutes of each relevant meeting and the entries in the WIP reports for each meeting. The amounts claimed are excessive. The time spent and the seniority of the persons spending that time are not justified. I will take the minutes of the joint meeting of SKFA and CJVA as an example. The claim of $5,120 includes a claim for Mr Lock as partner ($1,267), Mr Jones as senior manager ($1,333) and Mr Nelson as manager ($2,370). Even the lowest amount claimed of $2,316.68 involves a charge for Mr Lock of $700 and for Mr Nelson of $830. These fees are excessive. I uphold the objection. The amounts claimed should be reduced by 50%.

Remuneration Reports 476 ASIC objects to the plaintiffs' claim for remuneration in respect of remuneration reports prepared for SKFA and CJVA dated 23 July 2010 ($3,016.67) and dated 3 November 2010, 17 February 2012 and the report relating to the resolution for remuneration on 1 November 2012 ($5,742.66), and with respect to SSFA dated 3 November 2010, 27 February 2012 and the remuneration report relating to the resolution passed on 15 July 2011 ($5,882.33) and 16 October 2012 ($922.50). 477 As I have said, the plaintiffs accept that their remuneration reports were deficient and I have found that to be the case. In cross-examination, Mr Lock said he had a concern as to whether the plaintiffs should be claiming remuneration with respect to inadequate remuneration reports. He said that the plaintiffs took legal advice and included a claim with respect to those reports. He said the following: However, those reports did contain information relevant for creditors to consider our claims for remuneration and the nature of the work undertaken in the period under review and creditors voted on whether our remuneration should be approved without any assertion that the reports did not contain sufficient information. 478 Although Mr Sheahan accepted that the remuneration reports were inadequate, he did not consider it inappropriate for a claim to be made with respect to those reports. 479 With respect to the WIP reports, they were tabled at the creditors' meetings at which remuneration resolutions were carried. I have had occasion to look at a number of entries in those reports. As I have previously said, they do not as to certain entries contain a great deal of detail and are not broken down according to the major tasks performed. In cross-examination, Mr Lock said that he could not recall any creditor actually reviewing the WIP reports. Mr Lock also said that at the creditors' meeting held on 16 and 17 October 2010, Mr Sheahan chaired the meeting in the United States and the WIP reports were tabled. However, they were with Mr Lock in Sydney. Clearly, it would not have been possible for a creditor in the United States to look at the WIP reports. In cross-examination, Mr Lock accepted that there could be no WIP reports with respect to the prospective approval of future remuneration. 480 This objection should be upheld. No remuneration should be allowed for remuneration reports because they did not comply with the Act.

Write-Up of Mr Oliver Sheahan's Time and Write-Up of Mr Samuel Rees' Time 481 With respect to Mr Oliver Sheahan, the starting point is the plaintiffs' remuneration report prepared for the Court and relating to SKFA and CJVA for the period of 7 August 2010 to 10 August 2010. The total fees claimed for that period were $31,746.67 of which $7,765 was said to relate to the following: Write up of Oliver Sheahan's uncharged fees during the period due to his manual recording of timesheets. 482 In his second affidavit, Mr Sheahan said that a write-up of fees could occur in two situations. The first situation is where it is necessary for staff to complete a manual timesheet or to instruct the administrative staff to manually record their time. Mr Sheahan explained the circumstances in which that could occur. The second situation is where the system has not been updated to record a change in a particular staff member's hourly charge out rate. Mr Sheahan said that in connection with the write-up of fees relating to Mr Oliver Sheahan, that a number of time entries were erroneously entered at a rate below his standard charge out rate and the write-up was performed to apply the correct hourly rate for his work. The explanation for the write-up in the remuneration reports provided to the Court and the explanation in Mr Sheahan's second affidavit are different. Mr Sheahan was asked about this in cross-examination and he said that he accepted that the two explanations were inconsistent and that he did not know "which one is right and which one is wrong now". 483 With respect to Mr Samuel Rees, the write-up appears in the remuneration report prepared for the Court for SSFA for the period 1 November 2010 to 30 June 2011. It is for an amount of $2,604.14. The write-up is expressed in the following way: Write up of Sam Rees' uncharged fees during the period due to his manual recording of timesheet entries. 484 The evidence of Mr Sheahan in his second affidavit is that Mr Rees was working from an old PC that did not carry the firm's time recording software and was completing manual timesheets and, therefore, Mr Rees' time was not a write-up as such, but rather an entry of his time into the firm's system. Mr Rees' manual timesheets were not produced and Mr Sheahan was not able to describe the work done by Mr Rees to which the claim related. 485 A write-up of fees requires an explanation so that the Court can be satisfied that the remuneration was reasonable and the work to which it relates was reasonably necessary. I am not so satisfied in the case of Mr Oliver Sheahan because I cannot be satisfied as to the reason for the write-up, and I am not so satisfied in the case of Mr Rees because I am not satisfied as to the work to which the write-up related.

Reports to Creditors, 22 December 2011 Creditors' Meeting and the ASIC Form 524s 486 ASIC objects to the claims for remuneration with respect to each of these matters. Its submission is that a broad discount in the range of 50% should be applied to each of these matters. 487 With respect to reports to creditors, the relevant reports are reports with respect to SKFA and CJVA and the dates of the reports and relevant amounts are 2 November 2010 ($23,526.64), 17 February 2012 ($20,429.18) and 16 October 2012 ($31,204.16). With respect to reports to creditors in the case of SSFA, the relevant reports and amounts involved are as follows: 2 November 2010 ($10,037.50), 28 June 2012 ($12,340.01), 27 February 2012 ($4,550.83) and 16 October 2012 ($6,055.01). 488 ASIC submits that it is apparent that the reports use information, in the sense of repeat information, contained in earlier reports. I have examined the reports and that submission is correct. For example, there is a good deal of repetition in the joint creditors' report for SKFA and CJVA dated 16 October 2012 of information contained in the joint creditors' report for those companies held on 17 February 2012. Mr Sheahan agreed in cross-examination that the plaintiffs' practice in preparing a new report to creditors was to take the previous report to creditors and update it. He agreed that it was fair to say that the earlier report was used as a template and matters were added to show events which had occurred since the last report. 489 Mr Sheahan agreed that in relation to reports from 2011 onwards, the only parties with a material interest in those reports were Mr Sharp and the Salyer interests. That was because in the case of SKFA and CJVA, all creditors had been paid out, and in the case of SSFA, there had been a dividend of 90% and it was well understood that the creditors were going to be paid in full with statutory interest in due course. In addition, it is correct to say that in relation to the Debt and Equity Issues, Mr Sharp on the one hand, and Mr Salyer on the other, were aware of what was happening from 2011 onwards. ASIC submits was that insofar as the reports set out in detail the dispute between Mr Sharp and the Salyer interests, that was unnecessary when the only parties with an interest in those reports already knew the details. I accept that submission in that that circumstance is certainly a relevant consideration. 490 ASIC submits that some of the work involved appeared to have been carried out after the preparation of the relevant report, the entries in the WIP reports give no indication of the complexity of the work, and there is nothing to suggest that the involvement of senior practitioners, to the extent shown, was necessary. Mr Sheahan described the plaintiffs' general practice with respect to the preparation of creditors' reports, including the involvement of one or other of the plaintiffs, the contentious nature of some of the issues in these liquidations, the need for a partner to be involved, and that some of the entries post the report identified by ASIC were, in fact, related to the next report. 491 I have been through the entries. I cannot think the number of hours and the involvement of so many people can be justified. I accept that some of the entries may relate to subsequent reports, but even so, the amounts claimed are excessive. I uphold the objection and the amounts claimed should be reduced by 50%. 492 With respect to the creditors' meeting to be held on 22 December 2011, ASIC objects to the remuneration claimed by the plaintiffs in respect of preparing for the said meeting (which ultimately did not take place), applying to the Federal Court for directions under s 511 of the Act regarding voting entitlements and costs which arose as a consequence of the adjournment of the creditors' meeting to 9 March 2012. ASIC contends that the time spent on these matters was 81.38 hours and remuneration claimed was $43,052.48. 493 ASIC submits that the plaintiffs undertook this work in circumstances where, on 8 December 2011, they made an application for directions under s 511 of the Act in the Federal Court regarding the manner in which they should adjudicate on the claims to the disputed debt and equity interests for the purpose of voting at the creditors' meeting scheduled for 22 December 2011. Mr Sheahan said that on 13 December 2011, it became apparent to the plaintiffs that the creditors' meeting scheduled for 22 December 2011 may not have been properly convened in accordance with the Regulations in that the plaintiffs had not given notice of the meeting to all of the potential claimants of the disputed shares. In cross-examination, Mr Sheahan accepted that there were costs thrown away as a result of the irregularly convened meeting. It will be recalled that there were two reports to creditors which were relevant to the meeting ultimately held on 9 March 2012 dated 5 December 2011 and 17 February 2012 respectively. Mr Sheahan accepted that the costs for the report, the advertisement and the circulars were all wasted. 494 ASIC submits that there should be a discount in the range of 50% with respect to the irregularly convened creditors' meeting for 22 December 2011. However, I am not satisfied on the evidence that there was a sufficient departure by the plaintiffs from the standard expected of them to allow this objection. 495 With respect to the preparation of ASIC 524 forms (containing the liquidators' accounts), the last date of the period to which the forms relate and the amounts in relation to each form are as follows: 10 February 2011 ($2,930.83), 10 August 2012 ($8,091.67), 10 February 2013 ($4,537.50) and 10 August 2013 ($3,495.83). Mr Sheahan described the plaintiffs' practice with respect to the preparation of such forms in his second affidavit. ASIC submits that the reasons the charges are so high are evident from the entries: (1) Entry for Ms Jane Sheahan on 8 October 2012: "Discuss Form 524 to 10/8/12 with Ian (with Elise) to clarify appropriate entity to reflect receipts/payments and method of doing this; work through draft 524 with Elise to attempt reconciliation/finalisation of same" 2.00 hrs $800; (2) Entry for Ms Elise Traeder for 8 October 2012: "Discussion IL/EJS; reviewing cash book, NAB cheque account & term deposits, amending draft 524s etc" 1.50 hrs $225; (3) Entry for Ms Jane Sheahan on 9 October 2012: "Examine receipts/payments of CEDE01 and CEDE02; try to correctly identify receipts/payments for 524 notice to 10/8/12, including cross-checking/cancelling items incorrectly appearing in both ledgers; discuss with ET then with IL; CEDE02 now correctly reflects the true position but CEDE01 still to be identified/corrected" 2.08 hrs $833.33; (4) Entry for Ms Jane Sheahan on 10 October 2012: "Continue attempting to reconcile figures to complete Form 524 to 10 August 2012" 1.92 hrs $766.67; (5) Entry for Ms Jane Sheahan on 11 October 2012: "Continue trying to ascertain correct figures for Form 524 for Cedenco JV Aust P/L (in Liq)" 0.25 hr $100; (6) Entry for Ms Jane Sheahan on 15 October 2012: "Examine draft Form 524s for Cedenco JV and SK Foods as prepared by ET. Check figures then start again as figures partly duplicated in both entities, other figures omitted" 6.00 hrs $2,400; and (7) Entry for Ms Jane Sheahan on 16 October 2012: "Complete recreation/reconciliation of Form 524 figures and go through with IL then ET; prepare 524 for lodgement" 3.75 hrs $1,500. 496 ASIC submits, correctly, that the timesheet entries indicate that the first attempt to prepare the Form 524 to 10 August 2012 was not done properly and it had to be redone. ASIC submits, again correctly, that the plaintiffs should not recover remuneration in respect of the time it took to fix the mistakes of its staff. 497 Mr Sheahan was asked about the Form 524 which he completed for the period 11 February 2011 to 10 August 2012. It was put to him that in excess of $8,000 was claimed for the preparation of the form. He agreed that that seemed unusually high. He said that he was surprised that it cost "that much". 498 In my opinion, the remuneration for the completion of the forms is excessive and the objection is upheld. There should be a discount of 50%.

Other Items Which Are the Subject of Objection 499 The matters which follow only arise on ASIC's case if a broad discount (to use ASIC's description) is not made in respect of the four work streams and the plaintiffs' hourly charges. As I understood it, ASIC's approach was based on the principle (which is correct) that there should not be a double discount of the plaintiffs' remuneration. I have applied a discount in relation to the plaintiffs' hourly charges and a discount in relation to three of the four work streams. I have applied only a small discount in relation to the largest work steam on the plaintiffs' estimate, being the Debt and Equity Issues. I will hear the parties as to the extent to which the following objections remain relevant. In each case, I will outline the nature of the objection and the plaintiffs' response to it.

Travel Arrangements 500 The objection by ASIC to travel arrangements in relation to SKFA and CJVA relates to a claim for $2,114.58 for the period from 6 May 2010 to 10 August 2010, and a claim for $34,903.37 for the period from 11 August 2010 to 31 October 2013. The objection in relation to SSFA relates to a claim for $2,993.34 for the period from 11 August 2010 to 30 June 2012, and a claim for $1,033.34 for the period from 1 October 2012 to 31 October 2013. 501 ASIC's basic objection to these claims is that the WIP reports have entries which are uninformative as to the travel which is the subject of the arrangements, but more fundamentally, the work is of an administrative nature and there is no explanation as to why a good deal of it was performed by the plaintiffs and, in particular, Mr Sheahan at his hourly rate. Of course, having regard to my earlier conclusions, that hourly rate will be reduced, but the point remains that, according to ASIC, there is no explanation as to why this work needed to be done by a partner. 502 ASIC gave the following examples of entries for travel arrangements or planning for Mr Sheahan and Mr Lock: (1) Entry for Mr Sheahan for 27 May 2010 "trav planning" 0.80 hr $420; (2) Entry for Mr Sheahan for 7 September 2010 "IL trav arrangs" 0.6 hr $455; (3) Entry for Mr Lock for 27 September 2010 "Travel arrangements + related corresp" 0.67 hr $466.67; (4) Entry for Mr Sheahan for 5 October 2010 "trav reconcilns" 0.75 hr $525; (5) Entry for Mr Sheahan for 2 November 2010 "trav arrangs" 0.77 hr $536.67; (6) Entry for Mr Sheahan for 20 October 2011 "USA trav arrangs" 0.83 hr $583.33; (7) Entry for Mr Sheahan for 20 October 2011 "USA trav arrangs" 0.42 hr $291.67; (8) Entry for Mr Sheahan for 27 January 2012 "trip planning, rescheduling" 0.80 hr $560; and (9) Entry for Mr Sheahan for 5 April 2012 "trav planning" 0.75 hr $525. 503 Schedule B to Mr Sheahan's second affidavit contains supplementary narrations, not only with respect to travel time, but also with respect to travel arrangements (see [110] above as to the preparation of this Schedule). 504 In his second affidavit, Mr Sheahan addressed the claim for travel arrangements or "trav arrangs" as it appears in a number of the narrations in his second affidavit. He said that his understanding was that the practice which he adopted was also the practice adopted by Mr Lock and other staff. The narration of "trav arrangs" referred to the following types of tasks: corresponding with and setting up meetings with relevant people such as solicitors or counsel, creditors or other stakeholders; planning the content of and setting agendas for meetings; liaising with various parties to ensure availability and attendance; arranging travel and routes in order to maximise the efficient use of time; instructing and directing administrative staff to book travel; and considering itineraries. Mr Sheahan said that the actual booking of travel is a task usually undertaken by an administration assistant or office manager in the firm. Mr Sheahan said that he commonly records time as relating to "trav arrangs" because he enters details of meetings in his diary. He said that he has found over a number of years that managing his own diary is the most efficient way of recording where he needs to be and when. He said that he is regularly out of the office and running his own diary is the most efficient way of being reminded about upcoming meetings and engagements.

Travel Time 505 The claim for travel time is a very large one. It comprises, in relation to SKFA and CJVA, $118,670.41 for the period from 6 May 2010 to 8 August 2010, and $586,560.84 for the period from 11 August 2010 to 31 October 2013, and in relation to SSFA, $140,790 for the period from 11 August 2010 to 30 June 2012, and $38,445 for the period from 1 October 2012 to 31 October 2013. According to ASIC's Notice of Objection, the number of hours involved is nearly 1,300 hours or, based on a 40 hour week, 32.5 weeks. 506 At the outset, I note that Mr Sheahan appeared to admit in cross-examination that some of the plaintiffs' claims for remuneration for travel time appeared to him to have been in error and were not properly chargeable in the amounts claimed. 507 ASIC submits that New Zealand travel had been charged to the Australian companies. On 10 May 2011, an examination notice under the New Zealand companies legislation was served on Ms Dekker of ANZ NZ. On 11 July 2011, Ms Dekker's examination was conducted in New Zealand and Mr Sheahan attended. Between 9 July 2011 and 12 July 2011, Mr Sheahan charged the following amounts to SKFA and CJVA: (1) Entry for Mr Sheahan for 9 July 2011 "Travel to NZ and reviewing 3 volumes of DMAW documents" 6.00 hrs $4,200; (2) Entry for Mr Sheahan for 10 July 2011 "Examination preparation with counsel/slrs in Auckland" 6.00 hrs $4,200; (3) Entry for Mr Sheahan for 11 July 2011 "Attending NZ examinations" 5.00 hrs $3,500; and (4) Entry for Mr Sheahan for 12 July 2011 "NZ - Aust" 3.00 hrs $2,100. 508 ASIC submits that on 9 and 10 August 2012, there was a hearing in New Zealand before Heath J in relation to applications brought by the plaintiffs in their capacities as liquidators of the New Zealand companies and the Australian companies (see ANZ National Bank Ltd v Sheahan and Lock [2013] 1 NZLR 674). One of the matters argued before his Honour was whether the plaintiffs had engaged in misconduct by using the transcript of Ms Dekker's examinations conducted for the purposes of the New Zealand liquidations in the Australian liquidations. Mr Sheahan agreed in cross-examination that it was in his capacity as liquidator of the New Zealand companies in the group that he sought and obtained the examination notice in relation to Ms Dekker. Between 8 August 2012 and 10 August 2012, the plaintiffs, and in particular Mr Sheahan, charged the following to SKFA and CJVA in respect of the hearing before Heath J: (1) Entry for Mr Sheahan for 8 August 2012 "Travel to NZ" 6.25 hrs $4,375; (2) Entry for Mr Sheahan for 8 August 2012 "Prep/attend conference slr/barrister" 3.00 hrs $2,100; (3) Entry for Mr Sheahan for 10 August 2012 "Attending NZ examination hearing, all preparation" 7.50 hrs $5,250; and (4) Entry for Mr Sheahan for 10 August 2012 "Travelling from Auckland to Adelaide" 4.50 hrs $3,150. 509 On 15 November 2012, Heath J delivered judgment and he held that the liquidators had engaged in misconduct by providing Ms Dekker's transcript to themselves as Australian liquidators (ANZ National Bank Ltd v Sheahan and Lock [2013] 1 NZLR 674 at [153]). 510 ASIC's submission is that as Ms Dekker's examination was conducted in the New Zealand liquidations by the plaintiffs as New Zealand liquidators, fees ought not to have been charged to the Australian companies for travel, preparation and attendance in respect of those examinations. As the hearing on 9 and 10 August 2012 related in large part to the New Zealand liquidations in respect of the plaintiffs as New Zealand liquidators, these ought not to have been charged to the Australian companies for travel, preparation and attendance in respect of those hearings. 511 ASIC identified other inappropriate charges for travel as including the following: (1) Entry for Mr Sheahan for 9 June 2010 "Trav LHR-SYD" 12.00 hrs $6,300; (2) Entry for Mr Sheahan for 26 August 2010 "trav to Adel incl reading/rev" 8.00 hrs $5,600; and (3) Entry for Mr Sheahan for 27 August 2010 "trav to Adel incl reading/rev" 14.00 hrs $9,800. As ASIC points out, the claims for (2) and (3) means that there is a travel claim for 22 hours at $15,400 on 26 and 27 August 2010. (4) Entry for Mr Oliver Sheahan for 15 October 2010 "Transport Prof O'Donovan to airport" 0.75 hr $187.50. 512 There are six entries in the WIP reports which support the conclusion that the plaintiffs made a claim for 31.73 hours at $22,213.33 in relation to a single trip. 513 Mr Sheahan gave the following evidence in cross-examination: You agree that that's a total of nearly 32 hours claimed against the two administrations for the flight back from the US to Australia?---Appears to be. Is there any explanation for that?---No. My standard procedure is to charge a maximum of 12 hours per day. I suppose that's probably essentially two days to get back. No. I can't explain that. 514 ASIC submits that the evidence of the insolvency practitioners supports the conclusion that the policies adopted by the various firms as to charging for travel time varied considerably. BDO does not generally charge for the time spent by its professional staff travelling in respect of formal appointments. KordaMentha, Hayes Advisory, Meertens Chartered Accountants, BRI Ferrier (NSW) and McGrathNicol have variable policies which involve travel time being charged in respect of some appointments or types of travel and it not being charged in relation to others. BRI Ferrier (SA) and Smith Hancock have a policy of charging normal hourly rates for time spent travelling by professional staff in relation to formal appointments. 515 Mr Sheahan said that the plaintiffs' firm charges for travelling time. Mr Sheahan said that his understanding was that the practice he adopted was also the practice adopted by Mr Lock and other staff which was to the extent possible to maximise the value of travelling time by undertaking work whilst travelling. That work might involve planning or preparing for meetings, reviewing materials relevant to examinations and depositions, reviewing emails and correspondence relating to the administrations or liquidations, and similar tasks. 516 Mr Sheahan said that he attempts to limit the overall amount of travelling required by organising meetings and appointments with creditors and other stakeholders, solicitors and counsel so that those meetings coincide with creditors' meetings, hearings or other events. 517 Mr Sheahan said that he could not specifically recall, in relation to the administrations and liquidations of the Companies, the work he did on each occasion he was required to travel. However, he recalls that he regularly reviewed materials pertinent to the meetings or events for which he was travelling. He said that if he had not done this work whilst he was travelling, he would have done it "in the ordinary course at my office". 518 Mr Sheahan gave an example of a trip to the United States in August 2011 for the purpose of attending the depositions and related conferences with his attorneys and the other meetings that he scheduled with this trip. 519 Mr Sheahan referred to ASIC's Notice of Objection and the various narrations in the WIP reports, including "meeting with receivers", "attending meetings of meetings", "attending court hearings" and he outlined the benefits of meeting with the receivers and of his attendance personally at creditors' meetings. Mr Sheahan explained the tasks involved in "investigating company affairs", "meetings with solicitors", "investigating potential claims" and "investigating debt and equity". He explained the advantages of personally attending court hearings in court and meetings with solicitors. Mr Sheahan said that he considered it reasonable and beneficial to the winding up of the Companies for himself, Mr Lock or a member of his staff to undertake the travel referred to in Schedule B.

Work Performed by Persons of Inappropriate seniority 520 With respect to SKFA and CJVA, ASIC submits that work was undertaken by staff of inappropriate seniority between 6 May 2010 and 10 August 2010 ($32,723.77), and between 11 August 2010 and 31 October 2013 ($209,778.19). The amount of $32,723.77 reflects 53.37 hours of work carried out by the plaintiffs, subject to one entry relating to Mr Alfred E Warnecke on 5 July 2010. The tasks involved are described in the WIP report and reproduced in Schedule 1 of ASIC's Notice of Objection. Mr Sheahan said that he could not recollect the work undertaken from a review of the tasks codes and narrations. However, he attempted to describe what the various narrations may have involved. With respect to the sum of $209,778.19, that is said to reflect 387.25 hours. 521 The same points are made in respect of SSFA for the period 11 August 2010 to 30 June 2012 ($48,165.82), and for the period 1 October 2012 to 31 October 2013 ($7,044.99). 522 ASIC gave six examples of purely administrative work done by Mr Sheahan: (1) Entry for Mr Sheahan for 2 July 2010 "admin planning" 0.92 hr $641.67; (2) Entry for Mr Sheahan for 16 September 2010 "staffing tasks" 1.30 hrs $910; (3) Entry for Mr Sheahan for 4 December 2010 "file rev, updating, planning" 3.25 hrs $2,275; (4) Entry for Mr Sheahan for 25 July 2011 "planning days's tasks" 0.25 hr $175; (5) Entry for Mr Sheahan for 23 September 2011 "file download" 0.25 hr $175; and (6) Entry for Mr Sheahan for 10 January 2012 "dealing with computer problems with WF download ex JM" 1.03 hrs $723.33. 523 Mr Sheahan said that there were advantages in either himself or Mr Lock, or both of them, undertaking a significant proportion of the initial work. They became familiar with the matter and were able to determine its complexity. Thereafter, they were able to make decisions about the seniority and experience required in relation to undertaking work in the administrations or liquidations. By initial work, Mr Sheahan meant correspondence with directors in order that the plaintiffs familiarise themselves with the affairs of the company and the nature of its operations, obtaining and conducting a high level review of the company's books and records, including seeking production of relevant documents from the company's former officers, advisers and financiers, communicating with key stakeholders in responding to creditor requests for information, considering and planning any investigations and, if necessary, briefing and seeking the input of solicitors and counsel at an earlier stage in the event some immediate step or steps may be required to be undertaken to preserve an asset of the company. 524 The above are the reasons Mr Sheahan and Mr Lock undertook the preliminary work in the administrations and liquidations. Mr Sheahan expressed the view that the following were complexities in the administrations and liquidations: (1) the facts surrounding the appointment of the receivers, the presence of those receivers, their possession of relevant records, and their refusal to resign following the expiry of the warranty period under the agreement for the sale of the Companies' business; (2) the presence of foreign ownership interests and the dispute between Mr Sharp and the Salyer interests over the Debt and Equity Issues; (3) the nature and demeanour of the major shareholders in the liquidations of the Companies required more direct communications by the plaintiffs; (4) the management of the group was operated from New Zealand meaning current and former directors and staff, and relevant records, were located in New Zealand; (5) the difficulties in obtaining accurate information, having regard to, for example: in relation to former directors, the incarceration and impending criminal trial of Mr Salyer restricted the plaintiffs' ability to obtain information from him, and Mr Lawrence's refusal to cooperate and respond to the plaintiffs' requests necessitating a formal examination and the former solicitors for the group in Australia and New Zealand resisting the production of records without compulsion; (6) the contentious nature of a number of proofs of debt; (7) the existence of foreign proceedings that touched upon issues arising in the liquidations; (8) the existence of a large and complicated claim available to the Companies against ANZ; (9) taxation issues arising out of the sale of the former business; (10) working through the cross-border issues; (11) the facts and circumstances relating to the Spin Off involved the consideration of complicated accounting and legal issues; (12) the complexity of the potential claims; (13) the existence of investigations and legal proceedings gave rise to confidentiality and privilege issues; and (14) the action taken by the AFP. 525 Mr Sheahan said that he had reviewed the time entries identified by ASIC in relation to the seniority of staff undertaking the work involved. He cannot recall the specific work undertaken. However, he made the following points. First, the time charged for work undertaken in the initial two to three months reflected the extent of work undertaken by the plaintiffs in order to familiarise themselves with the matter. Secondly, the notation "file review" may refer to one of the following: (1) the periodic review undertaken by the plaintiffs; (2) reviewing a specific aspect of the file or particular documents, often in advance of a hearing or meeting where it would be necessary to have reference to the information contained in those files; (3) high level review of the progress of the file in advance of creditors' meetings or informal conferences with stakeholders so that the plaintiffs were in a position to address queries from creditors or stakeholders; and (4) review of specific files produced by directors, solicitors or other advisers, financiers and others. Thirdly, Mr Sheahan said that "document review or record review" relates to the review and consideration of relevant documents, such as books and records of the Companies, or provided to the plaintiffs by directors and advisers or other material witnesses. Fourthly, "reviewing correspondence" relates to reading emails, letters or facsimiles sent to the plaintiffs, or reviewing correspondence sent to or from the plaintiffs' legal advisers. Mr Sheahan said that he noted that there were a number of entries where there was no narration. Mr Sheahan expresses a view as to the task or matter to which the narration most likely relates. He does this for himself on the following dates: 10 September 2010, 13 August 2012, 11 December 2012, 18 February 2013, 8 March 2013, 14 May 2013 and 20 September 2013. He does a similar exercise in relation to Mr Michael Nelson in relation to the following dates: 4 and 9 September 2012, 21 May 2013; 28 May 2013 and 25 October 2013.

Other Administrative Work 526 The claims in issue in relation to SKFA and CJVA are $14,091.18 for the period 6 May 2010 to 10 August 2010, and $42,180.99 for the period 11 August 2010 to 31 October 2013. With respect to SSFA, the amounts in question are, with respect to the period 11 August 2010 to 30 June 2012 $10,363.36, and with respect to the period 1 October 2012 to 31 October 2013 $1,633. 527 In cross-examination, Mr Sheahan expressed surprise that there was an entry for him for filing and he agreed that it was not his practice to claim for filing. He agreed that it was not appropriate for the plaintiffs' firm to charge its time for preparing its fee accounts to the Companies. 528 ASIC advanced 15 examples of inappropriate charging under this heading. They are as follows: (1) Entry for Mr Sheahan for 27 May 2010 "filing" 0.12 hr $61.25; (2) Entry for Mr Sheahan for 27 May 2010 "filing" 0.42 hr $218.75 (3) Entry for Mr Sheahan for 28 August 2010 "reading/filing post-trip" 1.50 hrs $1,050; (4) Entry for Mr Sheahan for 5 October 2010 "confer and consider re offsite storage of files" 0.50 hr $350; (5) Entry for Mr Jones for 18 November 2010 "Organise payment of Approved Fees" 0.50 hr $275; (6) Entry for Mr Lock for 18 November 2010 "Pmt of fee accounts etc" 0.17 hr $116.67; (7) Entry for Mr Nelson for 11 March 2011"Prep fee accounts" 0.58 hr $262.50; (8) Entry for Mr Sheahan for 26 September 2011 "planning - re admin issues" 0.50 hr $350; (9) Entry for Ms Jane Sheahan for 3 November 2011 "Draft fee a/c for liquidators' fees/disbursements Oct 11" 0.25 hr $100; (10) Entry for Ms Jane Sheahan for 3 November 2011 "Fee/disb a/c for Oct; check last pre-bill and rec; discuss-IL" 0.75 hr $300; (11) Entry for Ms Jane Sheahan for 6 December 2011 "Raise fee a/c for November 2011 (inc minutes)" 1.00 hr $400; (12) Entry for entry for Mr Sheahan for 13 February 2012 "filing of docs" 0.33 hr $233.33; (13) Entry for Ms Jane Sheahan for 4 April 2012 "Prepare fee account to 31 March" 0.50 hr $200; (14) Entry for Mr Lock for 14 November 2012 "Review and pmt of fee accts" 0.17 hr $116.67; and (15) Entry for Ms Rogers for 11 July 2013 "Administration" 3.50 hrs $1,050. 529 Mr Sheahan addressed the work which ASIC had characterised as "Other Administrative Work". He said that it was the firm's usual practice that administrative work would be undertaken primarily at an administrative or clerical level. That was the practice adopted in relation to the liquidations of the Companies. 530 Mr Sheahan said that he has reviewed the time entries that ASIC asserts represent work of a purely administrative nature. He states that those narrations (i.e., the narrations in the plaintiffs' WIP reports) may give a misleading impression of the nature of the work undertaken. Mr Sheahan said he could not recall the specific tasks that were undertaken in relation to each time entry. However, he said that by reference to the task code and the narrations and the firm's usual practice, he considered that the work represented by the following entries was as follows. First, in relation to "internal staff attendance" that category broadly comprises internal meetings, sometimes with multiple staff, wherein instructions may be given, or work delegated to, more general practitioners, or a review of documents or records is undertaken with the assistance of other staff, or feedback or updates obtained from staff as to the progress of their work, discussions they may have had with creditors, solicitors or others, and any issues that may have arisen out of those discussions. Secondly, the category "planning" includes conferral between the plaintiffs as to dividing the necessary work between them, consideration of appropriate investigations, the necessity and form of such investigations, consideration of any statutory limitations that may impact on investigations and potential claims, planning the appropriate order in the investigations and when and where such investigations are to be carried out, determining which staff would be appropriate to undertake work relating to those investigations. Thirdly, "staff tasks" refers to time spent delegating to and providing instructions to staff about work to be undertaken. Fourthly, "meeting arrangements" includes consideration of the appropriate location for a meeting, who ought to chair the meeting, what information should be made available to creditors, and general preparation for a meeting. Fifthly, "conferring" means the plaintiffs conferring with each other about the separate aspects of the administrations for which they have primary responsibility in order that both of them are kept abreast of the status and developments in the liquidations and also to discuss the next steps. Sixthly, "fee accounts" refers to settling of the plaintiffs' remuneration claims, review of WIP schedules and remuneration reports, the review of third party fee accounts to determine the appropriateness of the charges, including review of fee accounts from the plaintiffs' solicitors, which in addition to enabling the plaintiffs to consider the appropriateness of the fees charged, also forms part of the plaintiffs' ongoing review of costs, and considering the appropriate allocation of third party costs, such as solicitors accounts as between each company. Finally, "staff review" or "staff supervision" relates to conferring with junior staff in order to be updated and kept abreast of what was occurring in the liquidations and review and delegate work.

Work of a Legal Nature 531 The amount in issue with respect to SKFA and CJVA is $300,679.36 for the period from 11 August 2010 to 31 October 2013. With respect to SSFA, the amount in respect of the period 11 August 2010 to 30 June 2012 is $9,165.05, and with respect to the period 1 October 2012 to 31 October 2013 the amount is $8,240. It is no doubt relevant to note in this context that the legal expenses in the administrations and liquidations were approximately $5.235 million. Mr Sheahan addresses the work which ASIC has characterised as work of a legal nature in his second affidavit. Mr Sheahan told the Court that it is the plaintiffs' practice that at least one of them will attend every court hearing at which "there was some particular issue of interest, but certainly if there was anything substantive to be decided or discussed, then yes, we would attend". Mr Sheahan was asked about directions hearings held on 28 and 29 February 2012 at which both plaintiffs and Mr Oliver Sheahan attended. Mr Sheahan accepted that by the second day, the application was routine and that it was then excessive for all three to attend. The time entries for these particular appearances are as follows: (1) Entry for Mr Lock for 28 February 2012 "Court re directions appn" 1.33 hrs $933; (2) Entry for Mr Lock for 29 February 2012 "Confer JS, mtg consl, court attendance" 2.5 hrs $1,750; (3) Entry for Mr Sheahan for 28 February 2012 "attend Fed Ct re Besanko J hearing mtg" 1.92 hrs $1,341.67; (4) Entry for Mr Sheahan for 29 February 2012 "prepn for/attendn confern in chambers re Besanko J& BS appl" 1.25 hrs $875; (5) Entry for Mr Sheahan for 29 February 2012 "Attend Fed Ct re vat applicns" 1.33 hrs $933.33; (6) Entry for Mr Oliver Sheahan for 28 February 2012 "attend directions hearing" 1.08 hrs $292.50; and (7) Entry for Mr Oliver Sheahan for 29 February 2012 "Attend directions hearing" 1.33 hrs $360. 532 Mr Sheahan said that in the case of these administrations and liquidations it was necessary for the plaintiffs to have frequent contact with their solicitors, counsel and attorneys. 533 Mr Sheahan said that he had reviewed the time entries which ASIC asserts fall within this category. He cannot recall the specific tasks that were undertaken for each time entry. However, he said that by reference to the narrations, the work represented by these time entries may have comprised the following. First, "preparation of briefs" relates to compiling relevant documents and preparing summaries, chronologies, requests for advice for briefs to be sent to the plaintiffs' solicitors in relation to legal issues upon which advice is or has been sought. Second, "reviewing documents" relates to the review of documents forming the books and records of the Companies and may include documents provided by directors, advisers or other witnesses, either voluntarily or by compulsion. Third, "corresponding/communicating with solicitors" refers to the plaintiffs or their staff communicating with and briefing solicitors about matters pertinent to their engagement or receiving advice. Mr Sheahan said that it was the plaintiffs' practice to maintain close communication with their legal advisers so that they could provide timely instructions, stay up to date with the progress of the preparation of advice or the progress of legal proceedings, making informed decisions about the next steps and the timing of those steps, and properly report to creditors. Fourth, "meetings with solicitors and/or counsel" related to meetings with solicitors or counsel or both for the same purposes as those set out in relation to communicating with solicitors. Fifth, "legal issues" or "legal matters" relates to the identification of matters for which legal advice may need to be sought, or considering advice which had been obtained. Sixth, "attending hearings" relates to attendance at hearings in proceedings in which the plaintiffs or the Companies are parties, or having an interest in the outcome. Mr Sheahan said that the plaintiffs find that being in court for such hearings, had the following advantages: (1) it enables the plaintiffs to give timely instructions to solicitors or counsel as required, including in relation to timetables, orders and any compromises or accommodations that may be reached with opposing parties; (2) it allows the plaintiffs to assess the demeanour of witnesses as well as the veracity of evidence that may be given in a superior way to simply reviewing transcript; (3) it affords the plaintiffs the opportunity to confer with an opposing party which can be beneficial in resolving disputes or narrowing issues; and (4) allows the plaintiffs to consider the subtleties of questions from the bench in the context of the proceeding as they occur. Seventh, "reviewing documents from solicitors" refers to the plaintiffs or their staff reviewing documents received from the plaintiffs' solicitors, such as draft correspondence or court documents, for example, pleadings or affidavits. Mr Sheahan said that the plaintiffs consider it necessary to undertake this work because: (1) with respect to correspondence of substance, the plaintiffs' solicitor invariably require instructions from the plaintiffs and, therefore, it is necessary for the plaintiffs to review the correspondence; (2) the plaintiffs are required to instruct their solicitors as to the content of affidavits and as to any amendments to draft affidavits; (3) the plaintiffs must instruct their solicitors for the purposes of pleadings and other court documents and must review draft documents; and (4) the plaintiffs must remain informed and up to date with their investigations and legal proceedings, and Mr Sheahan states that for that purpose, they must monitor correspondence and have a working understanding of the issues in legal proceedings. Eighth, "settling and compiling affidavit material" relates to reviewing, amending and compiling affidavits drafted by the plaintiffs' solicitors in relation to court proceedings. Mr Sheahan said that he provides instructions to his solicitors as to the content of any affidavit he is to swear and information as to any source documents or annexures or exhibits in his possession. He then settles the affidavit to ensure that it is correct and accurate.

Conclusions 534 The plaintiffs' application under s 1322(4)(a) of the Act is refused. 535 As far as determining or fixing the plaintiffs' remuneration is concerned: (1) the plaintiffs' remuneration must be reduced to reflect my conclusions with respect to hourly rates (at [314]-[315]); (2) the plaintiffs' remuneration in relation to the four work streams and the application to validate appointment as voluntary administrators must be reduced in accordance with my conclusions in these reasons (at [382], [424]-[425], [447], [469]-[471]); (3) the plaintiffs' remuneration for minutes of meetings, remuneration reports, write-up of Mr Oliver Sheahan's time and write-up of Mr Samuel Rees' time and reports to creditors, 22 December 2011 creditors' meeting and the ASIC Form 524s are disallowed or reduced in accordance with these reasons (at [476]-[498]); (4) I will hear the parties as to the disposition of ASIC's other objections in light of these reasons (at [499]-[533]); and (5) ASIC submitted that after its specific objections have been considered and an amount determined, the Court should give consideration to whether the resulting amount is proportionate "overall as a check and balance". Whether there is room for such an approach after the analysis already conducted is a matter that ASIC, if so advised, can raise after the amount has been determined. 536 I will give the parties an opportunity to consider these reasons and fix a date for the final disposition of the proceedings. The parties will then be heard on the question of costs. I certify that the preceding five hundred and thirty-six (536) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

Associate: Dated: 11 February 2019 Annexure A MARKET RATES FOR INSOLVENCY PRACTITIONERS - 2010 Firm Hourly rates ($) Manager Senior Manager Partner Sheahan Lock Partners 450 550 700 PPB Advisory (Large & Complex) 455 500 625 Korda Mentha 400 450 625 BDO 420 465 595 PPB Advisory (General) 425 465 590 McGrathNicol 395 420 570 Grant Thornton Australia 380 415 525 BRI Ferrier 360 380 495 Meertens Chartered Accountants 386 425 495 Smith Hancock 310 390 470 Hayes Advisory No data No data No data

Average hourly rates by firm size (excluding Sheahan Lock Partners) Firm size Average hourly rates ($) Manager Senior Manager Partner Medium to large firms 405 442 575 Boutique firms 348 408 483 Overall 392 434 554

MARKET RATES FOR INSOLVENCY PRACTITIONERS - 2011 Firm Hourly rates ($) Manager Senior Manager Partner Sheahan Lock Partners 450 550 700 PPB Advisory (Large & Complex) 465 510 675 Korda Mentha 425 475 625 PPB Advisory (General) 445 490 620 BDO 450 495 595 McGrathNicol 395 420 570 Grant Thornton Australia 395 430 545 BRI Ferrier 390 410 535 Meertens Chartered Accountants 438 481 545 Smith Hancock 325 395 495 Hayes Advisory No data No data No data

Average hourly rates by firm size (excluding Sheahan Lock Partners) Firm size Average hourly rates ($) Manager Senior Manager Partner Medium to large firms 424 461 595 Boutique firms 382 438 520 Overall 414 456 578

MARKET RATES FOR INSOLVENCY PRACTITIONERS - 2012 Firm Hourly rates ($) Manager Senior Manager Partner Sheahan Lock Partners 450 550 700 PPB Advisory (Large & Complex) 510 560 745 Korda Mentha 445 495 625 BDO 450 495 595 McGrathNicol 395 420 570 BRI Ferrier 410 430 560 PPB Advisory (General) 380 450 555 Grant Thornton Australia 395 425 545 Smith Hancock 340 410 540 Hayes Advisory 320 355 450 Meertens Chartered Accountants No data No data No data

Average hourly rates by firm size (excluding Sheahan Lock Partners) Firm size Average hourly rates ($) Manager Senior Manager Partner Medium to large firms 426 468 600 Boutique firms 330 383 495 Overall 405 449 576

MARKET RATES FOR INSOLVENCY PRACTITIONERS - 2013 Firm Hourly rates ($) Manager Senior Manager Partner Sheahan Lock Partners 450 550 700 PPB Advisory (Large & Complex) 520 570 745 Korda Mentha 450 495 625 BDO 450 495 595 BRI Ferrier 430 450 585 Meertens Chartered Accountants 466 512 580 McGrathNicol 395 420 570 Grant Thornton Australia 440 465 565 PPB Advisory (General) 390 460 555 Smith Hancock 355 425 560 Hayes Advisory 320 355 450

Average hourly rates by firm size (excluding Sheahan Lock Partners) Firm size Average hourly rates ($) Manager Senior Manager Partner Medium to large firms 439 479 606 Boutique firms 380 431 530 Overall 422 465 583

MARKET RATES FOR INSOLVENCY PRACTITIONERS - 2014 Firm Hourly rates ($) Manager Senior Manager Partner Sheahan Lock Partners 450 550 700 PPB Advisory (Large & Complex) 520 570 745 Korda Mentha 475 525 650 BDO 450 495 645 Grant Thornton Australia 465 490 595 BRI Ferrier 430 450 585 Meertens Chartered Accountants 466 512 580 McGrathNicol 395 420 570 Smith Hancock 365 435 560 PPB Advisory (General) 390 460 555 Hayes Advisory 320 355 450

Average hourly rates by firm size (excluding Sheahan Lock Partners) Firm size Average hourly rates ($) Manager Senior Manager Partner Medium to large firms 446 487 621 Boutique firms 384 434 530 Overall 428 471 593

Annexure B Work stream Question 1 Question 2(a) Question 2(b) Would a CPIP have carried out the work? To what extent? With similar personnel? Debt and equity issues Investigations into the debt and equity issues Yes, to a limited extent. To the extent of preliminary investigations necessary to understand the nature of the dispute Insufficient information to comment Otherwise, only if preferred alternative approaches were exhausted or unavailable. US Bankruptcy Court Proceedings Yes, to a limited extent To the extent of reviewing and seeking advice to understand the injunction order and its impact on the liquidation. Insufficient information to comment No In relation to the review of the materials submitted by Mr Sharp in support of the application for the injunction. Yes In corresponding with Mr Sharp regarding the allegedly misleading information should such information have been identified. Equity Proceedings Yes In defending allegations which falsely impugned the Practitioners' conduct. Insufficient information to comment. No In defending allegations which properly impugned the Practitioners' conduct. Yes, to a limited extent. In applying to transfer the proceedings to South Australia provided that there was a net cost saving to the Parties from such an action, otherwise no. No In opposing Mr Sharp's application for summary judgment and offering to assist the Court as contradictor. Yes In acting as contradictor in the proceedings if required by the Court. Potential claims against Directors and ANZ Briefing solicitors Yes, to a limited extent. Up to the point of receiving the O'Donovan advice. Insufficient information to comment. After that only if: • the Parties had agreed that pursuing the Potential Claims was in their best interests; or • if litigation funding had been obtained to protect stakeholders' interests. Investigations in Australia and NZ Yes, to a limited extent Up to the point of receiving the O'Donovan advice Insufficient information to comment Yes After that only if: Yes • the Parties had agreed that pursuing the Potential Claims was in their best interests; or • if litigation funding had been obtained to protect stakeholders' interests In relation to the investigation of options for the funding of the pursuit of the Potential Claims. In reporting to creditors regarding the nature and prospects of the Potential Claims and, if relevant, in relation to the progress in pursuing the Potential Claims. POC Act Proceedings and AFP Consideration of POC Act Application Yes In relation to initial enquiries regarding POC Act Application and briefing solicitors Insufficient information to comment. Liaison with AFP Yes, to a limited extent. Only to extent required under s533 of the Corporations Act and any reasonable assistance to law enforcement agencies Insufficient information to comment. Responding to AFP Yes, to a limited extent. To the extent of orders issued for production under the POC Act otherwise seek to avoid or minimise voluntary production or assistance. Insufficient information to comment. Involvement in POC Act Proceedings Yes, to a limited extent Only to extent required to efficiently and effectively respond to allegations of misconduct alleged by Mr Sharp. Insufficient information to comment Receivers Correspondence about Receivers' retirement Yes Corresponding with the Receivers about their retirement and the completion of the remaining tasks in the receivership. Insufficient information to comment No Seeking of legal advice about the retirement of the Receivers and the prospects of success of an application to remove them. Receivers' directions application Yes Briefing solicitors to correspond in relation to the Receivers' application for directions. Insufficient information to comment No Participating in Receivers' application for directions. Application to remove Receivers No In relation to making an application for removal of the Receivers. Insufficient information to comment. No In relation to bringing the application to dismiss the relief sought by ANZ

SCHEDULE OF PARTIES SAD 222 of 2015 Plaintiffs Fourth Plaintiff: IAN RUSSELL LOCK AND JOHN SHEAHAN AS JOINT AND SEVERAL LIQUIDATORS OF SK FOODS AUSTRALIA PTY LTD (IN LIQUIDATION) Fifth Plaintiff: IAN RUSSELL LOCK AND JOHN SHEAHAN AS FORMER JOINT AND SEVERAL ADMINISTRATORS OF SS FARMS AUSTRALIA PTY LTD (IN LIQUIDATION) Sixth Plaintiff: IAN RUSSELL LOCK AND JOHN SHEAHAN AS JOINT AND SEVERAL LIQUIDATORS OF SS FARMS AUSTRALIA PTY LTD (IN LIQUIDATION)