MARTIN BRUCE JONES joint and several administrators GD PORK HOLDINGS PTY LTD (ACN 126 978 676) (ADMINISTRATORS APPOINTED) AS TRUSTEE FOR THE GD PORK UNIT TRUST [2021] WASC 428 (1 December 2021)

3 Mr Jones and Mr Smith (then partners of the consultancy firm Ferrier Hodgson) discharged their positions of voluntary administrators of the two corporations (who had been involved in the West Australian pork producing industry) over roughly a seven (7) month period - from the time of their statutory appointments until conclusion, on the appointment of independent liquidators at 28 May 2019.

4 The present action was commenced by the originating process of Messrs Jones and Smith whilst they were still discharging their roles as the joint voluntary administrators, at 1 February 2019. Later, on 28 May 2019, the creditors of both corporations resolved (at reconvened second meetings) that the respective companies should be wound up and that joint and several liquidators be appointed - being Ian Francis and Michael Ryan of FTI Consulting (see par 94 of the parties' statement of agreed facts (exhibit 1.9)).

5 Also on 28 May 2019, relevantly to the present applications, the creditors of GD Pork approved payment of $807,486 plus GST to Messrs Jones and Smith - as remuneration for their work as voluntary administrators of GD Pork between 17 November 2018 and 28 May 2019 (agreed facts subpars 93(a) and (b)). Likewise, the creditors of GDPH approved payment of $28,895 plus GST, as remuneration to Messrs Jones and Smith for their work as voluntary administrators of GDPH in that same period (see agreed facts subpars 93(c) and (d)).

6 Essentially, ASIC takes issue with the remuneration determinations as approved by the creditors of the two corporations (at the respective reconvened meetings on 28 May 2019) in respect of Messrs Jones and Smith's work as voluntary administrators in the period of 17 November 2018 to 28 May 2019. Further, ASIC also takes issue against what were earlier remuneration determinations reached by the same creditors, at 5 December 2018, in respect of the earlier period of billed work (31 October 2018 to 5 December 2018) for Messrs Jones and Smith in their role as voluntary administrators (agreed facts par 65).

7 As will be elaborated upon by these reasons, ASIC's primary grievance is that Messrs Jones and Smith should not ever have taken up their appointments as voluntary administrators - given that their firm Ferrier Hodgson, had earlier provided advice to the two corporations in a private capacity. On this basis, ASIC contends that conflict of interest and bias concerns arose and hence that the administrators' approved remuneration determinations by the creditors should be a subject of a court conducted review and to a corresponding substantial reduction in approved remuneration.

8 Before rendering some early observations and evaluations towards the present interlocutory applications, it is necessary first, to set out the relevant statutory framework underlying remuneration determinations for the voluntary administrators.

9 The payment approval resolutions of the GD Pork and GDPH creditors of 28 May 2019 and 5 December 2018, hold the status of being 'remuneration determinations' made under the Insolvency Practice Schedule (IPS), which is found at Schedule 2 to the Corporations Act. The definition for 'remuneration determination' under s 5-5 of the IPS, reads:

Remuneration determination, for an external administrator of a company, means a determination made in accordance with section 60‑10 in relation to the external administrator.

10 The term 'external administrator' is found defined in IPS s 5-20 IPS to include, inter alia, an 'administrator of the company'.

11 Section 60-10, titled 'Remuneration Determinations', appears in pt 3, div 60, subdiv B of the IPS, under the general heading 'Remuneration of an external administrator - general rules'.

12 It is apparent from IPS s 60-10 that a remuneration determination can be effected by a number of mechanisms, including by a resolution of the creditors of a corporation (see s 60-10(1)(a)), or in other circumstances by a court (see s 60-10(1)(c)). By the preface to s 60-10(1), a remuneration determination must be made in respect of 'necessary work properly performed by the external administrator in relation to the external administration ...'.

13 By s 60-11, a person (including ASIC) may apply to the court for a 'review' of a remuneration determination made in respect of an external administrator of a corporation (see especially s 60-11(1)(a)). I note that the right to apply for a review does not apply where the remuneration determination itself is made by the court (see s 60-11(5)).

14 Nevertheless, a court is given a discretion in relation to a decision to conduct a review of a remuneration determination or otherwise - concerning an external administrator. This is evident from IPS s 60-11(3), which says:

On application under subsection (1), the Court may, if it considers it appropriate to do so, review the remuneration determination. (my emphasis in bold)

15 If a court does affirmatively resolve to conduct a review of a remuneration determination, then some mandatory obligations follow, in terms of the conducting of the review. This emerges via s 60-11(4), which reads:

After reviewing the remuneration determination, the Court must:

(a) affirm the remuneration determination; or

(b) vary the remuneration determination; or

(c) set aside the remuneration determination and substitute another remuneration determination. (my emphasis in bold)

16 Moreover, I note that by IPS s 60-12, the Court 'must have regard to whether the remuneration is reasonable' and if undertaking the review task, the Court takes into account any or all of the following matters. There follow some thirteen (13) subparagraphs numbered (a) through (m), setting out (comprehensively) the relevant matters. But the basal aim of a review task for a Court has been clearly stated in mandatory terms - namely, to ascertain 'whether the remuneration is reasonable'.

17 Since it is central to the present applications, I will return later in these reasons to set out the entirety of IPA s 60-12 by reference to the 13 different categories of matter considerations seen to follow, found comprehensively assembled under subpars (a) through (m).

18 At this early stage, I turn to discuss in greater depth the two interlocutory applications filed in the proceedings.

19 The interlocutory application of the plaintiffs Messrs Jones and Smith was filed on 3 June 2020, seeking at then, orders to draw their approved remuneration. By that time, as mentioned, they had ceased to occupy the roles of joint and several administrators of the two corporations (the two corporations having been placed into liquidation 12 months earlier, on 28 May 2019).

20 The interlocutory application of Messrs Jones and Smith is made pursuant to s 90-20 of the IPS, alternatively under s 447A of the Corporations Act.

21 IPS s 90-20(1) permits persons with a 'financial interest' in the external administration of a company to bring application for orders from a court - under s 90-15. That provision (see especially s 90-15(1) and s 90-15(3)) permits a court, as it thinks fit, either of its own initiative or upon application, to issue orders in relation to the external administration of a company.

22 By s 90-15(3)(a), a court may issue an order 'determining any question arising in the external administration of a company'. As mentioned, the plaintiffs seek, in effect, permissive orders from this court that as former administrators of the two corporations, they be entitled to draw down on the remuneration which had been the subject of remuneration determinations approved by the creditors of the two corporations by resolutions dated 28 May 2019 - and set aside to that end.

23 I would note that, strictly speaking, there is no legal requirement that the former administrators seek a court approval to draw down upon amounts the subject of the 28 May 2019 remuneration determinations

- given these determinations had already been formally made by the corporations' creditors. However, the plaintiff's interlocutory application was commenced under circumstances where the former administrators had previously been in dialogue with ASIC as regards ASIC's expressed opposition then to any drawing down of the approved sums, without a prior court approval. That course was agreed upon. Consequently, an interlocutory application seeking permissive orders to this effect was filed by the plaintiffs.

24 But ASIC did not merely communicate its opposition to the drawing down of those 28 May 2018 remuneration determination amounts. ASIC informed the administrators of its opposition as well to the earlier remuneration amounts earlier approved and then received by the administrators of the two corporations. This became the subject matter of ASIC's subsequent interlocutory application.

25 On 28 August 2020, ASIC as an intervenor, filed its own separate interlocutory application pursuant to IPS s 60-11(1) and 90-15(1) (exhibit 1.2). By this application, ASIC seeks that the court review the remuneration to Messrs Jones and Smith pursuant to the earlier remuneration determinations of the creditors of the two corporations made on 5 December 2018 in respect of earlier billed work owing to their roles as voluntary administrators. Specifically, the earlier amounts related to work carried out between 31 October 2018 and 5 December 2018 and were in aggregate amounts of $141,576.50 (excluding GST) paid by GD Pork and $49,466 (excluding GST) paid by GDPH.

26 The statutory provision (IPS s 60-11(1)) has been mentioned as regards the genre of persons who may apply to seek a review of a remuneration determination concerning an external administrator of a company. ASIC is specifically identified as such a person by s 60‑11(1)(a).

27 I have also mentioned an alternate IPS provision relied upon by ASIC upon its application as well, namely IPS s 90-15(1). By this provision, a court, either on it own initiative or upon application, can issue such orders 'as it thinks fit', in relation to the external administration of the company. In particular, by IPS s 90‑15(3) the court may, without limitation, determine any question arising in the external administration of the company.

Distilled issues upon the present interlocutory applications

28 By reference to the two pending interlocutory applications, there respectively emerged two related controversies.

29 The first is whether, as sought by the former administrators, they should be permitted by order of the court to draw down the amounts of the two remuneration determinations as resolved upon by the creditors of the two corporations on 28 May 2019 (which application for permission to draw down those funds is opposed by ASIC).

30 The second controversy is whether, by ASIC's interlocutory cross‑application made as intervenor, there should be a review conducted by the court of what was the earlier remuneration determinations made by the creditors of the corporations at 5 December 2018 in respect of the earlier work of Messrs Jones and Smith. If such a review were to be conducted by the court, then a further question arises as to whether there should be significant reductions in the amounts of the 5 December 2018 remuneration determinations, as is presently advocated by ASIC.

31 As matters have developed, it appears uncontroversially accepted that ASIC is actually seeking that the court conduct a review, not only of the 5 December 2018 remuneration determinations, but also of the creditors' 28 May 2019 determinations (the subject of the plaintiffs' interlocutory application for draw down permission). It emerges on the plaintiffs' interlocutory application that ASIC opposes any draw down of funds now set aside and held on trust to meet the currently unpaid remuneration determination payment obligations to the former administrators.

32 As will be discussed further, a key component of ASIC's opposing intervention contends for a court apportioned reduction (roughly in the order of 90%) in the level of the creditor approved remuneration fees for Messrs Smith and Jones as the joint and several administrators in respect of both corporations. ASIC has attempted a suggested apportionment reduction exercise by way of suggested reductions to the fees as have been approved under all remuneration determinations of creditors over the two companies' period of voluntary administration.

33 ASIC's mooted remuneration reduction and apportionment exercise was first a subject of an attachment to the affidavit filed and read for ASIC in these interlocutory applications - namely, in the affidavit of an ASIC employee, Mr Adrian James Saggers sworn 28 August 2020 (exhibit 1.21). An attachment to the Saggers affidavit (attachment AJS-46) saw an attempted apportionment of the fees conducted by reference to a so-called 'workbook' prepared by another ASIC employee, a Ms Peries. However, that first attempted apportionment exercise came to be abandoned by ASIC before the hearing. It was overtaken by another attempt of ASIC under what is found as Schedule A to ASIC's first tranche of written submissions dated 7 April 2021 (exhibit 1.12).

34 As is explained by the cover sheet to that schedule (at page 2), ASIC at the end seeks to ask this Court by way of a remuneration review, to disallow in aggregate some 93.5% of the approved fees the subject of creditor remuneration determinations in respect of GD Pork; and 30.2% of the approved remuneration in respect of GDPH. ASIC's expressed rationale for those proposed fee disallowances (were a review to be conducted by the court) was candidly explained by junior counsel for ASIC during the application hearing. I will elaborate upon that attempted apportionment exercise later in the reasons.

35 I pause to mention at an early point a key observation pivotal to the present dispute and the application hearing.

36 But for the opposing intervention of ASIC, the interlocutory application by the plaintiffs (as former administrators) of 3 June 2020, would present as a relatively straightforward and routine interlocutory application made to the court - seeking approval to draw down the funds specifically set aside to abide the payment obligation to them arising by the remuneration determinations of the two corporations' creditors.

37 As mentioned, the basis for ASIC's expressed opposition to the plaintiffs' application is grounded on suggested conflict of interest and ostensible bias arguments - as regards the administrators' alleged wrongful taking up of their statutory appointments. As will be elaborated upon shortly, there is no suggestion by ASIC that Mr Jones and Mr Smith did not perform valuable work to the benefit of both corporations whilst discharging their roles as joint and several administrators over a period of almost seven (7) months, between 31 October 2018 and 28 May 2019. Nor was there any suggestion that the professional work claimed for under all the remuneration determinations was not carried out timeously, diligently, or competently, or that there had been any level of overcharging such as by excessive hourly rates, or by charging for work not performed. Nothing like that was suggested by ASIC concerning the seven (7) months of the voluntary administration.

38 Nor was there any suggestion by ASIC that any of the many business decisions as were taken by the administrators whilst performing their offices were wrong, biased for or against any person, improperly or negligently taken, or had brought about any degree of harm or damage to the corporations or to their creditors or to shareholders. Further, there was no contention that the remuneration determination amounts as were claimed (both under the December 2018 and May 2019 remuneration determinations) were otherwise than reasonable in their quantums - as fees levied for the work done in the period of voluntary administration (and later approved by the creditors of the two corporations).

39 Nor was there any suggestion that the creditor resolved and approved remuneration determinations were in any way tainted or influenced by any level of misunderstanding, by misrepresentation, or by any element say, of misleading conduct - so as to possibly bear adversely against the resolution approval decisions as ultimately resolved upon and approved by those creditors.

40 Instead, the rationale for ASIC's expressed administrator remuneration opposition and for ASIC's advocated court review of remuneration exercise - is grounded on its 'concern' that Messrs Jones and Smith ought not, at 31 October 2018, to have accepted and thereafter to have continued on in their respective appointments as the joint and several administrators of the two corporations.

41 Hence, ASIC's expressed 'concern' is directed at events occurring before the appointments as voluntary administrators - and as to their suggested ramifications. ASIC argues that at the time of their appointments, Messrs Jones and Smith, by then, suffered under a conflict of interest or a potential conflict of interest. Further or alternatively, ASIC argues that they took up their appointments under circumstances where they were then open to challenge - on the basis of their suggested ostensible bias in their future decision‑making whilst discharging positions as voluntary administrators of the two corporations. How does ASIC support that view?

42 The factual basis for ASIC's expressed negative stance is grounded on expressed 'concerns' that Ferrier Hodgson (and Mr Jones as a former partner therein) had earlier been professionally engaged by the same two corporations privately and had carried out advisory work for them in an earlier period. That was from 25 July 2018 to 31 October 2018 (before Messrs Jones and Smith of Ferrier Hodgson came then to be appointed as the voluntary administrators of the two corporations).

43 So then, it is the earlier period of prior private engagement of Ferrier Hodgson and Mr Jones, spanning roughly three (3) months, that ASIC contends is problematic when viewed against their entitlements to remuneration for work done as voluntary administrators done in a later period of roughly seven (7) months. According to ASIC, the earlier period of private engagement generated either an actual or potential conflict of interest in Mr Jones and Mr Smith, and it also raised, says ASIC, an allied ostensible bias concern over the taking up of their statutory appointments at 31 October 2018. That concern is said by ASIC to bear against the level of the reasonable remuneration to be allowed to Mr Jones and Mr Smith in respect of all the work done by them in the later seven (7) months of otherwise unblemished professional insolvency work as voluntary administrators.

44 Two key issues arise from the interlocutory observations so far. First are the applicable legal principles governing the circumstances in Australia under which an insolvency practitioner, who has earlier acted in a private advice capacity for a corporation, might legitimately go on to take up a subsequent formal appointment as a voluntary administrator appointed to the same corporation(s) - to which they have earlier provided their private insolvency advisory services.

45 The second key issue is whether it is at all legitimate for ASIC, under an advocated methodology of attacking the approved levels of remuneration as resolved upon by the corporations' creditors as remuneration determinations, to ask a court to reduce, or to deny the approved remuneration under a review process - based on 'concerns' over conflict of interest, or as to ostensible bias arising potentially in the voluntary administrators' likely future decision-making (even though no such decisions made as administrators are in fact criticised).

46 To consider the underlying questions, three more key pieces of information need to be identified at an early point.

Disclosure omission by Mr Jones to creditors as regards payment to Ferrier Hodgson for pre-appointment work

47 First, it is not in dispute that on 19 October 2018, Ferrier Hodgson had rendered an invoice to GD Pork in respect of pre-appointment work as was carried out by Ferrier Hodgson - in the amount of $110,136.81 (GST included). The invoiced sum was subsequently paid by GD Pork, sometime between 22 to 31 October 2018 (see agreed facts pars 45 and 46). For the purpose of the present applications, Mr Martin Jones swore a number of affidavits in support of the claims and upon the position of the former administrators. Mr Jones was cross‑examined upon his affidavits and more generally at the application hearing.

48 Mr Jones accepts that the $110,136.81 payment by GD Pork in respect of Ferrier Hodgson's pre-appointment work (including for some work done by him) was not mentioned as it should otherwise have been in the administrator's report made to creditors. And so, a receipt of those funds by his then firm was not highlighted as being a potential voidable transaction, possibly to be claimed back and recouped later by a liquidator. Mr Jones fully accepts that the payment made to Ferrier Hodgson should have been mentioned in the report and that the failure to make reference to the amount to creditors was an oversight by omission.

49 But there is no question of that Ferrier Hodgson invoice and its payment being rendered or received in a covert or surreptitious fashion. The GD Pork payment was made and recorded at the time and it manifests itself in the books of the corporation as an outgoing expenditure to Ferrier Hodgson at the time.

50 ASIC however, points to that payment and to the omission to disclose it to creditors in a report - to support its contentions of conflict of interest and of ostensible bias. ASIC asserts the payment to Ferrier Hodgson might have become a subject of pursuit later as a potential unfair preference, or as a voidable transaction - subsequently to be set aside and be recoverable by a liquidator pursuant to the Corporations Act s 558FA, s 558FE or s 558FF. However, no focused liability argument was put at the hearing (noting the possible defences under s 558FG) suggesting an overwhelming or conclusive position about the likely success of a recovery action brought for that sum by a liquidator.

51 Factually, it is the case that even though independent liquidators were appointed at the conclusion of the period of voluntary administration at 28 May 2019, that no pursuit of the amount back from Ferrier Hodgson has occurred to date as recovery action taken by the independent liquidators. Sensible economics may well play a part in any such decision, given the relatively small amount concerned, viewed in overall context.

52 The second overarching early point is that it is recognised as a matter of law, that the remuneration for services provided ought not be opposed or undermined under a collateral methodology towards an object of punishing or sanctioning an external administrator. Such a 'backdoor approach' would be legally unprincipled. ASIC accepts that principle in the present application. But it also rejects any suggestion that this is the course it is taking by its present interlocutory application seeking a court review of the administrators' remuneration.

53 In Re Barokes Pty Ltd (In Liq) [2020] VSC 555 (Barokes), Hetyey AJ set out the state of the law upon this principle at [69], in terms I would respectfully endorse and adopt. The learned associate justice said:

The court's function in a remuneration application is solely to assess whether the external administrator's fees are reasonable and to determine what those fees should be. However, it is not a forum to inquire into the conduct of an external administrator. Nor should it be used as mechanism to discipline or punish an external administrator [referring at footnote 83 to Re Palmer (1998) 18 FCR 271; Paul's Retail [2009] NSWSC 1222; (2009) 76 ACSR 26]. Because the remuneration assessment procedure is a summary one, it is neither appropriate nor possible to examine whether there has been unsatisfactory conduct by an external administrator, including conduct lacking in propriety or tantamount to breach of duty. Were it otherwise, the process could encourage satellite litigation by aggrieved parties with an interest in the external administration. It could also provide an opportunity for a collateral attack on the actions of an external administrator by a party who is otherwise the subject of investigations or claims arising from the company's affairs. Either scenario could unnecessarily delay the finalisation of an external administration. As previously noted, allegations of misconduct, misfeasance, or breach of duty need to be properly tested through evidence, and natural justice afforded to the external administrator. As discussed further below, there are other provisions within the statutory regime which better accommodate the ventilation of grievances by interested persons. (footnote omitted).

54 One of the case authorities referred to by Hetyey AJ (at footnote 83) was Barrett J's earlier decision in Paul's Retail [2009] NSWSC 1222; (2009) 76 ACSR 26. While this case did not concern the review of a voluntary administrator's reasonable remuneration, Barrett J nevertheless came to observe (at [77]):

The assessment whether the initially fixed sum is fair and reasonable will be made in the light of all relevant circumstances brought to the court's attention upon the review. These may include circumstances that were not known or foreseen at the time the remuneration was fixed. They may include the circumstance that some work actually done was outside the proper performance of the administrator's functions or was unnecessary, although allegations of misfeasance or breach of duty should not be determined upon a review of remuneration; also notions of punishment are foreign to the process: [referring to his Honour's earlier decision in Re Anderson Group [2002] NSWSC 764; (2002) 20 ACLC 1607].

55 Barrett J further observed (at [20]), in that context of the remuneration of a trustee in bankruptcy, that:

There is recognition here that misconduct on the part of a trustee in bankruptcy may mean that the entitlement to remuneration is removed or, I would add reduced. But the adjustment is not punitive in nature. Disallowance of the whole or some part of the remuneration claimed will be no more than a reflection of the realty that itis no part of the function of a trustee or liquidator to act in breach of duty and conduct of that kind attracts no remuneration. The difference between adjustment to allow for such conduct and punishment emerges from the decision in Re Palmer; Ex parte Taylor (1988) 18 FCR 271 where a Deputy Registrar in bankruptcy had denied remuneration to a trustee whose conduct he had found to be improper, an allegation the trustee had strenuously denied in detailed submission made by him in writing.

56 In Re Palmer; Ex parte Taylor (1988) 18 FCR 271, Spender J had earlier observed (at page 284):

... It is not part of his function to discipline trustees by the imposition of any penalty, but it is to fix the remuneration to which a trustee is entitled by the Act at a figure that is reasonable in all the circumstances. It is of course not correct that a person is entitled to be paid only if his work manifests no error or is without fault. Such a standard of perfection would be unworkable.

57 Some of the observations referred to in the case authorities now mentioned above were rendered in the contexts of a liquidator's remuneration, or under circumstances where a court itself was fixing the level of remuneration to be paid - with the court itself effectively rendering the remuneration determination. Here of course, the creditors have now made the remuneration determinations and the court is being asked by ASIC to review them - by reference to the suggested effects of events prior to the work that was the subject of the remuneration determinations.

58 Despite minor differences in factual circumstances, no different principles apply in my view - concerning an attempted de facto imposition of a penalty, or as an attempted de facto disciplinary sanction against an external administrator - under the guise of denying or reducing the levels of their claimed remuneration approved by creditors for legitimately performed work. And the same principle which stands against back door punishments or sanctions against remuneration would also bear against this court weighing as a matter of discretion, whether to conduct a review of a creditors' remuneration determinations and in turn, to determine whether remuneration already resolved upon for an external administrator was reasonable (under IPS s 60-12). A punishment or sanction exercise is plainly not the objective a court would or should have in mind whilst conducting an IPS s 60-12 remuneration review exercise.

Affidavit evidence of Adrian Saggers relied upon by ASIC

59 As a last factual matter, I turn to mention the affidavit of Adrian James Saggers sworn 28 August 2020 (exhibit 1.29), which is relied upon by ASIC in its opposition to the plaintiffs' interlocutory application. Mr Saggers' affidavit spans some 845 pages. An overwhelming component of the affidavit comprises the documentary attachments ASJ‑1 through ASJ‑47. The affidavit undoubtedly serves a legitimate purpose of putting relevant documentary material before the court.

60 Mr Saggers, a chartered accountant, swears his affidavit as the senior manager of ASIC's Insolvency Practitioners Stakeholder Team in Perth, where he has been engaged since 2008.

61 Whilst Mr Saggers' affidavit was admitted without any admissibility objections by the plaintiffs, it is apparent that much of the direct text in Mr Saggers' affidavit would have been vulnerable to inadmissibility objections - on a basis that it is seen to be (attachments aside) riddled with much non-factual content. In particular, it displays large measures of argument or conclusionary statements - which present in the nature of submission, rather than as true factual evidence. A few examples are sufficient to make the point. For instance, see first par 53 of the Saggers affidavit, at which Mr Saggers argues:

There are inconsistencies between what is referred to in the Engagement letter and 'Updated Engagement letter', in that ...

62 Such conclusionary commentary observations are plainly in the nature of submission or argument, rather than constituting true factual evidence. Since there was no objection by the plaintiffs, the affidavit was formally received. Nevertheless, the illegitimate character of such material bears against the level of weight I will afford to it - which in the circumstances, must be slight at best.

63 A second example is found at par 76. Here Mr Saggers says:

Based on my reading of the 2 October 2018 meeting file note, I believe that part of it states: 'apparently idea was for 100k per week but this was never agreed.' Given the close proximity of the meeting to the payment to Weston Animal Nutrition of $120,000 (referred to above), it is not implausible that the $120,000 payment was connected to the Companies' efforts to secure a standstill agreement.

64 Again, that material is really in the nature of argument, as well as carrying a level of speculation on the part of Mr Saggers. Its character is such that it ought not be found in an affidavit, even allowing for the admissibility of hearsay evidence on the present applications.

65 A last chosen example is found at par 101, where Mr Saggers says:

[referring to a file note of 9 August 2018 prepared by Mr O'Farrell of Quadrant Advisory, which was attended by Mr Jones and others, including Mr Soerensen.]

I believe that Mr Jones was a key participant at the meeting, acting as an advocate for the Companies' proposal for standstill agreements with its lenders.

67 Again, no significant evidentiary weight can be afforded to Mr Saggers' argumentative submissions of that nature by him - as a complete outsider to this note. The attempts at file note interpretation are pure argument. They should not be found in any affidavit - even one read at the interlocutory level.

68 The paragraphs mentioned above are not the only paragraphs within the text of Mr Saggers' lengthy affidavit which, by reason of their argumentative or conclusionary nature, are ultimately of minimal weight in presently assisting ASIC. The text of Mr Saggers' affidavit is littered with multiple examples of that kind too numerous to recount. I refer further, say, to pars 179, 180 and 184. A better standard is expected than this.

69 Consequently, apart from the affidavit's admissible documentary annexure content, much of the text of the Saggers affidavit must largely be treated as submission and argument by ASIC - to which I can afford little weight as evidence.

70 Having discussed those three key introductory matters, I can return to discuss some further procedural directions and events that occurred prior to the eventual three-day interlocutory hearing that unfolded on these two applications.

71 Under directions of a former case manager of 2 October 2020 (exhibit 1.3) and 13 November 2020 (exhibit 1.4), the parties came to file respective statements of contentious facts. The plaintiffs' lawyers address that in their filed document of 9 December 2020 (exhibit 1.10), followed then by a statement of agreed contentious factual issues filed on 14 December 2020 (exhibit 1.11).

72 Next followed ASIC's first tranche of written outline of submissions of 7 April 2021 (exhibit 1.12), including, as mentioned, Schedule A thereto (exhibit 1.13). There followed the plaintiffs' first tranche of written outline of submissions of 28 April 2021, including its Schedule A - being a schedule cross-referencing the plaintiffs' evidence (mostly of Mr Jones) to various subparagraphs of IPS s 60‑12.

73 Following that, the matter was set down for a three-day interlocutory hearing before me, to commence on 31 May 2021. But by reason of adverse COVID‑19 Australian travel interruptions prevalent at the time bearing against respective senior counsel travelling to Perth in person, it was agreed between the parties that that scheduled hearing be deferred.

74 Ultimately, a hearing came to be rescheduled subsequently across 9 through 11 August 2021. However, COVID‑19 travel restrictions were still prevalent across most of Australia, even at the later time. Consequently, by agreement, the three‑day hearing at that time was agreed to be conducted by video link to the plaintiffs' and intervenor's respective senior counsel located in Victoria and New South Wales, with junior counsel for the plaintiffs and for the intervenor all present in person at Perth.

75 The unexpected deferment at 31 May 2021 occurred after I had had some opportunity to consider the participants' first tranches of written submissions and their evidentiary materials as filed to that point.

76 As a result, I was somewhat concerned at that point that the parties' written positions, as exchanged, appeared then to be rather like 'passing ships in the night'. With a view to refocussing a more engaged debate, I called the matter on for a directions hearing on 31 May 2021, conducted then only in the physical presence in Perth of junior counsel on each side. At the time, I indicated that without reaching any final positions, I had identified some 22 points or issues I wished the parties to direct their more specific attention at, prior to any rescheduled substantive hearing.

77 In particular, I was at then concerned that ASIC (who I note had filed its first tranche of written submissions before the plaintiffs) had insufficiently engaged against many of the issues the plaintiffs had raised in their first tranche of written submissions (exhibit 1.15) - under circumstances concerning opposition against the levels of remuneration for voluntary administrators that looked to be without direct case precedent.

78 I proceed next to mention aspects of those 22 points or issues - since the parties' subsequent tranches of exchanged written submissions did later seek to specifically engage with the points as then raised - namely ASIC's second tranche outline of written submissions of 7 April 2021 (exhibit 1.24), responded to by the plaintiffs' supplementary written outline of submissions of 30 July 2021 (exhibit 1.25).

79 By reference to aspects of the transcript of the 31 May 2021 directions hearing, the points I then raised for the parties' further consideration are related below.

Essentially, what I'm looking for is precedent, in terms of what the court is being asked to do [here], bearing in mind that the earlier fees, which appear to have been rendered, appear to have been the subject of an earlier remuneration determination ...

Under cl 90-20(1) [sic], the categories of persons who can make [sic] application to court for an order under 90-15 include ASIC. But this is the application of the former joint and several administrators. So I assume that they apply as persons with a financial interest in the external administration of the company under 90-20(1)(a) ...

[In due course, the plaintiffs' second tranche submissions confirm that to be the case as regards s 90-15.]

So essentially then, there looks, in terms of the period of appointment for the administration, two tranches of fees rendered. The first tranche are the amounts that I mentioned earlier, the subject of an earlier remuneration determination by the creditors, [look] to have been paid. The second amount, the subject of the interlocutory application, have been approved by a meeting of creditors on 28 May 2019. They are held to abide payment, but have not yet been received, as I understand it, by the joint and several administrators.

Hence the application to the court seeking an order that they are entitled to draw down on those amounts. I infer [but] I would like it confirmed that the reason the application is made is because ASIC opposes the drawing down of those amounts, as approved.

I also assume that the two amounts in question, being the subject of moneys held to abide those fees, and approved by meeting of the creditors of 28 May 2019, in respect of each of the two companies, meets the description of remuneration determinations for the purposes of that definition under ... the dictionary at cl [sic] 5-5, and then subsequently referred to in 60-10.

82 My second point concerned ASIC as intervenor on the application. After noting that ASIC was perfectly entitled to be heard as intervenor, I continued (at ts 31):

There's no difficulty in that respect. And prima facie [it] would carry no costs exposure, in terms of seeking to be heard in relation to that. I notice that in the Ten Network Korda decision of 2017 by O'Callaghan J in the Federal Court, that ASIC was amicus curiae upon that application, effectively seeking to assist the court with the orders that were ultimately made by consent. This seems to me to be a different situation.

As amicus curiae, or as an intervener in the public interest, ASIC wouldn't carry a costs exposure.

Point 3: In Ten Network, ASIC did not seek a review of a remuneration determination

83 My third point was that, unlike Ten Network Holdings Ltd Administrators Appointed) (Receivers and Managers Appointed) [2017] FCA 914 (Ten Network), ASIC in present circumstances had brought its own interlocutory application as an applicant on 28 August 2020 - by which it sought a review of the remuneration determination(s) of the creditors. This application embraced not only the remuneration determinations of 28 May 2019 (in respect of which the first interlocutory application is made by Mr Jones and Mr Smith) but also seeking a review of the earlier first tranche determination made by the creditors at 5 December 2018.

84 Noting the content of s 60-11(1) and recognising ASIC's entitlement to apply for a review of a remuneration determination, I came to observe on a preliminary basis, that (see ts 32):

In bringing that application, it seems to me that ASIC goes further than simply being amicus curiae, as it was in the Ten Network case, or intervening to be heard on the interlocutory application, it [is] seeking affirmative relief, by way of the conducting of a review by the court of the remuneration determinations - plural - by creditors. And, as such, [ASIC] seems to me to be advocating a position. And with that, [would follow a potential] costs exposure, in terms of its participation beyond [simply] being heard on the application made by the administrators.

[Subsequently, a potential exposure position to costs depending upon the outcome of this hearing, is not seriously questioned by ASIC.]

Point 4: Court's discretion to conduct review of a remuneration determination

85 The fourth point observed upon the wholly discretionary nature of the court's power to conduct a review of a remuneration determination (as defined) - by reference to the explicit wording of s 60-11(3). The provision provided for a court to conduct a review 'if it considers it appropriate to do so'.

86 ASIC was asking the court to review all the creditors' remuneration determinations in respect of the fees rendered by the joint and several administrators (Messrs Jones and Smith) attributable to work performed in the seven‑month period of their appointments as voluntary administrators of the two corporations.

Point 5: The Court must have regard to '... whether the remuneration is reasonable, taking into account any or all of ...')

87 By reference to IPS s 60-12, the mandatory criterion applicable upon a review was to determine whether the remuneration claimed was reasonable, and as to which the court 'must' then have regard whilst conducting a review of a remuneration determination.

88 The remuneration determinations relevant to a presently advocated potential curial review of those determinations were made by the creditors of the two corporations.

Point 6: IPS s 60-12 considerations

89 By reference to IPS s 60-12, the as seen specified matters (a) through to (l) all looked to invoke fairly orthodox fee related considerations going to a reasonableness evaluation to be made as regards the quantum of the remuneration amount that was under a review, including (ts 33):

Were the fees of a reasonable amount? Was the work done? Was it done competently? Did the corporations get value for money? Were there any wrong decisions that harmed creditors or members?

Point 7: Plaintiffs address the IPS s 60-12(a) - (l) matters in the first tranche of their written submissions

90 It was observed next that the Schedule A to the plaintiffs' first tranche written outline of submissions of 28 April 2021 (exhibit 1.13) had looked to address and engage with the various ss (a) - (l) considerations as assembled under s 60‑12. They presented item by item in that Schedule, with cross‑references back to the affidavit evidence relied upon and found largely within the two affidavits of Mr Jones (Mr Jones' affidavits sworn 2 June 2020 (exhibit 1.17) and 24 November 2020 (exhibit 1.18)).

Point 8: ASIC had not then addressed IPS s 60-12 matter criteria other than subsection (m)

91 However, ASIC's first tranche written submissions did not look to '... have engaged with any of the criteria under ss 60-12 items (a) through to (l) [sic] in the same way' as the plaintiffs. I also observed as regards that non-engagement by ASIC (to that point) that (ts 34):

... It would be helpful if it did, in short, because I can't tell, from ASIC's position, in terms of the written materials filed to date ... what its position is ...

92 Subsequently, ASIC by its second tranche of written submissions has confirmed that it does not seek to join issue against any of the evidentiary contentions assembled by the plaintiffs under their Schedule A - in relation to the various IPS s 60-12 matter criteria being met - save only in respect of a contention regarding item 60‑12(m) concerning the concluding reference to 'any other relevant matter' - being ASIC's as expressed contentions as to the ramifications of an alleged conflict and bias (see ASIC's second tranche of written submissions at par 19).

Point 9: What is there for a court to 'review' about reasonable remuneration once the plaintiffs' as invoked IPS s 60-12(a) - (l) matter criteria are undisputed?

93 Next, I pointed out that, if ASIC did not seek to engage severally against the s 60‑12(a) - (l) matter consideration touchstones for determining what was reasonable remuneration as relied upon by the plaintiffs under Schedule A, then prima facie, this may be (at ts 34):

... a very strong reason for the court not to conduct a review of the remuneration determination, as a matter of discretion lying in the court ...

Point 10: Mr Saggers' affidavit raised no issue as to the work done by the former administrators

94 Further, as regards the discretionary considerations informing an exercise of the court's discretion in deciding whether or not to conduct a review, the 'concerns' expressed by ASIC as regards conflict and bias were found in Mr Saggers' affidavit, which (ts 34):

... mainly contains documents, plus Mr Saggers' [sic] submissions or opinions that he adds to that affidavit about the concerns of ASIC.

... Certainly, the documents that are appended look to me to be largely relevant. But taking it at face value, it seems to me that the concerns that Mr Saggers [sic] expresses on behalf of ASIC don't look to be focussed on the quality of the work done by the joint and several administrators in the period after their appointment, on 31 October 2018, through to the end of May 2019, when their administration period came to an end.

There doesn't seem to be anything there about the quality of the work done by the administrators in the time that they were administrators. Nothing about the fees that they charged in that period being too high, or the work not being done, or about bad decisions that they made, as administrators, that hurt the companies. I don't detect anything there, in terms of the companies not, in broad terms, getting full value for money, in terms of the work carried on by the administrators in the time that they were administrators.

97 If there were any issue about that from ASIC, I asked for it to be clarified.

98 Subsequently, ASIC's second tranche of written submissions confirm these prima facie observations. However, ASIC then contends that none of that is really to the point - bearing in mind its plenary expressed concerns over conflict and bias concerning the voluntary administrators arising from events before they accepted their statutory appointments at 31 October 2018 (see par 19 of ASIC's second tranche of written submissions).

99 Again, going to the question of whether the court would agree (as a matter of discretion) to conduct a review - if the focus of ASIC's grievances was not upon the work as actually done by the administrators (as appeared to be the position by reference to Mr Saggers' affidavit), then was that not a matter going against the exercise of the court's discretion to conduct a review of the remuneration determination?

Point 12: Focus of ASIC's concerns over pre‑appointment work of Ferrier Hodgson on the basis the voluntary administrator appointments should not have been accepted

100 Next, I pointed out that on my reading of Mr Saggers' affidavit, ASIC's expressed concerns (at ts 35):

... looks to be directed to the pre-appointment period, where Mr Jones and his firm, Ferrier Hodgson, before 31 October 2018, were privately engaged by the two corporations to assist them with their restructuring and their financial issues then being encountered.

Referring to ASIC's suggested conflict of interest or an ostensible bias problem arising from events in the pre‑appointment period, I observed that prima facie:

And that, if I understand, should be taken, somehow, to have borne upon whether Mr Jones or Mr Smith should have taken up the appointment as joint and several administrators in due course, after 31 October [2019].

101 In due course, ASIC's second tranche of written submissions, in effect, confirm this is indeed its position (see ASIC's second tranche of written submissions at pars 30 and 32).

Point 13: Why should voluntary administrators not be fully remunerated for their administration work if the ASIC concern is over earlier events?

Because of those [ie, conflict and bias] concerns, in terms of the pre‑administration period conduct, giving rise to a suggested conflict of interest or ostensible bias problem, I discern that what Mr Saggers [sic] is saying, on behalf of ASIC, is that somehow - and I don't quite understand this - and I need clarification - Mr Jones and Mr Smith ought not be remunerated or fully remunerated or even partially remunerated for their post-appointment work as joint and several administrators.

Point 14: No absolute bar against a prior, private appointment under Ten Network

103 By reference to Ten Network, I observed that there looked to be no suggestion at all by ASIC there that an insolvency practitioner could not have held an earlier private pre-appointment with a corporation over which they were later appointed as a voluntary administrator.

In fact, that case is exactly to the contrary. In the decision, which was effectively a decision made in terms of consent orders, O'Callaghan J accepted a submission of ASIC that it was appropriate for - or not inappropriate for a private appointment to be taken up, followed by appointment as joint and several administrators thereafter, providing - and the phrase used is, 'appropriate safeguards are put in place'.

There's a certain opacity about that phrase, 'appropriate safeguards', that troubles me, and I need some clarity about it. Because to the extent that it is put that that delivers a bright line boundary, or a bright line distinction, in terms of what can and can't be done, I don't see it. That's not to say that it could not be clarified. But it seems to me that there's shades of grey in terms of phrases like 'appropriate safeguards', in terms of drawing the line, if it's possible to draw a line.

106 By reference to Ten Network, I further observed that O'Callaghan J, as to the relief ultimately granted consensually, had there (at ts 36):

... appointed a registered liquidator and partner ... of Ferrier Hodgson, to look at and prepare a 'limited report for inclusion in the report to creditors' dealing with two things that gave rise to his conflict concern, (a) the relationship to the lawyers who had actually briefed and continued to brief Mr Korda, and Mr Korda's firm, that was Gilbert + Tobin, and (b) akin to here, a concern about the fees in the pre-administration period that had been rendered by Mr Korda or Mr Korda's firm.

I interpolate that the magnitude of the private KordaMentha fees at issue in Ten Network was considerably higher than here (by a factor of 10), being over $1 million.

107 My point as to the relief that ultimately issued in Ten Network, was that the concern issue over KordaMentha's fees was to be looked at discretely by an independent person, who was a registered liquidator in a report. Why then, by analogy, was that type of independent report remedy not capable of being used for this case - where independent liquidators had been appointed at the end of the voluntary administration? I referred to [56] of Ten Network, where O'Callaghan J observed as to the first of ASIC's three potential grounds upon which Mr Korda's pre-appointment work might give rise there to a reasonable apprehension of his bias. This had been that:

The first identified ground was that 'sheer volume of the work that was performed prior to the administrator's appointment. The fact that it went for some three months, and the fact that [KordaMentha] was paid more than $1 million for the work'.

108 Noteworthy at then was ASIC's shift in Ten Network over that first ground of concern in that decision, by reference to it being, in effect, appeased by Mr Korda's sworn evidence concerning the nature of the pre-administration work as carried out towards the preparation of an administration contingency plan 'in case the informal restructuring negotiations then being conducted by the Ten Group were unsuccessful' (see [59]).

Point 16: Relatively small quantum of the Ferrier Hodgson private fee and Weston Milling transaction amounts

109 Point 16 concerned the payments made by the two corporations to Ferrier Hodgson and to Weston Milling - which had raised ASIC's concerns as to potentially voidable transactions vulnerable to a setting aside and recoupment action by a liquidator.

110 I had identified two subcomponents. The first was concerned with the fees rendered by Ferrier Hodgson for their private pre-appointment work being potentially recoupable if ever challenged by a liquidator as an unfair preference, or as a potentially voidable transaction. As to the Ferrier Hodgson payment, I observed (at ts 36):

That would relate, in the scheme of things, to what is [a] concern over an economically modest amount of roughly $100,000, which in the scheme of a selloff of assets by the administrators of [in] rough terms - $27.56 million, looks, in relative terms, to be almost trivial.

... If there was any concern about the fees rendered for that pre-appointment period of about $100,000, as an undue preference, the position here is that, unlike in the Ten Network Korda case, there were independent liquidators appointed to these two corporations.

Hence the liquidators of the two corporations here have every opportunity to scrutinise [the] avoidable preference issue, over an amount of $100,000 if they choose to do that, remembering that in the Ten Network case, that was one of the things that the report to creditors, in the limited report, consented to in the relief, dealt with.

113 The second aspect of point 16 sought further elaboration over ASIC's expressed concern (from a conflict or bias perspective) over Mr Jones' or his staff's involvement in a decision whereby one unsecured creditor, being a key grain supplier to the two corporations (ie, Weston Milling) had come to receive a payment during the pre-administration period. This was roughly in the amount of $160,000 - as came to be received then by Weston Milling. I observed (at ts 37):

And again, if that's the nature of the concern - and I might have got this totally wrong - that's something the independent liquidators could pursue, if in fact, they thought there was any merit or worth in the pursuit of [a] voidable transaction.

114 I also observed that the two amounts, in relative economic terms, looked to be bordering on the line of the trivial (economically speaking and measured against the context of the costs of a three day hearing in the Supreme Court of Western Australia).

Point 17: Decision making for voluntary administration compared to liquidation

115 Since ASIC's first tranche of written submissions appeared to be invoking many case authorities all dealing with the position for liquidators, I contrasted the character of a liquidation process to that of the necessarily earlier work as conducted by voluntary administrators of corporations, observing (at ts 38):

The focus of administrators, compared to the focus of liquidators, when appointed, is that for administrations, the nature of the appointment is conceptually supposed to be brief. When administrators are appointed, it's always super urgent, and there is a need for the insolvency practitioners concerned to get up to speed, from usually a cold start, with what is happening in terms of the way the companies are performing in order to obtain the best possible returns for creditors and members.

Usually, but not always, that is by the sale of a business as a going concern, or at least by the sale of the business's most valuable and saleable and marketable assets before they deteriorate and lose value. That's always the primary focus of an administration, which is urgent, and is in the nature of a salvage operation ... drawing upon a maritime law analogy ... in terms of the necessary prioritisation of issues to be addressed by voluntary administrators.

116 I also referred to observations made by the High Court of Australia in Patrick Stevedores No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1 at [47] - [54] - concerning what was then a relatively newly introduced Pt 5.3A of the Corporations Law. I drew particular attention to observations at [52] concerning the obligations of an administrator to act impartially as among all parties.

117 Ultimately, I was trying to point out and emphasise the necessary requirement for some prioritisation of work under a voluntary administrator's triage role towards initially preserving the worth of a business or assets of a business that was teetering financially, under invariably urgent circumstances - by contrast to the colder nature of a liquidator's subsequent and necessarily more ordered consideration of any potential unfair preference payments or voidable transactions under a liquidation scenario where the corporation is being wound up.

Point 18: Ferrier Hodgson's private pre-appointment work payment was overt and obvious

118 This point concerned the fees rendered by Ferrier Hodgson and then paid for the pre‑appointment period, in terms of Ferrier Hodgson charging for private work being rather unsurprising to anyone - where a professional accounting firm with specialist insolvency skills had been engaged.

119 Correlative to that, I observed that the payment of the fees rendered by Ferrier Hodgson for the private work had also been overt.

120 The point I was attempting to make was that there was no covert payment to Ferrier Hodgson. Anyone looking at the books of the corporations, such as a liquidator, would have readily identified the recorded payment to Ferrier Hodgson, if there was any issue to be pursued about it being chased or recouped in the future.

Point 19: Work done in the pre-appointment period needed to be done at some point anyway

121 I posed a hypothetical question as to whether, if Ferrier Hodgson had acted on a pro bono basis during the pre-appointment period, whether that would have appeased ASIC's expressed conflict and bias concerns? The point of the observation was that the private professional work, as performed by Ferrier Hodgson in the pre‑appointment period (in obtaining familiarity with these piggery operation businesses, their creditors, their financial accounts and trading history), would or would likely need to have been performed at some stage anyway by someone and would similarly be professionally charged for at that time. I continued to observe, prima facie, that (see ts 39):

The fact that it was privately done seems to me to have given these joint and several administrators insights, in terms of the knowledge that they held, so that they could hit the ground running once they were appointed as joint and several administrators. In other words, if it's a question about when the work is done, it looks as if much of that work would need to be done anyway. It's just that it was already done prior to them being appointed as joint and several administrators.

122 By reference to ASIC's as then foreshadowed objective to cross-examine Mr Jones at the hearing, it looked as if (by reference to par 186 of Mr Saggers' affidavit concerning the apportionment exercise work book as prepared), the court would be asked to draw some adverse inferences in terms of the value of the voluntary administrators' professional work later carried out being 'somehow diminished in terms of its value, or affected by ASIC's conflict of interest or ostensible bias concerns as expressed' (see Mr Saggers' affidavit at pars 186 to 189).

Hence an argument [looks to be made] that the court ought to reduce or reject some component of the remuneration determinations reached by the committee of creditors. It seems to me, notwithstanding the 54 cases cited across both lists of authorities [to that point; more were added later], to me to be without precedent. Again, I stand to be corrected about that. But if, in fact, the court is being asked to embark upon some sort of apportionment exercise, (by reduction) in terms of the ... administration fees and in terms of [value] determinations, then I would like some more guidance about the principle by reference to which that ought be implemented ... [because it does seem to me to be unusual].

Point 20: Barokes: No de facto punishments by attacking remuneration

124 The Barokes decision, which was then on the plaintiffs' list of authorities, had not to that time been addressed by ASIC. The decision presented then as being, prima facie, 'particularly relevant'. This was for its (ts 41):

... canvassing of the principle stated in some of the other cases, that you can't use a remuneration determination review, in effect, as a side wind to punish, discipline or run some sort of case of misconduct or impropriety against joint and several administrators, under the guise of attacking their fees.

125 Subsequently, ASIC did not seek to challenge the principle. But it would still argue that the position here was different - where these appointments as voluntary administrators, it says, should not have been accepted because of the as expressed conflict and bias concerns (see ASIC's second tranche of written submissions at pars 43 to 51).

Point 21: ASIC's other mechanisms to sanction a voluntary administrator other than by undermining the remuneration determinations made by creditors

If ASIC's true concern is misconduct, and it wishes to punish the joint and several administrators or hold them to account in some way, then it seems to me, ASIC has a panoply of other remedies under the ASIC Act and under the Corporations Act, in terms of going about that intent if, in fact, that is what it wishes to achieve.

127 Subsequently, by its second tranche of written submissions, ASIC accepts it holds other relief remedies. Nevertheless, ASIC says that its challenge against the remuneration determinations is principled and is justified (ASIC's second tranche of written submissions pars 52 and 53).

Point 22: Apprehended bias: Voluntary administrators are not akin to courts or tribunals as regards the making of business decisions for the corporations to which they are appointed

128 My last point raised concerned ASIC's attempted invocation of the principles of apprehended bias in relation to the role and work of joint and several administrators - in some contrast to other situations where a judge is rendering a determination as between disputant parties in the judicial process. Effectively, I was highlighting a necessary distinction of roles - as between a disputant party's entitlement within the curial process to receive a fair hearing from an unbiased decision‑maker

- measured against any importation and attempted wholesale application of the same ostensible bias principles towards work done by joint and several administrators in their unique context of corporate insolvency business decision‑making - which looked to be a distinct process, conceptually.

129 Subsequently, ASIC's second tranche of written submissions refers me helpfully to observations made in the Full Federal Court by White J in ASIC v Franklin [2014] FCAFC 85; (2014) 223 FCR 204 - to which I will refer and which with respect, provide some level of acknowledgement of the distinction in roles vis-à-vis ostensible bias considerations around decisions made by administrators of corporations.

130 My 22 preliminary observations as articulated to the parties on 31 May 2021 were intended to assist in delivering a more focussed framework for the eventual substantive hearing to follow.

131 As mentioned, there has duly ensued the second tranches of supplementary written submissions by the plaintiffs and the intervenor, which do address a number of the issues I had mentioned. These submissions need to be read with that background.

132 For the position of ASIC, my assessment is that, broadly speaking, it takes minimal issue against most of the points I raised for consideration on 31 May 2021 - save for ASIC eschewing any suggestion it was acting punitively, or was seeking to discipline the joint and several administrators by it objecting to the remuneration determinations as resolved by the creditors and seeking a court review of them.

133 From its second tranche of written submissions, ASIC confirms its essential concern is over the taking up of the formal appointments as voluntary administrators at 31 October 2018 by Messrs Jones and Smith - in light of the private pre-appointment work as was performed by Ferrier Hodgson and which is argued to have given rise to contended issues of conflict and bias (see ASIC's second tranche of written submissions at par 21).

134 ASIC's second tranche of written submissions also confirms that the present challenges taken against the creditor‑approved remuneration determinations for the joint and several administrators - by reference to ASIC's concerns bearing upon a contended apportioned reduction of remuneration amounts - is indeed without direct support of any prior case law precedent (see ASIC's second tranche of written submissions par 8).

IPS s 60-12

135 As I have mentioned, IPS s 60-12 identifies what are the enumerated 'any or all' matters to which a court can have regard whilst it is in the process of conducting a review as to the reasonableness of an external administrator's remuneration.

136 IPS s 60-12 reads:

In making a remuneration determination under paragraph 60-10(1)(c) or (2)(b), [identifying circumstances where it is the court that issues the determination, rather than under a resolution of creditors], or reviewing a remuneration determination under section 60-11, 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 by the external administrator was necessary and properly performed;

(b) the extent to which the work likely to be performed by the external administrator is likely to be necessary and properly performed;

(c) the period during which the work was, or is likely to be, performed by the external administrator;

(d) the quality of the work performed, or likely to be performed, by the external administrator;

(e) the complexity (or otherwise) of the work performed, or likely to be performed, by the external administrator;

(f) the extent (if any) to which the external administrator was, or is likely to be, required to deal with extraordinary issues;

(g) the extent (if any) to which the external administrator was, or is likely to be, required to accept the 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 external administrator;

(i) the number, attributes and conduct, or the likely number, attributes and conduct, of the creditors;

(j) if the remuneration is worked out wholly or partly on a time‑cost basis - the time properly taken, or likely to be properly taken, by the external administrator in performing the work;

(k) whether the external administrator was, or is likely to be, required to deal with one or more controllers, or one or more managing controllers;

(i) a review has been carried out under Subdivision C of Division 90 (review by another registered liquidator) into a matter that relates to the external administration;

(ii) the matter is, or includes, remuneration of the external administrator.

the contents of the report on the review that relate to that matter;

137 For present circumstances, ASIC invokes on its application seeking a court review of the creditors' remuneration determinations, only the miscellaneous provision, seen as the last of the thirteen (13) component subparagraphs above, namely s 60‑12(m).

138 Having exposed the terms of IPS s 60-12 as it applies to the present applications, I turn to undertake an examination of the court's jurisdictional power and role in the present applications by the plaintiffs and the intervenor.

139 ASIC's opposition position as intervenor is expressed under its first tranche of written outline of submissions of 7 April 2021. ASIC says there (at par 2):

The plaintiffs seek approval to draw down remuneration for work that they performed as voluntary administrators of GD Pork Pty Ltd (GD Pork) and GD Pork Holdings Pty Ltd (GDPH) (collectively the Companies). The Australian Securities and Investment Commission (ASIC) seeks orders for the review, reduction and part repayment of that remuneration.

140 ASIC's submission contends (at par 11) that a court may review a determination upon ASIC's application (referring to IPS s 60-11(1) and (3)). Indeed, the court may. ASIC adds that the court holds a separate power under IPS s 90-15(1) to make orders 'as it thinks fit' in relation to the external administration of a company, including orders for the repayment of remuneration (by IPS s 90-15(3)). This appears to be referring specifically to s 90-15(3)(f), which cites as an example of orders that may be made - 'an order in relation to remuneration, including an order requiring a person to repay to a company, or the creditors of a company, remuneration paid to the person as external administrator of the company'.

141 ASIC's submission continued to observe (at par 12) that in making such an order, a court can take into account matters including: (a) whether there has been a faithful performance of the external administrators duties; and (b) the seriousness of the consequences of any action or failure, including the effect on public confidence in liquidators as a group.

142 Whilst the general power that is afforded to a court under s 90-15(1) is undoubtedly wide, I would observe that s 90-15(4) is a qualifying provision - identifying five matters (a) - (e) a court may take into account when making orders. These matters all expressly concern liquidators. That chosen reference terminology of 'liquidator' may be contrasted to a rival use of the term 'external administrator' as seen in other subparagraphs such as in s 90-15(3)(f), s 90-15(5) and s 90-15(6).

143 I also note that the IPS s 90-15(1) general power afforded to a court stands to be contrasted with the earlier s 60-11 - that specifically provides for a discretionary review towards remuneration determinations, taking account of the extensive criteria found as set out in s 60-12.

144 Towards present circumstances, I do not assess s 90-15 as adding any extra dimension to ASIC's position, beyond the position reached via s 60-12. In other words, were it assessed as not appropriate for the Court to conduct a review under s 60-12, then ASIC's position would not be changed or elevated by anything that is found in s 90-15(1).

145 The plaintiffs read and relied upon four affidavits of Martin Bruce Jones (two of which are confidential) in support of its interlocutory application seeking court approval to draw down amounts under the remuneration determinations - as they were resolved upon by the creditors of GD Pork and GDPH at 28 May 2019.

146 The Jones affidavits read and relied upon were:

(a) Mr Jones' affidavit sworn 2 June 2020 with the attachments MJ-1 through MJ-24 (exhibit 1.17);

(b) Mr Jones' further affidavit sworn 24 November 2020 with the attachments MJ-25 to MJ-30 (exhibit 1.18);

(c) Mr Jones' confidential affidavit sworn 2 June 2020 with the attachments MJ-1 to MJ-10 (exhibit 1.19); and

(d) Mr Jones' (second) confidential affidavit sworn 2 December 2020 with the attachments MJ-11 to MJ-16 (exhibit 1.20).

147 In addition, there was a lengthy statement of agreed facts of 3 December 2020 (exhibit 1.9) agreed to as between the plaintiffs and ASIC. For overall convenience, I will attach that statement of the agreed facts as a Schedule 1 to the reasons. Clearly such agreed facts are found for the purposes of this hearing.

148 ASIC (as intervenor) reads and relies upon the already mentioned affidavit of Mr Adrian James Saggers, sworn 28 August 2020 with its documentary attachments AJS-1 through AJS-47 (exhibit 1.21).

149 Those five now mentioned affidavits, together with their documentary attachments, the agreed facts and some sundry further documentary materials found within the parties' agreed three volume trial bundle, constituted the submitted evidence on the two interlocutory applications (exhibits 1.1 through 1.27) heard together.

150 Mr Jones was also extensively cross-examined by senior counsel for ASIC. Mr Saggers was not required for cross-examination upon his affidavit tendered for ASIC.

151 Within the materials tendered for the plaintiffs was the Schedule A to the plaintiffs' first tranche of written submissions filed 28 April 2021 (exhibit 1.15). Helpfully, the schedule draws out and assembles various evidentiary aspects of Mr Jones' affidavits and materials relied upon by the plaintiffs. The schedule compiles all this evidence by cross‑referencing it with the various subparagraphs of IPS s 60 - 12 - in terms of its contended engagement with matters (a) - (m) - to which the court can have regard in conducting a review exercise. For convenience, I will also attach this document as a Schedule 2 to the reasons.

152 As was confirmed unequivocally in ASIC's further written submissions of 20 July 2021, ASIC does not seek to engage against, or to join issue upon, any of the remuneration review matter criteria as is identified by the plaintiffs in that schedule (ie, in Schedule A to the plaintiff's first tranche of written submissions). There is, however, one qualification in respect of ASIC's own contended resort to s 60‑12(m) - which, as will be recalled, refers to 'any other relevant matters'.

153 By par 19 of its second tranche of written submissions dated 20 July 2021, ASIC says towards its stance:

As to the application of the criteria in IPS s. 60-12(a) - (l) in the present case, the administrators address the criteria in IPS s 60-12 in Schedule A to their submissions dated 28 April 2021, and (subject to the conflict and bias issues addressed further below), ASIC does not take issue with that schedule. That is, subject to the fundamental point that the conflict and bias issues affect the quantum of remuneration that is properly and reasonably to be allowed, ASIC does not make any other criticisms about the work done during the appointment; nor does it challenge the rates being charged. (my emphasis in bold) (footnotes omitted)

Those written submissions of ASIC continued (at par 20):

Questions of conflict and bias go to the heart of the administrator's role, and, in the application of orthodox fiduciary law, are:

(a) 'relevant matters' within the meaning of IPS s. 60-12(m) which justify the review of remuneration and the exercise of the discretion in the manner sought by ASIC; and

(b) otherwise matters that should impact upon the discretion of IPS s. 90-15.

Preliminary observations towards ASIC's conflict and bias submissions

154 At a still early stage, I would re-emphasise two matters.

155 First, the stance by ASIC as intervenor on the present applications looks unprecedented - bearing in mind especially the evidentiary concession as regards the matters a court can have regard to - in assessing whether a voluntary administrators remuneration is reasonable under s 60-12, namely 'any or all' of the as identified matters in ss 60-12(a) - (m).

156 No direct case authority to support ASIC's challenges taken against the remuneration determinations of the creditors was identified in either of its two tranches of written submissions. In particular, ASIC has not identified a prior case authority where a conflict or ostensible bias concern directed at a voluntary administrator supported an affirmative exercise of a court's discretion to conduct a review of a remuneration determination. Stemming from this, no case authority has been provided of a court actually engaging in a review by an evaluation of conflict or ostensible bias arguments as 'other relevant matters' (pursuant to s 60-12(m)). Put more simply, the position taken by ASIC appears as unchartered territory, no matter how self‑confidently ASIC otherwise states the position. In my view, there is good reason for the lack of direct case authority upon the remuneration issue sought to be raised by ASIC.

157 Second, ASIC's stance seems to proceed on the basis that irrespective of IPS s 60-11 and s 60-12, that it is fully legitimate for it to raise matters of alleged conflict or bias against a remuneration determination via IPS s 90-15 (regarding the court's jurisdiction generally to make orders 'in relation to external administration). Nevertheless, ASIC's attempted invocation of the plenary s 90‑15 discretion looks to be something of a stretch as regards a review of a remuneration determination, given the elaborateness of the variously stated relevant matters assembled under s 60‑12. Again, by my assessment, this approach of ASIC is also unprecedented from a prior direct case authority perspective.

158 ASIC's written submissions seek to invoke in support a number of earlier case authorities, including Re Kal Assay (1992) 9 ACSR 245; City and Suburban Pty Ltd v Smith [1998] FCA 822; (1998) 28 ACSR 328, Re Anderson Group [2002] NSWSC 764; Re Vplus Superstores Pty Ltd (In liq) [2013] NSWSC 662 and Paul's Retail Pty Ltd v Morgan [2010] NSWCA 217.

159 But on a close scrutiny of the underlying facts to those decisions, there will invariably be found some adverse factual circumstances that directly bore against the level of remuneration claimed in each case. It was these variously adverse factual circumstances that have ultimately underpinned the court's exercise of its discretion, in terms of it reviewing a claimed level of remuneration. For instance, for circumstances where work performed underpinning claimed remuneration had been unneccessary (Re Kal Assay); or where there had been a decision not to investigate serious matters that might otherwise have materially benefited creditors (City and Surburban); or where there were claims of excessive or unreasonable levels of fees charged, or had been improper dealings with assets, or a failure to investigate the affairs of the company, or then, to properly take control of property and a failure to act impartially (Re Anderson Group); or an erroneous decision had been made to cease trading, which decision in turn had financially hurt the company and its creditors (Re Vplus Superstores); or where work was done outside the scope of a proper performance of the administrative functions, or was unnecessary. All such factual circumstances and allied grievances could be found in those cases. They may readily be seen to carry their obvious negative nexus or link against the reasonableness of a claimed level of remuneration for the external administrator. But none of those like underlying adverse factual circumstances bearing against the reasonableness of claimed remuneration were present here.

160 As I have already mentioned, there was no suggestion at all from ASIC that the professional work of the administrators as charged for was not done, or was improperly done or that there had been any level of overcharging or anything of such an adverse nature towards the level of the remuneration claimed and approved.

161 Moreover, as emerged clearly during the hearing, ASIC also did not direct any level of criticism against any of the business judgment decisions made by the former voluntary administrators during the seven-month period of their appointments - in terms of there being any decisions made then that were said by ASIC to be inappropriate, or improper, or which had delivered any degree of damage or financial loss to either corporation (see ts 67). Put simply, there was no suggestion that during the voluntary administration period that there were any decisions taken otherwise than that were in the best interests of both corporations.

162 Instead, as mentioned, ASIC's position was only put upon the basis of 'concerns' over a conflict of interest or ostensible bias - arising out of the earlier private pre-appointment work of Ferrier Hodgson and Mr Jones. Such expressed 'concerns' by ASIC were not raised by any creditor or shareholder (ie, they were not raised by anyone with any direct 'skin in the game'). I undertake a greater examination of ASIC's expressed concerns later in the reasons.

163 At this stage, I merely note that such concerns over the prior private engagement would be more understandable in circumstances where there was some direct legislative prohibition put against an insolvency practitioner who had earlier performed an advisory role in a private capacity - later taking up appointment as a voluntary administrator in that official statutory capacity. But there is no such statutory prohibition.

164 Or it might be that ASIC could point to one of its many Policy Statements indicating there a stance by it of its unqualified opposition to the later taking up of an appointment as administrator, after having performed earlier work in a private advisory role. There was ample opportunity for ASIC to point to such a policy statement across two tranches of written submissions or at the three day hearing. But that was not to be.

165 Instead, the position expressed by ASIC is far more qualified and is tied back to some observations rendered by O'Callaghan J in Ten Network and to some other case authorities. It will be seen, however, that the decision in Ten Network was not factually concerned with a remuneration determination made for a voluntary administrator, or as to its advocated later review by a court. Consequently, Ten Network does not provide any direct precedent to support ASIC's present opposing position.

166 Given the suggested policy importance that ASIC directs towards its expressed conflict of interest and bias considerations vis-à-vis remuneration, it is necessary to divert briefly to address the law surrounding such issues.

Legal principles as regards fiduciary duty, bias and conflict of interest

167 ASIC's two tranches of written submissions invariably run together what are two distinct lines of legal principle. I address them both in general terms below.

168 The first is the venerable line of equitable case authority applicable to fiduciary relationships - where one person is entitled to expect that another will act faithfully in their interests, to the exclusion of that other's separate interests. As a consequence of such a relationship, the fiduciary is under a negative obligation to avoid situations where they could be tempted to prefer their own interests, or to prefer the interests of third persons - above the paramount interests of the person to whom they owe their exclusive and primary duty.

169 Over centuries, strict proscriptive principles have been moulded by courts of equity around the obligations owed by trustees to beneficiaries of a trust, as the paradigm example of a fiduciary obligation. The same strict obligations of overriding fidelity and loyalty also extend to agents and to company directors vis-à-vis their corporations and as well, to external administrators where appointed in respect of a corporation. See generally the case authorities as they are referred to by Brereton J in Re Recycling Holdings Pty Ltd [2015] NSWSC 1016; (2015) 107 ACSR 406, 435 at [94].

170 Towards fiduciaries and their strict obligations of loyalty and fidelity, Mason J in Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 (at 103) referred to frequently cited extra-curial observations by Sir Frederick Jordan (Jordan F, Chapters on Equity in New South Wales (6th ed, 1947) 115), as follows:

It has often been said that a person who occupies a fiduciary position ought to avoid placing himself in a position in which his duty and his interest, or two different fiduciary duties, conflict. This is rather a counsel of prudence than a rule of equity; the rule being that a fiduciary must not take advantage of such a conflict if it arises.

171 The strict obligations of fiduciaries are sometimes codified, so as to differentiate as between so-called proscriptive rules: see Breen v Williams [1996] HCA 57; (1996) 186 CLR 71 at 113 (per Gaudron and McHugh JJ). The text Austin R and Ramsay I, Ford, Austin & Ramsay's Principles of Corporations Law (17th ed, 2018) discusses and differentiates three such rules as regards company directors (at par 9.020). The rules specifically include a conflict rule, a profit rule and a misappropriation rule - but the rules significantly overlap and are often applied together.

172 Given there is no present suggestion by ASIC that the former administrators misused their positions by advancing their own position or advanced any third party's profit or gain over or above the interests of GD Pork or GDPH, ASIC is presumably raising the conflict rule (rather than the profit rule or misappropriation rule) towards present circumstances.

173 Summarised by Ford, Austin & Ramsay's Principles of Corporation Law, the rule against conflict of interest is expressed in terms (for directors, but analogously for voluntary administrators) at par 9.020:

company directors must not, in any matter falling within the scope of their service, have a personal interest or inconsistent engagement with a third party, except with the company's fully informed consent ...

174 ASIC's first and second tranches of written submissions refer to many of the leading case authorities concerning fiduciaries and to their obligation to avoid actual or potential conflicts of interest. Beyond the 1984 decision of Hospital Products, reference was made to Boardman v Phipps [1966] UKHL 2; [1967] 2 AC 46, Chan v Zacharia [1984] HCA 36; (1984) 154 CLR 178, Furs Ltd v Tomkies [1936] HCA 3; (1936) 54 CLR 583, Keech v Sandford (1726) Sel Cas Ch 61, Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134, and Warman International Ltd v Dwyer [1995] HCA 18; 182 CLR 544.

175 ASIC eventually came to formulate a position as regards avoidance of conflicts of interest for the voluntary administrators under the second tranche of written submissions, in these terms (at par 27):

The strictness of the fiduciary undertaking means that it is not to the point that a person acting in a position of conflict performs a relevant task honestly and competently, that the principle derived value or benefit by the work, or that the beneficiaries of the duty were not harmed. It is likewise not to the point that the principle (here, the company in administration or its creditors) might get a 'windfall' if the duty is enforced. Acting in the situation of conflict is what matters. (footnotes omitted)

176 ASIC even cited some observations by Jacob LJ as were made in Imageview Management Ltd v Jack [2009] EWCA Civ 63 concerning the (presently irrelevant) scenario of an agent receiving a secret commission. Jacob LJ had observed (at [50]):

We are here concerned not with merely damages ... but with what the remedy should be when the agent has betrayed the trust reposed in him - notions of equity and conscience are brought into play. Necessarily such a betrayal may not come to light. If all the agent has to pay if and when he is found out are damages the temptation to betray the trust reposed in him is all the greater. So the strict rule is there as a deterrent to betrayal ...

177 None of these well established principles of equity are in any dispute. No-one seeks to deprecate their vital ongoing importance as matters of principle. But such case authorities are limited in their present potential application, given there is absolutely no factual suggestion whatsoever of any secret commission or profit here.

178 The other quite distinct line of case authority invoked by ASIC derives from common law principles concerning concepts of natural justice or procedural fairness.

179 Beyond a time-honoured principle concerning a citizen's right to be fairly heard before any decision is made bearing against their rights, there exists an allied counterpart natural justice principle concerning the citizen's right to a fair hearing.

180 Manifestly, there could be no fair hearing if the decision maker was not impartial, or was 'not seen to be' impartial. These cherished public law principles have come to be viewed as fundamental freedoms enjoyed by the citizens of a free society. They continue to evolve and develop under the common law. There has also emerged as a counterpart of the rule against direct bias, an associated rule against ostensible bias if found in a decision maker, on the rationale that justice must not only be done, it must also be seen to be done.

181 Bias avoidance considerations carry a particular relevance for courts and tribunals - who are frequently engaged in rendering inter parte determinations as between rival disputant parties following a hearing over a dispute.

182 Plainly, if a decision maker were not seen to be fully independent and wholly impartial, in terms of being isolated from any connection or possible influences from one or more of the disputant parties, then justice will not be seen to be done - from an independence of the decision maker's perspective. Sometimes there can arise grey areas and a decision maker may then make a voluntary disclosure to parties of a fact potentially bearing against their perceived neutrality. Often no objection is raised post a disclosure being made, thus illustrating in this respect, that an ostensible bias exposure concern can then be waived and overcome.

183 Rules against bias and ostensible bias undoubtedly apply to external administrators. No-one suggests otherwise. But clearly those persons do not, under their unique professional statutory engagements, discharge the same curial decision making function as judicial officers. Consequently, the application of the bias principles needs to hold in front of mind what is the non‑curial context of their potential application towards what are more likely to be business decisions made by external administrators of corporations. There is a need for that business task perspective when applying those bias principles. That context distinction was recognised by White J in the Federal Court of Australia in ASIC v Franklin [2014] FCFCA 85; [2014] FCAFC 85; (2014) 223 FCR 204, particularly at [60] - [61].

184 But it is not helpful to just roll together, as ASIC has done here, what are now seen as two distinct bodies of legal principle - as regards the fiduciary obligations of external administrators to avoid conflicts of interest, with distinct rules concerning ostensible bias avoidance by decision makers. A conflation would lead to poor policy decision making.

185 It is also important to keep front of mind that for present circumstances, there is no contention at all here that any of the business decisions as they came to be taken by the former administrators across their almost seven (7) month tenure - are presently challenged as decisions that unfairly advantaged or disadvantaged either the voluntary administrators themselves, or any third party. Relevantly, no creditor or shareholder of GD Pork or GDPH contends that to be the case.

186 The expressed concerns of ASIC over any degree of ostensible bias in the voluntary administrators at their appointment therefore manifests as being in the nature of a theoretical concern - that has not actually ever manifested in any tangible harm or unfairness to anyone who complains. ASIC's contentions as regards the administrators' alleged ostensible bias should be seen in that light - as regards them possibly bearing against reasonable remuneration for work fully and competently performed. Frankly, they do not bear relevantly or causatively against the administrators' creditor-approved reasonable remuneration for work performed. Emphasis then, must really be directed at ASIC's expressed concerns over conflict of interest, to which I turn.

187 In relation to the expressed conflict of interest concern as regards the former administrators' discharge of their fiduciary obligations towards the interests of the two corporations, I emphasise again that no criticism is advanced by ASIC towards Messrs Jones and Smith having ever preferred their own interests, or preferred the interests of any third party to the detriment of the two corporations, or to their creditors, or to their shareholders - over the seven‑month period of their voluntary administration - which is the subject of the remuneration determinations as approved by creditors.

188 As was confirmed in argument by senior counsel for ASIC at the hearing, that is also the case in relation to the conduct of Ferrier Hodgson during the (three-month) pre‑appointment period.

189 Consequently, none of the conduct undertaken or advice provided across an almost ten (10) month period toward the two corporations is sought to be impugned by ASIC factually, as being improper or inappropriate. It is merely the acceptance and the later continuance of the appointments, arising in the wake of a period of prior private engagement of Ferrier Hodgson, that ASIC contends as giving rise to its concern over an actual or a potential conflict of interest in Messrs Jones and Smith.

190 As regards the rule concerning the avoidance of conflicts bearing upon fiduciaries, ASIC's stance must first engage with a threshold requirement that there must be a real and sensible possibility of a conflict, as between the fiduciaries' duty and interest vis-à-vis their role as voluntary administrators.

191 By reference to the position of a company director, the High Court in R v Byrnes [1995] HCA 1; (1995) 183 CLR 501 observed (at 516 - 517):

A company is entitled to the unbiased and independent judgment of each of its directors. A director of a company who is also a director of another company may owe conflicting fiduciary duties. Being a fiduciary, the director of the first company must not exercise his or her powers for the benefit or gain of the second company without clearly disclosing the second company's interests to the first company and obtaining the first company's consent. (footnotes omitted)

192 With all those basic principles as regards fiduciaries, conflict of interest and ostensible bias now exposed, I can turn to an examination of ASIC's base contentions, pressed as regards Mr Jones' and Mr Smith's alleged bias and conflict positions at 31 October 2018.

ASIC's expressed concerns as regards Messrs Jones and Smith

193 In what are unprecedented circumstances, the expressed concern of ASIC (emphasised across two tranches of written submissions and under verbal submissions of senior counsel at the hearing) is that Messrs Jones and Smith ought never to have accepted and then continued on in their appointments as voluntary administrators of the two piggery corporations as and from 31 October 2018 (before which Mr Jones for Ferrier Hodgson had conducted some private pre‑appointment insolvency advice work for the two corporations).

194 By the first tranche of written submissions, ASIC said (at par 6):

The plaintiffs should not have accepted their appointments as voluntary administrators and performed those functions. But they did, and they never sought judicial directions or took any other action to avoid or manage the conflicts.

195 By its supplementary written outline of submissions, ASIC added (at par 21):

ASIC's concerns relate to conflicts of interest that existed in the administrators' work by reason of work that they did for the Companies in the pre-administration period. And that conflict justifies the Court denying the administrators that part of the remuneration that would otherwise by payable were their work not tainted by that conflict.

196 ASIC's asserted position requires examination. Given that ASIC's substantive objection is that the statutory appointments ought not to have been taken up at all, a more logical position for ASIC to have advocated would have been that all work as subsequently came to be performed by Messrs Jones and Smith in their statutory capacities as voluntary administrators must be tainted and so consequently, that there ought be no remuneration at all to these administrators for their seven (7) months of otherwise unblemished professional work.

197 However, I infer that a self-evident unfairness and commercial repugnance of a $nil outcome position, has led ASIC instead to pursue a more optically palatable readjustment of the remuneration outcome position - under a contended apportionment and remuneration reduction approach. However, that lesser suggested approach is unprecedented and on my assessment, with some good reason. It lacks a convincing underlying rationale in principle.

198 ASIC advances the apportionment reduction approach under par 32 of its second tranche submissions, in terms:

Rather, in point of principle, the conflict or bias issues warrant disallowance of remuneration that is sufficiently connected with the relevant conflict or bias. The administrators would still be entitled to receive remuneration for work that is entirely unconnected with the conflict or bias problems. (footnotes omitted) (my emphasis in bold)

199 ASIC proceeds to say it embarked on its own analysis of the Ferrier Hodgson time sheets towards recorded work and time costed remuneration claimed for in the voluntary administration period. By par 33 of its second tranche of written submissions, ASIC states that a narrow view should not be taken in this respect, having regard to the strictness of the fiduciary rules and policy issuest ASIC says arise.

200 ASIC then refers to Schedule A to its first tranche of written submissions, as to a suggested apportionment approach to 'reasonable remuneration'. I canvass that methodology as I return to the Schedule later in the reasons.

201 I would merely observe at this point that ASIC's downward reduction apportionment as regards the administrators' so-called tainted work - is ultimately an unacceptable methodology, even by its 'sufficiently connected' criteria. If the voluntary administrators should never have taken their roles in the first place, then everything that follows would meet the tainted touchstone.

202 But prior to making my final observations as regards ASIC's expressed position, I move to first discuss the law as regards the position of voluntary administrators that have previously undertaken some prior private insolvency related engagement with a corporation.

203 As regards conflicts of interest and in particular voluntary administrators being persons earlier engaged privately, the law looks to be directly canvassed in Australia in only two first instance cases.

204 First are the 1996 observations of Branson J in Commonwealth v Irving (1996) 65 FCR 291. Second is the 2017 Federal Court decision by O'Callaghan J in Ten Network.

205 I turn to examine in greater detail the two cases.

206 In Commonwealth v Irving, Branson J had been concerned with a situation of a close prior personal association arising on the facts of that case as regards a perception of bias. Concerning the position of a Mr Irving (a partner of the accounting firm appointed as administrator of the second respondent corporation), her Honour had observed (at page 296):

However, the circumstances of this case go beyond mere professional acquaintanceship. Mr Irving has in his professional practice over many years looked to Mr Townsend for legal advice. It is implicit in this that he regards Mr Townsend's professional advice and judgment as sound. In my view, a reasonable person might well apprehend that, if required to investigate Mr Townsend's conduct as a past director of the second respondent, Mr Irving might tend, consciously or unconsciously, to favour Mr Townsend, and accord to any submissions made by him in regard to any such investigation undue respect. This apprehension, in my view, could only be heightened by Mr Irving and Mr Townsend's publicised close association in relation to the 'Variety Club Car Bash', and Mr Irving's frank and proper acknowledgement at the meeting of creditors of his personal friendship with Mr Townsend.

207 Given those facts, Branson J expressed the view that it would not be appropriate for Mr Irving to continue as the administrator of the second respondent corporation (see page 296).

208 Having reached that position, Branson J proceeded, at the heading of 'Other Issues', to render some further obiter observations.

Complaint was made of Mr Irving's involvement with the second respondent prior to the commencement of the administration.

It is not, in my view, the law that a person appointed as an administrator of a company under Pt 5.3A of the Corporations Law may not have had any prior contact with the company or its directors or officers. It is now common place for a company to seek professional advice respecting actual or apprehended insolvency and for the advice received to be to appoint an administrator pursuant to Pt 5.3A of the Corporations Law. Not infrequently, and, in my view, not improperly, the proponent of the advice to appoint an administrator then accepts appointment as that administrator. There would, I consider be an air of commercial unreality about suggestion that this course of events is necessarily improper. When Sheppard J in the matter of Re Stadbuck Pty Ltd spoke of an accountant, perhaps subconsciously, tending the favour those who had originally consulted him or her I understand him to have been referring to a consultation or consultations on matters of ongoing business relevance.

However, the authorities make it plain that a substantial involvement with a company prior to its administration will disqualify a person from appointment as that company's administrator. Such involvement will be seen to detract from the ability of the person to act fairly and impartially during the course of an administration. In Molit (No 55) Pty Ltd v Lam Soon Australia Pty Ltd (1996) 63 FCR 391, in speaking of the role of an administrator, I said:

'In such a role he or she is, in my view, obliged to consider not only means to maximise the chances of the company, or as much as possible of its business, continuing in existence (s 435A), but also issues of fairness between the company and its creditors, and between the company's creditors inter se.' (my emphasis in bold)

It is necessary that a person appointed as an administrator can be seen to be independent of the company and of each of its creditors so that his or her ability to perform the above role is not open to question.

In view of the conclusion which I have reached with respect to the relationship between Mr Irving and Mr Townsend it is not necessary for me to reach a final conclusion on whether, in the circumstances of this case, Mr Irving's prior involvement with the second respondent was such as to undermine his independence as an administrator. I content myself with saying that involvement of the kind which he undertook is of a kind capable of giving rise to questions of possible lack of independence. (my emphasis in bold)

211 Those 1996 observations rendered it explicitly clear there was no general rule against a taking of a statutory appointment in circumstances where there had been some level of prior professional engagement. There would be, as her Honour had recognised, an air of 'commercial unreality' in a blanket prohibition against an insolvency practitioner being unable to accept an appointment as administrator, if they had provided prior professional advice regarding actual or apprehended insolvency. However, a hypothetical disqualification scenario was discussed by Branson J at the foot of page 296 - by reference there to the situation of 'substantial involvement with a company prior to its administration'.

212 Such criteria for a disqualification is very much factual, relative and quantitative. What might constitute a 'substantial involvement' prior to an administration would have to be evaluated contextually against the individual circumstances presenting under each and every differing corporate administration scenario that arose.

213 The obiter observations of Branson J in Commonwealth v Irving came to be referred to and were later applied by O'Callaghan J in Ten Network. I turn next to discuss that case in more detail.

214 In this case, ASIC had obtained leave to appear as amicus curiae on the application as it came to be considered by O'Callaghan J (see [4]).

215 Clearly, the application was brought on an urgent basis.

216 On 18 July 2017, orders had issued effectively by an agreement reached as between the administrators and ASIC in respect to resolving ASIC's concern over the involvement by KordaMentha - who had been acting as 'potential' or 'putative' administrators over the Ten Network corporations in their financial troubles at the time.

217 Urgent orders of the Federal Court came then to be issued as to relief, resolving ASIC's then concerns, reading:

Pursuant to s 447A of the Corporations Act 2001 (Cth) (the Act), Peter Gothard, a registered liquidator and partner of Ferrier Hodgson (Ferrier Hodgson), is appointed to:

(a) prepare a limited report for inclusion in the report required to be given to creditors of each of the [Ten Group Companies] pursuant to s 439A(4) of the Act... which considers the matters set out in regulation 5.3A.02 of the Corporations Regulations 2001 (Cth) and any other provision or law which may result in a recovery for creditors in a liquidation of [the Ten Group Companies], including, but not limited to:

(i) any claims arising from the conduct of the directors, officers, advisers (including Gilbert + Tobin) and/or KordaMentha as prospective administrators of each of [the Ten Group Companies] prior to the appointment of the First Plaintiffs; and

(ii) whether the remuneration received by KordaMentha in respect of the work undertaken by KordaMentha prior to the appointment of the First Plaintiffs are voidable preferences;

(b) supervise the First Plaintiffs' conduct so as to satisfy himself that the First Plaintiffs are acting consistently with their statutory duties and fiduciary obligations as administrators of [the Ten Group Companies] in relation to any claims which Ferrier Hodgson identify in the report prepared pursuant to this Order that the Plaintiffs may pursue or should further investigate.

218 ASIC's involvement as amicus curiae in that urgent application was over a 'principal issue' as stated by his Honour at [1]. This was:

... the terms upon which administrators appointed pursuant to s 436A of the Corporations Act 2001 (Cth) (the Act) may continue to act when, in their prior capacity as 'potential' or 'putative' administrators, they have had recent, long-term, substantial and remunerative involvement with the company or companies to which they are appointed. (my emphasis in bold)

219 As noted by his Honour at [56], KordaMentha had charged over $1 million in respect of work carried out prior to the appointment of voluntary administrators.

220 By the nature of the uncontroversial, rehabilitative relief orders as issued, O'Callaghan J appointed a third party (who was an independent registered liquidator, namely Peter Gothard) to prepare a limited report and, in a certain respect, to supervise the conduct of Messrs Korda, Vilani and Nettleton in the future discharge of their roles as joint and several administrators of the Ten Group Companies.

221 Such orders delivered the end result of appeasing the concerns of ASIC as regards allowing the three KordaMentha partners - Messrs Korda, Vilani and Nettleton - to continue to act as the Ten Network administrators notwithstanding an already very substantial prior private involvement by KordaMentha with the Ten Group Companies.

222 I pause to observe that for the facts as raised presently, that independent liquidators came to be appointed to both GD Pork and GDPH on resolutions of the creditors of 28 May 2019. Those persons have thus held full capacity to examine the prior affairs of both corporations and obviously then to pursue, as they see fit, any evaluated unfair preference or voidable transactions concerning the two corporations. Such opportunity aligns as going even somewhat beyond O'Callaghan J's order towards a commissioning of an independent report on such issues.

223 Consequently, some level of analogy can be drawn from out of the orders issued in Ten Network as regards meeting the policy concern as then expressed by ASIC - that payments to Ferrier Hodgson, or made by GD Pork to the grain supplier and unsecured creditor entity, Weston Milling Pty Ltd - might be challenged and be possibly set aside as potential unfair preferences or voidable transactions. Capacity and opportunity for such issues to be pursued by wholly independent liquidators, should they assess that action is appropriate and commercially justified, arises here as a close parallel rehabilitative course - if such payment considerations were the only concern as regards Messrs Jones and Smith taking up their appointments as voluntary administrators at 31 October 2018.

224 Plainly, ASIC is fully cognisant of the position as regards the independent liquidators being appointed here. But, unlike the Ten Network facts as regards a commissioning of a court-ordered report by the independent person possibly investigating voidable transaction issues around KordaMentha's prior fees, here ASIC's concerns remain unappeased. Instead, ASIC seeks a review by the court of the remuneration determinations as made by the creditors towards the fees of Messrs Jones and Smith whilst in office as voluntary administrators over seven months.

225 After issuing what were, in effect, the urgently agreed upon orders of 18 July 2017, O'Callaghan J later came to deliver reserved written reasons on 11 August 2017.

226 His Honour observed (at [5]) in those reasons, by reference to a submission that had then been put by ASIC as amicus, that:

... the court's reasons will give guidance to the insolvency and restructuring profession, and to company directors, both as to the proper boundaries of pre-administration work that might be undertaken in complex restructuring situations, and as to the appropriate actions in the event that those boundaries are exceeded. (my emphasis in bold)

227 That was the context under which O'Callaghan J at ([13]), then came to observe upon Branson J's earlier reasons in Commonwealth v Irving.

228 He noted first Branson J's observation as to there being an air of 'commercial unreality' about a suggestion that an insolvency practitioner who had provided professional advice to a company in circumstances of actual apprehended insolvency, be barred from subsequently accepting an appointment as an administrator. Plainly, this is self-evident.

229 O'Callaghan J's subsequent discussion of the issue (at [14] to [23]) canvassed international commentary texts regarding overseas insolvency practice and authority, including reference to concepts around various schemes encountered overseas such as a 'pre‑pack', 'cramdown' or a 'distribution scheme' (at [16]).

230 His Honour advanced to observe (at [20]) that it was critical to understand that the character of the pre-appointment work (as it had been described by Mr Korda in his affidavit evidence and came later to be accepted by ASIC), was work a potential administrator may properly perform and that it:

... bears no relevant resemblance to the work performed, and advice given, by practitioners in the United Kingdom and elsewhere engaged in concluding an agreement in advance of statutory administration.

As explained below, Mr Korda swore, and I accept, that neither he nor anyone else from his firm provided advice to the board, the directors or the management of the Ten Group, or to any of its creditors or other stakeholders, in relation to the management of the Ten Group, its affairs, its insolvency or the obligations and duties of the board, individual directors and management. (my emphasis in bold)

232 By reference to observations in the international insolvency text of Mr Wellard and Dr Walton concerning advice or assistance towards the detail of a prepacked transaction - his Honour observed (at [23]) that it was difficult to imagine a situation in which a taking of an appointment in circumstances as described by the authors, would ever be locally countenanced. Again, so much, with respect, presents as almost self-evident.

233 O'Callaghan J proceeded to notice, however, that the facts as presented to him (as indeed I likewise observe for the facts presented here to me), were far removed from the circumstances of any pre-pack arrangement (see [23]).

234 His Honour then proceeded to canvass the circumstances around the then well publicised financial difficulties of the Ten Group at the time. He explained that the earlier February 2017 appointment of KordaMentha (retained by the Ten Group's legal advisors, Gilbert + Tobin) had been to 'provide assistance to the Ten Group in relation to assessing the Ten Group's financial position' and further that (see [27]):

The scope of [the work] was limited to ensure that KordaMentha would be in a position to accept the appointment of administrators or any or all of the companies in the Ten Group should their directors resolve to appoint administrators at a future point in time ...

235 O'Callaghan J addressed a submission of ASIC (rendered as amicus), as to what a potential administrator should and should not do, before their appointment. As seen at [35], ASIC's submission had been:

Directors contemplating potential insolvency should be encouraged to engage with appropriately-qualified professionals early to develop restructuring plans which will maximise the chance of rescuing a viable business or returning as much value as possible to the relevant stakeholders should a later appointment prove necessary. A reasonable fair-minded observer would appreciate that as a common characteristic of large and complex corporate distress situations. Provided that appropriate safeguards are put in place to avoid the existence or appearance of conflict should an appointment subsequently prove necessary, significant, long-term and consequently remunerative work undertaken for such purposes should not of itself preclude the practitioner from taking a formal appointment (subject of course to consideration of the facts and circumstances of each particular case). (my emphasis in bold)

236 I would pause to observe that the virtuous ring of a reference to 'appropriate safeguards' seen above regrettably lacks a substantive empirical content. Obviously, it is necessary to appreciate that each case of a voluntary administration must be unique. No invariably discernible bright line boundary emerges between pre-appointment work that is untarnished, against work that is not. A lofty sounding deployment of the 'appropriate safeguards' standard threshold looks ripe for generating future potential disputation - as is presently encountered. Marking the attempted demarcation based upon aa touchstone threshold of 'appropriate safeguards' can deliver, at best, only some possible 'demilitarised zone' of separation, rather than a true bright line boundary.

237 O'Callaghan J ultimately came to accept ASIC's submission. But his Honour, with respect, appreciated the empirical deficiency in the ASIC formulation. He attempted to give it some substantive content. At [36] his Honour observed:

The safeguards to which ASIC referred in its submissions should include that the potential administrator makes it clear to the board of directors and executives that he or she is the person who might become the actual administrator if other measures to fix the company's finances do not succeed. And as Mr Zwier submitted, and I agree, from the outset 'directors', well advised by their independent advisers, ought to be saying to the board, 'you have to be careful because this person might one day be publicly examining you or might be suing you or might be taking action against you'. Putting the point slightly differently, Mr Zwier submitted, and again I agree, '[i]n other words, that person [does not] sit inside the tent, so to speak, with the advisers. The person is potentially someone who talks about what the administration involves but is not someone in the inner sanctum of ... decision making.' (my emphasis in bold)

Other safeguards that a potential administrator can adopt should also include ensuring that their retainer is clearly defined, as well as ensuring from the outset that they keep a sufficient record of the nature of the tasks performed, so that, for the purposes of proceedings like this (and doubtless for other purposes) evidence can be adduced to address such issues about conflicts of interest that may arise. (my emphasis in bold)

239 At [38], his Honour observed concerning Mr Korda, by reference to his evidence, that:

... KordaMentha's role in this case was to prepare an administration contingency plan, in case the informal restructuring negotiations then being conducted by the Ten Group were unsuccessful. He was not in any sense retained to be, nor did he act as, a professional adviser to the Ten Group, the board, management or any other director. (my emphasis in bold)

240 Manifestly then, the Ten Network decision displays that there is no blanket prohibition against the taking of an appointment as voluntary administrator, albeit there has been some earlier and even a significant level of prior remunerative engagement. For the engagement to be legitimate there must be 'appropriate safeguards' in place. As seen, the person engaged must not 'sit' inside the management 'decision making tent' during the prior engagement period.

241 I return to discuss some further aspects of the Ten Network decision later in the reasons. I note at this stage, that ASIC's presently made remuneration objections were not advanced here on a basis of a lack of 'appropriate safeguards' being in place.

242 I turn next to highlight some of the agreed facts concerning the scope of Ferrier Hodgson's prior private engagement with the two corporations and which ASIC relies upon to support its expressed concerns over conflict and ostensible bias.

Agreed facts relied upon to sustain contentions of alleged conflict and bias

243 As earlier indicated, Schedule 1 to these reasons is a statement of agreed facts filed in these proceedings as between the plaintiff and ASIC, dated 3 December 2020 (exhibit 1.9).

244 Presently, I direct attention to what is recorded at pars 2 through 9 by those facts, as regards the scope of Ferrier Hodgson's engagement as private advisors to the two corporations - in a period prior to Messrs Jones and Smith's statutory appointments as voluntary administrators.

245 By par 3, it is agreed that Ferrier Hodgson had been approached in June 2018 by Quadrant Advisory ('QA'). That entity (a banking debt advisory and risk management services firm) had earlier been engaged as adviser to the two corporations, at 4 January 2018. Ferrier Hodgson then came to be engaged on 25 July 2018 (ie, in that pre-appointment private capacity) as advisers by the (sole) director of the two corporations, a Mr Torben Soerensen (see par 4).

246 Carriage of the private engagement was essentially undertaken by Mr Jones, (then a partner of Ferrier Hodgson) - albeit he was assisted by other Ferrier Hodgson employees and staff, including by a senior manager of the firm, Ms Lauren McCann ( see pars 5 and 6).

The initial scope of Ferrier Hodgson's work as adviser was to prepare a report detailing a summary of the Companies' financial position focused on any settlement with its main customer Derby Industries Pty Ltd (CMG), and how this affected the Companies':

248 Later, again by agreement, Ferrier Hodson accepted an updated scope of works. That was at 7 August 2018 (see par 8).

249 As further agreed by par 9 of the agreed facts:

The revised scope of works was for Ferrier Hodgson to assist the Companies to:

1. review and finalise a cashflow model of the Companies' financial position;
2. negotiate with the Companies' secured lender and stakeholders to formulate a potential strategy as to its options;
3. formulate a restructure plan; and
4. prepare a report to the secured lenders. (footnotes omitted)

250 There was no ASIC criticism directed at this revised scope of work for Ferrier Hodgson. I would emphasise that from out of the preface seen above before the four items under the revised scope of works (see par 9), that it was clearly said that Ferrier Hodgson was being engaged to 'assist the Companies to', rather than for Ferrier Hodgson itself to unilaterally undertake any of those identified tasks. The distinction is important towards 'a line' not being crossed or a 'management tent' not being entered - if descending to an analysis by metaphor.

251 That agreed position is consistent with Mr Jones' evidence at the hearing given under cross‑examination. See for instance, the following exchange as between senior counsel for ASIC and Mr Jones (at ts 203):

... You were part of that negotiation that you've just described?---No. I've never described 2 October as being part of a negotiation that we had with Western [sic] Milling. Yes, I was at the meeting, but those negotiations were between Mr Soerensen and Western [sic] Milling ... I had no concept of entering into any negotiations around what would be paid and what needed to be ordered, and when it was capable of being delivered, because I do not have the intellectual background to be able to do it, I was asked along to the meeting, effectively, to give Mr Soerenson some support, but this was, I guess in essence, a legitimate attempt to solve its financial problems with the company, and he wasn't simply looking to gain Mr Friedrichs [of Western [sic] Milling] around what he owed.

Quite. So you, in conjunction with Mr Soerensen, are negotiating with Western [sic] Milling, in an endeavour to keep GD Pork alive? I mean, that's what you were there for, correct?---No. No, I'm not. Mr Soerensen is negotiating with Western [sic] Milling.

For what purpose, other than contributing to that negotiation, could you possibly have been telling Mr Friedrichs, about the effect of a voluntary administration moratorium?---That's factual.

Nobody is accusing you of misleading anybody, Mr Jones, nor of getting any improper leverage, if that's what you're getting at. But the point is, the only reason for you to be having the phone conversation on 3 October and the other conversations that you had with Mr Friedrichs [ie, of Western [sic] Milling] in this context, was the contribute to the negotiation between him and GD Pork in respect of the ongoing trade between these two entities?---And contributing to a negotiation, I'm happy with. To be shoehorned into the negotiator, I don't agree.

I think you and I can agree that you weren't the exclusive negotiator. Can we agree on that common ground?---To contribute, correct.

Your second affidavit, sorry. There you say you didn't and couldn't negotiate the terms with Western [sic] Milling for three main reasons. You may not have negotiated on particular terms of the arrangement that was put to Western [sic] Milling, but you certainly participated in the negotiation with Western [sic] Milling, as we've now seen, correct?---I think we agree I contributed to them ...

254 I refer also to a transcript reference (ts 208 - 209) concerning Mr Jones' frank acceptance of participation in GD Pork's negotiation with Weston Milling as a key grain supplier to the businesses - by reference to the statement in his second affidavit sworn 24 November 2020 (at par 14), in terms that he 'did not and could not' negotiate terms with Weston Milling.

255 Mr Jones was very fully, closely and competently cross-examined by senior counsel for ASIC. The theme of much of the cross-examination, as I assessed it (in circumstances where most underlying facts are largely not in dispute) was directed towards advancing ASIC's characterisation contention that Mr Jones, colloquially speaking, had 'crossed the line', or had strayed to sit inside 'the management tent' of both corporations during this prior period of prior engagement of Ferrier Hodgson. But as I assessed Mr Jones' trial evidence, he would not accept he was ever an independent negotiator in his own right in this period or that he held any management role or authority for the corporations.

256 To the contrary, Mr Jones' position was that his own professional expertise and the insolvency expertise and insights of his firm, Ferrier Hodgson, was, in effect, engaged to assist in the companies' decision making, as regards solvency considerations at the time. But Mr Jones, I found, was firm and consistent in his position that at the end, decisions taken were always ultimately management decisions taken by Mr Soerensen for the two Corporations, rather than by Ferrier Hodgson. In other words, it was always firmly rejected by Mr Jones that Ferrier Hodgson had ever, during the pre‑appointment period 'crossed the line' or had moved towards being located anywhere inside a management decision making 'tent' with these corporations.

257 I accept as reliable that evidence by Mr Jones as to his and his former firm's activities prior to the commencement of his (and Mr Smith's) statutory appointments at 31 October 2018 as voluntary administrators. Indeed, I would accept all of Mr Jones' evidence generally (including across his four affidavits) as being reliable, straightforward and convincing. On my assessment, Mr Jones answered questions directly and coherently whilst under an extensive cross-examination conducted by senior counsel for ASIC. At times, Mr Jones made some appropriate concessions - in particular he frankly accepted the omission of not expressly reporting to the creditors the payment of the account of Ferrier Hodgson in the amount of $110,000 (GST included) for the private pre‑appointment work as was carried out by Ferrier Hodgson before the voluntary administration period. That, in my view, only advanced his credibility as a fair and reasonable witness, whose evidence was realiable and convincing.

258 With the underlying facts concerning Ferrier Hodgson's and Mr Jones' actions vis-à-vis the two corporations in mind, I turn to further expose the legal test concerning ostensible bias as it is to be applied to voluntary administrators.

259 To that end, I turn back to some further aspects of the 2017 Ten Network decision of O'Callaghan J, particularly to the legal test his Honour applied there towards an ostensible bias evaluation, involving the person who subsequently seeks to take up the role of voluntary administrator.

260 At [71] through [80], his Honour came to resolve what was then a disputed point of legal principle, over whether the objective standard to be applied was a test grounded upon a reasonable apprehension of bias that was held by a hypothetical creditor - or by a distinct standard by reference to the reasonable apprehension in a fair‑minded lay observer as to the impartiality of a would be administrator.

261 Resolving that issue of disagreement, O'Callaghan J canvassed a number of earlier case authorities. In particular, he expressly declined to follow an approach used by Santow J as seen in Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230 at 234.

262 Santow J's objective hypothecation as used towards evaluating independence and an absence of bias in a liquidator, had been then expressed as (at 234):

... the correct balance is struck by permitting a liquidator to act as such even if there be a prior involvement with the company in liquidation, provided that involvement is not likely to impede or inhibit the liquidator from acting impartially in the interests of all creditors or be such as would give rise to a reasonable apprehension on the part of a creditor that the liquidator might be so impeded or inhibited ... (my emphasis in bold)

263 However, O'Callaghan J did not adopt that bias evaluation standard towards voluntary administrators - instead preferring a wider approach as used by White J and as seen in the Full Federal Court of Australia decision ASIC v Franklin [2014] FCAFC 85; (2014) 223 FCR 204, [59] - [61]. That decision had also concerned the independence of a liquidator.

264 ASIC v Franklin had canvassed ASIC's application seeking that the liquidator in question be disqualified on a basis of a perceived lack of independence, by reason of a strong anterior referral relationship.

265 As noted by White J at [45], ASIC had sought orders for the removal of the liquidators of two companies (and for new liquidators to be appointed in their place) on the ground of a reasonable apprehension they lacked independence and impartiality in the discharge of their functions. ASIC did not assert an actual lack of independence and impartiality. Rather, ASIC's concern as expressed was as to a reasonable apprehension of bias and so, to a perceived lack of independence.

266 It should be observed that factually there are no present parallels for this application to the facts of ASIC v Franklin (in terms of strong prior business referral relationships) for the circumstances of Messrs Jones and Smith as voluntary administrators. If such a parallel were present, that might have been contended as a basis to conclude that the double 'might' test as it was used by the majority in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 and later by White J in ASIC v Franklin, was engaged.

267 In ASIC v Franklin, White J had carefully observed as regards the application of that double 'might' ostensible bias test (which can be tracked to the High Court's earlier decisions in Re Watson; Ex parte Armstrong [1976] HCA 39; (1976) 136 CLR 248 at 264 and Liversey v New South Wales Bar Association [1983] HCA 17; (1983) 151 CLR 288 at 294) that for a liquidator, the context of application for such test, was a vital consideration. White J duly observed at [61]:

Liquidators are officers of the court and are, accordingly, expected to conduct themselves with independence, impartiality and integrity. However, questions of bias in relation to liquidators arise in a context which differs in material respects from that of the judiciary or administrative decision-makers. Liquidators are themselves engaged in business in a competitive environment. They have to attract work. This makes it almost inevitable that they will develop contacts and relationships with those who are actual or perspective sources of referrals. Further, the success or otherwise of liquidators will depend in part on their maintaining good professional reputations. (my emphasis in bold)

268 There is, however, as was recognised in the observations of White J seen above, a fundamental difference as between the work of a judge, a tribunal member, or an arbitrator - in terms of the dispute resolution function being conducted as between disputant parties. By some strong contextual contrast, the liquidator and axiomatically also the voluntary administrator, are distinctly engaged in the making of business decisions on behalf of corporations - usually in pressing circumstances of looming or actual financial distress.

269 Brereton J's observations as rendered in Re Recycling Holdings Pty Ltd [2015] NSWSC 1016 at [94], essentially followed White J's observations in ASIC v Franklin at [58] - [64], as regards the apprehended bias test and its application towards liquidators, voluntary administrators and to deed administrators. For clarity, the (double 'might') objective standard applied was: whether a fair‑minded lay observer 'might' reasonably apprehend that the administrators 'might not bring an impartial mind to the resolution of questions they may be called upon to decide'. Significantly however, Brereton J proceeded to say at [94]:

That said, the court will remove and replace an administrator only if satisfied that to do so would be 'for the better conduct of the administration' ... That requires that attention be given to the stage of the administration, and the remaining functions of the administrator or deed administrator ... (references omitted)

270 The last sentence emphasised above is insightful towards what here is a fully completed administration and as to the present ASIC suggestion that the creditors' remuneration determinations ought now be reviewed by the court for circumstances where these administrators would likely not, on my assessment, have been removed by a court - had ASIC ever made such an application during the period of the voluntary administration by Messrs Jones and Smith.

271 By reference to the observations of Austin J in Bovis Lend Lease Pty Ltd v Willy [2003] NSWSC 467; [2003] 45 ACSR 612 at [133], there is no doubt that voluntary administrators do carry implied duties of independence and of impartiality which are 'part of the very marrow of [the] voluntary administration system'. There is no controversy about that.

272 Austin J had also observed in Bovis Lend Lease that the principles of independence and impartiality developed and applied to liquidators, were equally applicable to voluntary administrators, albeit with an important contextual observation, namely that (see [133]):

... although differences in the circumstances in which they are required to work (especially the speed at which the administrator must work) may affect the standard required to be observed in particular circumstances. (my emphasis in bold)

273 I pause to reiterate that on the present interlocutory applications, I am called to resolve two issues towards what was at 28 May 2019, a completed voluntary administration conducted by Messrs Jones and Smith. The first is as to an approval by the court of the drawing down of the funds set aside to meet the administrators' further tranches of claimed remuneration as approved at the reconvened second creditors' meetings of 28 May 2019. The second is alternatively for the court itself to conduct a review of the earlier amounts of remuneration as it was approved by the creditors and has already been drawn upon by the liquidators, and then upon that review (if conducted), to order that most of the remuneration essentially be disallowed and repaid.

274 By my evaluation, such applications are far removed, factually, from the scenario of the removal of a serving liquidator as considered by the Full Federal Court in ASIC v Franklin and concerning there what was a genuine conflict of interest as suffered by those particular liquidators. Accordingly, the factual circumstances presenting in ASIC v Franklin are to be distinguished from the present applications.

Application of legal test by reference to the fair-minded observer

275 In Ten Network, O'Callaghan J, after referring to the cases now mentioned, came to agree with a submission as then put by senior counsel for ASIC. The ASIC submission (as cited at [79] of his Honour's reasons) was:

... the reasonable fair-minded observer could be any reasonably educated and intelligent person fully apprised of the facts ... that person has an interest in the independence of insolvency practitioners merely by virtue of the fact that they are participants in our market. And everyone with an interest in our market has an interest in the effective operation of our insolvency system. And the effective operation of our insolvency system relies on the trustworthiness and independence of its registered practitioners. The community puts its trust in insolvency practitioners to act objectively in investigating, in reporting, in adjudicating on proofs of debt, and where necessary in litigating as responsible officers. (my emphasis in bold)

276 Accepting that submission of ASIC at the time, O'Callaghan J noted the objectives identified under Part 5.3A of the Corporations Act 2001 (Cth) and by s 435A(b) therein, as regards the interests of creditors and members being relevant. Nevertheless, his Honour declined to follow Santow J's approach in Advance Housing by limiting the objective hypothecation standard for ostensible bias - merely to the company's creditors, or to its members (ie, shareholders).

277 Before me, there was no challenge put against the application of that Ten Network bias standard to the present circumstances. However, it is still important to keep in mind, as White J plainly did in ASIC v Franklin, the contextual landscape distinction as between a curial role in deciding as between the rival arguments as put by adverse parties, measured against the more commercially direct role of a professional insolvency practitioner accountant who is urgently parachuted into the management of a declining business operation and is potentially carrying personal responsibilities whilst rendering speedy business judgment decisions as required. The operative landscapes for any hypothesised reasonable observer towards a possible bias problem could hardly be more different. Consequently, the double 'might' ostensible bias test of the reasonable fair-minded observer will need to be applied with a commercially minded recognition of that contextual difference.

278 Of course, none of the cases I have now canvassed were ventilated in a context of ASIC raising an objection against the receipt of an approved remuneration payment to an external administrator. Factually, none of the cited decisions were concerned with valuable work professionally carried out by an administrator, nor the statutory appointments of administrators under circumstances where their remuneration has been approved by the creditors.

279 By my own observation I would add that there appears to be a world of difference as between a hypothesised well-educated and fair-minded observer positioned quietly at the back of a courtroom - interested, informed of the facts and issues and calmly observing a process of determination unfold as between disputants presided over by a curial officer. In some contradistinction is that same fair‑minded observer positioned in a context of the sometimes rapid commercial decisions of a voluntary administrator - made around complex operations of a corporate business usually suffering some level of financial stress.

280 The imposition of an objective standard towards delivering independent and unbiased decision making by a voluntary administrator (or liquidator) ought not be fashioned into a Trojan horse to deliver an hypothesised reasonable observer with limited commercial instincts or who holds some activist expansionary agenda to be silently progressed.

281 Having now discussed the law concerning ostensible bias, it may be helpful if I were to provide a brief overview of the business of GD Pork at around the time Ferrier Hodgson was engaged to provide private advice at 25 July 2018 - as this evidence undoubtedly informs the observations rendered as regards Messrs Jones' and Smith's alleged bias and conflict.

282 An 'Operation Review and Restructure Proposal' document had been then prepared by Ferrier Hodgson. That is a convenient reference point. The document bears the date 8 August 2018 and is found at attachment MJ-3 to Mr Jones' second affidavit sworn 2 June 2020 - in support of the orders seeking court consent to draw the approved remuneration (exhibit 2.27). Essentially, this report was to be provided to the two main secured creditors of the two corporations, namely for the Export Finance and Insurance Corporation (EFIC), a Commonwealth statutory body, and to another private and secured lender, Bankwest.

283 From the executive summary to the report, observations were made explaining the significant business of GD Pork:

GD Pork was established in 2007 by a group of Danish investors and has supplied pigs under various contracts to the Craig Mostyn Group through its subsidiary Derby Industries Pty Ltd ('CMG') for the past 10 years.

In May 2018 CMG put GD Pork on notice (this followed the 3 year notice of termination which was notified to the lenders on 27 March 2018) that the weekly quantity of pigs supplied under the costs plus contract was being reduced from 1,400 pigs per week to 1,000 at the contract price of $3.70/kg from 4 June 2018. Any surplus pigs would be paid at $0.48/kg.

GD Pork filed an application in the Supreme Court of WA for an injunction to prevent CMG from altering the contract. The matter was settled prior to the trial date of 30 July 2018 with an agreed revised weekly supply of an initial 1,400 pigs per week for the first 6 months at $3.10/kg before industry levies and then transitioning to a weekly supply of 1,300 pigs per week at $3.10/kg plus any grain price uplift for the next 12 months. It was decided to accept the settlement offer, but after Bankwest and EFIC were advised, given the inherent uncertainty of the success and costs associated with the legal action.

Current forecasts based on the settled price and quantity have identified that the group will sustain an initial operating cash flow (before interest and debt amortisation) shortfall of circa $586K and an accounting loss of $184K to December 2018. The position is anticipated to deteriorate to December 2019.

GD Pork has prepared a number of strategies to attempt to stabilise the business and determine its viability including, but not limited to:

- Realisation of land assets

- Equity injection

- Model refit to market dynamics

- Vertical acquisition

In order to achieve these objectives, the business requires stabilisation of its cash flow shortfall. An immediate initiative is to obtain the secured lender's consent to a standstill agreement to defer any capital debt repayments until 31 December 2018. Interest on the debt will continue to be serviced over this period.

It is intended that standstill arrangements are also negotiated with the main grain suppliers.

If we implement the proposal outlined herein, the business is able to cover the cash flow shortfall and meet expected operational costs.

284 By the executive summary, further observations were rendered concerning topics:

285 Under the topic 'Objectives', the following outcomes were named:

Further examination of the market/business model over the next 6 months.

Consider sale of the Australind property as a contribution towards debt repayment.

286 For the topic 'Restructuring Plan', the following points were made:

Obtain standstill agreement from secured lenders and key trade creditors to defer any debt repayments until 31 December 2018.

Provide monthly monitoring reports to key stakeholders.

Implement key objectives strategy.

287 Section 2 of the document (entitled 'Background and Corporate Structure') presents some further background, including the observation that:

During the 10 years of operation, GD Pork has sold in excess of 242,200 pigs making it a significant contributor to the WA market.

288 As regards corporate structure, it was observed, by reference to the adjacent diagram, that:

Illustrated right is the group's corporate structure. GD Pork Pty Ltd is the operator of the business, owns the infrastructure and livestock. GD Pork Holdings Unit Trust owns the land.

289 The diagram indicates that 100% shareholding control of both corporations was offshore - by the identification of Denmark and essentially identifying Danish investors 'Pork Australia Ops' as the shareholders of both corporations.

290 A restructuring plan was elaborated upon at section 5 of the document, adjacent to a creditor deferral financial position - which showed a so‑called cash flow 'waterfall', with an anticipated impact at 30 December 2018 stemming from a standstill proposal to secured creditors and key grain suppliers requiring total funding of AUD$2,847,027.

291 'Key contacts' provided, as identified under s 8, were Mr Martin Jones, partner, and Ms Lauren McCann, senior manager at Ferrier Hodgson.

292 Across the three (3) month period of Ferrier Hodgson's private engagement, a number of like documents were prepared for and submitted to the secured creditors. See for instance, a following Interim Monitoring Report of 5 September 2018 at page 72 of Mr Jones' affidavit. Subsequently then, at page 92 of Mr Jones' affidavit, Ferrier Hodgson's Monitoring Report for September, dated 26 October 2018, is shown.

293 I refer particularly to the 26 October 2018 report, given it was prepared only two days before what was the formal statutory appointment of Messrs Jones and Smith as voluntary administrators to the two corporations. The introduction to the report (at page 94 of Mr Jones' Affidavit) observes as regards 'key items of note', that:

- GD Pork purchased the majority of the grain for the month from Nymann Strathaven rather than Weston Milling on better credit terms. The grain contacts for the balance of the year are with Weston Milling at an estimated total cost of $1.893M.

- Weston Milling have responded to the request for a standstill by advising that:

• Weston Milling reject GD Pork's proposal to make weekly payments of $160,000 which would cover new purchases and any upside to be restrained by Weston Milling as a debt reduction
• There is no interest in receiving a second ranking security arrangement behind the secured creditors. Weston Milling have requested details of any unencumbered property to take security over.
• GD Pork are requested to make weekly payments of $125,000 per week as debt reduction in addition to any pre-payments.
• GD Pork has until 1 November 2018 to respond or the account will be put on stop supply as of 5 November 2018.

- We have not received any feedback on the draft deed of forbearance nor secured any formal standstill agreements with the secured lenders.

- The Group will be unable to make the debt reduction payment due to EFIC on 30 October 2018.

- We have commenced a controlled asset marketing campaign requesting interested parties provide non-binding expressions of interest by 29 October 2018. At this time, the likely offer to be received will be from Westpork.

- Craig Mostyn Group (CMG) has advised they are interested in some form of arrangement that will secure future supply from GD Pork and which will negate the possible acquisition by Westpork. We have provided CMG with a draft term sheet for discussion which broadly includes:

• An upward price adjustment for the contract grower pigs under 2018 Pig Supply Agreement.
• Use of CMG technical staff to resolve the biogas plant issues.
• Future profit sharing from any market turnaround to repay the financial assistance.

- The Department of Agriculture and Water Resources (DAWR) has brought criminal charges against GD Pork Pty Ltd, the director, Torben Soerensen and former production manager, Henning Laue, for the alleged illegal importation of genetic material. The matter is due to be heard in the Mandurah Magistrates Court on 26 October 2018 whereby the matter is expected to be committed to the Perth District Court in 2-3 months time.

- If found guilty, Mr Soerensen faces a maximum penalty of $420,00 or 10 years jail time. GD Pork faces a maximum penalty of $2M.

294 Under section 2 of the document, under a 'September Key Metrics Snapshot', it was observed that for September (2018):

• Total revenue collected $1.326M (after levies and processing fees), circa 70k above budgeted collections
• 6,648 pigs (contract, surplus and sows) sold, 88 pigs above budget
• Total accrued expenses were $1.41m which were under budget by $396k
• Accrued feed costs were $791k, circa $82k under budget
• Accrued total costs of production $944k, circa $99k under budget

295 Five ensuing dot points were noted at the bottom of section 2, as follows:

• Distributed email blast and flyer to select potential interested parties
• Confidentiality agreements executed and information memorandums issued
• Site visits being completed by interested parties
• Engagement of Landmark to market and sell Australind property
• Business is reviewing outstanding matters to commission Biogas plant.

296 Further observations followed concerning an estimated financial position (see section 4). In basic terms, the cash flow position was observed as gloomy, without secured creditor support.

297 A support proposal as put to the corporations' main grain supplier at that time (Weston Milling) is elaborated upon at section 5, under a heading 'Other Operational Matters'. The section noted Weston Milling's rejection of a proposal as put by GD Pork to obtain a continued supply of grain, raw materials and other items for a period between October and December 2019, in the amount of $1.893 million - on a basis GD Pork pay Weston Milling $160,000 per week (or $640,000 per month), regardless of the quantity purchased. At 25 October 2018, Weston Milling was recorded as having rejected the proposal, by advising the corporations then that:

There is no appetite to obtain a second ranking security arrangement behind the secured lenders. Weston Milling have requested details of any unencumbered property which could be used for security.

298 Supply of further grain and raw materials from Weston Milling was threatened to cease as of 5 November 2018, unless a counter proposal for debt reduction and pre-payments for new purchasers was agreed to by the GD Pork group.

299 In summary then, the GD Pork corporate group at the end of October 2018 was teetering. It was facing significant liquidity problems in the continued operation of its West Australian piggery business operation. The group had two significant secured lenders, EFIC and Bankwest. They effectively held the economic fate of the companies in their hands. Beyond the two secured creditors, the nature of the companies' piggery business very obviously required that the significant underlying live pig livestock asset be adequately and regularly supplied with grain, as an essential food supply. Animal welfare considerations for the pigs were also strongly in play, as regards ensuring an adequate food supply.

300 As a result, the grain supply issue from Weston Milling (who was then a significant unsecured creditor) was evidently a key consideration, if the piggery business was to continue or if not, to at least preserve the asset value of the livestock. There was a significant unsecured arrears due to Weston Milling. It, very understandably, was pressing for that exposed unsecured debt position to be improved. Commercially speaking, there is nothing at all unusual about such a stance exposed by a concerned creditor being communicated to a teetering business operation. This is an everyday event for an insolvency practice.

301 Basic, but obvious options for the GD Pork group to then consider in strained financial circumstances included seeking short term forbearances from the group's secured creditors until the end of 2018, possibly coupled with some allied equity injection, if obtainable. If secured and unsecured creditors were prepared to afford some level of indulgence in the nature of further time, or a deferral of looming capital repayment - then possibly, a looming insolvency trading scenario might be avoided for the companies. But absent consensual agreements from the creditors to some deferment terms then, an external administration and possibly liquidation, were firmly on the horizon at that time. It follows that it was an appropriate and inevitable course of action to appoint professional insolvency practitioners, such as Messrs Jones and Smith, to the position of voluntary administrators.

The overriding issue: voluntary administrators taking up a prior appointment

302 There are the obvious commercial reasons why secured and unsecured creditors of a significant business could wish, along with the board of those trading entities, to avoid a formal scenario of external administration, if that is possible. More obvious considerations would include avoiding wider damage to business relationships, as well as to the general goodwill of a business. Avoiding jeopardy to the tenure of key personnel and avoiding the significant costs of a formal external administration, also present as avoidance considerations. Such considerations could be particularly relevant if there were adverse trading circumstances (viewed as having delivered only a short term cash flow problem to a business) perceived as being either passing, or as aberrant in the long term to a business with underlying substance.

303 Where a business finds itself teetering over its ongoing financial viability, an involvement of a skilled and respected insolvency firm in a private capacity (ie, prior to any appointment of administrators) might deliver some advantages in such circumstances, including by obtaining:

(1) the availability of experienced, specialist accounting expertise to advise about potential formal and informal insolvency relief options;

(2) gaining an ability to discern and evaluate more quickly, clinically, and independently the corporation's financial trading data, as it emerges on a daily or weekly basis;

(3) an accessibility to frank and impartial advice concerning the corporation's solvency, with a view to board management avoiding any scenario of insolvent trading;

(4) the benefit under sometimes stressful and strained business relationship circumstances of accessing a line of professional and dispassionate communication to secured and unsecured creditors - to calmly and reliably relay current facts and information as obtained from management, without emotion;

(5) a capacity to be able to converse at the same sophisticated financial level as key decision makers who are advising secured creditors and to gather for them the most relevant financial information then being sought as a priority, in terms of creditor decision-making under such circumstances; and

(6) to be ready to 'hit the ground running', if a call does eventually need to be made to formally appoint voluntary administrators.

304 As has been seen, there was, at 29 October 2018, a resolution carried to appoint Messrs Jones and Smith as joint and several voluntary administrators of both corporations.

305 The essential issue before the court goes formally to the reasonableness of the voluntary administrators' remuneration. I repeat in this respect, that the application for a remuneration determination review by ASIC is not concerned with the level of Ferrier Hodgson's fee under that firm's prior private appointment (which fee was $110,136.81 including GST) invoiced on 19 October 2018, and which invoice was paid at between 22 and 31 October 2018 (see agreed facts 45 and 46).

306 Rather, as has now been discussed, ASIC's current challenge is only directed at the remuneration for the subsequent work (as it came to be completed by Messrs Jones and Smith as voluntary administrators) over roughly a seven (7) month period of voluntary administration for the two corporations - but which work itself is not a subject of any criticism by ASIC, as to its utility or value.

307 ASIC's objection position is simply that, by reason of the prior engagement of Ferrier Hodgson, that Messrs Jones and Smith should not have taken up and then continued in their appointments as voluntary administrators at and after 31 October 2018.

308 By reference to the relevant legislation to be applied, namely to the comprehensively assembled assessment criteria seen under IPS s 60-12(a) - (l), I repeat that ASIC does not seek to challenge any of the matters to which a court can have regard if conducting a review as to the level of reasonable remuneration. Only matter s 60-12(m) is invoked by ASIC - to argue that its conflict or ostensible bias concerns are relevant in a remuneration review exercise and ought, on a review conducted by this court, negate most (approximately 90%) of the administrators' remuneration as was approved by the creditors.

309 Because ASIC's grievance is fundamentally over the taking up in the first place of the statutory appointments as voluntary administrators, its conflict and bias stance stands chronologically to be assessed at 31 October 2018 - when Messrs Jones and Smith were then officially appointed as the voluntary administrators of the two corporations.

310 As events had transpired, objections by ASIC against Messrs Jones' and Smith's continued discharge of their functions as voluntary administrators only came to be articulated some 112 days after the statutory appointments were assumed. By then, much professional work obviously had been done in the administration. Such facts may be contrasted to those underlying the 2017 decision of O'Callaghan J in Ten Network, where ASIC's concerns vis-à-vis Mr Korda were urgently articulated at a time very close to a commencement of his appointment. Removing the administrators once embedded carries considerations as to unnecessary waste of such an extreme removal and replacement measure, unless absolutely necessary.

311 A further consideration in play is thus the feasibility and commercial sense of stepping aside mid appointment - in terms of inevitably to be then incurred wasted costs, delays and the utility of a loss of commercial knowledge acquired in the voluntary administration landscape - none of which considerations presented on the Ten Network facts.

312 I turn now to a prior distillation of the five essential issues to be addressed on the present applications.

Vaughan J's distillation of five relevant issues to be addressed

313 The two interlocutory applications had been case managed in this Court and became a subject of various pre-hearing case management directions.

314 On 13 November 2020, the case manager (Vaughan J, as his Honour then was) had issued orders in terms (see exhibit 1.4):

THE COURT NOTES that, following variation by agreement, the parties are agreed that the applications give rise to the following varied issues for determination by the court (amended agreed statement of issues):

1. Whether the plaintiffs accepted or performed their appointments as voluntary administrators as one or both of GD Pork Pty Ltd or GD Pork Holdings Pty Ltd (Companies) in circumstances were the plaintiffs should not have done so because:

(a) The plaintiffs were not independent, or alternatively, could not be seen to be independent?

(b) The plaintiffs were not free of actual or potential conflicts of interest or apprehended bias in carrying out one or more of the following functions, namely:

(i) investigating and reporting on voidable transactions including unfair preferences?

(ii) investigating and reporting on the conduct of the Companies' management including any insolvent trading claim?

(ii) pursuing the sale of the Companies' assets and businesses?

(iv) trading the Companies' assets in business as a function forming part of, or being sufficiently connected with, pursuing a sale of the Companies' assets and business?

2. To the extent any part of Issue one is answered 'Yes':

(a) Is it appropriate to review the remuneration determinations made by the creditors of each Company on 5 December 2018 and 28 May 2019?

(b) If so, by what amount, if any, ought the remuneration determinations be varied?

(c) Should the court direct that the plaintiffs repay any varied amount of remuneration to one or both of the Companies?

3. Ought the court otherwise direct that the plaintiffs are entitled to draw down remuneration in accordance with the remuneration determinations made by the creditors of each Company on 5 December 2018 and 28 May 2019;

4. Who should pay the costs of the plaintiff's interlocutory application dated 3 June 2020?

5. Who should pay the costs of the ASIC's interlocutory application dated 28 August 2020?

315 As a matter of formality, at the end of the reasons I will provide my answers to the respective questions. At this point, I merely notice sub‑issues 1(a) and (b). In particular, I observe there to be an obvious lack of particularity as regards any questioning of the plaintiffs' independence or ostensible independence under sub‑question 1(a). There is, as well, an unsatisfactory melding together by the preface of sub‑question 1(b) of the conflict of interest issue, to the further issue of apprehended bias - that I assess as a melding of distinct legal concepts and ultimately, in unhelpful fashion.

316 Sub‑question 1(b) focuses on four identified concerns by ASIC as regards so‑called actual or potential conflict of interest.

317 As regards ASIC's apprehended bias concerns, it is important to recall that none of the business decisions taken by the voluntary administrators across, roughly the seven (7) month period to 28 May 2019, were a subject of any level of adverse criticism as being decisions improperly favouring any person, or favouring any interest over another interest. Further, no grievance was expressed by any creditor or shareholder as regards a lack of independent decision making. The question of ostensible bias therefore looks from a reasonable remuneration perspective for valuable work competently performed essentially, to be one of academic, rather than true commercial concern in terms of the outcomes of the administration itself.

318 A greater focus is thus at the issue of suggested actual or potential conflict of interest, in the four respects as alleged and identified above at sub-questions 1(b)(i) through (iv). I refer to these issues collectively as 'issue 1'.

319 Pursuant to order 2 of Vaughan J's earlier orders of 2 October 2020 (exhibit 1.3), ASIC had filed a statement of contentions on the agreed statement of issues, on 16 November 2020. This document, found at exhibit 1.5, elaborates on issue 1 in respects that are more insightful.

320 Towards issue 1 (concerning potential conflicts of interest), ASIC's statement came to be in the following terms.

Issue 1

...

Issue 1(a) and 1(b)(i)

2. In carrying out the pre appointment engagement, Mr Jones advised the Companies about, and negotiated with a creditor of the Companies (Weston Milling) in respect of, [a payment] (for about ... $163,000) which the Companies made to Weston Milling in October 2018.

[Note: At the hearing, par 2 seen above was corrected, so as to just refer to the single payment of $163,000 and hence, I have shown that position as the corrected version in the above quotation.]

3. Separately for work performed on the pre‑appointment engagement, GD Pork paid Ferrier Hodgson about $100,124 (excluding GST) in late October 2018.

4. The payments to Weston Milling and/or to Ferrier Hodgson were payments which an administrator was required impartially to investigate and form an opinion on, and report about to creditors, as potential voidable preferences. By reasons of paras 2 and 3 above, there was a real or sensible possibility the plaintiffs could not, or apparently could not, perform this function impartially.

5. Notwithstanding paras 2 and 4 above, the plaintiffs accepted appointment as voluntary administrators of the Companies, and performed work and claimed remuneration in investigating and reporting to creditors about voidable preferences. As a result, Issue 1(a) and Issue 1(b)(i) should be answered 'yes'.

321 Having exposed those as distilled issues, I turn to render my concluding evaluations on the matters as identified above. In basic terms, these matters are said by ASIC to have generated a scenario of conflict of interest for Mr Jones and Mr Smith, in terms of their taking up of their seven‑month appointment as voluntary administrators, from 31 October 2018 to 28 May 2019.

Final evaluations The $110,136.81 payment to Ferrier Hodgson for pre-appointment work

322 First, I would observe that ASIC has expressed this aspect of its conflict of interest concern in relation to what looks, commercially speaking, to be a very modest sum, viewed in the context of the administration of the two corporations ($110,136.81 (GST included)).

323 Second, I point out that it is the task of a liquidator to pursue and recover amounts paid away that are set aside and to be claimed back as a voidable transaction or unfair preference. This role is to be contrasted with that of a voluntary administrator appointed over a still operative business (particularly a large scale piggery business holding valuable assets in the nature of pig livestock), whose urgent task of commercial priority would undoubtedly be to protect and preserve that business and its assets for a purpose of assessing the viability of continued trading or alternatively, a potential sale of the business or the completion of a deed of company management with creditors (DOCA).

324 That is not to deprecate the importance of an identification of potentially voidable transactions, where that is possible during the administration. But any later pursuit of those amounts by recovery action must ultimately be by a liquidator, if ever appointed (see s 588FA of the Corporations Act 2001 (Cth)).

325 Third, towards the Ferrier Hodgson fee and payment for the pre‑administration work, it was, as I have said earlier, always frankly accepted by Mr Jones that the receipt should have been a subject of an administrator's report to creditors. Notwithstanding, the rendering of the fee and its payment was never covert. It was recorded on the books, open and would have been obvious to anyone relevantly looking, or concerned. And no‑one with a workable level of commercial experience would reasonably have expected Ferrier Hodgson to provide almost three months of pre‑appointment private advisory services in 2018 for no remuneration.

326 During the course of the hearing, senior counsel for ASIC referred me to a 1999 Victorian Court of Appeal decision in V.R. Dye & Co v Peninsula Hotels Pty Ltd (in liq) [1999] VSCA 60 per Winneke P, Tadgell and Ormiston JJA. That decision explained (by reference to s 588FA of the then Corporations Law), that voidable preference exposures can be avoided if, for instance, a putative creditor asked for and had secured an amount of money that was paid upfront and was then held in trust to abide the rendering of a professional fee rendered later for the services provided.

327 Alternatively, it was pointed out that had the legal responsibility for Ferrier Hodgson's fees to be incurred in the pre‑appointment period been assumed by some other related party as, in effect, a guarantor obligation - then a later preference payment exposure issue could also be readily avoided. All this is very well known in the insolvency industry, it is said. But it did not happen here. Instead, Ferrier Hodgson merely rendered its invoice for the pre‑appointment services to GD Pork in late October 2018. Had the alternate or related person VR Dye & Co pathway or a related person scenario been used instead, then all voidable transaction or undue preference exposure arguments would then have been avoided. ASIC accepts that to be the case under the submissions of senior counsel.

328 But towards such unutilised avoidance methodologies, I would observe first, that the wider policy issue of an actual or potential conflict of interest as raised here by ASIC should be engaged with as a matter of substance, not of form. If anything, senior counsel for ASIC's highlighting of a readily open, different modes of securely obtaining funds for the services provided by Ferrier Hodgson by other methodologies - only highlights for me the shallowness of the underlying conflict argument grounded around this fee and its payment - if there is said then to be no conflict issue arising upon the alternate methodology being used.

329 Fourth, it is, by my assessment, simply not correct to reason, as ASIC does, that Messrs Jones and Smith might be necessarily viewed as lacking in the requisite levels of professional independence whilst undertaking their statutory roles over seven (7) months as voluntary administrators post 31 October 2018 - by way of a concern over a potential voidable transaction, or an undue preference exposure over such a small sum as received by Ferrier Hodgson. It was, as mentioned, a fully accepted omission of Mr Jones to not identify the Ferrier Hodgson invoice and its payment in October 2018 - as funds potentially to be pursued later by liquidators. But no matter where an objective bar is set, that small amount of money could not sensibly be viewed here as a possible influence or driver to a reasonable observer holding any level of commercial background - against the perceived proper and professional performance of Mr Jones' and Mr Smith's statutory tasks as voluntary administrators post 31 October 2018. So much was not even suggested to Mr Jones during his cross‑examination.

330 I find that there was, in the words of case authorities, no real or sensible possibility of any conflict of interest in Messrs Jones and Smith - by reference to that small level of fees invoiced and paid to Ferrier Hodgson for the administrators' pre-appointment work. The fact Ferrier Hodgson could have handled the payment arrangements differently as a matter of form in terms of an earlier obtaining funds upfront before 25 July 2018 and a holding of them in trust and thereby completely avoiding any exposure or conflict of interest criticism - only reinforces that view.

331 Fifth, as is known, independent liquidators were in fact appointed to these two corporations post 28 May 2019. By some level of analogy to the remedial orders as they came to be consensually issued by O'Callaghan J in Ten Network, a possible preference or voidable transaction pursuit concern of ASIC here, if a true concern, was fully capable of being examined and pursued by those subsequently appointed independent liquidators. Correlatively, a determination of the issue as to liability for an unfair preference or voidable transaction is not put directly before this court for a present considered resolution. Nor could it be. There are of course, some complex statutory defences. Resolution of such issues can be complex. All these issues are thus to be viewed only at a level of potentialities.

Remuneration determinations for work conducted as voluntary administrators

332 I turn back to the later remuneration determinations made by the creditors, which the plaintiffs now seek to be drawn on their present interlocutory application with the approval of this court.

333 ASIC's stated grievances as to an asserted lack of independence or a potential conflict of interest do not, on my assessment, logically or causatively translate as factors that support the advocated substantial denying to Messrs Jones and Smith of their reasonable remuneration towards their undoubtedly valuable work, performed across a roughly seven‑month period whilst in their roles as voluntary administrators. I point out again that no level of criticism was directed against the quality or value of any of their work by creditors, shareholders or any other source - other than by ASIC. But ASIC's grievance seems not only to be without precedent but it is as well, conceptually misdirected in my assessment.

334 Denying or dramatically reducing the level of remuneration as was approved by the creditors, for circumstances when that remuneration is otherwise not challenged as to the level of its reasonableness by regard to any of the s 60-12(a) - (l) matter respects (save only by ASIC under the s 60-12(m) 'sundries' provision) presents to me, as unfair, illogical and misconceived, conceptually. To put it more colloquially, the advocated 'back door' remuneration reduction punishment (which it is) does not relate to the crime, if there ever was a crime.

335 The attempted fee apportionment review exercise as advocated by ASIC seeks that this court conduct a review and to apportion and reduce the remuneration in accord which the approach seen in the Schedule to its first tranche of written submissions. Some explanation was provided about ASIC's percentage discounting methodology as deployed, by reference to various 'action codes' seen in that Schedule (commencing at consolidated court book page 77 and following through to page 84). I note in particular the percentage reduction allocations in column 6 which, at various places, is seen at 100%.

336 I asked junior counsel for ASIC at the hearing about how the percentages as came to be disallowed were arrived at by a member of ASIC's staff (Ms Peries), working then under the supervision of Mr Saggers. By reference to the first mentioned item on page 77 of the courtbook, where there was shown a 20% reduction against that billed amount (which in turn was significantly less than the WIP (work in progress) amount) I asked, 'how did Ms Peries get to 20%'. A frank, but revealing answer provided by counsel was (ts 288):

It is - there is no science behind it, your Honour. It is a figure that she has come to, based on her experience - having reviewed the narrations and trying to understand - from the information contained in the narrations - about what work has been done and whether it relates to any matters of conflict or bias. So, this is the reason why I refer your Honour to the limitations that are referred to in paragraph 189 of Mr Saggers' affidavit. There is no perfect way of doing this. It's really just a judgment call, based on her experience.

337 Ultimately, it does not appease my concerns to any extent that the remuneration apportionment exercise as performed by ASIC and advocated for the court is, by its nature, unprincipled and arbitrary. I repeat that if the true concern of ASIC was that the voluntary administrators were so conflicted or ostensibly biased that they should never have accepted their statutory positions in the first place - then questions of apportionment do not really present. Logically, there should be no remuneration, if they should never have been appointed.

338 An alternative approach as seen in the House of Lords decision of Boardman v Phipps [1966] UKHL 2; [1967] 2 AC 46, and which may have been pursued by ASIC, was for Messrs Jones and Smith, despite any ascertained conflict of interest (if there were any) - to receive a just allowance for their work and skill performed as a fiduciary on a liberal scale: see Boardman v Phipps at 104 (per Lord Cohen) and at 112 (per Lord Hodson). But that approach would be something else as a matter of principle. It was not ASIC's approach taken here.

The administrators' so-called 'Substantial Involvement'

339 Returning to ASIC's statement of contentions (exhibit 1.5), it reads further, as regards issues 1(a) and 1(b)(ii):

6. In carrying out the pre-appointment engagement, Mr Jones and others at Ferrier Hodgson formulated, provided advice to the Companies about, and negotiated with creditors and other stakeholders about, a restructure - including standstill, forbearance and funding proposals (Restructuring Work).

7. By virtue of the Restructuring Work, Mr Jones and Ferrier Hodgson had a substantial involvement with the Companies and their management, prior to the plaintiffs accepting appointment as voluntary administrators.

8. Further, an administrator was required impartially to investigate and form opinions about the Restructuring Work, including in reporting to creditors on potential insolvent trading claims, and possible safe harbour defences. By reason of paras 6 and 7 above, there was a real or sensible possibility the plaintiffs could not, or apparently could not, perform this function impartially.

9. Notwithstanding paras 6 to 8 above, the plaintiffs accepted appointment as administrators, and performed the work and claimed remuneration in investigating and reporting to creditors about the conduct of the Companies' management, including insolvent trading issues. As a result, Issue 1(b)(ii) should be answered 'yes', and Issue 1(a) 'yes' for this further reason. (my emphasis in bold)

340 The central feature of these contentions is by the phrase seen used in par 7, namely a 'substantial involvement with the companies and their management'. The term 'substantial involvement' obviously harks back to Branson J's obiter observation in Commonwealth v Irving, at page 296. But in Ten Network, what was undoubtedly substantial work performed there by KordaMentha was, in the end, not problematic for ASIC - given that the 'appropriate safeguards' were in place.

341 Such contentions of 'substantial involvement' obliquely raise issues of fact and of quantitative degree that need to be evaluated in the context of any particular corporation's unique financial circumstances, prior to the entering of a voluntary administration.

342 The use of porous phrases like 'substantial involvement', without identifying the underlying supporting facts, is always unhelpful. To the extent findings of fact present for my resolution in present circumstances, I would as I have said earlier, essentially accept all of what Mr Jones has said in his evidence and as he recounted across four affidavits as entirely reliable (exhibits 1.17, 1.18, 1.19 and 1.20).

343 To the extent that ASIC's submission as to a 'substantial involvement' requires some quantitative level of assessment, I am not left persuaded from all the hearing evidence that Ferrier Hodgson could be properly classed as 'substantially involved' in the two piggery corporations - as a matter of proper characterisation of the tasks and level of work performed by Ferrier Hodgson across that three-month period. Essentially, the $110,136.81 fee across three months of work is a minimal fee, suggesting minimal work.

344 To the extent ASIC's submission under par 7 further alleged that Ferrier Hodgson (or Mr Jones) were, prior to their statutory appointments on 31 October 2018, rendering corporate management decisions themselves or acting without reference to the board of the two corporations (ie, to Mr Soerensen as sole director), then I would reject the contention, outright. It is wholly unsubstantiated by the evidence and I find accordingly.

345 Instead, I would find (as was frankly accepted by Mr Jones under cross‑examination) that Mr Jones and Ferrier Hodgson had been professional participants in providing advice about solvency‑related issues concerning the two corporations to Mr Soerensen and in liaison with the two major secured creditors. I reject the implicit suggestion by ASIC that Ferrier Hodgson were the management decision-makers, or the negotiators in their own right. I also reject an implicit suggestion that Mr Jones or Ferrier Hodgson had involved themselves in partisan fashion in a rendering of management decisions, or in negotiations with creditors. In colloquial terms, I reject any allegation that they were ever 'inside the management tent' before 31 October 2018. By my rival assessment, their professional input and participation around creditor meetings was by way of providing assistance to the corporations and did not ever cross over the line into management decision-making in their own right.

346 ASIC's counter-contentions of fact were pitched mainly at an always unhelpful level of obscurity, largely by bare generalised assertions. ASIC rarely descended to offer a precise factual allegation to engage with. Consequently, it is only necessary to dismiss those same ASIC concerns here, as simply not established.

347 As regards a contention that Ferrier Hodgson or Mr Jones had favoured one interest over another - as it came to be established at the hearing, Mr Jones' and Mr Smith's report to creditors did in fact identify the $163,000 Weston Milling payment as made to GD Pork in October 2018 - as a potential transaction for an investigation by a liquidator. Consequently, that was never overlooked. Other than this issue, there can be no legitimate suggestion of Mr Jones or Ferrier Hodgson ever personally conducting themselves in the pre-appointment period so as to favour Weston Milling at the expense of other creditors or to the detriment of the two corporations to which they were ultimately appointed voluntary administrators.

348 For a large scale piggery operation with thousands of pigs as livestock needing to be kept fed and healthy as a significant asset of the business, it was necessarily important strategically that Weston Milling, as a creditor, be engaged with and placated towards co-operation, if that were reasonably possible. In context, the level of dialogue with Weston Milling was entirely routine and understandable in the prevailing commercial circumstances of trying to protect the interests of all the creditors. Efforts to secure a level of creditor forbearance ultimately proved unsuccessful and so, the voluntary administration followed. But Ferrier Hodgson never pursued private interests in participating in, and assisting, Mr Soerensen in communications with Weston Milling.

349 In summary then, any suggestion by ASIC that Mr Jones or Ferrier Hodgson held some greater personal investment in or around the interests of this particular creditor - is once again, simply not established by the evidence.

350 Continuing with ASIC's statement of contentions, it next addressed as identified issues 1(a), 1(b)(iii), 1(b)(iv), observing:

10. In carrying out the pre-appointment engagement, Mr Jones and others at Ferrier Hodgson formulated, provided advice to companies about, and managed and pursued, a process for the marketing and sale of the assets and businesses of the companies (Sales Process Work).

11. An administrator was required impartially to investigate and form opinions about the Sale Process Work, including: (a) whether it was appropriate and in the best interests of creditors to sell the assets and business of the Companies; and (b) if so, how the sale and sale process should be structured, including whether (and if so, how) it should differ from the Sale Process Work. By reason of paragraph 10 above, there was a real or sensible possibility the plaintiffs could not, or apparently could not, perform this function impartially.

12. Notwithstanding paras 10 to 11 above, the plaintiffs accepted appointment as administrators, and performed work and claimed remuneration connected with, pursuing a sale of the Companies' assets and businesses, including in trading them to facilitate that sale. As a result, Issues 1(b)(iii) and 1(b)(iv) should be answered 'yes' and issue 1(a) 'yes' for this further reason.

351 I would observe once again, that ASIC's further grievance above, is seen to be advanced at too high a level of factual generality. ASIC, it would seem here, favours an abstract technique of deploying a rolled up definition such as 'restructuring work', or 'sale process work', at a level of removed generality and then reasoning from that disengaged factual plateau. The technique is unhelpful and ultimately, unpersuasive.

352 The factual reality at October 2018 was that the business of the two corporations was experiencing cashflow problems. They might or might not have been terminal. Under such circumstances, the business survival options at then were relatively straightforward, albeit limited, if the business was to keep trading. The business could try to sell off an under‑utilised, potentially valuable land asset, such as its Australind property. Alternatively, it could seek to reduce its outgoings (and therefore enhance its short term cash position) by debt repayment deferment proposals to the secured and unsecured creditors. But these were all very basic recovery options which might or might not prove successful in terms of delivering an improvement outcome that may assist to avoid a formal external administration. They were hardly unique or novel options to anyone with basic commercial insolvency insights.

353 To reiterate a vital point, none of the conduct by Mr Jones, Mr Smith or of Ferrier Hodgson has been criticised as unprofessional, improper, neglectful or negligent. A possible sale of unused assets and restructuring proposals as ventilated then by the corporations with assistance from Ferrier Hodgson, was a basic plan. This was hardly rocket science in a context of professional insolvency work.

354 Implicit in ASIC's criticism is that other alternatively appointed administrators could have viewed things differently at 31 October 2018. How so? This was never explained or developed by ASIC and hence, only a more academic criticism was rendered in the circumstances. The financial survival options available for the two corporations were obviously limited at the time. There is no hint of legitimately arguable criticism directed at any of the as mooted strategies adopted by Messrs Jones and Smith in terms of their demerits.

355 During the course of senior counsel for ASIC's verbal explication of this aspect of its grievances (see ts 152 to 154) - a suggestion emerged as to a need for fresh voluntary administrators because if appointed, they would need to closely review what had occurred in the preceding (three) months - by reference to assessing potential professional negligence action as a possibility vis-à-vis the work of Ferrier Hodgson. Again, the factual foundation for that rather extreme as expressed task was never pointed to. Quite the contrary in fact. Nevertheless, the suggested theoretical desirability of having fresh ongoing administrators was argued to be enough to provide the rationale for Messrs Jones and Smith to be barred from accepting their appointments (and of course then substantially denied their remuneration).

356 As I put to senior counsel for ASIC at the time, if such a possible negligence suit potentiality consideration were to be upheld, then it was difficult to envisage any case at all where an insolvency practitioner whose firm had performed some level of pre-appointment work (for remuneration), might ever subsequently see one of its partners take up a later position as a voluntary administrator. That is not the current state of the law. For the reasons as now expressed, that concern as articulated against independence is also unsupportable, both factually and conceptually.

No review by the Court of the remuneration determinations

357 Summing up all the above observations, there is no person, including creditors, shareholders or even ASIC that have rendered any level of criticism at the value, quality and standard of the work as it was performed by Ferrier Hodgson, and then, by Messrs Jones and Smith, across essentially a ten (10) month period from 25 July 2018 to 28 May 2019 - which includes Ferrier Hodgson's pre‑appointment work rendered in respect of the two corporations.

358 Accordingly, there is no factual basis to sustain ASIC's contention that Messrs Jones and Smith, as the voluntary administrators, should not be entitled to receive all of the remuneration as was approved for them under the remuneration determinations of the creditors of both corporations - including by EFIC and Bankwest. Those secured creditors were commercially sophisticated organisations with commercial and business acumen and insight. They held considerable commercial 'skin in the game'. They were more than capable of rendering robust and reliable business judgments on matters such as the reasonable remuneration of the voluntary administrators.

359 The aforementioned considerations lead me to my ultimate conclusion that under the circumstances, this court should not, as a matter of discretion, embark upon ASIC's advocated review of the remuneration determinations reached by the creditors of these corporations. Such a review exercise would be completely unnecessary and ultimately pointless.

360 ASIC's efforts to ventilate a largely academic conflict and ostensible bias concerns against the administrators' level of reasonable remuneration for their work following their appointments via 'the back door, are ultimately not persuasive. I assess them to be in truth, punitive in their object, contrary to accepted principle.

361 A review by the court pursuant to IPS s 60-12 would necessarily be directed at the 'reasonableness' of the remuneration and conducted by reference to one or more of the 'matters' stipulated as the express criteria in s 60-12 subpars (a) through (m). As seen, ASIC does not seek to engage against any of those subparagraphs - save for s 60‑12(m). That sundries provision (namely, 'any other relevant matters') ought not be used as a back door by ASIC to open an attack against the taking up of the voluntary administrator appointments.

362 In any event, I would find that ASIC's conflict and bias arguments, as expressed, are ultimately not established. There was never a real and sensible possibility of conflict here. No decision taken is remotely suggested as being tainted by apprehended or ostensible bias. None of that possibly goes to detracting from the levels of the reasonable remuneration for the obviously valuable professional services of commercial benefit to the corporations - as approved by the creditors. Nor does IPS s 90-15 'open the door' as an alternative avenue for ASIC to pursue academic grievances by an attack against approved remuneration determinations.

363 Consequently, this court, in exercise of its discretion under IPS s 60-11 and s 60-12, declines to embark upon the conducting of any review of any remuneration determinations by creditors of the two corporations. As these reasons have sought to explain, such a review as regards the remuneration determinations of 5 December 2018 or 28 May 2019 made by the creditors would be unprincipled and ultimately, wholly pointless.

364 By reference to the various matter considerations found assembled under IPS s 60-12, there is no suggestion that the work conducted by the voluntary administrators over seven (7) months (and the subject of remuneration determinations) was not carried out, or did not confer a valuable benefit on the two corporations concerned. In such circumstances as expressed throughout these reasons, there is absolutely no point conducting a review over whether the remuneration was reasonable. Plainly it was reasonable in the eyes of the creditors and nothing serious has emerged to undermine that assessment.

365 The base concern of ASIC was that the appointments in October 2018 as voluntary administrators ought not to have been taken up at that time - such concerns being grounded on contentions of conflict of interest, or of ostensible bias which, in the circumstances, are not established.

366 But even were those expressed conflict and bias arguments to be established, that still would be an insufficient basis to deny these administrators their reasonable remuneration for the valuable benefit they provided to the corporations by their services across the seven (7) month period of administration.

367 I reject ASIC's notion that a contended path of remuneration reduction under arbitrarily apportioned percentages applied well after the event, by reference to time sheets, carries any level of principled or supportable rationale. My contrary assessment is that the apportionment exercise as contended for by ASIC by way of remuneration reductions (as seen under Schedule A to ASIC's first tranche of written submissions) proceeds on an erroneous premise. It was never viable to differentiate work that was said to be 'tainted', from work said not to be. If it is ASIC's primary grievance that the administration appointment should never have been taken up at 31 October 2018, then logically, the entirety of the remuneration claimed by Messrs Jones and Smith for the work carried out during a seven-month period of administration, should then be denied. But that only exposes the unfairness in what is currently advocated by ASIC.

368 I also note that ASIC does not approach the remuneration issue on the basis of allowing a 'just allowance' for Messrs Jones' and Smith's work and skill on a liberal scale - as was afforded to the defaulting fiduciary in Boardman v Phipps. In any case, were that concessionary approach advocated by ASIC, then just allowances for all the work carried out across seven months, on my assessment, would have been essentially at the same level as that approved by the remuneration determinations of the creditors of the two corporations. In other words, there would be no remuneration reductions.

369 I will, upon the publication of these reasons, allow the plaintiffs and ASIC a period of seven (7) days to consider them and to confer over orders effecting their implementation. However, prima facie, orders would look to issue in terms of the relief as sought under pars 1, 2 and 3 of the plaintiffs' interlocutory application of 3 June 2020 (exhibit 1.1).

370 The interlocutory application of ASIC of 28 August 2020 (exhibit 1.2) should be dismissed.

371 As a matter of formality, I also turn to answer issues as they were stated for determination at 13 November 2020 by the orders of Vaughan J (exhibit 1.4), as follows:

1. Whether the plaintiffs accepted or performed their appointments as voluntary administrators of one or both of GD Pork Pty Ltd or GD Pork Holdings Pty Ltd (Companies) in circumstances where the plaintiffs should not have done so because:

(a) the plaintiffs were not independent, or alternatively, could not be seen to be independent?

(b) the plaintiffs were not free of actual or potential conflicts of interest or apprehended bias in carrying out one or more of the following functions, namely:

(i) investigating and reporting on voidable transactions including unfair preferences?

[ANSWER: No. There was no actual or potential conflict of interest as regards investigating or reporting upon voidable transactions, including unfair preferences. Nor was there any conflict in investigating and reporting on potential voidable transactions, including unfair preferences. There was no reasonable basis for a concern as to apprehended bias as regards decision-making or upon non decision-making by the voluntary administrators on such issues.]

(ii) investigating and reporting on the conduct of the Companies' management, including any insolvent trading claim?

[ANSWER: No. Likewise, as regards actual or potential conflicts of interest or apprehended bias, this question is answered in the negative.]

(iii) pursuing the sale of the Companies' assets and businesses?

(iv) trading the companies' assets and business as a function forming part of, or being sufficiently connected with, pursuing a sale of the Companies' assets and businesses??

2. To the extent that any part of issue 1 is answered 'Yes':

(a) is it appropriate to review the remuneration determinations made by the creditors of each Company on 5 December 2018 and 28 May 2019.

[ANSWER: Not applicable. Issue 1 has been answered in the negative in all respects. In any event, it is not appropriate as an exercise of the court's discretion to conduct a review of the remuneration determinations as they were made by the creditors of each company on 5 December 2018 and on 28 May 2019.]

3. Ought the court otherwise direct that the plaintiffs are entitled to draw down remuneration in accordance with the remuneration determinations made by the creditors of each company on 5 December 2018 and 28 May 2019?

4. Who should pay the costs of the plaintiffs' interlocutory application dated 3 June 2020?

[ANSWER: Prima facie and subject to hearing the parties if necessary, costs should follow the event. ASIC as an unsuccessful intervenor and who was put on notice as to a possible costs exposure, should meet the taxed costs of the plaintiffs.]

5. Who should pay the costs of ASIC's interlocutory application dated 28 August 2020?

[ANSWER: Prima facie, ASIC should bear its own costs and meet the costs of the plaintiffs in relation to their successful resisting of ASIC's interlocutory application as intervenor.

The summary of correspondence set out in this Statement of Facts should not be taken to be a substitute for the terms of the correspondence.

1. On 9 August 2007, Torben Soerensen was appointed the sole director of GD Pork Pty Ltd (administrators appointed) (GD Pork) and GD Pork Holdings Pty Ltd (administrators appointed) as trustee for the GD Pork Trust (GD Pork Holdings) (together, the Companies).[1]

Engagement of Ferrier Hodgson as advisors for the Companies

2. On 4 January 2018, Quadrant Advisory, a debt advisory, banking, and risk management services firm, was engaged as an advisor to the Companies.

3. In June 2018, the Companies via their advisors Quadrant Advisory approached Martin Jones of Ferrier Hodgson to undertake work for the Companies.[2]

4. On 25 July 2018, Mr Soerensen, on behalf of the Companies, engaged Ferrier Hodgson as advisors for the Companies.[3]

5. Martin Jones, then a partner of Ferrier Hodgson, had carriage of the engagement between Ferrier Hodgson and the Companies.

6. Mr Jones was assisted by other employees of Ferrier Hodgson, including Lauren McCann, then a Senior Manager of Ferrier Hodgson.[4]

7. The initial scope of Ferrier Hodgson's work as advisor was to prepare a report detailing summary of the Companies' financial position focused on any settlement with its main customer Derby Industries Pty Ltd (CMG), and how this affected the Companies':

8. At Mr Soerensen's request, Ferrier Hodgson's scope of work as advisor to the Companies was expanded.[6] On 7 August 2018, Ferrier Hodgson sent a letter to Mr Soerensen which incorporated the updated scope of works.

9. The revised scope of works was for Ferrier Hodgson to assist the Companies to:

1. review and finalise a cashflow model of the Companies' financial position;
2. negotiate with the Companies' secured lender and stakeholders to formulate a potential strategy as to its options;
3. formulate a restructure plan; and
4. prepare a report to the secured lenders.[7]

Period between 25 July 2018 and 31 October 2018 - work performed by Ferrier Hodgson prior to administration of the Companies

10. On 8 August 2018, Ferrier Hodgson issued a report for the Companies' secured lenders, Bankwest and EFIC, titled 'Operational Review & Restructure Proposal.[8]

11. The 8 August 2018 report contained a proposal for the secured lenders to agree to a standstill on capital debt reduction until a review date of 31 December 2018[9] to determine whether the Companies business was viable, as an aspect of the proposed restructure which included key trade creditors also deferring debt repayments to 31 December 2018.[10]

12. The 8 August 2018 report contained an outline of key objectives which envisaged a proposed restructure in four phases including:[11]

1. ensuring sufficient cashflow to continue operations including through feed and other input costs to determine efficiencies, deferral of debt repayments, assessing possibilities for other customers/markets, consideration of strategies for operational improvement and commissioning a biogas plant.[12]
2. equity injection including preparing a campaign to targeted investors, engaging with previous interested parties to determine interest for investment, liaising with key industry players to consider potential partnerships, preparing financial information and due diligence packs and considering how the equity injection should be structured;[13]
3. debt deferral from the secured lenders and key trade creditors; and
4. consideration of a sale of the Companies' Australind property and determine whether to use the funds wholly or partly as debt repayment and working capital.[14]

13. On 9 August 2018, Mr Jones, Ms McCann, Mr Soerensen, and Mr O'Farrell met with representatives of Bankwest and EFIC.

14. At the 9 August 2018 meeting, Mr Jones outlined the 8 August report prepared by Ferrier Hodgson to Bankwest and EFIC,[15] which included the proposal to agree standstill agreements with the secured lenders.

15. No agreement with the secured creditors was reached at the 9 August 2018 meeting.

16. On 15 August 2018, Mr Soerensen identified a number of interested parties to be approached for the purposes of seeking an equity injection for the Companies and asked Mr Jones if there were any other parties he could put forward.[16]

17. On 27 August 2018, the Companies made a proposal to their major grain supplier. Weston Milling, a division of George Weston Foods Limited (GWF), for Weston Milling to agree a standstill until 31 December 2018 on any repayments by the Companies on outstanding invoices due to Weston Milling as of 31 July 2018.[17] Ferrier Hodgson documented the proposal.[18]

18. On 30 August 2018, Mr Jones requested Lavan provide a quote to prepare a draft standstill and forbearance deed between the Companies and their secured lenders Bankwest and EFIC.[19]

19. In September 2018, Lavan prepared a draft standstill and forbearance deed between the Companies, Mr Soerensen, Bankwest and EFIC.

20. On 13 September 2018, Ms McCann sent a draft information memorandum to Mr Soerensen (Information Memorandum). On 19 September 2018, Ms McCann sent to Mr Soerensen a marked-up version of the Information Memorandum with further edits to the document.[20]

21. On 13 September 2018, Ms McCann prepared a confidentiality deed (Confidentiality Deed) and distributed it to Mr Soerensen for the Companies' consideration and subsequent circulation to interested third parties.[21]

22. During about September 2018, Mr Soerensen on behalf of the Companies had a discussion with Strathaven about the Companies' predicament.[22]

23. By letter dated 19 September 2018, Ferrier Hodgson wrote to Strathaven[23] outlining the financial difficulties facing the Companies' cashflow position and the Companies' restructure plan. The letter also outlined, as an incidence of the restructure plan, for a standstill until 31 December 2018 on any outstanding invoices due by the Companies to that creditor.

24. By letters dated 20 September 2018 Mr Jones invited, as part of Ferrier Hodgson's engagement as advisors to the Group, real estate agents, Landmark Harcourts[24] and Elders - Southern Districts Estate Agency,[25] to provide a submission for marketing and selling the Companies' property located at 96 Rosamel Road, Parkfield in western Australia (being the Australind property). Ferrier Hodgson drafted these letters.[26]

25. On 24 September 2018, the Companies commenced a targeted marketing campaign seeking third party investment for the Companies.[27]

26. On 25 September 2018, Ms McCann sent Mr Soerensen a further copy of the draft Information Memorandum.[28]

27. On 26 September 2018, Mr Kirkness and Mr Soerensen provided comments to Ms McCann on the wording of the draft Information Memorandum,[29] which Ms McCann incorporated into the document,[30] before recirculating a revised Information Memorandum to Mr Soerensen, Mr Kirkness and Mr O'Farrell on 27 September 2018.[31]

28. On 26 September 2018, in response to the requests sent by Ferrier Hodgson set out in paragraph 26, Landmark Harcourts submitted a marketing and sales proposal for the Australind property addressed to Mr Jones and Mr Rompotis (Ferrier Hodgson).[32]

29. In response to the requests sent by Ferrier Hodgson set out in paragraph 24, Elders - Southern Districts Estate Agency submitted a marketing and sales proposal for the Australind property address to GD Pork and Ferrier Hodgson.[33]

30. On 28 September 2018, following the meeting held between the Companies' director and its secured lenders, EFIC and Bankwest, Ferrier Hodgson issued a report addressed to the Companies' secured lenders, titled 'Monitoring Report - August'.[34]

31. On around 4 October 2018,[35] Ferrier Hodgson prepared and issued a flyer to advertise for sale or equity investment the Companies' businesses and assets at Pinjarra, Kojonup, and Australind (Flyer).[36]

32. The Flyer invited non-binding offers for purchase of the assets, or investment in the Companies, by 29 October 2018, with final offers required by 15 November 2018 and directed interested parties to Mr Soerensen or Ms McCann of Ferrier Hodgson for further information.[37]

33. On or around 5 October 2018, the Companies made a payment of $120,000 to Weston Milling.[38]

34. By exchange of emails from 5 October 2018 to 8 October 2020, Mr Friedrichs confirmed to Mr Jones that he had spoken with Mr Soerensen and verbally agreed payment terms for Weston Milling to agree to an extension of time for the Companies to pay down outstanding invoices. Mr Jones noted, in response to Weston Milling's request for a payment of $160,000 by the week ending 8 October 2018, that:

1. the Companies were not sufficiently capitalised to over commit on additional payments that would jeopardise the Companies' short term cashflow and long term viability; and
2. that he (Mr Jones) would speak with Mr Soerensen in relation to the additional payment request; and
3. he would work through the Companies' cash flows that week with the benefit of September's results and respond to Mr Friedrich's request once he had facts to present.[39]

35. On 11 October 2018, Neil Ferguson of Westpork Pty Ltd, an interested person in answer to the Flyer, telephoned Ms McCann.[40]

36. During the telephone discussion with Mr Ferguson on 11 October 2018, Ms McCann asked Mr Ferguson to sign the Confidentiality Deed before sending him the Information Memorandum.[41]

37. Subsequently, Ms McCann informed Mr Ferguson that if he required further information, he could contact Mr Soerensen, including to arrange a site visit, or Ms McCann.[42]

38. On or around 12 October 2018, Mr Soerensen, Ms McCann, and Mr Jones discussed a proposal concerning the making of payments to Weston Animal Nutrition in reduction of the Companies' outstanding account.[43] The letter documenting the proposal was drafted by Ferrier Hodgson.

39. On 15 October 2018, the Companies (by Mr Soerensen) entered into an Exclusive Rural Selling Agency Agreement with Landmark Harcourt,[44] with a view to selling the Australind Property by the middle of December 2018.[45]

40. On 16 October 2018, Mr Friedrichs emailed Mr Soerensen and Mr Jones and requested that they advise him (Mr Friedrichs) of the Companies' payment plan and property security proposal as soon as possible.[46]

41. On 16 October 2018, Mr Soerensen instructed Ms McCann and Mr Jones that he was ok with the repayment proposal discussed between himself and Mr Jones and Ms McCann on Friday, being 2 October 2018, being sent to Mr Friedrichs.[47]

42. On or by 17 October 2018, Mr Jones provided to Mr Friedrichs the Companies' proposed payment plan to reduce part of their outstanding trade creditor account with Weston Animal Nutrition.[48]

1. the Companies proposed to pay $160,000 per week commencing from the date of acceptance of the proposal until 31 December 2018;
2. Mr Jones informed Weston Animal Nutrition that GD Pork would be in a better position to advise on repayment in full of the balance of the Companies' trade creditor account following 31 December 2018;[49] and
3. any security arrangement in favour of Weston Milling would require the consent of the Companies' secured lenders, and Ferrier Hodgson would approach the secured creditors about this issue upon Weston Milling otherwise agreeing to the terms of the standstill proposal.

44. On 18 October 2018, GD Pork made a payment from its Bankwest account ending 7853 of $163,628.59 to Weston Milling.[50]

45. On 19 October 2018, Ferrier Hodgson invoiced GD Pork for professional fees and disbursements totalling $100,124.37 excluding GST (or $110,136.81 including GST).[51]

46. Between 22 and 31 October 2018, GD Pork paid the fees totalling $100,124.37 excluding GST (or $110,136.81 including GST).[52]

47 On 23 October 2018, Landmark Harcourts provided to Ms McCann a copy of a draft advertisement for th sale of the Australind Property, which Ms McCann provided to Mr Soerensen.[53]

48. On 25 October 2018, Ferrier Hodgson prepared a draft terms sheet for the Companies to provide to CMG.[54] At Mr Soerensen's instruction, Mr Jones sent the terms sheet (in the form of the version circulated to Mr Soerensen for the Companies to issue) to Patrick Walsh of CMG for CMG's consideration.[55] Ferrier Hodgson requested a response to the draft term sheet by 29 October 2018.[56]

49. On 25 October 2018, Weston Milling responded to the proposed payment plan documented in Ferrier Hodgson's letter dated 12 October 2018.[57]

50. In the response of 25 October 2018, Weston Milling informed Ferrier Hodgson that:

1. it rejected the Companies' proposal;
2. it had no appetite to obtain a second ranking security arrangement behind the secured lenders;
3. it requested details of any unencumbered property which could be used as security;
4. GD Port was required to make weekly payments of $125,000 as debt reduction in addition to any pre-payments for new purchases; and
5. GD Pork had until 1 November 2018 to respond, otherwise the account would be put on stop supply as of 5 November 2018.[58]

51. By report dated 26 October 2018, Ferrier Hodgson provided a report titled 'Monitoring Report - September' for the Companies' secured lenders, Bankwest and EFIC.[59]

52. On 29 October 2018, Mr Jones sent a letter to Mr Soerensen providing an overview of the voluntary administration process, the role of the administrator, and a proposal for Mr Jones and Mr Smith to act as voluntary administrators of the Companies.[60]

53. On 31 October 2018, following confirmation that shareholders were not in a position to advance further funds for working capital.[61]

Period between 31 October 2018 and 5 December 2018 - work performed after administrators appointed to the Companies

54. On 31 October 2018, Mr Soerensen appointed Mr Jones and Mr Smith joint and several voluntary administrators of the Companies and accepted the terms of engagement set out in the 29 October 2018 letter (Administrators).[62]

55. On and after their appointment, the Administrators assumed control of the Companies' businesses.

56. Immediately after their appointment, the Administrators conducted an urgent financial analysis of the Companies to determine the financial metrics of a trade-on of the Companies' businesses or a cessation of operations.[63]

57. On 1 November 2018, the Administrators completed their Declaration of Independence, Relevant Relationships, and Indemnities for the Companies (the DIRRI).[64] The DIRRI was lodged with ASIC on 2 November 2018.[65]

58. Immediately following their appointment, the Administrators issued a new flyer on the letterhead of GD Pork (Administrators Appointed) that:

1. sought non-binding offers for sale of the Companies' assets by 30 November 2018;
2. sought best and final offers by 10 December 2018; and
3. otherwise was, or was substantially, identical to the flyer prepared on around 4 October 2018.

59. On 12 November 2018, concurrent first meetings of creditors of the Companies were held.[66]

60. At the concurrent first meetings of creditors of the Companies held on 12 November 2018, the Administrators' appointment to the Companies was confirmed.[67]

61. On 27 November 2018, Mr Jones and Mr Smith provided their statutory report to creditors pursuant to section 438B and IPR 75-225 (Major Report).[68]

62. In the Major Report, a summary of remuneration for each of the Companies for which the Administrators would be seeking approval at the second meeting of creditors was set out,[69] which included, with respect to GD Pork Pty Ltd:

1. $96,576.50 for the period between 31 October 2018 and 16 November 2018; and
2. $45,000 for the period between 17 November 2018 and 5 December 2018.

63. On 5 December 2018, the concurrent second meetings of creditors of the Companies were held to decide whether a Deed of Company Arrangement (DOCA) should be executed by the Companies, whether the administration of the Companies should end, or whether the Companies should be wound up.[70]

64. At the concurrent meetings of creditors on 5 December 2018, creditors of the Companies resolved that the concurrent second meetings of creditors would be adjourned for a period not exceeding 45 days to enable, amongst other things:[71]

1. additional time for the sale process to advance and to identify a buyer;
2. additional time for interested parties to put forward a DOCA proposal to creditors and allow the Administrators further time to progress the restructure of the Companies; and
3. to allow the Administrators to report back accurately to creditors with sufficient information on the outcome of the sale process or whether entering into a DOCA (if one is proposed) would provide a better return to the creditors as compared to an immediate winding up of the Companies.[72]

65. At the concurrent meetings, the creditors of the respective Companies unanimously resolved to approve the Administrators' remuneration and disbursements as follows:

1. in respect of GD Pork:
   1. remuneration of the Administrators for the period from 31 October 2018 to 16 November 2018 was approved in the sum of $96,576.50 plus GST.[73]
   2. remuneration of the Administrators for the period from 17 November 2018 to 5 December 2018 was approved in the sum of $45,000 plus GST.[74]
   3. disbursements in respect of the voluntary administration period for the period from 31 October 2018 to 16 November 2018 was approved in the sum of $1,432.20 plus GST.[75]
   4. disbursements of the Administrators from 17 November 2018 to completion was approved in the sum of $1,810 plus GST.[76]
2. in respect of GD Pork Holdings:
   1. remuneration of the Administrators for the period from 31 October 2018 to 16 November 2018 was approved in the sum of $39,446 plus GST.[77]
   2. remuneration of the Administrators for the period from 17 November 2018 to 5 December 2018 was approved in the sum of $10,000 plus GST.[78]
   3. disbursement in respect of the voluntary administration period for the period from 31 October 2018 to 16 November 2018 was approved in the sum of $1,101 plus GST.[79]
   4. disbursements of the Administrators for the period from 17 November 2018 to completion was approved in the sum of $1,810 plus GST.[80]

66. The remuneration approved by creditors of the Companies at the meetings on 5 December 2018 included amounts claimed by the Administrators for:[81]

1. Preliminary investigations and reporting to creditors about the availability of voidable preferences.
2. Preliminary investigations and reporting to creditors about the conduct of the Companies' management, including with respect to the availability of an insolvent trading issues claim and the indicators of insolvency; and
3. pursing the sale of the Companies' assets and businesses, including in trading them to facilitate that sale.

67. By 10 December 2018 (the closing date), the Administrators had received four offers from parties interested in purchasing the Companies' assets and businesses,[82] which included an offer from Westpork Pty Ltd.

68. On 21 December 2018, the Administrators accepted an offer from Westpork Pty Ltd for the sale of certain of the Companies' assets and its businesses as a going concern, including livestock at the Pinjarra and Kojonup sites, but excluding the Australind property and associated plant and equipment.[83]

Period from 28 February 2019 to 28 May 2019 - work performed by Ferrier Hodgson after ASIC's involvement

69. On 4 February 2019, 6 March 2019, and 2 April 2019, on the application of the Administrators, the Supreme Court of Western Australia made orders for the extension of the convening period for the holding of the reconvened second meeting of creditors of the Companies to 8 March 2019, 8 April 2019, and 4 June 2019, respectively.[84]

70. On 25 February 2019, an online auction of the plant and equipment remaining at the Australind Property was completed.[85]

71. On 28 February 2019, ASIC wrote to Mr Jones and Mr Smith following its review of the DIRRI. ASIC stated its concern that due to Ferrier Hodgson's prior dealings with the Companies, Mr Jones and Mr Smith may have placed themselves in a position of actual or perceived conflict of interest by accepting the appointments as voluntary administrators of the Companies. ASIC sought a response from Mr Jones and Mr Smith by 11 March 2019.[86]

72. On 8 March 2019, Mr Jones wrote to ASIC seeking an extension of time to respond to ASIC's letter of 28 February 2019 until 29 March 2019 on the grounds that there was no prejudice to the creditors of the Companies, the administrations of the Companies were complex, a number of issues were afoot, there was potentially significant detriment to the return to the Companies' creditors and by reason of the impending sale of the Companies' businesses, resources were consumed elsewhere.[87]

73. On 11 March 2019, ASIC responded to Mr Jones' letter of 8 March 2019 and granted Mr Jones and Mr Smith an extension of time to respond to ASIC's letter of 28 February 2019, until 29 March 2019.[88]

74. On 13 March 2019, the Administrators drew down remuneration totalling $141,576.50 (excluding GST)[89] on account of the approvals of creditors of GD Pork made on 5 December 2018.

75. On 2 April 2019, Mr Jones wrote to ASIC stating, amongst other things that in his view the Administrators did not place themselves in a position of actual or perceived conflict of interest or duty by accepting their appointment.[90] Their pre-appointment engagement work was stated to be:

1. reviewing the Companies' financial performance;
2. assisting with developing a restructuring plan;
3. commenting on options available to the Companies;
4. preparing a report detailing a summary of the Companies' financial position following the settlement of Debry Industries Pty Ltd dispute and how it affected the restructuring plan;
5. preparing a report to the secured lenders on the financial position of the Companies; and
6. preparing a cashflow model of the Companies' financial position.[91]

76. On 10 April 2019, Mr Jones and Mr Smith prepared a draft updated DIRRI. The draft updated DIRRI was provided to ASIC on 12 April 2019. The Administrators proposed lodging the draft updated DIRRI with ASIC, subject to any comments from ASIC.[92]

77. On 12 April 2019, the sale of the Companies' businesses and assets to Westpork Pty Ltd on a going concern basis was completed.[93]

78. On 23 April 2019, Lavan (solicitors for the Administrators) wrote to ASIC stating amongst other things that, the sale of the Companies' assets was completed, that the Court had extended the convening period until 4 June 2019 and that it was likely that the Companies would proceed to liquidation at the reconvened second meeting of creditors. The letter sought feedback from ASIC on the updated DIRRI and the matters raised in the letter from Mr Jones of 2 April 2019.[94]

79. On 30 April 2019, by letter of that date, ASIC requested that the Administrators defer reconvening the second meeting of creditors until after 10 May 2019, given its concerns about the Administrators' pre-appointment work. ASIC stated that it anticipated being in a position to advise the Administrators of its views by 8 May 2019.[95]

80. On 7 May 2019, by letter of that date, ASIC informed the Administrators of its view that an informed observer might reasonably apprehend that their prior dealings with the Companies were such that the Administrators might not bring an impartial mind (in the exercise of their duties) to circumstances that include:

1. whether there is an unfair preference claim that could be made against Weston Milling for approximately $163,000 in respect of the payment at which the Administrators appear to have been directly involved;
2. whether there are any unfair preference claims that could be made against the Administrators for approximately $100,000 for fees rendered for informal restructuring services;
3. the sale of the Companies' business, and whether it was in the best interest of the creditors;
4. whether there are any claims that could be made against the Administrators, the Companies' director, the Companies' officers, Quadrant Advisory, Lavan and any other advisers in connection with the Companies' failure to achieve an informal restructure, and whether the Companies traded while insolvent during the informal restructuring period.[96]

81. In the letter dated 7 May 2019, ASIC also informed the Administrators that:[97]

1. it considered that the information the Administrators provided in their original DIRRI and in Mr Jones' letter of 2 April 2019 was not fulsome;
2. its view was that the Administrators should immediately take steps to resign as voluntary administrators.

82. On 10 May 2019, by letter of that date, Lavan informed ASIC, amongst other things, that the Administrators did not consider it to be in the best interests of creditors for the Administrators to retire and be replaced, because:[98]

1. new administrators would be required to urgently prepare a report for creditors and convene the second meeting of creditors;
2. it was considered extremely likely that the Companies would be placed into liquidation at the second creditors' meeting because no DOCA proposals had been received at that time; and
3. the Administrators would be prepared to agree not to accept appointment as liquidators of the Companies at the reconvened second creditors' meeting, and to recommend at the meeting that an alternate liquidator, Ian Francis of FTI Consulting, be appointed.

83. On 13 May 2019, by letter of that date, ASIC responded to Lavan's letter of 10 May 2019 stating that:

1. the Administrators' proposal was not acceptable to ASIC, as in ASIC's view a fair minded observer might apprehend that the Administrators might not discharge their duties concerning the preparation of the report required to be prepared under s.439A of the Corporations Act 2001(Cth) in an impartial or independent manner and in the interests of creditors as a whole;
2. ASIC requested that the Administrators resign as voluntary administrators forthwith, that they do not attempt to seek remuneration approval at the second creditors meeting or any subsequent meetings of the Companies' creditors or committee, and that they apply to Court for a review of their remuneration.[99]

84. On 14 May 2019, Lavan provided to ASIC:[100]

1. a copy of the Administrators' report of the Companies that was issued to creditors on 27 November 2018. This report was subsequently lodged with ASIC on 15 May 2019;
2. the minutes of meeting of creditors of the Companies held on 27 November 2018;
3. a proposal, in addition to the terms which Lavan had put to on 10 May 2019, that Administrators would not draw any remuneration approved at the reconvened second creditors' meeting, and instead would make an application to Court for approval of that remuneration; and
4. notice of their intention to issue a supplementary Major Report to creditors to reflect these matters, among other things.

85. On 14 May 2019, Mr Jones and Mr Smith completed replacement DIRRIs for the Companies.[101]

86. On 15 May 2019, Lavan provided to ASIC an amended draft supplementary Major Report to creditors of the Companies.[102]

87. On 15 May 2019, ASIC provided to Lavan a copy of the draft supplementary Administrator's report, containing its comments on the document, and requesting a further amended version of the report to be provided to ASIC.[103]

88. On 16 May 2019, ASIC wrote to Lavan, informing them that it accepted the proposal set out in Lavan's letter of 14 May 2019.[104]

89. On 17 May 2019, Ferrier Hodgson provided ASIC with the Administrators' supplementary Major Report for each of the Companies.[105] The reports were provided to creditors of the Companies on the same day.[106]

90. On 28 May 2019, the concurrent reconvened second meetings of creditors of the Companies were held.[107]

91. At the date of the reconvened second creditors meetings of the Companies, no DOCA proposals for either of the Companies had been received.[108]

92. At the reconvened second meetings of creditors of the Companies, the Administrators informed creditors of their investigations which a liquidator would explore further and noted matters for further investigation.[109]

93. At the meetings on 28 May 2019, the creditors of the Companies approved the Administrators' remuneration and disbursements for the companies in the following periods:

1. in respect of GD Pork, for the period between 17 November 2018 and 5 May 2019, $762,486 plus GST;
2. in respect of GD Pork, for the period between 6 May 2019 to 28 May 2019, $45,000 plus GST;
3. in respect of GD Pork Holdings, for the period between 17 November 2018 and 5 May 2019, $23,895 plus GST; and
4. in respect of GD Pork Holdings, for the period between 6 May 2019, $5,000 plus GST.[110]

94. At the meetings on 28 May 2019, the creditors of the Companies also resolved that:

1. the Companies be wound up; and
2. Ian Francis and Michael Ryan of FTI Consulting be appointed joint and several liquidators of the Companies.[111]

95. The remuneration approved by the creditors of the Companies at the meetings on 28 May 2019 included amounts claimed by the Administrators for:

1. investigating and reporting to creditors about voidable preferences;
2. investigating and reporting to creditors about the conduct of the Companies' management, including insolvent trading issues; and
3. pursuing the sale of the Companies' assets and businesses, including in trading them to facilitate that sale.

96. With effect from 28 May 2019, the Administrators ceased to hold office as joint and several administrators of the Companies.[112]

97. On 11 June 2019, Lavan wrote to ASIC stating that the Administrators were in the process of making an application to Court in respect of their remuneration and asking ASIC to indicate what course it should take with respect to lodging a Form 5603 pursuant to section 70-6 of the Insolvency Practice Rules (Corporations) 2016, which requires information about the administrators remuneration, receipts and payments.[113]

98. On 17 June 2019, ASIC wrote to Lavan informing it that the Administrators should lodge the Form 5603 reporting nil fees drawn and including all transactions that occurred during the period of return.[114]

99. The Administrators currently hold the amount of about $974,409.70 (including GST) on account of their claims for remuneration for work performed regarding the Companies up to 28 May 2019 but have not drawn down on this sum.

Schedule A-Consideration of evidence in relation to s 60-12 of the IPS

IPS s 60-12(a): the extent to which the work by the external administrator was necessary and properly performed

Financial review and securing assets, trade on of Companies and other administration tasks

Jones I at paragraphs [37.2], [38], [64.5], [64.7]­

Jones 2 at paragraphs [17], [52]-[57] and [63]

The administrators undertook necessary work in securing the Companies assets, feeding and looking after livestock and trading on the business.

SOAF at paragraphs [58], [67]-[68], [70] and

Jones I at paragraphs [37.3], [38.1l]-[38.21], [39]-[43], [63] and [64.6].

The administrators conducted a sales and marketing campaign ultimately leading to

Jones I annexures MJ-8 to MJ-10, MJ-21 to MJ-22 and MJ-24.

The administrators held meetings with creditors as required, adjourned the second creditors meeting (as voted on by the creditors) and issued the necessary reports to creditors with the requisite information pursuant to the Act.

SOAF at paragraphs [59]-[66] and [90]-[95].

Jones I at paragraphs [44]-[57], [64.2]-[64.3] and [75]-[85].

Jones I annexures MJ-8 to MJ-10, MJ-21 to MJ- 22 and MJ-24.

Jones I paragraphs [34], [58]-[62], [64. I],

Jones I annexures MJ-7 page 151, MJ-11 to MJ-20 and MJ-23.

The administrators were required to undertake certain actions in accordance with their obligations under the Act (ie)

SOAF at paragraphs [57], [69], [71]-[73], [75] - [76], [78]-[89] and [97]-[98].

Jones I paragraphs [34], [58]-[62], [64.1], [644]

DIRRI, extending the convening period and liaising with ASIC)

Jones 2 at [21], [22.2]-[22.3], [29]-[4 I] and

The administrators conducted necessary statutory investigations into voidable transactions, the Companies' management or the sales and marketing campaign.

Jones 2 at [21], [22.2]-[22.3], [29]-[4 I] and [46]­

ASIC do not consider the administrators' investigations into voidable transactions, the Companies' management or the sales and marketing campaign (devised during the Engagement) were properly performed.

IPS s 60-12(b): the extent to which the work likely to be performed by the external administrator is likely to be necessary and properly performed

All work performed or to be performed has been completed.

Jones I annexure MJ-6 page 142, annexure MJ-5 page 130.

The administration of the Companies began on 31 October 2018 and ceased on 28 May 2019, lasting for a period of roughly 7 months.

Jones I annexure MJ-6 page 142, annexure MJ-5 page 130.

ASIC have identified in their submissions at paragraph [3] the period of the administration.

A minimum 13-week period would have been required to wind-down the Companies businesses and deal with livestock.

IPS s 60-12(d): the quality of the work performed, or likely to be performed, by the external administrator

The work done in commencing and pursuing the sales campaign was properly undertaken.

Jones 1 annexure MJ-10 page 346 - 347, annexure MJ-24 page 576-579.

Jones 1 annexure MJ-10 page 346-347, annexure MJ-24 page 576-579.

The Companies' creditors approved the administrators' remuneration.

The work done in trading on the Companies was properly undertaken.

Jones 1 annexure MJ-10 page 339, annexure MJ-24 page 570.

The Companies' creditors approved the administrators' remuneration.

Jones I annexure MJ-IO page 339, annexure MJ- 24 page 570.

Jones 2 at [21], [22.2], [29]-[4I] and [46] - [5I].

Jones 2 at [21], [22.2], [29] - [4 I] and [46]-[5 I].

The administrators conducted necessary statutory investigations into voidable transactions, the Companies' management or the sales and marketing campaign.

ASIC submissions at paragraphs [22] and [41] ‑ [49].

ASIC do not consider the administrators' investigations into voidable transactions, the Companies' management or the sales and marketing campaign (devised during the Engagement) were properly performed.

IPS s 60-12(e): the complexity (or otherwise) of the work performed, or likely to be performed, by the external administrator

Complexity of work performed during the administration

Saggers annexure AJS-13 (being the Supplementary Administrators' Report at MJ-21 and MJ-22) pages 200 and 231, annexure AJS-23 pages 400-40 I.

The administration of the Companies' business was complex and involved

Jones 2 at paragraphs [17]-[19] and [52]-[57].

Jones 4 at paragraph [55] and annexure MJ-1 I page 8.

Saggers annexure AJS-13 (being the Supplementary Administrators' Report at MJ-21 and MJ-22) pages 200 and 231, annexure AJS-23 pages 400-40 I

ASIC do not address the complexity of the work to be performed.

factors (including feeding and transporting livestock and liaising with Commonwealth and State regulatory bodies).

IPS s 60-12(1): the extent (if any) to which the external administrator was, or is likely to be, required to deal with extraordinary issues

Extraordinary issues dealt with during the administration

Jones 2 at [17.12] - [17.14], [18]-[19] and

Jones 4 annexure MJ-11 page 8. Saggers annexure AJ - 13 (being the

Supplementary Administrators' Report at MJ-21 and MJ-22) pages 200 and 231, annexure AJS-23 pages 400-401.

The Companies conducted a Iivestock breeding and fattening business.

The administrators were required to take on the responsibility of the welfare of 46,568 pigs which meant complying with specific welfare legislation.

Jones 2 at [17.12] - [l7.14], [18] - [19] and [55]­

Jones 4 annexure MJ-11 page 8. Saggers annexure AJS-13 (being the

Supplementary Administrators' Report at MJ-21 and MJ-22) pages 200 and 231, annexure AJS-23, pages 400 - 401 .

ASIC has not addressed the extraordinary issues faced by the administrators as set out in the evidence.

The sole director of the Companies resigned meaning the administrators could not simply resign from their role as there was no one to hand over control of the Company to.

The sole director of the Companies and another senior staff member were facing serious criminal charges which resulted in both going to jail.

IPS s 60-12(g): the extent (if any) to which the external administrator was, or is likely to he, required to accept a higher level of risk or responsibility than is usually the level

Saggers annexure AJS-13 (being the Supplementary Administrators' Report at MJ-21 and MJ-22) page 200.

The administrators were required to take on the responsibility of the welfare of 46,568 pigs which meant complying with specific welfare legislation.

Jones 2 at [I 7.12] - 17.15], [I 8] - [I 9] and [55] -

ASIC has not addressed the additional risks that were taken on by the administrators in this regard.

The Companies conducted a livestock breeding and fattening business which required communication with Commonwealth and State regulatory bodies.

IPS s 60-12{h): the value and nature of any property dealt with, or likely to be dealt with, by the external administrator

Jones I annexure MJ-9 pages 279-280. Jones 2 at paragraph [57].

The assets of the Companies dealt with and ultimately sold by the administrators were worth $27,566,000 prior to the administration.

Jones I annexure MJ-9 pages 279-280. Jones 2 at paragraph [57].

ASIC has not addressed the value of the property dealt with by the administrators.

The value of the Companies' assets would materially diminish if the administrators ceased operations of the Companies' business due to death of livestock and loss

IPS s 60-12{i): the number, attributes and conduct, or the likely number, attributes and conduct, of the creditors

Jones I annexure MJ-8 page I 87-188, annexure MJ-10 page 339 and annexure MJ-24 page 570.

The Companies had between 50-200 creditors (28 of who had proved debts) at the time of the Major Report. The administrators estimated the value of unsecured debt to be $10,520,000.

Creditors approved the administrators' remuneration.

Jones I annexure MJ-8 page 187-188, annexure MJ-IO page 339 and annexure MJ-24 page 570.

ASIC have not made comment or put forward evidence as to the number and attributes of the creditors.

IPS s 60-12(j): if the remuneration is worked out wholly or partly on a time-cost basis--the time properly taken, or likely to be properly taken, by the external administrator in performing the work

Jones I annexure MJ-8 page 238-246, annexure MJ-24 pages 575-579.

Saggers annexure AJS-10 pages 114 - 115, annexures AJS-45 and AJS-46 pages 610 - 736.

Remuneration worked out wholly on a time-cost basis (apart from disbursements) and equivalent to $974,409.70.

Jones I annexure MJ-8 page 238-246, annexure MJ-24 pages 575-579.

Saggers annexure AJS-10 pages 114-115, annexures AJS-45 and AJS-46 pages 610 - 736.

ASIC has done its own review of remuneration contained at Schedule A of ASIC's submissions. The remuneration is based on a review ofWIP on a time-cost basis.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] First Jones Affidavit, attachment MJ-5, page 129, 143.

[3] Saggers Affidavit, attachment AJS-16, page 352.

[4] Saggers Affidavit, attachment AJS-45, page 611.

[5] Jones Affidavit attachment MJ1, page 41, Saggers Affidavit, attachment ASJ-16, page 352.

[6] Saggers Affidavit, attachment AJS-6, page 362.

[7] Saggers Affidavit, attachment AJS-6, page 362.

[8] First Jones Affidavit, attachment MJ-3, page 61.

[9] First Jones Affidavit, attachment MJ-3, page 69.

[10] First Jones Affidavit, attachment MJ-3, page 63.

[11] First Jones Affidavit, attachment MJ-3, page 67 see further page 68.

[12] First Jones Affidavit, attachment MJ-3, page 68.

[13] First Jones Affidavit, attachment MJ-3, page 68.

[14] First Jones Affidavit, attachment MJ-3, page 68.

[15] Saggers Affidavit, attachment AJS-28, page 608.

[16] November Jones Affidavit attachment MJ-25, page 34.

[17] First Jones Affidavit, attachment MJ-8, page 172.

[18] Saggers Affidavit, attachment AJS-45, page 733; November Jones Affidavit attachment MJ-25, page 34-35.

[19] Saggers Affidavit, attachment AJS-30, page 513-514.

[20] Saggers Affidavit, attachment AJS-37 and AJS-38, page 590.

[21] Saggers Affidavit, attachment AJS-45, page 662.

[22] Saggers Affidavit, attachment AJS-36, page 586.

[23] Saggers Affidavit, attachment AJS-36, page 586.

[24] Saggers Affidavit, attachment AJS-39, page 592.

[25] First Jones Affidavit, attachment MJ-2, page 51.

[26] Saggers Affidavit, attachment AJS-45, page 734.

[27] First Jones Affidavit, attachment MJ8, page 172.

[28] Saggers Affidavit, attachment AJS-41, page 602.

[29] Saggers Affidavit, attachment AJS-41, page 602.

[30] Saggers Affidavit, attachment AJS-41, page 599.

[31] Saggers Affidavit, attachment AJS-41, page 598.

[32] Saggers Affidavit. attachment AJS-27, page 472.

[33] Saggers Affidavit, attachment AJS-27, page 466.

[34] Saggers Affidavit, attachment AJS-27, page 405.

[35] Saggers Affidavit, attachment AJS-45, page 663.

[36] Saggers Affidavit, attachment AJS-42, page 604.

[37] Saggers Affidavit, attachment AJS-42, pages 604.

[38] Saggers Affidavit, attachment AJS-22, page 397.

[39] Saggers Affidavit, attachment AJS-22, page 397.

[40] Saggers Affidavit, attachment AJS-43, page 607.

[41] Saggers Affidavit, attachment AJS-43, page 607.

[42] Saggers Affidavit, attachment AJS-43, page 606.

[43] Saggers Affidavit, attachment AJS-46, page 735; Saggers Affidavit, attachment AJS-22, page 395.

[44] First Jones Affidavit, attachment MJ-2, page 56 to 60.

[45] First Jones Affidavit, attachment MJ-3, page 103.

[46] Saggers Affidvait, attachment AJS-22, page 395.

[47] Saggers Affidavit, attachment AJS-22, page 395.

[48] Saggers Affidavit, attachment AJS-23, page 400 to 401.

[49] Saggers Affidavit, attachment AJS-23, page 400 to 401.

[50] Saggers Affidavit, attachment AJS-24, page 402.

[51] First Jones Affidavit, attachment MJ-4, page 122 to 127.

[53] Saggers Affidavit, attachment AJS-44, page 608.

[54] Saggers Affidavit, attachment AJS-33, page 580.

[55] Saggers Affidavit, attachment AJS-35, page 583.

[56] First Jones Affidavit, attachment MJ-3, page 103.

[57] First Jones Affidavit, attachment MJ-3, page 99; First Jones Affidavit, attachment MJ-8, page 173.

[58] First Jones Affidavit, attachment MJ-3, page 99; First Jones Affidavit, attachment MJ-8, page 173.

[59] First Jones Affidavit, attachment MJ-3, page 92.

[60] First Jones Affidavit, attachment MJ-6, page 138.

[61] First Jones Affidavit, attachment MJ-8, page 173.

[62] First Jones Affidavit, attachment MJ-6, page 142.

[63] November Jones affidavit, attachment MJ-29, page 97.

[64] First Jones Affidavit, attachment MJ-7, pages 152-155; Saggers Affidavit, attachment AJS-19, page 368.

[65] First Jones Affidavit, attachment MJ-5, page 132; Saggers Affidavit, attachment AJS-3, page 65.

[66] First Jones Affidavit, attachment MJ-8, page 168.

[67] First Jones Affidavit, attachment MJ-8, page 168.

[68] First Jones Affidavit, attachment MJ-8, page 156.

[69] First Jones Affidavit, attachment MJ-8, page 169.

[70] First Jones Affidavit, attachment MJ-8, page 168; Saggers Affidavit, attachment AJS-10, page 109 to 111.

[71] Saggers Affidavit, attachment AJS-10, page 113.

[72] First Jones Affidavit, attachment MJ-10, page 345-346.

[73] First Jones Affidavit, attachment MJ-8, page 346; Saggers Affidavit, attachment ASJ-10, page 114.

[74] First Jones Affidavit, attachment MJ-8, page 346; Saggers Affidavit, attachment AJS-10, page 114.

[75] First Jones Affidavit, attachment MJ-8, page 346; Saggers Affidavit, attachment AJS-10, page 114.

[76] First Jones Affidavit, attachment MJ-8, page 346; Saggers Affidavit, attachment AJS-10, page 114.

[77] First Jones Affidavit, attachment MJ-8, page 346-347; Saggers Affidavit, attachment AJS-10, page 115.

[78] First Jones Affidavit, attachment MJ-8, page 346; Saggers Affidavit, attachment AJS-10, page 115.

[79] First Jones Affidavit, attachment MJ-8, page 346; Saggers Affidavit, attachment AJS-10, page 115.

[80] First Jones Affidavit, attachment MJ-8, page 346; Saggers Affidavit, attachment AJS-10, page 115.

[81] First Jones Affidavit, attachment MJ-8, page 330-333.

[82] First Jones Affidavit, attachment MJ-21, page 422; Saggers Affidavit, attachment AJS-11, page 162 to 163.

[83] First Jones Affidavit, attachment MJ-21, page 422; Saggers Affidavit, attachment AJS-14, page 277.

[84] First Jones Affidavit, attachment MJ-21, page 415; Saggers Affidavit, attachment AJS-13, page 195.

[85] First Jones Affidavit, attachment MJ-21, page 415; Saggers Affidavit, attachment AJS-11, page 163.

[86] Saggers Affidavit, attachment AJS-1, page 51 to 55.

[87] First Jones Affidavit, attachment MJ-12, page 385.

[88] Saggers Affidavit, attachment AJS-2, page 60.

[89] Saggers Affidavit, attachment AJS-3, page 65 and AJS-13, page 199.

[90] First Jones Affidavit, MJ-13, page 389.

[91] First Jones Affidavit, attachment MJ-13, page 389 to 390.

[92] First Jones Affidavit, attachment MJ-14, page 395; Saggers Affidavit, attachment AJS-3, page 65.

[93] First Jones Affidavit, attachment MJ-21, page 415, attachment MJ-22, page 495; Saggers Affidavit, attachment AJS-14, page 284.

[94] Saggers Affidadvit, attachment AJS-4, page 70.

[95] Saggers Affidavit, attachment AJS-5, page 76.

[96] First Jones Affidavit, attachment MJ-16, page 397.

[97] Saggers Affidavit, attachment AJS-6, page 78.

[98] First Jones Affidavit, attachment MJ-17, page 399; Saggers Affidavit, attachment AJS-7, page 82 to 84.

[99] First Jones Affidavit, attachment MJ-18, page 402; Saggers Affidavit, attachment AJS-8, page 89 to 90.

[100] First Jones Affidavit, attachment MJ-19, page 405; Saggers Affidavit, attachment AJS-9 and AJS-10, page 99 to 101.

[101] First Jones Affidavit, attachment MJ-23, page 566.

[102] Saggers Affidavit, attachment AJS-11, page 146.

[103] Saggers Affidavit, attachment AJS-12, page 167.

[104] First Jones Affidavit, attachment MJ-20, page 408.

[105] First Jones Affidavit, attachment MJ-22, page 489 and attachment MJ-23, page 566.

[106] Saggers Affidavit, attachment AJS-13 and attachment AJS-14, page 189.

[107] First Jones Affidavit, attachment MJ-24, page 572.

[108] First Jones Affidavit, attachment MJ-24, page 574.

[109] First Jones Affidavit, attachment MJ-24, page 575-576.

[110] First Jones Affidavit, attachment MJ-24, page 575-579.

[111] First Jones Affidavit, Attachment MJ-24, page 579; Saggers Affidavit AJS-47, page 744.

[112] First Jones Affidavit, attachment MJ-5, page 130.

[113] Saggers Affidavit, attachment AJS-15, page 349.

[114] Saggers Affidavit, attachment AJS-15, page 348.