Pearce, in the matter of Bandiera Holdings Pty Ltd (Receiver Appointed) (in liquidation) v Bandiera Holdings Pty Ltd

Introduction 1 By orders of the Registrar of this Court on 16 June 2022, HLB Mann Judd (SE Qld) Pty Ltd (HLB Mann Judd) has been issued with a summons pursuant to s 596B of the Corporations Act 2001 (Cth) (the Act). It was issued at the request of the plaintiffs being Mr Michael Dullaway and Mr Mark Pearce who are the liquidators of Bandiera Holdings Pty Ltd (receiver appointed) (in liquidation) (the Company). 2 The summons requires the production of documents pursuant to s 596D(2) of the Act concerning an array of matters including those relating to any advice given by HLB Mann Judd to the Company and/or its director, Mr David Reynolds. HLB Mann Judd has not disputed that the summons was validly issued. Indeed, it has largely complied with it and produced a number of documents. However, it resists the production of one class of documents, being any document recording any policy of professional indemnity insurance held concerning the conduct of HLB Mann Judd. In substance, HLB Mann Judd submitted that as any potential claims against it were weak, the Court should exercise its discretion to refuse the production of those documents at this time given their confidential and sensitive nature. It seeks to set aside the summons to this extent. 3 By its application HLB Mann Judd also seeks an order requiring the liquidators to pay to it an amount in respect of the work which it says it has undertaken in complying with the summons issued to it. 4 It initially also sought to inspect the affidavit on which the liquidators relied for the issuing of the summons, however, as a result of the liquidators filing an updated affidavit for the purposes of this hearing that relief was not pursued.

Background 5 As HLB Mann Judd acknowledged that its relationship with the Company, Mr Reynolds and other companies controlled by him are within the "examinable affairs" of the Company, it is not strictly necessary to outline the circumstances on which the liquidators relied for the issuing of the summons. However, there is some value in a general description given the issues which have arisen. In particular, the strength of any potential claims which the Company or the liquidators might have against HLB Mann Judd is relevant to the discretion which the latter seeks to exercise in their favour. 6 It must be recognised that the circumstances identified in these reasons are those which appear to arise on the material produced by the liquidators. That evidence has not been the subject of contradiction and nor has it been tested. Therefore, the Court's observations are not findings made after the conduct of a hearing, but merely the substance of an arguable case raised by the liquidators. 7 The Company was the trustee of the Reynolds Family Trust. It was owned and controlled by Mr Reynolds. 8 By about December 2018, Mr Reynolds and the Company had been in negotiations with Mr Graham Yates of L&J Copperfield & Associates Pty Ltd (Copperfield) for the Company to purchase Copperfield's financial planning business, including its book of clients. 9 On 21 December 2018, the Company and Copperfield entered into a business sale deed (the "Sale Deed") by which Copperfield sold its financial planning business to the Company for a purchase price of $1.84 million. 10 The whole of the purchase price was financed by the vendor, Copperfield, which took a security over the Company's assets to secure payment. 11 Completion of the Sale Deed occurred on 2 January 2019. 12 Subsequently, a dispute arose between Copperfield and the Company. The Company paid only $225,000 of the $1.84 million purchase price and failed to make any further payments. The dispute subsequently resulted in Copperfield appointing receivers to the Company. 13 A particular aspect of this matter is the manner in which Copperfield's clients were "transferred" under the Sale Deed. The transfer was to take place by introducing them to the new entity and passing their records and files to it. However, the evidence reveals that Mr Reynolds caused those clients to be "serviced" by the company, Panoptic Wealth Management Pty Ltd (Panoptic Wealth), of which he was both the director and indirect owner, rather than by the Company. 14 The evidence also shows that Mr Reynolds has asserted that at no time did the Company ever conduct the financial advisory business which it purchased because at no time did it hold an Australian Financial Services Licence (AFSL) and nor was it, or any of its employees, an authorised representative of the holder of an AFSL. 15 It appears that Panoptic Wealth was the authorised representative of an AFSL holder, namely, Hunter Green Pty Ltd. 16 The evidence further suggests that at all relevant times Mr Reynolds determined that the business acquired from Copperfield would be conducted by Panoptic Wealth which had been incorporated on 20 December 2018 for that purpose. It is clear that the revenue from the operation of the business was paid to Panoptic Wealth. None was paid to the Company which was obliged under the Sale Deed to make the payments of the purchase price to Copperfield. 17 It is apparent that no consideration was paid by Panoptic Wealth to the Company in respect of the former's effective acquisition of the business. 18 The business was subsequently transferred to Panoptic Holdings Pty Ltd, being a further company controlled by Mr Reynolds.

Preliminary matters 19 The liquidators raised two preliminary and technical objections to the application. 20 The first was that the application was made pursuant to r 11.5 of the Federal Court (Corporations) Rules 2000 (Cth) which requires that, as soon as practicable after filing, the application and supporting affidavits must be served on the Australian Securities and Investments Commission (ASIC). It was submitted that HLB Mann Judd has failed to establish compliance with that rule. 21 It is not immediately apparent why that requirement exists other than to give ASIC notice of the disputation between the parties. There is no reason why the application should not proceed despite the absence of service and it is appropriate to waive compliance with that rule and require notice of the application and supporting affidavits to be given to ASIC in the future. 22 It should be recorded that the liquidators did not ultimately press the issue of non-compliance with r 11.5(3). 23 The second objection was that the application had been filed out of time and no application for an extension of time was made. 24 An application under r 11.5 of the Federal Court (Corporations) Rules must be made within three days of the person being served with the examination summons. It is clear that the application was not made by HLB Mann Judd within that period. 25 Further, an application under r 3.11 of the Federal Court Rules 2011 (Cth) (the Rules) must be made within 21 days after the day on which the power was exercised by the Registrar. Again, it is not in contest that the application was filed out of time for the purposes of this rule. 26 The liquidators did not suggest that they would suffer any prejudice from the granting of an extension of time for the making of this application. On the other hand, HLB Mann Judd's application involves a matter of some importance to it and its insurers and, in particular, because it requires the divulging of private and confidential documents. If HLB Mann Judd were prevented from agitating the application, it may have lost the opportunity to protect itself from the invasive effect of the summons. 27 Although by its application HLB Mann Judd sought an abridgement of time under r 11.5 as opposed to an extension, it has been patently clear to all concerned that an extension was sought. In the circumstances, and in particular due to the importance of the matter, it is appropriate, pursuant to r 1.39 of the Rules to extend the time for the bringing of the application to the extent to which it is required. 28 Again, it is appropriate to record that the liquidators did not ultimately oppose the granting of an extension of the time.

Nature of the application 29 Before the Court the parties treated the application as being one pursuant to r 3.11 of the Rules and thus constituting a review of the Registrar's decision of 16 June 2022 to issue the summons to HLB Mann Judd. On that basis, the application is by way of a rehearing de novo where fresh evidence may be adduced as of right. 30 The evidence relied upon by the liquidators for the hearing of the application before the Registrar was contained in a substantial affidavit of Mr Dullaway. It not only contained the evidence on which the liquidators relied to obtain a summons directed to HLB Mann Judd, but contained material supporting the issuing of summonses to a number of other persons. By a fresh affidavit filed for the purposes of the present hearing, Mr Dullaway has effectively reproduced the evidence in his first affidavit insofar as it relates to HLB Mann Judd and has excluded that relating to other persons or entities. Some additional elaboration of the liquidators' concerns in relation to HLB Mann Judd have been added.

Whether the summons was issued for a proper purpose 31 HLB Mann Judd appears to suggest that the summons (or at least paragraph 19 of it concerning its policy of insurance) was not issued for a proper purpose and was a "fishing exercise". 32 In support of that allegation it relies upon the evidence of one of its partners to the effect that HLB Mann Judd is unaware of any existing or potential claim that the Company may have against it in respect of any services which it has performed for the Company. The partner's evidence suggests that the services provided by HLB Mann Judd were limited to acting as "ASIC agent", presumably meaning that it filed documentation with ASIC, and assisting with a change of trustee of the Reynolds Family Trust. It is also suggested that the services were only provided in the period from November 2020 to December 2020. On this basis HLB Mann Judd submitted that it had no relationship with the circumstances of which the liquidators are now concerned. 33 However, on the material produced by the liquidators, there is reason to believe that HLB Mann Judd had a far closer relationship with the Company, Mr Reynolds and Mr Reynolds' other companies. That evidence included: (a) An engagement letter from HLB Mann Judd to Mr Reynolds of 23 October 2018, being a date which is approximately two months prior to entry into the Sale Deed between the Company and Copperfield. The letter identified that the purposes of the engagement included the provision of advice requested from time to time in relation to business acquisitions. Whilst HLB Mann Judd asserted that the advice provided was in relation to the acquisition of a different business by Mr Reynolds, the liquidators claim, and no doubt they are correct, that they are entitled to investigate that matter. (b) That on 12 December 2018, being a little over a week before the Sale Deed was executed, Mr Reynolds sent to a partner of HLB Mann Judd an email enclosing details for the Reynolds Family Trust together with its tax file number and Australian Business Number. The email asked the partner of HLB Mann Judd to let him know what he needed to do. This indicated the likely provision of services to Mr Reynolds or his companies around the time when the impugned transactions occurred. (c) Material which showed that also on 12 December 2018, Mr Reynolds sent a further email to Mr Yates of Copperfield in relation to the Reynolds Family Trust. The email was copied to HLB Mann Judd. In it, reference was made to the question of whether Mr Reynolds would replace the then current director of the Company. Again, if HLB Mann Judd was not then providing services to the Company or Mr Reynolds in relation to the acquisition of the business from Copperfield, it is unusual that the email was sent to it. (d) Further material which showed that on 13 December 2018 Mr Reynolds sent an email to Mr Yates. In it he identified that he had been receiving advice from HLB Mann Judd in relation to the acquisition of the business from Copperfield and specifically in relation to the use of tax losses held by a beneficiary of the Trust. It is apparent that the alleged advice from HLB Mann Judd related to the identity of the entity which would operate the business acquired from Copperfield. (e) Material showing that Panoptic Wealth was incorporated on 20 December 2018. Its registered office is care of HLB Mann Judd although HLB Mann Judd asserts it had no involvement with its incorporation which may be correct. However, that is a further factor which the liquidators are entitled to investigate. 34 It is also apparent from the evidence that HLB Mann Judd acknowledged that it provided advice to Mr Reynolds in relation to certain matters arising from the Sale Deed. There is reason to believe that the advice provided may relate to the subsequent conduct of Mr Reynolds in causing Panoptic Wealth to conduct the business purchased from Copperfield. As mentioned, Mr Reynolds had indicated that it was always his intention to use Panoptic Wealth to service the clients transferred from Copperfield and the possibility exists that he sought advice from HLB Mann Judd as to how that arrangement could be effected. The liquidators are concerned to know the nature and effect of the advice given and the impact it had in relation to the actions of the Company, Mr Reynolds and Panoptic Wealth.

The examinable affairs of the Company 35 The concept of the "examinable affairs" of a company is broad and encompasses matters concerning the transactions and dealings of the company as well as its property. The latter would include the existence and the value of any causes of action which the company might have against third parties. It follows that there is a relatively low bar to be overcome for the purposes of s 596B in order to satisfy a Court that the party seeking the summons has presented sufficient facts to demonstrate that a proposed examinee is likely to be able to give information warranting the Court to call upon that person to be examined or to produce a document: Ex parte Merrett (1997) 140 FLR 412. 36 Although the section uses the word "may" that does not mean that any possibility that a person might be able to provide information, no matter how remote, is sufficient. Rather, what is required is a reasonable degree of likelihood that information could be provided. To achieve this, the applicant for the summons must satisfy the Court of the existence of a reasonable hypothesis or scenario which raises the likelihood or possibility that the potential examinee has information. The existence of that reasonable hypothesis or scenario must be established by some facts or circumstances: Re Cunningham [2017] FCA 559 [27] - [29]. 37 In this case the liquidators are rightly concerned about the circumstances in which the Company purchased the business from Copperfield and became subject to the obligation to pay the purchase price whilst effectively permitting the business to be transferred to Panoptic Wealth. Whilst they may also be concerned with the subsequent transfer of the business to Panoptic Holdings Pty Ltd, their greatest interest will be in relation to the first transfer and, in respect of that, there is evidence to suggest that HLB Mann Judd had involvement in it. In particular, the evidence tends to indicate that HLB Mann Judd provided advice to Mr Reynolds or the Company at the time and in relation to the transaction. Indeed, it has provided documents concerning those matters. 38 In relation to the production of the insurance policy, the question is whether sufficient information has been shown that one of the examinable affairs of the Company is the existence of a cause of action against HLB Mann Judd. Otherwise the policy of insurance would be irrelevant. 39 The liquidators submitted that there is sufficient material to demonstrate that there exists the possibility of a cause of action against HLB Mann Judd and, further, that they are entitled to ascertain whether it is worth pursuing: Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301; Evans v Wainter Pty Ltd (2005) 145 FCR 176 [82]; Pleash v Tucker (2018) 264 FCR 374 [53]; Heard, in the matter of GEBIE Services Pty Ltd (in liq) [2017] FCA 323 [27]; Boys v Quigley (2002) 26 WAR 454 at 460 [20]. 40 On the issue of the sufficiency of the evidence required to establish the possibility of a cause of action which would justify requiring HLB Mann Judd to produce its insurance policy, the liquidators relied upon the observations in Pittman v Park; in the matter of BAM Recycling Pty Ltd (in liq) [2020] FCA 887 [68] - [75] as follows: 68 The material adduced supports the possibility of the existence of that cause of action arising such that its existence or otherwise is something which the liquidator can investigate through the public examination process. It would undermine that process if the Court was to require a liquidator to establish the likelihood of the existence of a cause of action to any greater extent: GEBIE Services, [29]-[34]. After all, the process is designed to discover the existence of such causes of action not merely to confirm what is already known. The possibility of the existence of the cause of action is one of the examinable affairs and once established, it provides the foundation for the operation of s 596D(2) and the imposition of the requirement that the person summonsed also produce documents evidencing their financial worth. … 70 It is not necessary to reach a conclusion as to whether the liquidator's onus is to show more than that the potential cause of action is more than fanciful, improbable, spurious, hypothetical, or illusory. On the other hand, if the claimed cause of action could be so described, it is likely to fall below the descriptor of being a possibility, with the result that no relevant "examinable affair" would exist. 71 A not entirely dissimilar issue was recently considered by Rees J in Newheadspace. There, her Honour referred to a number of authorities rejecting the proposition that a liquidator was required to establish there existed a "plausible claim" against a potential examinee's before an examination summons might issue, including the decision of White J in Pobjie Agencies, where it was said (at 68 [76]): It is no part of the court's task on an application for the issue of an examination summons to discern whether or not the company has a good cause of action against the examinees or a person with whom the examinees are connected. The investigation of facts to ascertain whether or not a cause of action might exist either against such persons, or against other persons, (such as officers of the company), is a proper purpose of an examination. Such an examination is not to be pre-empted by the examinees adducing evidence directed towards demonstrating that they, or persons connected with them, could have no liability to the company. 72 It was further said by White J (at [84]) that it would be wrong to attempt to confine the discretion under s 596B to only those against whom it was identified that a plausible claim existed. 73 Whilst, those cases relate to the power under s 596B to issue a summons and not the power under s 596D(2) to require the production of documents, the same general principle is applicable. … 74 The observations of White J in Pobjie Agencies to the effect that applications for review of decisions to issue summons ought not to become mini trials of a summonsed person's liability to the company in liquidation should be accepted. … 75 However, putting such practical issues to one side, as a matter of principle there can be no need for a liquidator to show more than the possibility that a cause of action exists in order to secure production of an examinee's personal financial documents. Pursuant to s 596D(2) the documents only need to relate to an examinable affair of the company. Given that the examination process is an investigative one, the "examinable affair" is not the existence of a cause of action or even a probable one. It is whether a cause of action which can be identified as being a possibility actually exists and, if so, whether potential defendants to it are worthwhile pursuing. So long as the liquidator can show that a possible claim or cause of action might exist, the Court has the power to order the production of documents related to it. As in this case, that would include the personal financial documents of possible defendants. 41 The liquidators rightly consider that Mr Reynolds' conduct may have amounted to breaches of ss 180, 181, 182 and 183 of the Act amongst other things. On the material, albeit as yet unchallenged, there are good reasons to believe that such causes of action exist. It also appears that HLB Mann Judd provided advice, whether to the Company or Mr Reynolds, as to the GST and stamp duty implications of the transactions effected by the Sales Deed with Copperfield. It also provided taxation advice which, at least in Mr Reynolds' view, was relevant to the transaction and the transfer of the business from Copperfield. Mr Reynolds wished to use tax losses in a related company to offset any future earnings from the business acquired and that necessarily related to the entity which may derive income from it. There is a sufficiently close connection between the alleged misconduct of Mr Reynolds and the advice provided by HLB Mann Judd to justify an investigation into whether the latter was involved in the identified breaches of the Act. This is sufficient to justify the conclusion that the liquidator has established that a possible claim or cause of action might exist against HLB Mann Judd which, prima facie, justifies the production of any relevant insurance held by that firm. 42 The liquidators also relied on the possibility of a direct claim against HLB Mann Judd in relation to the advice which it provided or may have provided to the Company. That claim may be for negligence or misleading or deceptive conduct if the advice so provided contained recommendations about the transfer of the business purchased from Copperfield to Panoptic Wealth. 43 It follows that there is sufficient justification for the issuing of the summons to the extent to which it requires the production of the policy of insurance.

Discretionary refusal 44 HLB Mann Judd submitted that the Court has wide and broad discretionary powers to grant or refuse to issue a summons pursuant to s 596B. In its written submissions it asserted that in determining whether to allow an examination under Part 5.9 Division 1 of the Act the Court must: balance the public interest in allowing a liquidator to obtain information which will assist discharge of his or her statutory duty to recover the assets of the company against the legitimate interests of a potential examinee in the privacy of his or her documents and in his or her position as a witness in any proceeding. 45 The submissions indicated that this passage was taken from the decision of the Full Court in Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301, 306. No such passage appears in that decision, at that page, or at all. A similar passage from the decision in Re Spedley Securities Ltd; Ex parte Potts (1990) 8 ACLC 673 at 675 appears on that page of the Full Court's decision as reported the ALR. There Young J is cited as having said: The court must always appreciate when an application is made to it under that subsection that two important public interests need to be balanced: viz (1) ensuring that the liquidator, in the interest of the creditors and the public, is able to collect all necessary information to carry out his public responsibility; and (2) an interest in justice to the witness: see Hamilton v Oades [(1989) 166 CLR 486 at 496; 85 ALR 1 at 7]. 46 It would appear that the passage claimed by HLB Mann Judd to have been extracted from the decision of Grosvenor Hill (Qld) Pty Ltd v Barber is, in fact, from an annotated commentary on Practice and Procedure in the High Court and Federal Court of Australia. Nevertheless, it is probably a correct statement of the law. 47 In any event, in relation to the discretion to exercise the power to issue summonses pursuant to s 596B the Full Court in Grosvenor Hill (Qld) Pty Ltd v Barber (1994) 48 FCR 301, 311 observed: We stress that it is important to bear clearly in mind the difference between the ambit of the power and the circumstances in which the power will be exercised. The court retains a discretion in appropriate cases to refuse to exercise the power or to make its exercise subject to stringent conditions. 48 It is undoubted that information about HLB Mann Judd's insurance position is commercially sensitive and confidential to it. However, it is also apparent that the worth of a potential litigant who may have caused the company loss is significantly relevant to the performance by the liquidator of their duties under the Act. In the weighing of the two interests it is not self-evident that the sensitivity and confidentiality of a policy of insurance outweighs the interests of the liquidators and unpaid creditors. 49 To the extent to which the policy of insurance is commercially confidential, the liquidator have proffered an undertaking to limit the scope of persons who might view it. It is in the following terms: Subject to the agreement of the parties or order of the Court to the contrary, the liquidators of the Company undertake to restrict access to any policy of insurance produced by HLB Mann Judd in answer to paragraph 19 of the Summons to the following persons: (a) the liquidators and their professional staff with involvement in the liquidation of the Company, or their administrative staff for the sole purpose of assisting the liquidators and their staff; (b) the solicitors and counsel retained by the liquidators, or their administrative staff for the sole purpose of assisting the solicitors or counsel; (c) any actual or proposed litigation funder of the liquidators and any solicitors or counsel retained by any actual or proposed litigation funder, provided that they have agreed in writing to be bound by a like confidentiality regime; and (d) any judicial officers or administrative staff of the Court. 50 The limitation contained in that undertaking necessarily negates any concerns about any serious imperilling of the commercial confidentiality of the policy of insurance. There was no substantive submission on behalf of HLB Mann Judd which suggested that any greater restriction should be required. The liquidators' undertaking should be accepted and the summons will issue on the faith of it. 51 HLB Mann Judd also submitted that the circumstances raised by the liquidators were not sufficiently strong to warrant the exercise of the Court's discretion requiring it to produce its policy of insurance at this time. It was submitted that further consideration could be given to the production of the document if some stronger case were to be shown to exist in the future. 52 Those submissions should be rejected. As has been mentioned, HLB Mann Judd had a sufficiently close connection to the Company and Mr Reynolds in relation to the impugned transaction. Whilst it may well be that no cause of action is ever established, the evidence produced raises a real and genuine possibility that a cause of action against HLB Mann Judd might exist. That may be a claim consequent upon it being knowingly involved in a breach of duty by Mr Reynolds or a more direct claim in negligence or for misleading or deceptive conduct. Further, if it transpires that there exists a policy of insurance that might respond to any claim, that information is valuable to the liquidators in determining whether to investigate the matter further. 53 In this case there are no circumstances which militate against exercising the discretion to issue the summons in respect of the policies of insurance which HLB Mann Judd may hold. 54 An issue was raised as to the scope of the wording of paragraph 19 of the summons, however, it is sufficiently clear that the current wording requires the production of any policy of insurance which might respond to the potential claims which the liquidators might have.

Applicant's costs of compliance with the summons 55 On 15 July 2022, HLB Mann Judd produced 207 documents in respect of 24 of the categories referred to in the summons. It now seeks an order for its costs of complying with the summons. 56 It is not doubted that the Court has inherent jurisdiction to make orders to reimburse an examinee for the costs of searching for and gathering together the documents necessary for a summons: Re Equiticorp Finance Ltd; Ex parte Brock (1992) 6 ACSR 725 (Equiticorp Finance Ltd); Re IMF Pty Ltd (Receiver and Manager Appointed) (in liq) [2018] VSC 317 (Re IMF Pty Ltd); Surpion Pty Ltd v MR Works Pty Ltd (2010) 80 ACSR 635, 638. 57 HLB Mann Judd has produced some evidence identifying what it said is the total amount of time spent responding to the summons, asserting that it took some 42.2 hours to identify and locate the documents. Using the hourly charge out rates of the relevant employees HLB Mann Judd claims that the cost incurred was $11,810 plus GST. That claim raised a number of concerns with the liquidators who opposed this Court making an order for the payment of any costs relating to the compliance with the terms of the Summons. By the time the matter came on for hearing, HLB Mann Judd's claim in respect of their costs was reduced to $4,050 plus GST. However, the manner in which that figure was reached was somewhat arbitrary and was arrived at by reducing the amount of hours worked by about 50% and then applying what was said to be a standardised or median charge out rate of $202.50 per hour. 58 A central aspect of the liquidators' submission that the Court ought not to make the orders sought, was that the Court does not have before it the documents which justify the conclusion that their production required 42 hours of professional work. It was submitted that when the documents are produced it may be that an examination of them might reveal that they could have been located and identified in a far shorter period of time. It was also submitted that making an order in relation to costs is possibly premature, given that further production of documents is required. Whilst the cost of producing the remaining category of documents might be small it is not necessarily insignificant. Finally, it was submitted that the application for an order for costs in relation to complying with the summons is premature because HLB Mann Judd may be required to comply with the summons by having a person attend to give evidence at a public examination. Mr Wrigley, for HLB Mann Judd, was not able to say that no further claim in respect of the costs of complying would be made. 59 In the circumstances of the above matters, it is not appropriate at this juncture to make any order in respect of the costs of complying with the summons, although that is not to deny that a further application may be made in the future. The conclusion that no order should be presently made is confirmed by the nature of the evidence presently before the Court as to the actual amount of time taken to ascertain the relevant documents and the quantum of the costs claimed. It is no real criticism of HLB Mann Judd that its claim was made in broad terms relying upon internal work-in-progress documents. However, those documents were never intended to be evidence in Court of the precise conduct of the offices of HLB Mann Judd and, if a future application is made, it is likely that more detailed information will be relied upon. 60 Although as at the date of the hearing of the application HLB Mann Judd's claim was reduced substantially as Mr Wacker, for the liquidators, correctly submitted, there is no justification for the amount now claimed. The amount of $4,050 has no logical rationality to it in the sense that it merely involved an arbitrary halving of the number of hours actually taken, or claimed to have been taken, and the application of what is said to be a "merged" charge-out rate. Just how that rate was calculated was not entirely clear. This was insufficient to permit this Court to make any relevant order in respect of the costs. It would be necessary for HLB Mann Judd to produce somewhat more precise and clear evidence as to the actual amount of work undertaken, including what work was undertaken and the circumstances in which it was done. The work-in-progress sheets produced in evidence do not provide that detail. 61 In those circumstances, no order should be made at this stage, but it should be recognised that a further application can be made in the future.

Costs of the application 62 The liquidators have had substantial success in resisting the application in relation to the summons. It was submitted on behalf of HLB Mann Judd that had it received a copy of the main affidavit on which the liquidators relied earlier, it may have produced the policy of insurance and not challenged the summons. Whilst HLB Mann Judd may not have been fully aware or cognisant of the circumstances in which the liquidators sought the policy of insurance, they were so informed by the subsequent affidavit of Mr Dullaway, which was filed on 20 July. That did not deter it from pressing on with the application. For that reason there is no basis for accepting that it would have acted differently had it been informed of the liquidators' grounds at an earlier time. 63 In those circumstances, the usual rule as to costs should apply and that the liquidators should have their costs of the application. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington.