Oswal, in the matter of Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Carson, McEvoy and Theobald

Solicitor for the Defendants: Herbert Smith Freehills

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 370 of 2011

IN THE MATTER OF BURRUP FERTILISERS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 095 441 151) BETWEEN: PANKAJ OSWAL

AND: IAN MENZIES CARSON, DAVID LAWRENCE MCEVOY AND SIMON GUY THEOBALD (IN THEIR CAPACITIES AS RECEIVERS AND MANAGERS OF BURRUP FERTILISERS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 095 441 151))

JUDGE: SIOPIS J DATE OF ORDER: 19 April 2013 WHERE MADE: PERTH

1. The Court will hear the parties as to the form of the orders and costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 370 of 2011

IN THE MATTER OF BURRUP FERTILISERS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 095 441 151) BETWEEN: PANKAJ OSWAL

AND: IAN MENZIES CARSON, DAVID LAWRENCE MCEVOY AND SIMON GUY THEOBALD (IN THEIR CAPACITIES AS RECEIVERS AND MANAGERS OF BURRUP FERTILISERS PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 095 441 151))

JUDGE: SIOPIS J DATE: 19 april 2013 PLACE: PERTH

REASONS FOR JUDGMENT 1 After Mr Pankaj Oswal, the plaintiff, obtained a degree in chemical engineering in the late 1980s, he worked in India in companies in the petrochemical industry controlled by his father. Mr Oswal developed an ambition to start his own business venture and saw an opportunity to do so in Western Australia. 2 To that end he established two companies. In December 2000, Mr Oswal established Burrup Fertilisers Pty Ltd (BFPL). On 14 June 2001, he established Burrup Holdings Limited (BHL) which then acquired all the issued share capital in BFPL. The intended business of BFPL (and its parent, BHL) was the construction and operation of a single line anhydrous ammonia manufacturing plant to be located on the Burrup Peninsula in Western Australia. Mr Oswal was the managing director of both companies. 3 On 17 December 2001, BFPL entered into an agreement (the GSA) with a number of companies referred to as the Harriet Gas Sellers for the supply of natural gas - the most important feedstock for the production of ammonia. The Harriet Gas Sellers comprised Apache Northwest Pty Ltd (and four other Apache related companies), Tap (Harriet) Pty Ltd (Tap) and Kufpec Australia Pty Ltd (Kufpec). These gas sellers were joint venturers in the Harriet Joint Venture, which produced natural gas from a number of gas fields located off the coast of north-west Western Australia. The GSA was signed on 17 December 2001 for a term of 25 years commencing on 15 July 2005, with a possible five year extension. Because of its prime importance as a feedstock, the cost and accessibility of the gas was a major determinant of the viability and profitability of the business operations of BFPL. The GSA provided that the Harriet Gas Sellers were to provide an annual gas reserve report for the purpose of demonstrating that they had sufficient uncommitted proven gas reserves available in the Harriet Joint Venture for supply to BFPL for the outstanding term of the GSA (the reserves commitment). 4 On 18 December 2002, in order to finance the construction of the proposed ammonia manufacturing plant, BFPL entered into an agreement, known as the senior bank subscription agreement (SBSA) with the Australia and New Zealand Banking Group Limited (ANZ bank) and a number of its related companies, one of which was ANZ Fiduciary Services Pty Ltd (ANZ Fiduciary Services). The SBSA provided a loan facility of US$350 million. On that date, BFPL also entered into a Deed of Charge whereby it charged its assets and undertaking in favour of ANZ Fiduciary Services, as a security. Also, on that date, BHL granted a mortgage to ANZ Fiduciary Services over its shareholding in BFPL. 5 In August 2005, the Harriet Gas Sellers issued a gas reserve report which did not show sufficient uncommitted proven gas reserves in the Harriet Joint Venture to satisfy the reserves commitment. 6 On 16 December 2005, the SBSA was amended and restated. Further, BFPL entered into a working capital facility agreement (WCFA) with the ANZ bank whereby the bank agreed to provide BFPL with a working capital facility to a maximum of US$10 million. 7 The plant was constructed and by 2006 production of ammonia commenced at the plant. The plant has a production capacity of approximately 760,000 tonnes of ammonia per year. 8 In November 2006, the Harriet Gas Sellers issued another gas reserve report showing that they did not have sufficient uncommitted proven gas reserves in the Harriet Joint Venture to satisfy the reserves commitment, and at the same time issued a notice of force majeure. BFPL did not agree that, on its proper construction, the GSA permitted the Harriet Gas Sellers to issue a force majeure notice as they had done. 9 In May 2008, a prospectus inviting the public to subscribe for shares in BHL was prepared. However, the prospectus was never issued to members of the public. 10 By September 2008, Yara Australia Pty Ltd (Yara Australia) held 35% of the issued share capital in BHL. Mr Oswal held 30% of the issued share capital in BHL and his wife, Mrs Radhika Oswal, held 35% of the issued share capital. At that time, Mr Oswal was the managing director of BHL and Mr Tor Holba, a nominee of Yara Australia, was the other director of BHL. BHL owned 100% of the issued share capital in BFPL. A shareholders deed regulated relations between the shareholders. The shareholders deed gave each of the shareholders a right of pre-emption in relation to any proposed transfer by any of the other shareholders of their shares in BHL. 11 In September 2008, following the disagreement between the Harriet Gas Sellers and BFPL about the construction of the GSA as to the extent of the Harriet Gas Sellers' obligation to supply gas, BFPL obtained an opinion from Mr Zelestis QC as to the proper construction of the GSA. 12 On 22 July 2009, Tap commenced a proceeding (CIV 2329 of 2009) in the Supreme Court of Western Australia seeking a declaration as to the proper construction of the GSA. Kufpec, and two related Apache companies, subsequently became parties to that proceeding. The question central to the dispute was whether the GSA obliged the Harriet Gas Sellers to supply gas only for so long as gas was available to them as joint venturers in the Harriet Joint Venture, or whether they were obliged to continue to supply gas on the terms of the GSA, even if gas was no longer available to them from that source. There was also a question of the remedies available to BFPL for any failure by the Harriet Gas Sellers to supply gas under the GSA. The Harriet Gas Sellers contended that they were obliged only to pay liquidated damages in respect of any failure by them to supply gas under the GSA. 13 During the period 2002 to 2009, the ANZ bank had not only advanced funds to BFPL under the SBSA and the WCFA, but it had also loaned substantial sums to entities controlled by Mr Oswal, including to related companies and to Mr Oswal in his capacity as trustee of the Burrup Trust. 14 On 23 December 2009, each of Mr and Mrs Oswal entered into a guarantee of debts due to the ANZ bank and its related entities for an amount of US$928 million and US$568 million respectively. On the same day, Mr Oswal executed a share mortgage in favour of the ANZ bank in respect of his 30% shareholding in BHL, and Mrs Oswal executed a share mortgage in favour of the ANZ bank in respect of her 7.5% shareholding in BHL. Mrs Oswal and the ANZ bank also entered into an escrow agreement dated 1 February 2010, in respect of her remaining 27.5% shareholding in BHL. This agreement gave the ANZ bank the right to sell those shares in certain circumstances. 15 By the end of 2010, relations between the shareholders of BHL had deteriorated. In 2010, Mrs Oswal commenced a proceeding in the Supreme Court of Western Australia seeking a declaration as to her rights as a 35% shareholder under various provisions of the shareholders deed. At about the same time, Yara Australia brought an application in the Federal Court for an order that it be permitted to inspect BHL's and BFPL's books. 16 In November 2010, the ANZ bank, exercising inspection and access rights under the SBSA authorised Mr Ian Carson and Mr Simon Theobald, two of the defendants, to inspect the books and records of BFPL to determine whether BFPL was complying with its obligations under its loan agreements. By this time, BFPL had become indebted to the ANZ bank in the amount of US$350 million under the SBSA and US$10 million pursuant to the WCFA, and the ANZ bank had advanced more than US$500 million to entities controlled by Mr Oswal including the Burrup Trust, which had not been repaid. 17 As a result of the investigations carried out by Mr Carson and Mr Theobald, a number of notices of default and demand were issued to BFPL in December 2010 by the ANZ bank and ANZ Fiduciary Services. I refer to them below. 18 A notice of default and demand dated 16 December 2010, was served on BFPL under cl 11.2 of the SBSA. The notice referred to a number of events of default including one stating that Mr Oswal had authorised payments to an associated entity which were not in the ordinary course of BFPL's business. The notice declared that by reason of the events of default, all monies actually or contingently owing under the SBSA were due and payable immediately and the notice demanded that the monies be repaid immediately. 19 A notice dated 16 December 2010, to similar effect was served on BFPL under cl 13.1(a) of the WCFA. 20 By a notice dated 16 December 2010 served on Mr Oswal, the ANZ bank informed Mr Oswal that it had appointed the defendants as receivers and managers of his shares in BHL. A similar notice was sent to Mrs Oswal on 16 December 2010, advising of the appointment of the defendants as receivers and managers in respect of 7.5% of her shareholding in BHL. 21 On 17 December 2010, ANZ Fiduciary Services appointed the defendants as receivers and managers of BHL's 100% shareholding in BFPL, pursuant to the share mortgage executed by BHL on 18 December 2002. 22 Also, on 17 December 2010, ANZ Fiduciary Services issued to BFPL a notice of appointment of receivers and managers. The notice referred to three security instruments - the Deed of Charge and two mortgages over real estate. These documents were referred to in the notice as the "Instruments". The notice stated that pursuant to cl 6.1 of the Deed of Charge and cl 7.1 of the mortgages, ANZ Fiduciary Services appointed the defendants "as receivers and managers of the Property for the purpose of the Chargee enforcing the Instruments". The "Property" was defined as "all of the undertaking and assets" of BFPL. 23 Each appointment of the defendants as receivers and managers, referred to in the preceding two paragraphs, was said to commence on 17 December 2010. 24 In December 2010, Mr Oswal departed Australia and has not since returned. On 20 January 2011, the defendants in their capacity as receivers and managers of BFPL, terminated Mr Oswal's employment on the basis that he had continued to absent himself from work. 25 On 10 March 2011, the defendants acting in their capacity as receivers and managers of BFPL, commenced a proceeding in the Federal Court (WAD 66 of 2011) against Mr and Mrs Oswal whereby BFPL sought a repayment of approximately A$140 million in respect of payments which the defendants alleged were made in breach of Mr Oswal's duties as a director of BFPL. It is also alleged that Mrs Oswal is liable on the basis of knowing assistance in, and knowing receipt of, the benefits of Mr Oswal's breach of duties. Mr Oswal cross-claimed in that proceeding for US$491 million, being the amount that Mr Oswal alleged is owed to him under an agreement whereby BFPL agreed to pay him amounts which he allegedly contributed towards the cost of constructing the Burrup plant. 26 In May 2011, the defendants, in their capacity as receivers and managers of Mr and Mrs Oswals' shares in BHL, commenced a sales process in respect of those shares. Flagstaff Partners and Lexicon Partners were appointed by the defendants to advise and assist the defendants in that process. In May 2011, they placed an advertisement in the Australian Financial Review newspaper inviting expressions of interest from potential purchasers of the shares. 27 On 11 May 2011, Mr Oswal commenced a legal action in Texas against Apache Corporation, the parent company of Apache Northwest Pty Ltd and the other Apache related companies. In that legal action, Mr Oswal alleged that Apache Corporation represented that it had access to sufficient natural gas supplies in its gas fields in Western Australia to supply the Burrup plant for 25 years at a fixed price and that it could and would supply gas from other sources at the same price if the Harriet Joint Venture supplies proved to be inadequate. Mr Oswal pleaded that in reliance on the representations he provided guarantees and securities and cash in order to secure finance and construct the Burrup plant. 28 In those proceedings, Mr Oswal, after having referred to the uncertain future of the GSA caused by the Harriet Gas Sellers' unsatisfactory gas reserve reports (see [5] and [8] above), stated at para 49 of his petition: As a result of the uncertainty regarding the long-term supply of gas, the market value of BFPL has plummeted, and the continued operation of the Plant is now at risk. BFPL may be unable to satisfy its remaining corporate debt, at which time Mr Oswal will face liability on the guarantees and other securities he provided for the benefit of BFPL. Mr Oswal also appears unlikely to recover the $343 million (USD) he infused in BFPL to cover additional costs during the construction of the Plant, or the $148 million (USD) he infused through his affiliated companies to cover additional construction costs. 29 In June 2011, the defendants opened a virtual data room to permit potential purchasers of Mr and Mrs Oswal's shares in BHL to carry out due diligence prior to presenting their bids. 30 An acrimonious stand-off then developed between the solicitors representing the defendants on one hand, and Tap and Kufpec on the other, about whether the defendants intended to, or had, disclosed, as part of the sale process, the contents of the GSA to potential purchasers of Mr and Mrs Oswal's shares in BHL. Tap and Kufpec contended that the defendants were precluded from doing so, because the contents of the GSA were confidential to the parties thereto, and as parties to the GSA, they had not consented to the disclosure of the GSA. They also contended that the disclosure of the GSA, without their consent, was a breach of the confidentiality provisions of the GSA which permitted them to terminate the GSA. 31 Ultimately, on 9 August 2011, Tap and Kufpec brought an application in the Supreme Court of Western Australia (CIV 2462 of 2011) for preliminary discovery against BFPL, BHL and the defendants to determine whether the defendants had caused BFPL to breach the confidentiality provisions in the GSA. 32 On 15 July 2011, the defendants filed with the Australian Securities and Investments Commission (ASIC), a Form 524 - Presentation of Accounts and Statement. This document disclosed that at 16 June 2011, the defendants, as receivers and managers of BFPL, were holding cash at bank of US$41,064,487.84 and A$34,719,750.18. 33 During the period 13 to 15 September 2011, there was a trial in the Supreme Court of Western Australia (CIV 2329 of 2009) of a preliminary issue relating to the dispute between BFPL and the Harriet Gas Sellers about the construction of the GSA. Judgment was reserved. 34 On 2 September 2011, Mrs Oswal commenced a proceeding in the Supreme Court of Victoria (SCI 4563 of 2011) against the defendants. The claim initially made was that the entry by Mrs Oswal into the share mortgage and the escrow arrangements with the ANZ bank was liable to be set aside on grounds of duress, undue influence and unconscionability. The claim made was very substantially amended in March 2012 following the sale of Mrs Oswal's shares in BHL. I refer to this amendment at [45]-[46] below. 35 On 30 September 2011, Le Miere J of the Supreme Court of Western Australia upheld Tap and Kufpec's application (CIV 2462 of 2011) against the defendants and BFPL for preliminary discovery. Le Miere J found that Tap and Kufpec may have a cause of action against BFPL and the defendants for breach of confidence in relation to the GSA. Le Miere J found that there was evidence from which it might be inferred that BFPL and the defendants might have disclosed confidential information to third parties, specifically bidders, in the process for the sale of Mr and Mrs Oswal's shares in BHL (Tap (Harriet) Pty Ltd v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] WASC 264 at [7]-[9] (Tap)). 36 On 28 November 2011, the defendants caused BFPL to enter into a new gas sale and purchase agreement (the new GSA) with Apache Northwest and Apache Energy Limited, relating to the future supply of gas to BFPL. It was generally accepted that the gas price under the new GSA was higher than the price under the old GSA. 37 Further, on 28 November 2011, the defendants entered into two share sale agreements pursuant to which they sold the shares held by Mr and Mrs Oswal in BHL (the November share sale agreements). One share sale agreement was with Yara Australia, and the other was with Apache Fertilisers Pty Ltd. The share sale agreement with Apache Fertilisers was conditioned on Yara Australia not exercising its pre-emption rights in respect of the proposed sale of the shares of Mr and Mrs Oswal. 38 The November 2011 share sale agreement with Yara Australia also included an option for Yara Australia to enter into an economic adjustment deed whereby it could elect to have its economic position in BHL dealt with under the GSA. If Yara Australia made that election, Yara Australia's position would thenceforth be dealt with by reference to any benefits it would have enjoyed under the GSA, as well as any burdens arising from the risks associated with the GSA. 39 Each November share sale agreement was conditional upon the execution of a deed of release between Tap and Kufpec and the ANZ bank whereby there were mutual releases of all claims arising out of the GSA, including any claims arising from the preliminary discovery application made by Tap and Kufpec in the Supreme Court of Western Australia proceeding against the defendants. 40 However, the November share sale agreements were subsequently cancelled by the parties thereto. 41 On 23 December 2011, Tap and Kufpec, having obtained preliminary discovery, commenced an action in the Supreme Court of Western Australia (CIV 3435 of 2011) alleging that the defendants had caused BFPL to breach the confidentiality provisions of the GSA. Tap and Kufpec claimed, inter alia, compensation and damages against BFPL and the defendants. This included a claim for exemplary damages. 42 On 31 January 2012, each November share sale agreement was replaced by a share sale agreement entered into by the parties to each of the cancelled November share sale agreements for the sale of Mr and Mrs Oswal's shares in BHL. On that date, the receivership of BFPL terminated. As a consequence of the execution of the January share sale agreements, Apache Fertilisers became the owner of 49%, and Yara Australia became the owner of 51% of the issued share capital of BHL respectively. 43 Each of the January share sale agreements contained a clause (cl 9.4) which required each of Apache Fertilisers and Yara Australia respectively to use their reasonable endeavours to procure that neither BFPL nor BHL bring a claim against the defendants in respect of their conduct as receivers and managers of BFPL, save for claims for fraud, gross negligence and wilful default. 44 The accounts filed by the defendants with ASIC in respect of the receivership of BFPL, for the period 17 December 2010 to 1 February 2012, showed that at the date that the defendants ceased to act as receivers and managers, BFPL held the sums of A$10,343,795.88 and US$128,627,825.83 in cash. 45 On 26 March 2012, Mrs Oswal amended the statement of claim in proceeding SCI 4563 of 2011 in the Supreme Court of Victoria (see [34] above). The amendments made by Mrs Oswal included a claim which related to the defendants' conduct in negotiating for the inclusion of cl 9.4 in each of the January share sale agreements. 46 Mrs Oswal has pleaded at para 115 of the amended statement of claim, that in entering into the Apache share sale agreement which contained cl 9.4 (see [43] above), the defendants preferred their interests and the interests of the ANZ bank to the interests of Mrs Oswal, and exercised their powers as receivers and managers of her shares in BHL, for a purpose other than that for which they were conferred. Mrs Oswal has pleaded at para 136, that this conduct, in conjunction with other pleaded impugned conduct, meant that it was beyond the scope of the defendants authority to enter into the Apache share sale agreement which was "invalid and of no effect". Mrs Oswal has further pleaded that the defendants' conduct in negotiating for the inclusion of the impugned term in the Apache share sale agreement, was likely to deter other prospective purchasers from purchasing Mrs Oswal's shares and to reduce the price obtained for Mrs Oswal's shares. Mrs Oswal has claimed, among other remedies, damages in respect of the defendants' alleged breaches of duty. Mrs Oswal has made like pleas in relation to the Yara Australia share sale agreement. 47 On 5 April 2012, Mr Oswal commenced an action (SCI 2012/01995) against the defendants in the Supreme Court of Victoria. In that action, Mr Oswal has alleged that the defendants in disclosing the GSA to third parties who had expressed an interest in purchasing Mr Oswal's shares, had acted in breach of their duty of good faith, their duty to take reasonable care to obtain a proper price and their duty to exercise all reasonable care to obtain the market price for the shares. 48 In support of this claim, Mr Oswal has pleaded at paras 37-46 of the statement of claim, that Tap and Kufpec advised the defendants that they did not consent to the disclosure of the GSA to third parties, and that the defendants' conduct in disclosing the GSA permitted Tap and Kufpec to assert, on a reasonable basis, that they were entitled to terminate the GSA. Mr Oswal has pleaded further that the defendants knew or ought to have known that their conduct would permit the Harriet Gas Sellers to obtain a significant advantage over the defendants, and this would adversely affect the price that could be obtained for Mr and Mrs Oswals' shares in BHL. 49 Mr Oswal, like Mrs Oswal, has also pleaded a cause of action alleging that, by negotiating for the inclusion of cl 9.4 in the Apache share sale agreement, the defendants breached their duties including their duty not to exercise powers for an extraneous purpose. Mr Oswal pleaded that there were a number of potential claims against the defendants at the time they negotiated cl 9.4. Mr Oswal pleaded further that had the defendants not breached their duties, they would have obtained a higher price for Mr Oswal's shares than they obtained. Mr Oswal claims, among other remedies, damages.

this proceeding 50 On 5 September 2011, Mr Oswal commenced this proceeding seeking relief under s 423 of the Corporations Act 2001 (Cth) in respect of the conduct of the defendants. Mr Oswal subsequently amended his originating application. Each party has relied upon voluminous affidavit material. There was no cross-examination. 51 At the trial, senior counsel for Mr Oswal identified those paragraphs in the further re-amended originating application which Mr Oswal intended to press at the trial, and abandoned the claim for relief in the remaining paragraphs of the further re-amended application. As a consequence, Mr Oswal claimed that the Court should order that there be an inquiry as to whether the defendants as receivers and managers of BFPL, had failed to carry out their duties or observe a requirement of the Corporations Act in the following respects: (a) Retaining in BFPL large amounts of cash and not using such cash to liquidate BFPL's indebtedness to the secured creditor. (b) Using documents of BFPL for the purpose of marketing the sale of shares held by Mr Oswal in BHL over which the defendants had been appointed receivers and managers. (c) Disclosing to third parties documents in respect of which BFPL owed contractual and equitable duties of confidentiality. (d) Causing BFPL to enter into a new gas supply agreement on substantially less favourable terms than the previous GSA. (e) Arranging for themselves to continue, after their proposed resignation as receivers and managers of BFPL, to have the right to commence or to continue proceedings in the name of BFPL not for the purpose of enforcing the security, but for the purpose of facilitating the sale of shares which Mr Oswal held in BHL. (f) Procuring for themselves, as part of the January share sale agreements, a covenant from each of the purchasers, that each would use all reasonable endeavours to procure that neither BFPL nor BHL make any claim against them in relation to their conduct as receivers and managers of BFPL. (g) Charging fees which were excessive and incurring disbursements which were unnecessary or excessive.

the law 52 Section 423 of the Corporations Act provides as follows: (1) If: (a) it appears to the Court or to ASIC that a controller of property of a corporation has not faithfully performed, or is not faithfully performing, the controller's functions or has not observed, or is not observing, a requirement of: (i) in the case of a receiver - the order by which, or the instrument under which, the receiver was appointed; or (ii) otherwise - an instrument under which the controller entered into possession, or took control, of that property; or (iii) in any case - the Court; or (iv) in any case - this Act, the regulations or the rules; or (b) a person complains to the Court or to ASIC about an act or omission of a controller of property of a corporation in connection with performing or exercising any of the controller's functions and powers; the Court or ASIC, as the case may be, may inquire into the matter and, where the Court or ASIC so inquires, the Court may take such action as it thinks fit. (2) ASIC may report to the Court any matter that in its opinion is a misfeasance, neglect or omission on the part of a controller of property of a corporation and the Court may order the controller to make good any loss that the estate of the corporation has sustained thereby and may make such other order or orders as it thinks fit. (3) The Court may at any time: (a) require a controller of property of a corporation to answer questions about the performance or exercise of any of the controller's functions and powers as controller; or (b) examine a person about the performance or exercise by such a controller of any of the controller's functions and powers as controller; or (c) direct an investigation to be made of such a controller's books. 53 This provision is almost in identical terms to s 536 of the Corporations Act which empowers a court to enquire in to the conduct of liquidators. 54 In Leslie, in the matter of the Aboriginal Councils and Associations Act 1976 v Hennessy [2001] FCA 371 (Leslie), the Full Court of this Court (Ryan, Dowsett and Hely JJ) heard an appeal from the decision of Drummond J in relation to an application for an inquiry under s 536 of the Corporations Law - a provision in almost identical terms to s 536 of the Corporations Act. 55 At first instance, Drummond J had considered a complaint by Mr Leslie in respect of the conduct of Mr Hennessy, as liquidator of two companies. Drummond J, in dismissing the application for an inquiry, adopted the following observations of Young J (as his Honour then was) in Burns Philp Investment Pty Ltd v Dickens (No 2) (1993) 10 ACSR 626 at 633 (Burns Philp): Mr Campbell QC for the plaintiffs, put that under s 536 the barrier over which the plaintiffs should be made to pass to have an inquiry mounted should not be a very high one and that all that was necessary for his clients to show was that there was a prima facie case that something needed to be investigated. In my view this is correct. The Court at this stage should not make any finding on the reasonableness or otherwise of the liquidator's conduct, but if there are sufficient matters prima facie calling for further investigation then, subject to proper safeguards as to the scope of the inquiry, an inquiry should be permitted. 56 The Full Court made the following observations in relation to those observations and as to the proper approach to the question of whether to order an inquiry: However, we believe that both Young J and Drummond J were describing something less formal than a prima facie case according to some evidential burden of proof. Their Honours both meant only that an applicant must show a sufficient basis for making an order, that there is something which requires inquiry. But the court then has a discretion which it must exercise. Many factors will be relevant to that exercise. They include the strength and nature of the allegations, any answers offered by the liquidator, other available remedies, the stage to which the liquidation has progressed, the likely amounts of money involved, the availability of funds to pay for any inquiry, the likely benefit to be derived from it and the legitimate "interest" of the applicant in the outcome. 57 In Hall v Poolman (2009) 75 NSWLR 99 (Hall), the New South Wales Court of Appeal (Spiegelman CJ, Hodgson JA and Austin J) agreed at [59] that the observations of the Full Court in Leslie had application to the construction of s 536 of the Corporations Act: subject to a qualification that we take to be implied in their Honours' remarks, namely, that "sufficient basis" for making the order must relate to the matters concerning faithful performance of duties or observance of the requirements that are stated in subs (1)(a). 58 Also, in Hall, the New South Wales Court of Appeal distinguished between s 536(1)(a) and s 536(1)(b) the Corporations Act (the equivalent of s 423(1)(a) and s 423(1)(b)) and observed that s 536(1)(b) would cover complaints about incompetence or lack of diligence in relation to the performance of a liquidator's duties. 59 At [90], Spiegelman CJ, Hodgson JA and Austin J observed: In its terms subs (1)(b) applies if a complaint is made to the court or ASIC with respect to "the conduct of the liquidator in connection with the performance of his or her duties", wide words which would cover complaints about incompetence or lack of diligence as well as complaints about failure to perform duties faithfully. We see no reason to read down those words by reference to another paragraph expressed as an alternative to subs (1)(b). 60 In Re S & D International Pty Ltd (in liquidation) (receiver and manager appointed) [2009] VSC 225 (S & D International), Robson J applied the principles developed in relation to s 536 (and its predecessor sections) in respect of the liquidators, to an application under s 423 of the Corporations Act for an inquiry into the conduct of a receiver and manager of a company, S & D International Pty Ltd, Mr Paul Vartelas. The application was brought by the liquidator of S & D International Pty Ltd, who complained that Mr Vartelas had sold the property the subject of the security but had not retired and had not accounted for the balance of the proceeds of sale to the company in liquidation. 61 Robson J referred to the distinction between s 423(1)(a) and s 423(1)(b) which was drawn in Hall. Robson J went on to observe that the process of determining whether to inquire into the conduct of a receiver and manager involved two stages. First, whether the complainant had established a prima facie case that there was something which required inquiry. Secondly, if the complainant did establish an initial case, as a first step, then whether the court in its discretion should order an inquiry. 62 Robson J ordered an inquiry into Mr Vartelas's conduct under s 423(1)(a) and s 423(1)(b) of the Corporations Act, to be conducted by himself. 63 It is clear enough, however, that there are limits on the circumstances in which it will be appropriate for a court to order an inquiry under s 423 of the Corporations Act otherwise this provision would have the propensity to undermine ordinary litigation processes. These limits have been referred to in a number of cases. 64 In the case of Australian Securities and Investments Commission v Forestview Nominees Pty Ltd (ACN 063 440 102) (recs and mgrs apptd) (2006) 236 ALR 652 (Forestview), French J (as his Honour then was) made observations as to the circumstances when it was appropriate for a court to order an inquiry under s 423 of the Corporations Act. 65 In that case, a director of the company, Forestview Nominees Pty Ltd applied to the receivers and managers of the company for the release of company funds for the purpose of paying legal costs to oppose a winding-up application which had been brought against the company. The receivers and managers refused to make the funds available. The director of the company then brought an application to the Court complaining about the conduct of the receivers and managers, relying upon s 423 and s 1321(b) of the Corporations Act, which provided for an appeal against an act, omission or decision of the receivers and managers. 66 At [15], French J adopted, as being applicable to an application for an inquiry under s 423, the following observations of McLelland J in Northbourne Developments Pty Ltd v Reiby Chambers Pty Ltd (1989) 19 NSWLR 434 at 438: Section 420 is concerned with aspects of the conduct of liquidators which are liable to attract sanctions or control for what might broadly be described as disciplinary reasons. Although the section applies to any liquidator it has particular significance in the case of a liquidator appointed by the court who is, in that sense, an officer of the court, and to a liquidator whose qualification for office is that he is a registered official liquidator or a registered liquidator with the public accreditation that such registration involves and who is in that sense a public officer. 67 French J also cited with approval, the observations of McLelland J in Belvista Pty Ltd v Murphy (1993) 11 ACSR 628 at 630 (Belvista) to similar effect. 68 French J found on the application of these principles, that it was inappropriate to deal with the complaint under s 423 of the Corporations Act, and dealt with the complaint as an appeal against the decision of the receivers and managers under s 1321(b) of the Corporations Act. 69 It should also be observed that the Full Court in Leslie, also cited with approval, the observations in Belvista which were relied upon by French J in Forestview. 70 In Vink v Tuckwell (2008) 216 FLR 309 at [81]-[82] (Vink), Robson J made the following observations: [81] As quoted above in Northbourne Developments Pty Ltd v Reiby Chambers Pty Ltd McLelland J of the Supreme Court of New South Wales said in respect of s 420 the predecessor to s 536 that it was "concerned with aspects of the conduct of liquidators which are liable to attract sanctions or control for what might broadly be described as disciplinary reasons". He repeated this observation in Belvista Pty Ltd v Murphy which I have quoted above. His observation was quoted with approval by the Full Federal Court in Leslie v Hennessy. [82] This approach is reinforced by the traditional approach of the courts not to interfere with the discretion of liquidators. In Naumoski v Parbery Young CJ in Equity said "There is a considerable amount of learning to the effect that under the modern system of company liquidation the Court rarely interferes with the exercise by liquidators of their statutory powers, and in particular, it does not interfere where the liquidator's decision is really one of commercial judgment". Young CJ referred as authority for this proposition to Leon v Your-O-Matic Ltd, Re Debtor (No 400 of 1940) [1949] Ch 236 and Re Peters; Ex parte Lloyd where Sir George Jessel said in a bankruptcy case: "The court will not interfere unless the trustee is doing that which is utterly unreasonable and absurd that no reasonable man would so act". (Footnotes omitted.) 71 In GE Capital Australia v Davis (2002) 180 FLR 250 (GE Capital), Bryson J considered the circumstances in which it was appropriate to "press subs 423 into service". 72 In that case, two companies executed a charge over industrial plant as security for a loan by the lender. Related parties, including the directors of the companies, provided guarantees of the debt. 73 Following default, the lender exercised the power of sale under the securities executed by the principal borrowers. The industrial equipment was sold pursuant to the power of sale. The lender claimed the amount of the principal debt, after deducting the proceeds of sale, from the guarantors. 74 The guarantors brought a cross-claim against the lender. By the cross-claim, the guarantors claimed to be entitled to damages in tort, damages pursuant to s 420A of the Corporations Act, damages pursuant to s 1324(10) of the Corporations Act, and damages consequent upon an inquiry which the court should conduct under s 423 of the Corporations Act. 75 Bryson J rejected each of the claims for damages in the cross-claim brought by the guarantors. The observations which Bryson J made in relation to the guarantors' attempts to pursue a remedy as part of a court ordered inquiry under s 423 of the Corporations Act are relevant. 76 At [63], Bryson J observed as follows: In my view, the discretion to award a remedy under s 423 should only be acted on where an inquiry into the conduct of the controller has revealed the existence of a liability which can be established simply and is not open to any substantial dispute. Except in clear cases it would not in my opinion be appropriate to press subs 423(1) into service to extemporise procedures and remedies against controllers of the property of corporations; except for remedies for which simple summary procedures are appropriate, the ordinary procedures of the court should be followed. S 423 does not empower the Court to order some remedy on the ground that the Court saw fit to do so in a case where there was not otherwise an enforceable obligation. The power although briefly stated is extensive; a court would not see fit to exercise it except in enforcement of some obligation which the law created. 77 Further, after having referred to the case of Artistic Builders Pty Ltd v Elliott & Tuthill (Mortgages) Pty Ltd & Ors [2002] NSWSC 16, Bryson J at [65], made the following observations: I do not regard Artistic Builders as establishing that the power of the Court should be exercised in cases where the grounds of the remedies sought are in any way complex, or that it should be readily exercised in cases where use of that power is contentious. 78 Although those observations were made in a slightly different context to the application before this Court, the observations are, nevertheless, instructive.

the failure by the defendants to pay the secured debt 79 During his oral submissions, senior counsel for Mr Oswal commenced with the complaint that during their appointment as receivers and managers of BFPL the defendants held large amounts of cash and did not use the cash to liquidate the company's indebtedness to the secured creditor. In this respect, said Mr Oswal, the defendants failed to act for a proper purpose and so breached their duties at law and under the instruments pursuant to which they were appointed. 80 Mr Oswal referred to a number of cases for the proposition that the purpose for the appointment of receivers and managers to a company was for them to realise the security held by their appointor. These cases included B Johnson & Co Builders Limited [1955] Ch 634, Re Geneva Finance Ltd; Quigley (Receiver and Manager Appointed) v Cook (1992) 7 WAR 496, Fraser v Australian Securities and Investments Commission [2007] FCAFC 208, Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 and Expo International Pty Ltd v Chant [1979] 2 NSWLR 820. Mr Oswal contended that from February 2012 at the latest, the defendants did not conduct the receivership of BFPL for the purpose of discharging the debt owing to the ANZ bank under the SBSA and the working capital facility. 81 Mr Oswal also contended that the defendants were only entitled to conduct the business of BFPL as an incident of the performance of their duty to discharge the secured debt. Therefore, said Mr Oswal, insofar as the defendants had not intended to discharge the secured debt, the conduct of the business of BFPL had been beyond their power. Mr Oswal pointed to the fact that the petrochemical business conducted by BFPL was a profitable business. Accordingly, said Mr Oswal, the ANZ bank security could have been discharged over time by the application of the funds generated by the business, or by the sale of the assets of the business. 82 In support of his contention, Mr Oswal said that it was evident from the fact that when they retired as receivers and managers of BFPL, the company held approximately A$140 million comprising A$10.3 million held in one account and US$128.6 million held in another account, that the defendants had not conducted the receivership of BFPL for the proper purpose of realising the ANZ bank's security. 83 In further support of his contention that it was not the intention of the defendants to pay down the ANZ bank debt, Mr Oswal referred to a letter dated 9 May 2012 from Flagstaff Partners and Lexicon Partners relating to the proposed sale of the shareholdings of Mr and Mrs Oswal in BHL. That letter stated that BFPL had two fully drawn debt facilities with the ANZ bank, a US$350 million SBSA and a US$10 million working capital facility. Mr Oswal relied particularly on the fact that the letter went on to state that the ANZ bank was prepared to allow the SBSA to remain on foot subject to certain requirements. 84 Mr Oswal also contended that the defendants had breached their duties as receivers and managers of BFPL under the instruments of their appointment, by failing to realise and distribute the monies secured by the charge in accordance with the terms of those instruments. Mr Oswal drew particular attention to cl 5.2 and cl 5.3 of the Deed of Charge and cl 6.2(f) of the Security Trust Deed, which provided that the repayment of the secured monies was the sixth priority payment to be made by the receivers and managers. In support of this contention, Mr Oswal referred to the following observations of Mason J (as his Honour then was) in the Bank of New South Wales v Federal Commissioner of Taxation (1979) 145 CLR 438 at 454: The receivers are bound to deal with the moneys coming into their hands in accordance with sub-cl 3(viii) of the mortgage which represents the formal bargain made between the company and the secured creditor. The receivers cannot use the moneys for the payment of general creditors or otherwise deal with them at the direction of the company. So to do would involve a contravention of the sub-clause. 85 The defendants denied that that they had breached their duties at law or under the instruments of appointment, nor that they had acted improperly in relation to the enforcement of the security in respect of BFPL. 86 Mr Theobald deposed that the defendants had considered a number of options for securing the payment of the ANZ bank debt. Mr Theobald deposed that Mr Carson had primary carriage of that task. On the basis of information and belief, Mr Theobald deposed that Mr Carson had considered the sale of some, or all, of BFPL's assets, the possible novation of the secured debt and other refinancing possibilities. 87 Mr Theobald said that there were significant factors which militated against adopting the option of selling the assets. One such factor was that the defendants had received legal advice that the sale of the assets of BFPL would generate a significant capital gains tax liability. Another consideration, said Mr Theobald, was that Apache Corporation, the parent company of the Apache subsidiaries, which were parties to the GSA, had guaranteed each of its subsidiary's obligations under the GSA. It was a term of the guarantee that it was to remain in place for the lesser of 10.5 years, or the date on which all amounts owing under the SBSA had been repaid. Some importance, said Mr Theobald, was placed on keeping the guarantee alive during the life of the GSA, particularly in light of the dispute between BFPL and the Harriet Gas Sellers about the construction of the GSA. 88 In support of their contention that they had considered selling the assets of BFPL as one means of securing the ANZ bank debt, the defendants also referred to the fact that, they had instructed Price Waterhouse Coopers to carry out a due diligence in relation to the sale of the assets of BFPL. 89 Mr Theobald also deposed that the ANZ bank had appointed them as receivers and managers in three different capacities in respect of different assets. He said that the defendants were also mindful about the confusion and difficulties that could arise if all the assets under each of the receiverships were to be marketed at the same time. 90 Mr Theobald said that given the circumstances, the defendants decided to allow a sale process at the BHL share level to be advanced to see if a sale could be achieved at that level in a way that could secure the payment of the ANZ bank debt, whilst the defendants continued to address the various matters connected with the BFPL business. Mr Theobald said that as part of the share sale process, the defendants had notified potential bidders that the ANZ bank may be prepared to provide ongoing funding subject to certain requirements. Mr Theobald went on to say that 65% of the shares in BHL were being offered for sale and that one of the requirements of any bid was that the potential purchaser be willing to provide a guarantee of the ANZ bank debt in the form and substance satisfactory to the ANZ bank. 91 Mr Theobald went on to say that the share sale process resulted in the share sale being achieved at BHL level together with a restructure of the ANZ bank debt financial arrangements at the BFPL level which included the entry into a guarantee by the share purchasers in a way that secured the payment of the BFPL debt to the ANZ bank. Mr Theobald deposed that the possibility of selling assets at the BFPL level remained an option throughout the period of the receivership. He said that had the defendants, through the share sale process, not been able to address satisfactorily the securing of the ANZ bank debt at BFPL level, the defendants would have revisited all options including, selling the BFPL assets. 92 Mr Theobald went on to say that as things transpired it was not necessary for the defendants to revisit the options. 93 In my view, this complaint does not fall within the category of complaints in respect of which it is appropriate to make orders for an inquiry under s 423 of the Corporations Act. 94 First, the nature of the allegations made against the defendants in this complaint is such that, even if established, the impugned conduct would not be "liable to attract sanctions or controls for what might broadly be described as disciplinary reasons". 95 Mr Theobald has deposed that the defendants considered a number of options for securing the ANZ bank debt and elected to pursue the option of securing the ANZ bank debt as part of the share sale process. The pursuit of this option proved to be a successful means of securing the ANZ bank debt. 96 In my view, the determination of the means of securing the ANZ debt was a matter for the commercial judgment by the defendants. The commercial judgment that had to be made in this case involved the consideration of a range of options arising from their appointment as receivers and managers at three levels in respect of different assets. None of the cases to which Mr Oswal referred dealt with this situation. As is evident from the observations referred to by Robson J in Vink, courts are reluctant to interfere in the commercial judgment made by liquidators. The same applies to other external administrators. This does not mean that a court will not do so, only that it is reluctant to do so. Nor does it mean that a court, if asked to rule on the issues the subject of Mr Oswal's complaint, may not ultimately come to the view that the defendants were misguided in their decision to proceed in the way that they did, and that in so doing, breached their duties and acted beyond power. However, before a court could come to that view, it would have had to consider and determine a number of complex and subtle legal arguments. Just one of those issues, which was identified during argument, would be whether, as a matter of law, the refinancing of the ANZ bank debt was a sufficient means of securing the debt by the receivers and manager's appointor, to justify the purpose of the appointment. 97 Such circumstances, in my view, involving primarily the assessment of a commercial judgment of the defendants in the context of complex legal and factual issues, place the conduct of the defendants complained of outside the range of conduct liable to attract disciplinary sanction or control. The nature of the conduct complained of is to be contrasted with the blatant nature of the conduct of the receiver and manager in S & D International in respect of which the court ordered an inquiry. In that case, the receiver and manager had sold the property the subject of the charge but declined to retire and declined to account to the company for the balance of the sale proceeds. 98 Secondly, the scope and nature of the issues involved in this complaint place it outside the category of complaints in respect of which, applying the constraints identified by Bryson J in GE Capital, it is appropriate to order an inquiry under s 423. According to Bryson J, it would be inappropriate to have an inquiry except where any liability of the controller of the property may be simply established, is not open to substantial dispute and the grounds of any remedies to be awarded in respect of the impugned conduct are "not in any way complex". 99 During the course of his oral submissions in debate with the bench, senior counsel for Mr Oswal made the following observations about the issues raised by this complaint: Yes. It may be, your Honour, that disciplinary relief in the sense of some kind of penal sanction is not the kind of relief that would eventually be granted were there to be this inquiry. But it is a fundamentally important matter, is it not. If we're right then there was no authority that the receivers had to negotiate the new GSA and no authority to incur all of those fees. These are big matters. 100 Senior counsel did not identify the specific remedies, which Mr Oswal might seek should he establish during the inquiry, his contention as to the effect of the defendants' impugned conduct. However, based on the fundamental nature of the issues referred to by senior counsel, it is clear that any such remedies would have far reaching consequences and the grounds for such remedies would be complex. This is because Mr Oswal seeks to impugn, among other things, the validity of the entry into the new GSA. Any finding to that effect in the course of any inquiry, would have far reaching consequences for the parties to the new GSA and the parties that entered into the January share sale agreements on the strength of the new GSA. An inquiry into Mr Oswal's complaint would, therefore, give rise to highly complex issues which would very substantially affect the rights of third parties. Senior counsel for Mr Oswal is correct in his characterisation of the complaint as giving rise to "big matters". However, this characterisation demonstrates that Mr Oswal's complaint is a far cry from the nature of the complaints in respect of which, it is appropriate to order an inquiry under s 423 of the Corporations Act. 101 Accordingly, I will not order that there be an inquiry into this complaint.

bfpl's CONFIDENTIAL DOCUMENTS 102 The complaint made by Mr Oswal is that the defendants disclosed information which was confidential to BFPL and in respect of which it owed obligations of confidentiality to a number of third parties. Mr Oswal also complained that the disclosure of the documents to third parties was made for the purpose of selling Mr and Mrs Oswal's shares in BHL, a purpose foreign to the interests of BFPL or the enforcement of the security. 103 Mr Oswal referred in his originating application to the disclosure of BFPL's confidential documents generally. However, much of the argument focused specifically on the disclosure by the defendants of the GSA. Mr Oswal claimed that the fact that Le Miere J in Tap (see [35] above) had found, on the application for preliminary discovery, that Tap and Kufpec may have a cause of action against BFPL and the defendants for a breach of confidence, demonstrated that there was substance to his complaint. Mr Oswal went on to say that the fact that Tap and Kufpec, having obtained preliminary discovery, then commenced proceedings in the Supreme Court of Western Australia against BFPL and the defendants in respect of the disclosure of the confidential information, added further support to his contention that there was substance to his complaint. Further, Mr Oswal contended that the defendants had not denied that they made the confidential BFPL documents available to the third parties for the purposes of selling Mr and Mrs Oswals' shares in BFPL. In particular, Mr Oswal said that the defendants had not denied that they made available the confidential advice obtained from Mr Zelestis QC as to BFPL's prospects of success in the GSA litigation. 104 Further, Mr Oswal observed that the defendants had not explained how it was in the interests of BFPL or necessary for the enforcement of the security, to disclose information to third parties, which was subject to contractual and equitable obligations of confidentiality. 105 Mr Oswal contended that one of the reasons why Tap and Kufpec had refused to consent to the release of the confidential information contained in the GSA was that the defendants had failed to give Tap and Kufpec an explanation of the basis on which the defendants, in their capacity as receivers and managers of Mr and Mrs Oswals' shares in BHL, were entitled to have access to the GSA and other information confidential to BFPL. 106 Also, Mr Oswal said that the defendants had not explained the basis upon which they were, in their capacity as receivers and managers of the shares of Mr and Mrs Oswal, entitled to access any documents from BFPL, let alone documents to which confidentiality obligations were owed by BFPL. 107 The defendants contended that the gravamen of Mr Oswal's complaint was that the defendants had, in the course of the share sale process, disclosed confidential documents to third party potential bidders. The defendants went on to contend that the Court has no power under s 423 of the Corporations Act to order an inquiry into that conduct of the defendants, which was undertaken in their capacity as receivers and managers of Mr and Mrs Oswals' shares in BHL. The jurisdiction to order an inquiry under s 423 is limited to those cases where the person has acted as a controller of property of a corporation, and not of a natural person. 108 In any event, said the defendants, to the extent that any aspect of Mr Oswal's complaint related to the defendants' conduct in their capacity as receivers and managers of BFPL, the defendants relied on the following contentions. 109 First, the defendants said that they were entitled to give copies of BFPL's documents to themselves in their capacity as receivers and managers of Mr and Mrs Oswals' shares because BFPL was a party to the shareholders deed. Under that deed, said the defendants, each shareholder of BHL had extensive rights to access the books of each of BHL and BFPL. The defendants relied upon cl 6.1 of the shareholders deed which permitted shareholders to be given the right to inspect and take copies of the documents of BHL and BFPL "for any reasonable purpose". The defendants contended such a purpose would include the right to sell their shares in BHL. The defendants said that they were entitled in their capacity as receivers and managers of Mr Oswal's shares in BHL, to exercise the rights of the shareholders under the shareholders deed. The contention of the defendants, therefore, was that they were, as receivers and managers of BFPL, entitled to give copies of the documents of BFPL to themselves in their capacity as receivers and managers of the shares of Mr and Mrs Oswal. 110 Secondly, the defendants said that cl 6.3(r) of the Deed of Charge conferred powers on ANZ Fiduciary Services to disclose to any person any documents or records or information about BFPL, the property of BFPL, or BFPL's business or affairs, whether or not confidential and whether or not the disclosure would be in breach of any law, or any duty owed to BFPL. The defendants said that in their capacity as receivers and managers of BFPL they had a right to exercise those powers. 111 Furthermore, said the defendants, they had ensured that each third party to whom the documents were disclosed during the share sale process, gave an undertaking of confidentiality in respect of the documents. 112 In relation to Mr Oswal's complaint that the defendants had caused BFPL to breach its confidentiality obligations under the GSA by disclosing the GSA to third parties, the defendants contended that a considerable amount of the information about the GSA was already in the public domain prior to the disclosure during the share sale process. The defendants said that they had filed a defence in the Tap and Kufpec proceeding which set out extensively the circumstances relied upon by the defendants for this contention. 113 The defendants also submitted that an inquiry should not be ordered because the allegations as to the conduct of the defendants in relation to the disclosure of BFPL documents, including the GSA, was the subject of parallel proceedings in the Western Australian and Victorian Supreme Courts. 114 I find that the gravamen of Mr Oswal's complaint relates to the conduct of the defendants in their capacity as receivers and managers of Mr and Mrs Oswals' shares in BHL in disclosing documents to third parties as part of the share sale process. I accept the defendants' submission that s 423 of the Corporations Act does not give the Court jurisdiction to inquire into that conduct of the defendants. However, there are aspects of Mr Oswal's complaint which relate to the conduct of the defendants in their capacity as receivers and managers of BFPL. Although there is jurisdiction to inquire into that conduct, I have come to the view that there should be no inquiry for the following reasons. 115 First, Mr Oswal's complaint raises matters of legal and factual complexity, which, applying the approach approved by Bryson J in GE Capital, renders it inappropriate to order an inquiry under s 423. One of the questions which would be raised in any such inquiry is whether the defendants acted improperly or in breach of duty in their capacity as receivers and managers of BFPL by disclosing BFPL's documents to themselves in their capacity as receivers and managers of the shares of Mr and Mrs Oswal in BHL. That calls for a proper construction of the shareholders deed and also of the Deed of Charge. Further, insofar as Mr Oswal's complaint relates to the conduct of the defendants in causing BFPL to act in breach of the GSA by disclosing that contract to third parties, without the consent of Tap and Kufpec, the inquiry would be required to embark upon a factual and legal inquiry to determine whether the terms of the GSA had, prior to the impugned disclosure, been disclosed publicly to such an extent as to relieve BFPL of its obligations to continue to keep that information confidential. 116 Further, Mr Oswal has by this complaint, as is the case in other complaints impugned the purpose for which the defendants acted. The contention here is that, in disclosing BFPL's documents, the defendants acted for the purpose of facilitating the sale of the shares of Mr and Mrs Oswal in BHL, and not for the purpose of the repayment of the secured debt. Mr Oswal did not specify in his originating application, the remedy he would seek should the Court, in any inquiry, uphold this contention. However, insofar as Mr Oswal would seek to have the Court set aside the agreements made by the defendants, as, apparently, he would seek in relation to his first complaint, the same considerations would apply as those referred to when I considered that complaint (see [98]-[100] above). Insofar as Mr Oswal would seek compensation from the defendants, that remedy would involve questions of causation and the assessment of losses being incurred by Mr Oswal. The scope of the questions which the Court would be required to consider in conducting such an inquiry would be detailed, time consuming and legally and factually complex. As I have mentioned before, the scope of such an inquiry would be a very far cry from the confined nature of the inquiry which Bryson J described in GE Capital as being appropriate to order in the proper exercise of the power under s 423 of the Corporations Act. 117 Secondly, I accept the defendants' contention that an inquiry should not be ordered because the matters complained of are already the subject-matter of proceedings in the Supreme Courts of Western Australia and Victoria. 118 In response to the defendants' submission that there should not be an inquiry because of the existence of parallel proceedings, Mr Oswal submitted that the existence of other proceedings was an important consideration against ordering an inquiry where a court was of the view that the complainant was seeking an inquiry as a means of gaining a collateral advantage in the related proceedings. Mr Oswal referred to the case of Re Bauhaus Pyrmont Pty Ltd (in liq) [2006] NSWSC 742 in support of this contention, and went on to say that Mr Oswal was not seeking an inquiry for that purpose. In my view, the existence of the parallel proceedings in this case is an important consideration which militates against the ordering of an inquiry for different reasons. The proceeding brought by Mr Oswal in the Supreme Court of Victoria demonstrates the complexity of the issues raised by the complaint and also the fact that Mr Oswal is able to pursue remedies in relation to this complaint in a forum, and by a process, which is more appropriate for the determination of the matter raised by the complaint. Further, the existence of parallel proceedings means that the ordering of an inquiry will result in duplication, a waste of resources and will bring with it the risk of inconsistent findings being made in different forums.

entering into a new gsa on less favourable terms 119 Mr Oswal's next complaint was that the defendants had failed to carry out their duties as receivers and managers of BFPL because they had entered into a new gas supply contract on terms which were substantially less favourable terms than the GSA. A confidentiality order was made by the Court in relation to the terms of the new GSA. However, the litigation was conducted on the basis that it was public knowledge that the term of the new GSA was for a shorter term than the old GSA and at disadvantageous prices. 120 In support of his contention that the terms of the new GSA were substantially less favourable than those of the old GSA, Mr Oswal referred to the fact that as part of the share sale process, Yara Australia, the other existing shareholder in BHL, was given an option of continuing to have its economic position in BHL dealt with by reference to the terms of the GSA, even after BFPL had entered into the new GSA. This was achieved by giving Yara Australia the option of entering into an agreement known as the "economic adjustment deed", as part of the November share sale process. This deed provided that if Yara Australia elected to have its economic position dealt with by reference to the GSA, that election would also carry all the risks associated with that contract. Mr Oswal submitted that the fact that Yara Australia was given this option demonstrated that the GSA was on more favourable terms. 121 Mr Oswal also contended that uncertainty about the construction of the GSA and the attendant litigation was not a sufficient basis for the defendants to have entered into a new GSA. Mr Oswal said that there were risks for both sides in the GSA litigation. 122 Mr Oswal also stated that the defendants had not in their evidence deposed directly as to the matters that were considered by the defendants in deciding that in their commercial judgment, it was in the best interests of BFPL to enter into the new GSA. 123 More specifically, Mr Oswal contended that the response of the defendants in their evidence to this complaint was deficient because the evidence of the defendants did not deal with the fact that BFPL had obtained legal advice from Mr Zelestis QC, an eminent Queen's Counsel from Western Australia. The complaint was that the defendants had not told the Court why it was that this "significant disadvantage" of entering into the new GSA was imposed upon BFPL. 124 Further, said Mr Oswal, there was no evidence that the entry into the new GSA was accompanied by the exercise by the defendants of "any degree of skill and diligence". Mr Oswal also said that by causing BFPL to enter into the new GSA the defendants had acted for an improper purpose of facilitating the sale of Mr Oswal's shares in BHL. 125 Mr Oswal also contended that a factor which influenced the defendants to enter into the new GSA was their desire to avoid the consequences of their unlawful conduct in disclosing confidential information in breach of the GSA. This conduct, according to Mr Oswal, had put the continued existence of the GSA, at risk. In this regard, Mr Oswal referred to para 22 of Tap and Kufpec's statement of claim in the Supreme Court of Western Australia action (CIV 3435 of 2011) (see [41] above). There, Tap and Kufpec pleaded that they were entitled, by reason of the defendants' conduct in disclosing the GSA, to give notice to BFPL to terminate the GSA. Tap and Kufpec have also pleaded that they had not given notice terminating the GSA and remained willing to continue to perform the GSA and did not presently intend to give notice to terminate the GSA unless the Court makes a declaration to the effect that they are entitled to terminate the GSA. 126 Mr Oswal went on to contend that the defendants' concern about this proceeding was "so palpable" that they negotiated a deed of release as part of the share sale agreements of January 2012, which included a release in their favour of any liability in respect of the Tap and Kufpec proceedings. 127 Mr Oswal complained that the only response by the defendants to that allegation was a statement by Mr Theobald in his affidavit that the existence of the litigation did not influence the defendants in their decision to enter into the new GSA. 128 In response to the matters raised by Mr Oswal, the defendants contended that entry into the new GSA was an act which was authorised by the powers of the receivers and managers under the Deed of Charge and s 420 of the Corporations Act; and that the question of whether to enter into the new GSA was a matter of commercial judgment for them. 129 The defendants said that at the time of their appointment, there was already uncertainty as to the security of the future supply of gas under the existing GSA. The question of the proper construction of the GSA and whether BFPL would be assured of a secure supply of gas under the GSA for the full period of its term and any possible extension thereof, was the subject of existing litigation. In addition, the Harriet Gas Sellers were asserting that they were only liable to pay BFPL modest liquidated damages in respect of any failure by them to supply gas under the terms of the GSA. The defendants also contended that by reason of this uncertainty of supply, the assertion made by Mr Oswal that the GSA was on better terms than the new GSA, was misplaced. 130 The defendants also referred to the fact that Yara Australia never exercised the option of having its economic position in BHL dealt with by reference to the benefits and risks associated with the GSA. Rather, it accepted the new GSA. This, said the defendants, comprised objective evidence endorsing the commercial judgment made by the defendants, to enter into the new GSA. 131 The defendants also made the point that the opinion of Mr Zelestis QC only dealt with one aspect of the dispute between BFPL and the Harriett Gas Sellers which was the subject of the litigation which they inherited. The defendants also denied that they exercised their power to enter the new GSA for the improper purpose of facilitating the sale of Mr and Mrs Oswals' shares. They said that a new GSA was for the benefit of BFPL. They said that Mr Oswal himself had recognised in the Texas proceeding that the uncertainty arising from the Harriet Gas Sellers' unsatisfactory gas reserve reports, was a threat to BFPL's ability to trade profitably and to repay its debt. 132 The defendants also said that the complaint made by Mr Oswal about the defendants' conduct in entering into the new GSA was the subject of the Victorian proceeding prosecuted by Mr Oswal. This, said the defendants, was a factor that militated strongly against the Court ordering that there be an inquiry in relation to that matter. 133 I will not order an inquiry into the defendants' conduct in procuring BFPL to enter into the new GSA. 134 First, in my view, the nature of the complaint made by Mr Oswal is not of such a character as would be liable to attract disciplinary sanctions. Mr Oswal's complaint seeks to impugn a decision which was made by the defendants in the exercise of their commercial judgment in relation to the business of BFPL. As already mentioned, it is well-established that the Court will not lightly interfere with decisions made by external administrators in the exercise of commercial judgment. 135 It was common ground that a secure source of gas supply was a fundamental element in the viability of BFPL's business. The defendants on their appointment were confronted with a situation where the Harriet Gas Sellers had given unsatisfactory gas reserve reports. This, together with the disagreement about the construction of the GSA, created a serious threat to the continued supply of a vital feedstock for the operation of BFPL's business. There was also a question whether, even if the Harriet Gas Sellers failed to supply gas under the terms of the GSA, a liquidated damages clause would apply and thereby yield only moderate damages. Further, litigation about these matters, to which BFPL was a party, was already on foot in the Supreme Court of Western Australia. 136 The defendants were required to make a decision on whether to take their chances with the GSA litigation or to steer a less risky course. In my view, it was open to the defendants to prefer the commercial certainty attendant upon the entry into the new GSA which could be achieved within a relatively short period of time, to an indeterminate period of uncertainty and risk attendant upon participation in commercial litigation. 137 I place no weight upon Mr Oswal's criticism of the defendants' conduct in entering into the new GSA rather than continuing the litigation because the litigation carried risks not only for BFPL, but also for the Harriet Gas Suppliers. That criticism is easy to make from the comfort of the Bar table. However, the position was very different for the defendants who were faced with having to make a decision of fundamental importance to the future viability of BFPL's business. 138 Also, I place little weight on Mr Oswal's criticism of the defendants' response to his assertion that in entering into the new GSA they were influenced by a desire to protect their own interests in relation to the litigation with Tap and Kufpec. In my view, the defendants' response was, in the circumstances of this case, a sufficient response bearing in mind the objective circumstances to which they pointed as supporting their decision as the exercise of sound commercial judgment. 139 For these reasons, it is my view, that even if it were to be found that the conduct of the defendants in entering into the new GSA, involved a breach of duty, such conduct, founded as it was in the exercise of commercial judgment, is not attended with such a degree of culpability as would be liable to attract disciplinary consequences. 140 Secondly, as with the first two complaints, Mr Oswal complains that the defendants entered into the new GSA for an improper purpose. The potential remedies which Mr Oswal may seek consequent upon a court making such a finding during an inquiry, gives rise to the same issues in respect of the factual and legal complexity and potential impact upon the position of third parties, to which I have already referred in [98]-[100] and [115]-[116] above. This is another reason why it is inappropriate to order an inquiry into this complaint. 141 Thirdly, the conduct of the defendants in entering into the new GSA is the subject of the Victorian proceeding prosecuted by Mr Oswal (see [48] above). In that proceeding, Mr Oswal claims damages against the defendants. The same considerations, therefore, apply mutatis mutandis, as those set out at [118] above, in relation to the second complaint.

retaining the right to conduct proceedings in the name of bfpl 142 Mr Oswal complained that the defendants in negotiating the January share sale agreements sought to retain rights to continue or commence proceedings in the name of BFPL not for the purpose of enforcing the security, but for the purpose of facilitating the sale of the shares which Mr and Mrs Oswal held in BHL. 143 The relevant clause in respect of which complaint is made is cl 9.5 of the January share sale agreements. I made confidentiality orders in relation to these agreements. However, I vary the orders to the extent of the disclosure of the information set out below. This information appears in the submissions of the parties and disclosure is not of sensitive commercial information such as would defeat the object of making those orders. 144 Clause 9.5 provides that following the completion of the sale, the purchaser was to use its reasonable endeavours to procure the directors of BFPL to authorise BFPL to continue to pursue the Burrup claims made against Mr Oswal, the subject of WAD 66 of 2011, and any claim or future claim against Mr and Mrs Oswal and/or related parties and entities, including Mr and Mrs Oswal's solicitors and insurers. 145 Further, cl 9.5 provides that the ANZ bank or the defendants must notify the purchaser of any claim which either of them chooses to pursue against Mr and Mrs Oswal and/or their related entities. The purchaser will then procure that the directors of BFPL institute that claim in the name of BFPL, and shall also make reasonable endeavours to procure that BFPL resolves that the ANZ bank and the defendants have conduct of the carriage of that proceeding. 146 In my view, the Court does not have jurisdiction to order an inquiry into this complaint. In negotiating and concluding the January share sale agreements the defendants were, save in respect of two clauses, acting in their capacity as receivers and managers of Mr and Mrs Oswal's shares. Clause 9.5 was not one of the two clauses which the defendants contracted in their capacity as receivers and mangers of BFPL.

PROCURING THAT BFPL NOT MAKE ANY CLAIM AGAINST THE DEFENDANTS 147 Mr Oswal also contended that the Court should order an inquiry into the defendants' conduct in procuring for themselves, whilst acting in their capacity as receivers of the shares held by Mr and Mrs Oswal in BHL, the benefit of a covenant in each of the January share sale agreements that each purchaser would use all reasonable endeavours to procure that neither BFPL, nor BHL, made any claim against them in respect of their conduct of the BFPL receivership. 148 Mr Oswal's complaint is, in its terms, directed towards the conduct of the defendants in their capacity as receivers and managers of the shares of Mr and Mrs Oswal in procuring for themselves a benefit at the expense of BFPL. On the face of it, therefore, the complaint relates to the defendants' conduct as receivers and managers of the shares of Mr and Mrs Oswal, and, therefore, not amenable to an order for an inquiry under s 423 of the Corporations Act. However, the impugned clause is cl 9.4 of each January share sale agreement and each such agreement provides that in relation to cl 9.4, the defendants contracted in their capacity as receivers and managers of BFPL. Accordingly, I will treat the complaint as falling within the Court's jurisdiction. 149 However, I would not order an inquiry for the following reasons. 150 The conduct of the defendants in relation to procuring the covenants contained in cl 9.4 is the subject of a Victorian proceeding brought by each of Mr Oswal and Mrs Oswal (see [46] and [49] above). Mr Oswal has alleged that in procuring the release as part of the terms of the January share sale agreements, the defendants acted in breach of duty, and for an improper purpose. Mr Oswal claims damages. Mrs Oswal makes similar allegations and claims in her proceeding but also claims that by reason of the defendants acting for an improper purpose, the January share sale agreements are void and of no effect. As I have already stated, an inquiry into conduct already the subject of proceedings in a different forum would give rise to duplication and a waste of resources, for no discernible benefit, because each of Mr Oswal and Mrs Oswal is already pursuing remedies in respect of the impugned conduct in another forum. Also, the holding of an inquiry would carry the risk of inconsistent findings being made in two forums. 151 Further, for the reasons already stated, the issues that would be raised by this complaint and the potential remedies identified in each of the proceedings, are complex and fall well outside the circumstances identified by Bryson J as being appropriate for the ordering of an inquiry under s 423 of the Corporations Act.

fees charged 152 Mr Oswal also complained that the defendants had charged, and procured that BFPL pay A$14,037,720.38 in remuneration and A$840,253.82 in expenses, during the period of the BFPL receivership from 17 December 2011 to 1 February 2012. Mr Oswal referred specifically to the fact that A$2.2 million of the fees and A$303,295.39 in expenses were incurred in the final six weeks of the receivership. Mr Oswal said that the fees and expenses were excessive and that there should be an inquiry into the amount of the fees and expenses charged. 153 Mr Oswal also made a separate but associated complaint about the amount of travel and related expenses which the defendants had charged BFPL as disbursements. More specifically, Mr Oswal complained that the defendants had charged, and procured that BFPL pay, the following travel and related expenses as disbursements in respect of each of the following persons: (a) the sum of A$31,928.59 incurred by Mr Richard Lawrence during the period 13 February 2011 to 27 June 2011; (b) the sum of A$20,593.12 incurred by Mr Tsun Chieh Yee during the period 14 February 2011 to 1 July 2011; (c) the sum of A$20,631.14 incurred by Mr Luke Furler during the period 21 February 2011 to 26 June 2011; (d) the sum of A$26,399.81 incurred by Mr Michael Paterson during the period 14 February 2011 to 4 July 2011; (e) the sum of A$45,265.22 incurred by Mr Charles Tulloch during the period 14 February 2011 to 27 June 2011; (f) the sum of A$33,124.42 incurred by Mr Neil Reynaldo during the period 1 February 2011 to 17 June 2011. 154 The basis of Mr Oswal's complaint in relation to the travel and related expenses is that these expenses were improperly incurred because the defendants had undertaken a receivership of a business located in Western Australia by using the services of personnel who were based in Melbourne, and passed on the costs to BFPL. As Mr Oswal put it, "in staffing the receivership of a Western Australian company from Melbourne", the defendants had incurred unnecessary and avoidable expenditure which they passed on to BFPL. 155 As I understand it, the gravamen of this part of Mr Oswal's complaint is twofold. First, Mr Oswal contends that the defendants acted improperly in accepting the appointment when they did not have the personnel in Western Australia to carry out the work but intended to pass on to BFPL the fees and expenses associated with using Melbourne based personnel to work on the receivership. Secondly, the effect of the defendants using personnel based in Melbourne to work on the receivership was to inflate the fees and expenses charged to BFPL. 156 I deal first with Mr Oswal's complaint that A$14,037,720.38 in fees and A$840,253.82 in expenses charged by the defendants was excessive. I will then deal with the complaint regarding the travel and related expenses.

The size of the fees and expenses charged for the BFPL receivership 157 Mr Oswal observed that the amount of the fees and expenses which were charged in respect of the receivership of BFPL was to be considered in the context of the fact that the defendants had, in their capacity as receivers and managers of Mr and Mrs Oswals' shares charged an additional A$18 million in respect of fees, charges and expenses. 158 In support of his contention that the level of fees and expenses was so high that an inquiry should be ordered, Mr Oswal referred to the observation of Young J in Burns Philp at 285: If a liquidator's bill for disbursements is extremely large that in itself may constitute grounds for inquiring into the liquidator's conduct or his bill. 159 Mr Oswal said that Young J's observation would apply a fortiori to a liquidator's fees, and by analogy, to a receiver and manager's fees. 160 Mr Oswal contended that the amount of the fees and expenses charged also had to be considered in the context of the fact that the BFPL business was a highly profitable business which was fully staffed. Senior counsel for Mr Oswal observed that the only person missing was Mr Oswal. 161 Further, Mr Oswal pointed to the fact that the defendants had had some opportunity to become familiar with the business prior to their appointment, because they had in November/December 2010 carried out an inspection of BFPL's business for the ANZ bank. 162 As mentioned, Mr Oswal paid particular attention to the fact that A$2.2 million in fees and A$303,295.39 in disbursements was incurred in the last six weeks of the defendants' receivership. Mr Oswal said that whilst one might reasonably comprehend the defendants, in their capacity as receivers and managers of the shares of Mr and Mrs Oswal, being engaged in a considerable amount of work during that period - being the period leading up to the entry into the January share sale agreements - it was not obvious why such a large amount of fees and expenses had been incurred in their capacity as receivers and managers of BFPL, when most of the work in relation to the business of BFPL would already have been done. 163 Mr Theobald deposed at some length to the services which were provided by the defendants as receivers and managers of BFPL and the tasks undertaken by the staff of the defendants. Mr Theobald said that the defendants had faced difficulties in conducting the business of BFPL arising out of the nature of its business and the location of the plant in a remote part of Western Australia. 164 Mr Theobald deposed that in the initial phase of the receivership, the defendants had to work long hours to familiarise themselves with the business and regularise its operations. Mr Theobald referred to the fact that the executive management team required early guidance on key decisions facing the business, which included the payment of the payroll. Mr Theobald said that the defendants learned that Mr Oswal had attempted to pay himself an amount exceeding A$1 million representing back-pay for alleged underpayment of his wages, which Mr Theobald was able to interrupt before it was processed. 165 Mr Theobald also deposed that during the initial months, the defendants spent time bringing BFPL's overdue accounts up to date, contacting all major suppliers to advise of the defendants' intention to continue trading and to commit to the payment of their bills on time and to establish a good working relationship. Mr Theobald deposed that BFPL had a poor record of paying supply invoices which caused operational difficulties and the defendants were, therefore, required to devote time to securing BFPL's supplier relationships. In particular, said Mr Theobald, at the time of their appointment, BFPL had a very poor relationship with the Water Corporation because of late payment of accounts and the Water Corporation had at times threatened to cease supplying BFPL. 166 Further, said Mr Theobald, during the initial period, the defendants had spent time re-assuring BFPL's work force of their continued employment, implementing proper governance procedures to ensure that no significant payments were processed without the defendants' approval and to strengthen internal checks and balances within the accounts department. 167 Mr Theobald also deposed that the defendants carried out an investigation of all the invoices which had been sent to BFPL, to determine if they were genuine. Mr Theobald said that this led to a number of the invoices being quarantined on the basis that the costs had not been incurred in providing a benefit to BFPL or on the basis that there was inadequate substantiation of the services provided to BFPL. 168 The defendants, said Mr Theobald, were required to deal with an audit of BFPL conducted by the Australian Taxation Office and were required to provide documents in relation to a number of issues including the quantum of travel expenses claimed, the transfer of shares, fringe benefits tax claims, income tax assessments and reporting obligations. 169 The defendants, deposed Mr Theobald, also reviewed a number of contracts which BFPL had entered into which were uncommercial in the sense that the price paid appeared to be in excess of what would have been paid if a competitive process had been followed. Mr Theobald said that the defendants spent time renegotiating these contracts, which generated substantial savings for the business. The contracts which were renegotiated included the plant maintenance contract, the plant painting contract and the planned maintenance shutdown contract. 170 Mr Theobald also deposed that the defendants also renegotiated the general insurance policy and the A$2 billion business interruption insurance policy between February and May 2011. The business interruption policy had over 80 underwriters located throughout the world. The defendants appointed new insurance brokers and reduced the number of underwriters which resulted in a saving to BFPL of A$5 million per year. The new policy, said Mr Theobald, also closed liability gaps which had been identified by the new insurance broker, Willis Australia Limited. 171 Mr Theobald deposed that by reason of these measures the defendants effected savings for BFPL of A$17.25 million per annum on a recurring basis and a one-off saving of A$34.1 million which included a saving of A$32.1 million achieved by conducting an additional tender process for a contractor to provide services in relation to the maintenance shutdown of the plant, scheduled to occur in June 2011. 172 Mr Theobald also said that after their appointment, the defendants and their staff investigated what appeared to be irregular payments out of BFPL's funds. The defendants and their staff traced 335 transactions comprising a total of A$119,285,929.00. In furtherance of these activities, the defendants and their staff, accumulated supporting documentation, engaged in communication with Mr Oswal's solicitors for the purpose of seeking an explanation for the payments, and also instructed BFPL's solicitors in respect of the commencement of legal proceedings in the Federal Court (WAD 66 of 2011) for the recovery of the payments. They also prepared a report to ASIC as required by s 422 of the Corporations Act on these matters. 173 Further, Mr Theobald deposed to the fact that the defendants and their staff spent a large amount of time in dealing with litigation which was already on foot at the time of their appointment and dealing with litigation which was commenced after their appointment. Some of the litigation has already been referred to, but Mr Theobald's affidavit shows that there were a number of proceedings against BFPL which were already on foot at the commencement of their appointment, to which the defendants had to give attention. 174 In addition to the matters already mentioned, Mr Theobald referred to the fact that the defendants spent time negotiating the new gas supply contract, as well as dealing with the planned maintenance shutdown operation, and the fire which ensued during the process of starting up the plant after the planned maintenance shutdown operation. 175 Mr Theobald also deposed that contrary to Mr Oswal's contentions, the defendants did not in fact charge any fees or expenses in relation to the receivership of the BFPL shares. He also deposed that in relation to the receivership of Mr and Mrs Oswals' shares, the defendants' fees were A$3,718,177, the disbursements were A$56,416 and the costs of other service providers were A$10,772,243, comprising mainly: (a) legal fees of Freehills: A$3,397,884.03; (b) legal fees of Minter Ellison: A$611,422.19; and (c) fees and disbursements for the services of Flagstaff Partners Pty Ltd: A$5,995,197.13. 176 The defendants have put into evidence two charts which summarised by reference to each month of the BFPL receivership, the total hours worked and the total fees charged. The defendants have also provided evidence of the hourly rates charged for each of the different categories of persons employed by PPB Advisory, the defendants' firm, who worked on the receivership. 177 Mr Theobald also said that the rates charged by the defendants were in the same range as their competitors, and that the ANZ bank had agreed that the defendants could apply the rates applicable in respect of large complex matters. 178 The evidence also included the first page of each of the monthly invoices furnished by the defendants to BFPL. This is an example of one of the invoices: BURRUP FERTILISERS PTY LTD Professional fees incurred by the Receivers and their staff, during the period 17 January 2011 to 31 January 2011. A detailed breakdown is attached. $634,569.25 179 The defendants did not, however, put into evidence, in respect of any of the invoices, the attachments referred to in the invoice as the "detailed breakdown". This is because, said the defendants, they might be prejudiced in their litigation with Mr and Mrs Oswal were they to have done so. 180 As mentioned, Mr Oswal referred to the case of Burns Philp in support of his contention that an inquiry into the level of the fees and expenses charged by the defendants should be ordered. 181 In Burns Philp, there had been a members' voluntary winding-up. Mr Dickens was appointed as the liquidator of the company. Mr Dickens, who was formerly a partner of Ernst & Young, appointed Ernst & Young to carry out work to assist him in the conduct of the liquidation. On his appointment, the members approved a resolution setting Mr Dickens' remuneration at $300 an hour and authorised him to pay the proper costs of any person, partnership or company retained by him to assist in his duties. 182 The total cost to the company of the liquidation was about $470,000. Of this amount, $30,600,030 was paid to the liquidator and $288,000 was paid to Ernst & Young. 183 Two shareholders of the company brought an application under s 536 of the Corporations Law seeking an inquiry into the level of fees and expenses charged in the liquidation. 184 Young J did not order an inquiry into the fees of the liquidator. His Honour observed at 285: There is no ground at all for challenging Mr Dickens remuneration as opposed to his expenses. There was a resolution that he be entitled to charge so much an hour and there is nothing in the materials to suggest that he personally overcharged in the amount of hours he spent on this particular liquidation. The only point is whether the expenses for which he claims, including Ernst & Young's fees, were properly incurred. 185 However, Young J did order that there be an inquiry into the question of whether the expenses were properly incurred. It is apparent, therefore, and it was not disputed by the defendants, that a complaint in relation to the charging of excessive fees and expenses could properly be the subject of an inquiry under s 423 of the Corporations Act. It should be observed that in this case the defendants were partners of the firm, PPB Advisory, and the fees charged included fees in respect of their work and the work of their staff. In other words, the distinction that existed in Burns Philp between the liquidator's fees and the Ernst & Young expenses did not exist in this case. 186 As mentioned, Mr Oswal sought to rely upon the observations of Young J to the effect that if the liquidator's bill was "extremely large that in itself may constitute grounds for inquiring into the liquidator's conduct". However, those observations should be read in the context of the evidence before Young J in that case. This is because usually an assessment of whether a bill is "extremely large", will have to be made by reference to some standard. Often that standard will be the subject of expert evidence, and in Burns Philp there was such expert evidence. This is apparent from the following observations of Young J at 287: Not only does this appear high compared with the range of fees quoted, but there is evidence from Mr LB Hunter, another experienced liquidator, that they exceed the high range of the scale. As to complaints two and three, the fees are very high, the evidence of Mr Hunter confirms their costliness and there is little material from Ernst & Young giving any real guidance as to how the time was spent. 187 That is not to say that there may not be cases, where the circumstances are such that even without the benefit of expert evidence, a court may come to the view that the inquiry is warranted on the basis the fees and expenses that were charged appear to be excessively high. 188 I have concluded, however, that I should not order an inquiry into the general level of fees and expenses rendered by the defendants during the period of the receivership, except for the last six weeks of the receivership. 189 The evidence adduced by the defendants was not as detailed as it could have been. In particular, I do not accept that the fear of prejudice in the conduct of the parallel proceedings is a sufficient explanation for the failure to adduce the "detailed breakdown" schedules which were attached to each of the monthly invoices. The question of potential prejudice could have been addressed by the making of an application for appropriate orders for redaction. However, Mr Theobald did depose in some detail to the work undertaken by the defendants and their staff. The defendants also put into evidence two charts reflecting the monthly summary of hours spent working and the monthly fees charged. The evidence of Mr Theobald did not, however, specifically address the work that was undertaken in the last six weeks of the receivership so as to explain the very large amount of fees and expenses charged during that period. 190 On the other hand, Mr Oswal, unlike the complainants in Burns Philp, did not adduce expert evidence on the question of the level of the fees and expenses. I am left in the position, therefore, of not having a reference by which to judge whether the fees and expenses were so large having regard to the work that was required to be undertaken, the work in fact undertaken and the fees and expenses charged in respect thereof, as to warrant an inquiry as to whether they were excessive. 191 Taking these matters into account, and subject to what is said below in relation to the use of Melbourne based personnel, I am not sufficiently persuaded that I should order an inquiry into whether the fees and expenses for the period of the receivership were excessive, save in respect of the fees and expenses charged for the last six weeks of the receivership. 192 The level of the fees and expenses charged in the last six weeks of the receivership are very high in relation to the rest of the period of the receivership, particularly having regard to the very high volume of work undertaken during the initial period of the receivership. Further, the evidence of Mr Theobald did not explain why the fees and expenses were so high during that period. In those circumstances, I am of the view that an inquiry into the level of the fees and expenses charged during the last six weeks of the receivership of BFPL is warranted.

The passing on to BFPL of the burden of using Melbourne based personnel 193 As I have mentioned, Mr Oswal complains that the defendants passed on to BFPL the additional costs and fees of using Melbourne based partners and staff. The complaint in the originating application was made by reference specifically to the claims for disbursements in respect of travel and related expenses incurred by six named individuals. However, said Mr Oswal, the extent of the travel and accommodation expenses incurred was a manifestation of a more fundamental complaint, namely, that the defendants inflated the costs of the receivership by using Melbourne based personnel and passed the costs and fees of using those personnel on to BFPL. 194 In relation to the amount of money expended in travel and related disbursements, in his affidavit of 11 November 2011, Mr Vallve, a solicitor in the law firm acting for Mr Oswal, referred to, and exhibited a very considerable number of invoices from Corporate Traveller, a travel agency used by the defendants for travel and accommodation in respect of the six named individuals. Mr Vallve then went on to depose that the invoices showed that the six individuals were "engaged in an unreasonable amount of unwarranted travel, were renting hotel accommodation in two different cities at the same time and were renting motor vehicles in cities for periods when they were not in such cities". 195 Further, as to the question of whether fees for professional time was charged for travel, Mr Vallve deposed that it appeared from the extent of the travel accommodation and the hire car expenses that: "A substantial part of the fees charged for professional services related to travel time." 196 In his affidavit, Mr Theobald said that it was necessary for his firm, PPB Advisory, to use their Melbourne based personnel on the receivership because there were not enough personnel in the Perth office of his firm to work on the receivership. 197 Mr Theobald did not dispute the analysis of the travel and accommodation invoices deposed to by Mr Vallve, but sought to justify that conduct on the basis that accommodation was scarce in Perth and Karratha and it was, therefore, necessary sometimes to book accommodation in both places, to ensure that personnel had a place to stay. There were occasions, said Mr Theobald, when the defendants would have to pay for accommodation not used because of hotel cancellation policies. Further, Mr Theobald said that it was sometimes necessary for the defendants' personnel to change flights which incurred additional costs. 198 Mr Theobald did not deny Mr Vallve's statement that it appeared that a substantial part of the fees charged for professional services related to travel time. 199 The affidavit evidence adduced by the defendants did not, in my view, adequately address the matters of concern raised by Mr Oswal. The evidence leaves open the question of whether it was proper for the defendants to accept the appointment to carry out a receivership in Western Australia, knowing that they did not have the personnel available in Western Australia to carry out their receivership, whilst intending to pass on to BFPL the additional costs and fees of using Melbourne based personnel to perform the work. Nor does it disclose the full extent of the additional amount of costs and fees passed on to BFPL occasioned by the use of Melbourne based personnel. 200 I place little weight on the contention by the defendants that the ANZ bank had agreed to the rates of fees to be charged by the defendants. This is because the ultimate burden of the fees and expenses charged by the defendants, in their capacity as receivers and managers of BFPL, was to be borne by Mr Oswal. The January share sale agreements provided that the amount of fees, expenses and disbursements charged by the defendants in their capacity as receivers and managers of BFPL, was to be deducted from the agreed purchase price to be paid by the purchaser for Mr Oswal's shares in BHL. The consequence is that the fees, expenses and disbursements charged by the defendants had the propensity to reduce the funds which might ultimately be available to be paid to Mr Oswal for the sale of his shares, after the satisfaction of his indebtedness to the ANZ bank. 201 Accordingly, I will order an inquiry into: (a) the propriety of the defendants' conduct in accepting the appointment to act as receivers and managers of BFPL; and (b) the extent to which the defendants, in respect of the whole period of the receivership, charged: (i) fees for the professional time that Melbourne based partners and staff spent in travelling; (ii) the expenses and disbursements incurred by Melbourne based partners and staff in respect of travel, accommodation and related activities; and (c) the extent to which the fact that the persons who worked on the receivership were based in Melbourne, increased the fees, expenses and disbursements which were charged by the defendants in respect of the receivership of BFPL. 202 I will hear the parties on the form of the order and costs. I certify that the preceding two hundred and two (202) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.