Plaintiffs and Defendants by Counterclaim v Defendant and Plaintiff by Counterclaim

3 As at 6 September 2010, WFL was the Responsible Entity of 30 investment management schemes but only the 1995 scheme is directly relevant for the purposes of this application. The 9599 scheme was comprised of six projects commenced by prospectuses issued between 1995 and 1999.

(a) They are entitled to indemnify themselves for the expenses incurred (including reasonable remuneration) in administering the 9599 scheme and/or caring for, protecting, preserving and/or realising the assets and/or property including the trees of the 9599 scheme ('the Assets') during the period from 26 October 2010 to 22 December 2011 out of:

- the assets;

- the proceeds of sale; and

- the proceeds of any insurance claims in respect of the 9599 scheme (together, 'the Lienable property').

(b) They be indemnified in respect of their costs of the application out of the Lienable property.

5 The liquidators seek the sum of $387,243.11 plus interest.

6 The liquidators initially sought a direction from the Court under s 511 of the Corporations Act 2001 (Cth) that they are justified in claiming the expenses incurred in caring for, preserving and realising assets of the 9599 scheme. Primary submitted that the liquidators should not be seeking directions from the Court but, rather, a declaration, because a direction would not be binding against the defendant and would not resolve any issue between the liquidators and Primary.

7 I ordered by consent that the plaintiffs' application proceed by determination on the following questions:

1. What categories of costs are being claimed by the plaintiffs?
2. What categories of costs are recoverable on a Re Universal Distributing Co Ltd (in liq)[1] basis?
3. What categories of costs are recoverable on a Re Berkeley Applegate (Investment Consultants) Ltd (No 1)[2] basis?
4. For those categories of costs recoverable on a Re Universal Distributing basis, what amounts are recoverable?
5. For those categories of costs recoverable on a Re Berkeley Applegate basis, what amounts are recoverable?
6. For the amounts recoverable, to what assets does the plaintiffs' lien attach?

8 The liquidators do not require questions 3 and 5 to be answered as they no longer seek their costs on a Re Berkeley Applegate basis where it was held that the work done by the receiver had been of substantial benefit to the trust property and to persons interested in the equity.[3]

9 The liquidators seek an indemnity for their costs over the assets of the scheme in accordance with the salvage principles in Re Universal Distributing where Dixon J held that a liquidator can recover from the assets of a company in liquidation his remuneration and expenses properly incurred in the care, preservation and realisation of the assets in priority to a debenture debt.

10 In Coad v Wellness Pursuit Pty Ltd (In Liq)[4] Dixon J's decision in Re Universal Distributing was considered in the context of equitable liens by the Full Court. Buss JA stated:[5]

His Honour explained that only those expenses which have been reasonably incurred in the care, preservation and realisation of the company's assets have priority over the claims of the debenture holders.

Dixon J then applied the principle he had discerned from the authorities to the facts of the case before him:

In the present case the liquidator has employed a material part of his time and energies in recovering moneys, both uncalled capital and debts, which enure for the debentureholder, and in so far as these services increase the remuneration which he receives, I see no reason why the burden should not be thrown upon the proceeds. The question is not whether moneys available for unsecured creditors should be relieved at the expense of the security. In such a case it may be said that the service of collecting enough to discharge the debenture must in any event be performed in order that a surplus may then arise in which the unsecured creditors may participate. The question in the present case is whether the liquidator can charge against the fund passing through his hands as between himself and the person to whom it is payable, so much of the remuneration fixed for work done in the winding up as is referrable to the calling in and conversion of assets producing the fund. I see no reason why remuneration for work done for the exclusive purpose of raising the fund should not be charged upon it.

It is apparent from this passage, and his Honour's reasons as a whole, that he distinguished between the liquidator's remuneration, costs and expenses reasonably incurred in caring for, preserving and realising the assets which have produced the fund (which are secured by the lien), and the liquidator's other remuneration, costs and expenses (which are not).

11 Primary submits that in order to establish a lien the liquidators must identify that the work performed had created an incontrovertible benefit and it would be unconscientious for the owners of the property over which they were assessing the lien not to compensate the liquidators for those costs and expenses.

12 The liquidators submit that the Court should follow Thackray & Ors v Gunns Plantations Ltd & Ors,[6] where Davies J stated:

Another way of putting it is to ask the question whether the work done and expense incurred was necessary to the salvage objective. An actual benefit from the receivers' work and expenditure does not have to be demonstrated. The nexus with the salvage objectives is sufficient.

13 The liquidators also submit that this approach has received support from the High Court in Stewart v Atco Controls Pty Ltd (In Liq).[7]

14 In that case Newtronics Pty Ltd ('Newtronics') was a wholly owned subsidiary of the respondent Atco Pty Ltd ('Atco'). Atco appointed receivers to Newtronics after Newtronics was ordered to pay damages of $8.9 million together with interest and costs to Seeley International Pty Ltd ('Seeley'). Receivers sold the business of Newtronics to another subsidiary of Atco for $13 million. Newtronics was wound up on Seeley's application and the appellant Mr James Stewart was appointed liquidator. Newtronics had no funds nor assets which could be realised in order to pay for the liquidators work. The liquidator therefore sought funding from its creditors for its investigations. Seeley agreed to provide funding and proceedings were taken by Newtronics against Atco and the receivers. The proceeding against Atco failed and the proceeding against the receivers was settled. The liquidator of Newtronics received a settlement sum and paid the settlement sum to Seeley, by way of reimbursement of the costs and expenses Seeley had paid under an indemnity agreement in respect of the actions against Atco and the receivers. Atco and its solicitors pursued its security and subsequently demanded payment of the settlement sum pursuant to Atco's charge.

15 The Court of Appeal of this court held that the liquidator was not entitled to an equitable lien over the fund constituted by the settlement sum with respect to the costs and expenses incurred in litigation against both Atco and the receivers.[8]

16 The High Court allowed the appeal against the decision of the Court of Appeal and held that the liquidator was entitled to an equitable lien. When considering the decision of the Court of Appeal the High Court said:[9]

It will be necessary to consider the various factors identified by each of the members of the Court of Appeal as distinguishing this case from one to which the principle in Universal Distributing applies. For present purposes, it suffices to identify the principal considerations which influenced the Court of Appeal. These considerations concerned the nature and purpose of the action against Atco, namely that: it involved a challenge to Atco's security; it was not pursued in the interests of Atco as secured creditor or to its benefit; and the liquidator's actions were taken in the interests of Seeley. Indeed, Cavanough AJA went so far as to say that the action was, in substance, an action between Seeley and Atco and that it was not, therefore, a typical case to which Universal Distributing could apply. [footnotes omitted]

17 The High Court considered all of these factors and concluded that there was no basis for distinguishing the case from the application of the principle in Re Universal Distributing. The High Court, when considering the factors relied upon by Atco to distinguish Re Universal Distributing, said:[10]

In Universal Distributing, Dixon J went on to fix the liquidator's remuneration and, in that process, excepted certain items from the liquidator's first-ranking charge. His Honour's reference to exclusivity of purpose is likely to have been intended to convey that only work done in connection with creating the fund was to be reimbursed. It most certainly does not imply that the subjective purpose of the liquidator is a relevant consideration.

18 In dealing with Atco's principle argument, the High Court stated:[11]

Atco's principal argument concerned the nature and purpose of the action brought against it and the fact that it did not stand to benefit from that action. These considerations were necessitated by the test of unconscientiousness which the Court of Appeal applied and which it concluded in Atco's favour.

It is no part of a liquidator's duty to ensure that litigation conducted in the course of the realisation of assets is for the benefit of a secured creditor, or any particular creditor. A liquidator's duty is owed to the body of creditors as a whole and to the court.[12] The relevant benefit is that which is sought by the realisation of assets, namely the augmentation of assets available for distribution. A liquidator is to do what he or she can to augment the disposable assets of the company.[13]

It is the duty of a liquidator to realise assets and, to that end, a liquidator has the power to bring proceedings.[14] While a liquidator must exercise care in determining whether to commence litigation, in this case the liquidator had received advice from counsel and there is no suggestion that the liquidator was reckless in bringing the actions or that the actions had no prospects of success. The liquidator acted with propriety in bringing them.

19 The High Court concluded that the purpose of the proceedings in respect of which the liquidator incurred the costs and expenses for which the equitable lien was sought was the realisation of assets.[15] In considering Re Universal Distributing their Honours stated:[16]

The proper question that follows from what Dixon J said is whether, in a general sense, the costs and expenses claimed by the liquidator could be said to have been incurred in the realisation of the asset which created the fund. Whether the costs and expenses claimed were in fact so incurred is a matter to be determined when the liquidator verifies his accounts.

20 In Thackray v Gunns Plantations Ltd[17] the plaintiffs were the receivers and managers of a company which was the responsibility of 45 managed investment schemes. The receivers made an application to establish their entitlement to be indemnified out of the scheme property of 10 of those managed investment schemes secured by equitable lien upon lienable property for their remuneration for work performed and expenses incurred in taking steps for the care, protection, preservation and realisation of assets and property of the schemes. They relied on Re Universal Distributing.

21 Primary submits that I should not follow that decision because it is plainly wrong. They contend Stewart v Atco, which the liquidators submit supports the broader test in Thackray, should be distinguished. In Stewart v Atco, the High Court held that a liquidator's duty is owed to the body of creditors as a whole when realising the assets. It also held that there was no suggestion that the liquidator was reckless in bringing actions against Atco or that the actions had no prospect of success. Most important was the finding that the liquidator acted with propriety in bringing the actions. The High Court did not determine that in order to establish a lien, the liquidator needed to identify the work performed had created an incontrovertible benefit and it would be unconscientious for the owners of the property over which the lien was asserted to deny them payment. It found that there was a relevant benefit which was brought by the realisation of assets, 'namely the augmentation of assets available for distribution'.[18]

22 Primary submits that Stewart v Atco should be distinguished because here there is no fund over which a liquidator is entitled to claim an equitable lien.

23 I do not accept that submission. In Pattison v Lockwood,[19] Finn J rejected a submission that there must be a creation of a fund for Re Universal Distributing to apply. His Honour said:[20]

While in the present case there was no fund produced from which payment was to be made - the consent given was to have the business continue to trade for the purpose of paying its debts - I do not regard this as an operative difference. I would add in passing that I reject the respondents' submission that the existence of a fund is a prerequisite for the principle of In re Universal Distributing Co coming into play. What is necessary is that there is property that properly can be subjected to the charge for remuneration, costs and expenses.

24 Robson J, in Re S & D International Pty Ltd (In Liq) Managers & Receivers Appointed,[21] also held that a lien may arise whether or not a sale is affected by the liquidator and the liquidator is entitled to be paid in priority out of the fund whether or not he is in possession of a fund.

25 The test that I must follow has been clearly put by the High Court. It is for me to ascertain whether costs and expenses claimed by the liquidator have been incurred in the care, preservation or realisation of an asset. Whether the costs and expenses claimed shall be allowed is to be determined from the liquidators verified accounts. I also need to consider whether the liquidator acted appropriately.

26 The liquidators have prepared extensive spread sheets which identify, record and allocate the costs and expenses on three bases:

- specific costs - the costs referrable to the 95-99 scheme;

- general costs - the costs which relate to work performed for more than one Willmott Scheme including the 95-99 scheme and are apportioned across the relevant Willmott Schemes; and

- mixed costs - the costs which are referrable to both the Willmott Schemes and unsecured creditors of the Willmott group.

27 Mr Crosbie deposes that this basis of charging was considered appropriate and reasonable and approved by the Federal Court by Deputy Registrar Burns. On 26 November 2010, the liquidators (then administrators) filed an application with the Federal Court seeking approval of their remuneration. Deputy Registrar Burns was appointed to review and approve the remuneration. Davies J, in the Approval of Sale Application brought in this Court by the liquidators, also approved this basis of charging.[22]

28 Primary submits that the orders of Deputy Registrar Byrnes in the Federal Court proceeding were not for the purposes of determining the liquidator's claim for an equitable lien. As to the position of this Court, Primary submits that the contracts of sale had produced a sale for distribution and the parties appeared to have agreed to this process to determine the costs and the expenses. Therefore, they contend that the process, nor the allocation scheme which has been used by the liquidators, is appropriate for establishing an equitable lien against a third party's assets.

29 In Thackray v Gunns Plantations Ltd (No 2),[23] Davies J could not find any line of authority to the effect that an expenditure with a mixed purpose could not be claimed under the salvage principles, such as where the expenditure has salvage benefit to two or more funds, or where the expenditure has two or more purposes. Her Honour was of the view that the apportionment would be necessary in those circumstances.

30 Her Honour referred to 13 Coromandel Place v C L Custodians[24] and stated:[25]

In 13 Coromandel Place, Finkelstein J dealt with an application for an indemnity by an external administrator out of trust assets. The applicant had first been a court-appointed receiver to the respondent's assets, which it held on trust for investors in certain joint ventures, then a provisional liquidator, and finally liquidator of a company which had carried on a business as a trustee. The proceedings concerned the applicant's application to have his costs, charges and expenses paid out of the assets held on trust by the respondent. His Honour had no difficulty deciding that the applicant was entitled to an indemnity out of trust assets for his costs as receiver and provisional liquidator although His Honour considered that it was more complicated regarding his costs as liquidator because those costs and expenses related to 'general liquidation' matters that did not fall within the Re Universal Distributing 'salvage' principle. His Honour stated as follows (at [35]):

The position is a little more involved as regards work done and expenses incurred in what may be described as general liquidation matters. If that work is unrelated to the beneficiaries and their claims it is difficult to see how the cost could be charged against their assets. In the case of a company that has carried on the business of trustee it might be that much of the work involved in the liquidation is chargeable against trust assets if it can be shown that the liquidation is necessary for the proper administration of the trust. But it is unlikely that this will be so where the company did not act solely as trustee or at least did not act in that capacity to a significant extent. In that event, the liquidator will be required to estimate those of his costs that are attributable to the administration of trust property and only those costs will be charged against the trust assets.

Finkelstein J held that it was necessary for the liquidator to prepare proper accounts 'to justify' his claim against the trust assets. His Honour also went on to hold that in so far as the liquidators' claim related to cost and expenses in carrying out trust activities, as distinct from general liquidation activities, and as the respondent was trustee of more than one trust, the liquidator had to 'estimate the costs and expenses incurred insofar as they relate to each trust and only charge those costs to the trust on whose behalf the work was performed.' If that was not possible then a pari passu distribution was required. Finkelstein J followed Re Suco Gold Pty Ltd (in liq). His Honour concluded that if some of the work performed by the liquidators was for investors for whom no property was held on trust, the liquidator could not look to the trust assets for the costs and expenses of that work unless in accordance with the principles enunciated in Re Universal Distributing and Re Berkeley Applegate 'the liquidator is entitled to charge those assets with a proportionate share of the costs'. That would be so if the costs and expenses are not divisible. [Footnotes omitted]

31 Primary submits that it is a mistake to read too much into the comments made by Finkelstein J regarding costs attributable to the administration of trust property. The liquidators also rely on the following passage in 13 Coromandel Place where Finkelstein J said:[26]

There is insufficient evidence before me to determine whether the whole or only some part of the work performed by the liquidator is chargeable against trust assets. It does appear that a good deal of the work was concerned with the affairs of the trusts. But whether that work was reasonably required to be undertaken in the administration of the trusts I cannot say. In these circumstances, I am not prepared to make any order insofar as the costs and expenses of the liquidation are concerned. It will be necessary for the liquidator to prepare proper accounts to justify his claim for indemnity against the trust assets and make a further application in that regard.

32 In my view the liquidators have prepared proper accounts and it would not be practical to calculate the costs and expenses using another method. I do not accept the submissions of Primary when they seek to distinguish 13 Clomandel Place.

33 In my view, the methodology adopted by the liquidator is appropriate and fair in this proceeding and has been used previously and has been successful in this Court and in the Federal Court. The assessment of costs in such a case as this is an extremely difficult exercise and I doubt whether another process could be applied to produce a fair and just result. I can see no reason why this method should not be adopted where there are proper accounts to justify the claims that are being made.

34 The liquidators' claim $194,180.51 for scheme specific costs. These are made up of $66,166.40 for costs of the liquidator and $128,014.11 being the costs of their solicitors, Arnold Bloch Leibler. A summary of the total scheme specific costs claimed on a month to month basis has been provided. This table sets out the main tasks undertaken by the liquidators which had been charged as scheme specific costs of the 95-99 scheme, and a table setting out the main tasks undertaken by Arnold Bloch Leibler which had been charged as scheme specific costs to the 95-99 scheme.

35 This table was, according to Mr Crosbie, generated having regard to the timesheets and the relevant liquidator staff. The type of tasks that were allocated a specific cost in the 95-99 scheme included:

- reviewing the scheme documentation of the 95-99 scheme;

- drafting the amendment deed to the constitution of the 95-99 scheme following the power of sale orders made by Dodds-Streeton J in the Federal Court on 29 June 2011;

- reviewing and considering Notice of Meeting and Explanatory Memorandum issued in relation to its proposal to replace WFL as the Responsible Entity;

- meetings and discussions with Primary and its solicitors in respect of the replacement Responsible Entity proposal;

- participating in the injunction proceedings issued by the receivers against Primary and others to restrain meetings going ahead. That injunction proceeding was successful and the liquidators supported the receivers. The injunction was finally discharged in December 2011 with each party to bear their own costs of the proceedings;

- drafting, reviewing and considering 'carve outs' in the sale contracts in respect of the 95-99 scheme trees;

- meetings and discussions with Primary and its solicitors in respect of a new proposal to replace WFL as Responsible Entity; and

- reviewing scheme amounts, including insurance and thinning proceeds in preparation for replacement of the Responsible Entity.

36 Primary submits that in respect to the specific costs in relation to the above tasks referred to:

- there is no cost allocated to each of the tasks listed in the liquidators' submissions;

- there is no link provided between the list of tasks in the liquidators' submissions and in the summary in Appendix 3;

- the Appendix 3 summary does not provide a cost for each task but groups different tasks together and provides a figure for the whole month;

- tasks claimed as specific costs are also claimed as general costs, indicating potential duplication; and

- there are tasks listed in the Appendix 3 summary which do not match up with the tasks in the liquidators' written submissions. Further, some of those tasks do not have a clear purpose to enable assessment against salvage.

37 Appendix 3 provides a summary of the costs claimed and a description of the work done. For example, in December 2011 the amount of $1,230.40 has been claimed which relates to lengthy discussions with Willmott employees regarding business proceeds held on trust by the Receivers and Managers, and lengthy telephone discussions with Korda Mentha regarding funds held on trust to the Willmott Forests 95-99 project. The costs are not allocated to each of the tasks listed in the submissions. A link has also not been provided between the lists of tasks and the liquidators' submissions and the summary in Appendix 3.

38 That should not hinder Primary in understanding what was done and what was claimed. To force the liquidators to provide such information would be a massive task and would not be proportional to the amount claimed. There has already been voluminous material provided to the Court.

39 The assessment of costs can be done without those costs allocated. The summaries in Appendix 3 groups different tasks together and provides a figure for the month in which the work was done. The liquidators should have provided the costs for each task but Primary has been given a description of tasks and also a total amount.

40 Exhibit CDC-72 to the seventh affidavit of Craig David Crosbie contains a list of timesheets of the liquidators. Produced in the third affidavit of Jane Chalmers Sheridan, a partner of Arnold Bloch Leibler, are a true copy of Arnold Bloch Leibler invoices and timesheets. In addition, six further invoices and timesheets were provided to Primary. Primary should know of the work that has been claimed to be work from which the liquidators claim their cost and expenses.

41 However, the issues raised by Primary have some merit and will be analysed further when Primary's objections are dealt with later.

42 The general costs claimed are allocated using two methodologies. The first methodology apportions costs equally across the Willmott projects. Pursuant to this method, the liquidators seek $83,301.93 plus interest.

43 Mr Crosbie deposes that the types of tasks which have been allocated under this method include:

- analysing the general viability of the Willmott Projects;

- considering plantation obligations and dealing with statutory notices;

- conducting an Expression of Interest campaign for a new Responsible Entity;

- analysing the estimated scheme outcome from the offers received during the sale campaign, including undertaking financial modelling, consulting with legal advisors and attending meetings; and

44 In the liquidators' written submissions the tasks include:

- engaging Poyry Management Consulting (Australia) Pty Ltd ('Poyry') to prepare a viability analysis of the Willmott projects, including the 95-99 scheme;

- reviewing the viability analysis prepared by Poyry;

- considering plantation obligations and dealing with statutory notices;

- conducting an expression of interest campaign for a new Responsible Entity including establishing a data room and responding to questions from interested persons;

- holding discussions with interested persons in respect of the expressions of interest campaign for a new Responsible Entity;

- reviewing and evaluating responses to the expressions of interest campaign for a new Responsible Entity;

- reviewing fire prevention, maintenance obligations and statutory obligations in respect of plantation preservation;

- analysing the estimated scheme outcome from the offers received during the sale campaign, including undertaking financial modelling, and consulting with legal advisers and attending meetings; and

- drafting updates to interested shareholders.

45 Primary, with respect to this method of general costs, complains that:

- the liquidators did not allocate sums to each task;

- a number of tasks referred to are not listed in the liquidators' submission under general costs;

- Appendix 6 to the affidavit of Mr Crosbie, which refers to these general costs, does not provide a cost for each task but groups different tasks together and provides a figure for the whole month;

- meaningless descriptions of tasks are provided in Appendix 6;

- the costs of preparing an affidavit and reviewing submissions in support of the application to the Federal Court to obtain a combined sale of land and trees is charged against the scheme, despite it being for the protection of the liquidators, and are costs of and benefit to the liquidation of WFL;

- there are tasks contained both in Appendix 3 summary for specific costs which duplicate the tasks in general costs, Appendix 6 includes claims that should be scheme specific costs; and

- a good deal of costs are for creating and updating the scheme costs register which are entirely inadequate for the purpose of the claim.

46 I will deal with some of these objections when considering the specific objections. Most of these objections have merit and will result in a reduction to the costs claimed under this head of costs. It is impossible to go through the material and make an accurate calculation. To do so would require further voluminous documentation to be filed and it would not be economically viable.

47 General costs, using the second methodology, are apportioned between the Willmott Projects pro rata according to the number of growers in each Willmott Project. Pursuant to this method, the liquidators seek $66,905.00.

48 Mr Crosbie deposes that the type of tasks that were allocated as method two general costs include:

(a) Poyry's viability assessment. That assessment involved an analysis of the trees in each plantation to determine their value and viability;

(c) dealing with insurance issues relating to growers;

(d) attending meetings with and dealing with enquiries from grower groups; and

(e) calculating estimated grower returns and offers received during the sale campaign, including undertaking financial modelling, consulting with legal advisers and attending internal and external meetings.

49 Primary complains that the method two general costs:

(a) include a claim of $644.12 for reviewing the Willmott Growers Group proposal and questions raised by Willmott Action Group in May 2011. However, a claim for $5,119.00 has also been made for reviewing the Willmott Growers Group proposal in May 2011 in Appendix 3 specific costs;

(b) include in Appendix 7, which describes the tasks, claims for tasks relating to litigation involving Carney Lawyers and Middletons which concern particular growers not part of the 95-99 scheme and also includes costs associated with GPS Data on the 2010 scheme which is a specific scheme cost related to that scheme, not a general cost;

(c) include in Appendix 7 Expressions of Interests campaigning costs which are at best a mixed cost and not a scheme cost;

(d) include in Appendix 7 costs related to grower monies held on trust which relate to specific schemes and a specific cost not a general cost. Primary is not aware of any moneys held on trust for the 95-99 scheme; and

(e) include tasks which are costs of the administration and liquidation, not a scheme cost, such as reviewing proofs of debts submitted by growers.

50 These submissions also have merit and there will be a reduction in the costs and expenses claimed.

51 The liquidators claim $42,855.65. The liquidators assert that they have incurred certain costs which are referrable to both the Willmott schemes and the liquidation of the Willmott Group.

52 Mr Crosbie deposes that these costs were incurred in continuing to operate the Willmott Group until a resolution about the future operation of the business was determined and, once resolved, to wind up the business and continue operating the Willmott schemes and Willmott Group until the assets were sold.

53 Mr Crosbie asserts that incurring the mixed costs allowed the liquidators to preserve the assets until their sale. The liquidators therefore considered that the benefit of the unsecured creditors and the growers in the liquidations incurring the mixed costs was directly proportionate to the proceeds of sale realised from the Sale Contracts. Accordingly, the liquidators allocated those costs, as between the unsecured creditors and the Growers, based on the total value received under the Sale Contracts from the unsecured creditors and growers which were calculated as 68 per cent to the unsecured creditors and 32 per cent to the growers.

55 In relation to these costs, Primary submits that the evidence shows that no actual costs were incurred to maintain and perform forestry works on the plantations in which the 95-99 scheme operated. They raise a significant concern to the mixed costs:

- that the liquidators seek 35 per cent of the sale costs, including seeking directions from the Court despite sale costs also being claimed under general costs;

- that the schemes are asked to pay for sale costs that have been attributable to the schemes under general costs, but also for 32 per cent of the sale costs under mixed costs; and

- the mixed costs include 44 per cent of the bank interest. That cost is said to cover payments made, including the 'slashing and removal of noxious weeds' which did not occur in the 9599 scheme.

56 I have spent a great deal of time going through the numerous affidavits and volumes of documents. Again, I am of the view that there is merit in these submissions which will be taken into account in determining the costs and expenses.

57 Primary has provided to the Court a document containing categories of costs that they may accept. Attached to this judgment is a copy of the items that Primary is prepared to accept.

58 The liquidators claim costs of $84,273.61 (costs of $7,833.00 and $76,440.61 for Arnold Bloch Leibler) for the injunction proceeding as a specific cost.

59 A meeting was called by the Willmott Growers Group on 20 May 2011 to take place on 23 June 2011, with a purpose to consider and vote upon a proposal to replace WFL as Responsible Entity with Primary and to reconstitute the 9599 scheme by converting the Scheme from a non-contributory scheme to a contributory scheme. An injunctive proceeding was issued by the Receivers and against Primary and others to restrain the meeting going ahead.

60 Mr Crosbie deposes as the current Responsible Entity of the 95-99 scheme, the liquidators considered WFL owed duties to protect growers' rights to ensure that they were fully informed in relation to the proposal of the Willmott Growers Group. Under that proposal, the growers would be required to pay an upfront reconstruction fee and a separate upfront management fee plus ongoing annual management fees as well as any supplementary fees required from time to time. The proposal provided estimates as to what some of those fees may be, however, this was subject to further due diligence and the Responsible Entity would always retain the right to charge supplementary fees if necessary. The proposal also included a dilution mechanism whereby the growers' interests in the scheme were reduced for non-payment of various fees. Growers would have lost their entire interest if they failed to pay $667.00 per hectare. Based on the fees estimated in the proposal, Mr Crosbie is of the view that the dilution of interest could have occurred in the first year.

61 On 13 May 2011, Mr Crosbie instructed Arnold Bloch Leibler to send a letter to Primary's solicitors setting out their main concerns with the proposal including the dilution mechanism. No response was received to the letter before the meetings were called. Following calling the meetings, Willmott Growers Group made changes to their proposal and the meetings were adjourned for ten days. The liquidators reviewed the proposal for considering whether the growers' rights were protected and that growers would be fully informed of all this when voting upon the proposal. According to Mr Crosbie the liquidators held serious concerns in relation to the dilution mechanism. WFL held an interest in the 95-99 scheme in its personal capacity. That interest was in the control of the Receivers. They objected to the proposal because they took the view that the dilution mechanism would amount to a fraud on the minority.

62 Mr Crosbie, based on the liquidators' concerns with the proposal, considered it necessary acting in the best interest of the growers to participate in the injunction proceedings and support the Receivers.

63 An interim injunction was granted on 22 June 2011 and a further interim injunction was granted on 1 July 2011 prohibiting Primary, the Willmott Growers Group and other parties from putting resolutions to a meeting of the 95-99 scheme. Ultimately by agreement between the parties the injunction proceeding was dismissed.

64 Up until such time as they were replaced as Responsible Entity of the 95-99 scheme, the liquidators considered it was in the best interests of growers to take steps to sell the 95-99 scheme assets because:

- if the proposal to replace WFL was unsuccessful, the delay in marketing and selling the assets would have resulted in additional maintenance costs being incurred; the 95-99 scheme assets being at risk during an additional fire season; additional sale costs being incurred which costs would be payable out of the 95-99 scheme assets; and 95-99 assets being less marketable as a standalone asset; and

- the sale process created an incentive for any party interested in taking over as Responsible Entity of the 95-99 scheme to take action prior to any sale contract completing. The liquidators considered this was in the best interest of growers because at the time the sale campaign was commenced WFL had already been in administration/liquidation for approximately nine months. Consequently, only limited maintenance was being taken of the plantations and costs were being incurred by the liquidators in relation to the 95-99 scheme.

65 Primary has raised numerous objections to these costs. It submits that:

- orders were made by consent that each party bear their own costs;

- orders have been previously made that the costs of the liquidators be reserved;

- the liquidators made no attempt to seek costs from the Judge seized of the proceeding at the time it was concluded;

- the commencement of the prosecution proceeding was not something that Primary or the growers would otherwise have had to do;

- in participating in the proceeding, the liquidators were said to have been actively seeking to prevent the growers from voting in favour of the change of the Responsible Entity, being the step that has ultimately preserved the scheme and made this application possible;

- the liquidators' involvement added nothing of substance to the claims being brought by the receivers in their capacity as growers;

- the liquidators played no part in the settlement of the proceeding;

- the costs of the growers in defending the proceeding, thus clearing the way for Primary's appointments, have been substantial; and

- the descriptions of tasks in the summary do not clearly distinguish between the tasks related to the injunction proceedings and tasks relating to other matters.

66 In my view, the objections that there were orders that each party bear their own costs, the previous costs of the liquidators were reserved and no attempts were made to seek costs by the liquidator, do not have a bearing on the amount of costs sought by the liquidators. The liquidators are entitled to seek their costs as an equitable lien if the Re Universal Distributing test is met.

67 It is said the liquidators, in taking an active part in the injunction proceeding, were seeking to stop the growers from voting in favour of the change of Responsible Entity. The liquidators were acting on behalf of all creditors, including growers.

68 When cross-examined, Mr Crosbie gave the following evidence regarding the injunction:

You no doubt - you were aware by about June - well, you were aware from late 2010 that the Willmott Growers Group was progressing a proposal to take control of the 95-99 schemes?---They'd certainly indicated that, yes.

And that proposal had developed significantly by the middle of 2011 to the point where the injunction proceeding was commenced by the receivers?Yes, that's correct.

At that stage, it's the case isn't it that the - if the schemes continued it was going to mean a much lower return on the sale of the land?---Yes, potentially.

Sorry Mr Crosbie. You were concerned at that time to do whatever you could in the interests of getting the best return for creditors to ensure that the scheme - the 1995-99 schemes didn't continue?---I was more concerned about the growers in that instance and the proposal that had been put forward.

But you - putting it bluntly you didn't want the - at that stage at least when you were pursing the sale process - in terms of your broader strategy, it was going to interfere with your broader strategy to have a new RE appointed to the 95-99 schemes and those schemes continue?---It was certainly different to the strategy.

Yes but it - let's not be too subtle about it. It was going to mean you were going to get a lot less money?---Yes, certainly.

...

And that's not something your unsecured creditors or secured creditors would've been very happy about?---Well certainly that's right, yes.

...

You also of course had to consider the interests of the company as a whole, that is the Willmott Forest Limited - it, as has been found, is the owner of the Bombala land which it owned unencumbered?---Yes.

And the company - it would be in the interests of the company to get the best possible sale price for that land?---Absolutely

...

And that sale price was going to be significantly compromised if the land continued under the schemes?---I think that's right, yes.

...

The proceeding that was brought to enjoin the holding of the meeting was brought by the receivers, wasn't it?---That's correct, yes.

...

So it was in its capacity as grower that the receivers went into court seeking to prevent the meeting going ahead?---That's correct.

The main basis for that proceeding or that claim was the one that was discussed earlier. They asserted that the dilution mechanism which was proposed in relation to the new RE was a fraud on the minority?---That's correct.

...

Well I want to ask you about that, Mr Crosbie. The receivers are there voicing their concerns in this proceeding because they were going to receive - well they'd received notice of this meeting and they weren't happy with aspects of it. What were you adding by going along to the court and saying, 'We agree'?---Um, we considered the proposal and were concerned about the um, the growers in that particularly around the dilution mechanism. So I took advice at that point and it was decided that we should get involved in that proceeding to support.

The growers were going to get to vote, weren't they?---Yes.

Don't you think it's a little bit patronising for you to be saying, 'Well we don't' want the growers to vote. We want to go along and in addition to the receivers, express our view about that'?---No, we took the view that we had to make a - an appearance in regard to our position.

You engaged Arnold Bloch Leibler as solicitors in pursuing that claim?---Yes, that's correct.

You also engaged senior counsel I think, did you?---Um, I think that's correct, yes.

...

You certainly didn't say anything in the course of those proceedings or instruct your counsel or solicitors that they should say anything in support of the RE's proposal, did you?---I think that's correct, yes.

So in substance what you were doing was actively seeking to prevent the process that ultimately has occurred, the change of RE?---Yes, that's right.

There was subsequently mediation in relation to that matter?---Yes, that's correct.[28]

69 When re-examined, Mr Crosbie gave the following evidence:

You were also asked questions around the fact that the affidavits and submissions made by you at the injunction proceeding did not raise any new matters to those raised by the receivers?---Yes, that's right.

As far as you can recall, did the receivers put on any evidence about the valuation of voting interests?---I don't recall, no.

In the course of your role as a liquidator of a company that acts as both - in its personal capacity and as a Responsible Entity - and I don't want you to disclose the contents of your advice. Did you receive any advice about the duties that you owed to creditors and to growers?---Yes.

And without, again, disclosing the contents of that advice, did that cause you to treat either of the interest of the creditors or the growers as being paramount?---Yes.

Which - whose interests did you treat as paramount?---Um well, it's a juggling act but certainly in a RE capacity, it's the growers interest, yes.[29]

70 From that evidence it appears that Mr Crosbie was concerned to get the best possible price for the land even though the scheme may have been terminated. He did state that he was concerned about the growers. From the affidavits it can be concluded that some growers may have been significantly worse off if there was no application to obtain the injunction.

71 Robert Garton-Smith, the managing director of Primary, was cross-examined regarding the proposals that the Willmott Growers Group raised. He gave the following evidence:

Under the first proposal, if a grower didn't make a contribution to ongoing costs, for every $10 that they didn't contribute they would lose interest in the revenue of the project?---That is my - that is roughly correct, yes. I can't remember the precise details but yes.

Well let me - - - ?---It was a different formula to what we later used.

Yes. Let me put it to you directly. Growers would lose 1.5 per cent of their interest for every $10 invoiced but not paid?---Yes.

So if a grower didn't pay about $80, they would lose - sorry, let me go back - going back a step, if a grower didn't pay approximately $800, they would lose their interest?---Yes, it was something worked out by Paul Challis - - -

Yes?--- - - - based on a discounted cash flow basis is my recollection.

And so growers who had already paid upfront fees for their interest in the trees - I want to - I want to make sure this is right. In respect of the 95-99 scheme, all projects except 1999 had paid their costs and expenses upfront, hadn't they?---Ah, all of the five years paid their rent and fees wholly upfront and borrowed the money mostly. 99 growers paid, I think, $3,000 up front and then had an ongoing obligation to pay rent and fees.

And what your proposal was going to do was that if they didn't agree to contribute more to meet another invoice, they were going to lose their interest in the project. That's correct, isn't it?---The - they - their interest was going to be gradually diluted on what might be an appropriate basis having regard to the amounts contributed by the others.

Following the injunction proceeding, Mr Garton Smith, you formed a view that that wasn't actually an appropriate basis on which to dilute a grower's voting interest, did you?---No, we preferred - it's not - it's not the dilution process, it's simply that we considered that - that method. We had other objections. It was no - it was no use in becoming appointed RE if growers didn't have some incentive to pay fees because it had to be turned into a contributory scheme and therefore we decided the best thing to do was to purchase - was to have a different formula and that is to purchase at some value such as what was being offered by the receivers.[30]

72 In Stewart v Atco, the Court made it clear that it is not part of a liquidator's duty to ensure the litigation conducted in the course of the realisation of assets was for the benefit of a secured creditor or any particular creditor. The duty was owed to the body of creditors as a whole and to the Court. The test that I am required to follow is whether costs and expenses claimed by the liquidator have been incurred in the realisation of the asset.

73 On the evidence, the liquidators acted appropriately in opposing the injunction. They were acting on behalf of growers and the original proposal which meant a dilution of interest to some growers was abandoned.

74 In cross-examination Mr Crosbie was asked questions about scheme specific costs, as he was referred to costs incurred in the sum of $12,843.00 on 11 June 2011. One of the five items claimed on that date referred to reviewing draft affidavits from Mr Paul Challis, Mr Mark Bland and Mr Ian Bond regarding the 95-99 scheme and the injunction proceedings.

The - my instructions in relation to the second item in that June 11 period, Mr Crosbie, are that there were no affidavits of Mr Challis and Mr Bond in the injunction proceedings. Those affidavits were sworn in relation to the sale approval proceedings. Do you know anything about that?---No, sorry.

So is it possible that those - if that were the case, reviewing the draft affidavits for Mr Challis and Mr Bond at least would be matters that should be in the general costs relating to the sale - or indeed mixed costs relating to the sale?---If that's what you put as correct, yes.[31]

76 On the evidence given by Mr Crosbie, not all of these costs can be claimed. It is doubtful as to whether these affidavits were relied on in the injunction proceedings. It is up to the liquidators to satisfy the Court that the costs were properly incurred.

77 It is impossible on the evidence to be sure if all of the work was required, particularly when taking into account that two affidavits were prepared and not relied upon. This is not a taxation of costs where each and every item must be considered and taxed. To do so would entail a process that would take months to conclude.

78 The liquidators claim costs in the sum of $36,019.97 for the sale process and the second expression of interest campaign. These costs are classified as specific general (method one) and mixed costs.

79 After the interim injunction was obtained, the liquidators, on 29 June 2011, obtained Power of Sale Orders from the Federal Court regarding the Willmott Group Assets. On receipt of those Orders, the liquidators in conjunction with the Receivers, commenced a campaign to sell the Willmott Group Assets, including the assets in respect of the 95-99 scheme. The sale campaign was conducted from July to September 2011. Mr Crosbie deposes that given the impending fire season it was extremely important that the liquidators, Receivers and the interested parties adhered to the time limit of the sale process. On or about 31 October 2011, they selected a preferred bidder and entered into further negotiations with the preferred bidder.

80 In his fifth affidavit Mr Crosbie has provided a chronology of events surrounding the sale process. He deposes that on 28 November 2011, Jonathan Grigg, the General Manager of Grimsey Financial Services Pty Ltd, emailed to Mr Crosbie a copy of a letter from the Willmott Growers Group to growers, a notice of meeting, a proxy form, a contribution form and a change of details form. According to Mr Crosbie the information provided in the new Willmott Growers Group Proposal was similar to the original Willmott Growers Group Proposal. It also involved an exit mechanism whereby growers who were not interested in retaining their interest could potentially sell their interest or their interest would be acquired by the New Responsible Entity based on a value determined pursuant to a specified formula.

81 On 6 December 2011, the liquidators entered into Contracts of Sale with the preferred bidder for the sale of the assets of the Willmott Group including the 95-99 scheme. They considered that the best price had been achieved because the bids received from other bidders on a property by property basis were, in general, substantially below the bids received from the parties interested in purchasing the entirety of the sale assets.

82 On review of the new Willmott Growers Group Proposal, the liquidators noted that the proposal did not guarantee the 95-99 scheme would continue. It did not guarantee the return, if any, that the growers would receive. In order to obtain any return, growers would be required to contribute additional funds or face dilution, unless a purchaser was located for their interests or the new Responsible Entity obtained the necessary funding to buy back the interest. Given that the sale process provided certainty of grower returns compared with the uncertainty of the new Willmott Growers Group Proposal including dilution and no certainty of any future return, the liquidators considered that notwithstanding the new proposal, the inclusion of the 95-99 scheme in their sale process was in the best interests of growers.

83 On 13 December 2011, the liquidators commenced an application in this Court seeking directions that they would be justified in procuring WFL to terminate or surrender the project documents in order to enter into the sale contracts. On 22 December 2011, WFL was replaced by Primary as Responsible Entity of the scheme.

84 Primary objects to these costs as it submits that:

- there were no realisations, or other savings or benefit for Primary or the growers from the steps taken by the liquidators towards the sale of the 95-99 scheme land;

- the growers did not consent or were complicit in the sale process;

- it was in the interests of WFL and the unsecured creditors to get the best possible price for the land and a sale without the 95-99 scheme would mean the liquidators were going to get a lot less money on the sale;

- all costs have been paid out of sales proceeds;

- working out how to carve out the 95-99 scheme land to enable the sale of the balance of the land was for the benefit of those left behind and thus should not be passed on to the growers in any event; and

- it is far from clear that related costs included in the 'General Costs' categories are appropriate to be claimed as general costs instead of mixed costs.

85 In my view, the liquidators acted appropriately. The liquidators' duty was owed to the body of creditors as a whole and that is how the liquidators saw their duty. The liquidators were trying to realise assets where they were of the view that it would be in the interests of the growers to do so. It does not matter that Primary or the growers had any realisation from the sale nor that they did not cause or were complicit in the sale process.

86 However, in relation to these costs, Mr Crosbie gave the following evidence:

... the various items there that make up the amount of 9253 include preparing and finalising the affidavit for application to the court for a power of sale to enable the combined saleable land used by the schemes and any tree situated on that land. Now, I think it's accepted, Mr Crosbie, that the costs associated with the sale process - costs ultimately that were for the benefit of both schemes and the administration generally and in relation to mixed costs, they were allocated 62 per cent to administration, only 32 per cent to schemes?---That sounds right, yeah.

But this item appears in general costs which would suggest that a hundred per cent of that is being ascribed to the schemes?---Yes, that's correct.

Can you explain why that is?---Um, presumably the reason is that the costs were identified as being scheme related costs in that particular instance and then allocated on method one.

Well, are you able to explain to his Honour how that can be that within the sale process, there were discrete parts of the costs that were determined to be specific scheme - scheme related and other things that were not?---Yeah, I'd have to look at the underlying documents though. I can't explain it for the time being, sorry.

Is it possible, Mr Crosbie, that one explanation is that this is simply an error and it should be in mixed costs?---Without looking at it, yeah, I'd have to verify that.

I won't take you to all of them, Mr Crosbie. If you just turn the page, you'll see, again towards the bottom, there're number of items there that appear to relate to the sale?---Sorry, this is on page - - -

This is the following page?---838?

838, yes?---Yes.

And if you look at the last - the last - first three - the last three items apart from the remuneration report are all - all appear to be sale related. Do you see that? Discussions surrounding into or over your affidavit in support of power of sale?---I was - - -

Reviewing (indistinct) affidavit, finalising affidavit. Do you see that?---Yes.

Again, are you able to identify just form that why those might be scheme specific and not in the mixed costs category?---Not on the basis but looking at that, no.

Do you have any recollection, Mr Crosbie, of there being a particular affidavit that was sworn that was somehow scheme specific but not relevant to the sale generally?---No, I don't think that's right.[32]

87 Mr Crosbie is unable to explain whether these costs included in the general categories of cost are appropriate to be claimed as general costs instead of mixed costs. This will again be taken into account when the final determination of the costs is calculated.

88 There were two expressions of interests campaigns. The liquidators' claim $38,269.53 for the first campaign and the sum of $30,340.52 for the second expression of interest campaign which includes the sale process.

89 The first expression of interest campaign involved the administrators on 12 December 2010 seeking expressions of interest in assuming:

(a) the obligations of Responsible Entity and/or manager for all or any of the Willmott schemes;

(b) the restructure of the Willmott Group's affairs 'business'; and

(c) the recapitalisation of the Willmott Group.

90 The second expression of interest campaign related to the sale campaign by the liquidators. The liquidators commenced a sale campaign of all assets, including the land on which the 95-99 scheme operated and its trees. There were advertisements for the sale campaign. On application, prospective buyers were provided with an interested parties pack, including a pro forma letter.

91 Primary submits that in relation to the first expression of interest campaign:

- as with the sale, nothing was realised or achieved as part of this exercise;

- it had multiple purposes and should be included in the mixed category, not the general costs category; and

- a report known as the Poyry Report was not put into the data room in sufficient time to be of any use to any party participating in this process. It was only ever going to be of assistance to parties involved in this sale process.

92 Mr Crosbie, when cross-examined, gave the following evidence:

Just moving to the expressions of interest campaign. There were three purposes in that campaign, weren't there?---Yes.

One of those was a restructure of the group. That was one of the things that you were asking people about?---Correct.

The second thing was whether anyone was interested in recapitalising the group?---That's right.

And the third thing was whether or not there was anyone interested in taking on the role of - as RE - - - ?---That's correct.

- - - of any of the schemes?---Yes.

Or of all the schemes?---That's right.

Of those three purposes, the first two, that is a restructure and a recapitalisation, that would have benefited all creditors including the growers, wouldn't it?---Potentially, yes.

Indeed a restructure of the group or a recapitalisation of the group would inevitably be something that would've had to have looked after the interests, if it went ahead, would have to deal with the interests of the creditors including the secured creditors, wouldn't it?---That's correct, yes.

So that expression of interest campaign wasn't undertaken exclusively for the benefit of the growers, was it?---Not in that context, no.

It's the fact, isn't it, Mr Crosbie, that at the moment you're seeking that the growers pay 100 per cent of the costs associated with the expression of interest campaign, aren't you? Under the general costs?---Yes, that's correct.

But you've just agreed with me, Mr Crosbie, that the process of the campaign was also for the benefit of the other creditors. Shouldn't that be mixed costs?--The principal purpose certainly was for - to find an RE. The other - other two items that were included in there were quite frankly considered very unlikely.

Well the change of the R - well changing the RE was pretty unlikely as well, wasn't it?---Um, it was probably more likely.

In any event, the actual campaign, had it achieved either of those two first objectives, wouldn't benefited the other creditors and including the secured creditors, wouldn't it?---Potentially, yes.

So I suggest to you that it should be an item that's included, if it's included at all, should be in mixed costs?---That may be right, yes.[33]

93 On the evidence, the expression of interest relating to the structure and recapitalisation would have benefitted all creditors, including growers, and was not taken exclusively for the benefit of the growers. These costs will be allowed. However, I note that Mr Crosbie conceded part of these costs should be in mixed costs and not general costs. Again, an allowance will need to be made for this.

94 The liquidators claim costs in the sum of $43,326.73 for this report. It is claimed as a general cost (method 2).

95 On 7 December 2010, the liquidators (then administrators) engaged Poyry to conduct a detailed viability analysis of the Willmott schemes. It concluded that depending on the discount rate (11 per cent, 13 per cent, or 15 per cent) a number of the Willmott schemes are not financially viable and that for the Willmott schemes to be viable further funding of $336.7 million in absolute terms ($123 million in net present value terms) was required.

96 Primary objects to the costs being allowed and submits that:

- the Poyry report was not put into the 'data room' in sufficient time to be of any use to any party participating in the process. It was only ever going to be of assistance to parties involved in the sale process;

- Willmott Growers Group and Primary did not give consent to use it in the material sent to growers; and

- Willmott Growers Group was advised to secure its own viability analysis and proceeded to obtain a report at a cost of $50,000.00.

97 When re-examined, Mr Crosbie gave evidence that the Willmott Growers Group had used the Poyry report for the purpose of its proposal for restructure. Mr Crosbie gave the following evidence:

Mr Crosbie, did the Willmot Action Group as at 9 January 2012 assert that they represent the growers in the 1995-1999 scheme?---That's my understanding, yes.

Mr Crosbie, you were asked a number of questions about the availability of the Poyry report to growers?---That's right.

Now, the Poyry report was an exhibit to your affidavit of 4 February 2011 and I can take you to a copy of that. I'll hand it up and ask them just to confirm that. Your Honour, you may not have been burdened with this rather lengthy report. You may not have of that. Mr Crosbie, is that the Poyry report exhibited at your affidavit of 4 February 2011?---Yes, it is.

...

Were exhibits to your affidavits made publicly available?---Yes, that's correct.

Same for confidential exhibits?---That's correct, yes.

Was the Poyry report a confidential exhibit?---Um no, it wasn't.[34]

98 I also note that Mr Garton-Smith, when cross-examined, gave the following evidence:

Now the Willmott Growers Group approached you to become involved in the 1995-1999 scheme. Is that correct?---They did.

And as part of the work that they did - let me go back a step. They were led by a man by the name of Mr Challis?---We dealt mainly with Paul Challis.

Yes and Mr Challis did some viability work in relation to the 1995-1999 scheme?---He is an accountant and was attempting to work out viability.

Yes?---That's one his things he was doing.

And he's - in an affidavit he's deposed and has been tendered in this proceeding, he said he used the Poyry data and assumptions to do that. You're not able - - - ?---Well I'm - - -

- - - to contradict that, are you?---I was here in court when that was mentioned and I haven't seen that particular affidavit.

All right but - - - ?---So I can't answer that question.

Mr Challis approached you to become - to Primary to become involved?Yes.

Yes and an explanatory memorandum was prepared?---We never got the Poyry affidavit from WGG. We never received - if you're asking that, we did not ever see the Poyry affidavit - - -

I'm not asking you that. I'm asking you whether an explanatory memorandum was received in respect of the 1995-1999 - - - ?---I don't know. This was before our appoint. We were dealing with matters like what changes the constitution. We asked for the Poyry affidavit - - -

Mr Garton Smith, you're not asking my - - - ?--- - - - from Willmott Forests and we never got it from them.

...

Mr Garton Smith, for the purpose of Primary becoming appointed as the RE of the 95-99 scheme, an explanatory memorandum was prepared. Is that correct?---A explanatory memorandum was prepared, yes.

And it was prepared by the WGG?---It was prepared by WGG and ourselves.

Yes and you - and that's an important document because it goes to growers to describe to them the state of affairs in relation to a scheme and the risks that they face?---Yes.

And that - because of that importance, it's a document that you reviewed carefully?---Yes.[35]

99 In my view, the liquidators were justified in obtaining their report. It was used in the injunction proceedings and I have previously found that the liquidators acted appropriately in supporting the Receiver. For the liquidators to obtain information about the viability of the scheme is clearly appropriate and relates to salvage of assets.

Reviewing statutory notices and related legislation

100 I presume that this objection relates to plantation obligations which the liquidators claim $2,377.31 as a general cost (method one). Primary submits that none of the work performed by the liquidators resulted in any work being done on the land. The concerns of getting the advice were to understand the consequences of not doing the work. It also states that no maintenance or other work was done on the land.

101 On cross-examination, Mr Crosbie gave the following evidence:

There was - the documents before the court suggest, Mr Crosbie, that there was quite a bit of work done reviewing legislation and notices and other things relating to statutory work or statutory - potential statutory requirements in respect of work to be done on the land. Do you recall that?Yes.

Given that no work was done, we assume that whatever work was done in reviewing that - is it safe to assume did not indicate that there was work that had to be one?---So there were notices that we received that we obviously had to review and take advice on where appropriate but there was certainly no funds to be able to complete those works, yes.

All right so - - - ?---Sorry, just to clarify that. With the exception of some slashing works that were ultimately done for fire prevention.

Yes?---Yep.

So to the extent that the reviews were undertaken of legislation and notices and so on, that didn't result in any work being done on any of the land?that's my understand, yeah.[36]

102 This is not a major item. The liquidators obtained the advice to ascertain if some sort of possessory lien may arise if the work was not done. The liquidator was therefore getting the advice to preserve the assets. The issue in relation to this item is whether it was necessary to obtain such advice. I am of the view that the motive was to protect the assets. Therefore, these items will be allowed.

103 The liquidators claim costs of insurance enquiries in the sum of $5,766.74 as both mixed and general (method two) costs.

104 Mr Crosbie deposes that there were four outstanding insurance claims for hail damage: two were related to the 95-99 scheme. The hail claims were being processed at the time of the liquidators' appointment. On their appointment, they continued to correspond with WFL's insurance brokers to finalise the hail claims.

105 On 23 December 2011, the liquidators received an email from Primary confirming that Primary was the Responsible Entity of the 9599 scheme. Following its appointment as Responsible Entity, Primary took over the processing of the hail claims.

106 Primary submits that these costs should not be recovered because no insurance proceeds were recovered in respect of the 95-99 scheme. It also objects to paying these costs because the liquidators charged an administration fee to cover costs of remitting premiums to brokers and it was not clear if that was taken into account in the calculations.

107 Mr Crosbie, when cross-examined, gave the following evidence:

When you went out to growers in relation to the issue of insurance, you sent them accounts to cover the premium cost?---Um, I think they were - yes I think that's right but they were remitted back to the insurance broker.

But you also charged them an admin fee, didn't you? To each grower of a hundred dollars?---Yes I think that's right.

So wouldn't that have been more than enough to cover costs associated with the - well speaking to them and sending letters out?---A hundred dollars per grower?---I'd have to look at the work that was completed but it may have been.

Well it looks as if the amounts that are claimed and again, I may be wrong about this, but it looks as though the total amount claimed by you for work in relation to liaising with growers, printing letters to growers for instance, $776.33, $113 for temporary staff to assist the mailout and $350 for considering responses in relation to insurance. So it sounds as if that was going to be well and truly covered by the admin fee, doesn't it?---Potentially.

I suggest to you the admin fee was not taken into account when you calculated those amounts?---Um, I don't recall.

So that's another that thing would need to be checked?---Yes.

Now the other issue that's arisen in relation to insurance concerns some insurance events that occurred in relation to the 1995-1999 scheme properties?---Yep.

Particularly hail damage?---Yes.

Now there seems to be some uncertainty about the number of claims, Mr Crosbie. I think at some point or at least the evidence that may have been provided on your behalf suggested that might've been a total of two claims in respect of hail damage?---That was my understanding, yes.

But the affidavits on behalf of the defendant, Primary, suggests that there was only one. Are you able to assist with that? Is it possible that you were wrong about that and there was only - - - ?---I could - I could've been. My understanding was it was two.

That was - those claims relate to events in - was it in m- do you remember when it was? The - - - ?---No.

February 2009. Does that sound about right?---Yeah, it was certainly before our appointment, yes.

You've claimed from the growers to the 1995-1999 scheme the lien in respect of costs in liaising with the broker in respect of those claims?---Yes.

Did you personally do any work in relation to that?---I personally didn't, no.[37]

108 In my view, any insurance costs associated with attempting to obtain funds from the hail damage is an appropriate cost of the liquidator. However, as there is doubt as to whether the liquidator took into account the administration fee to cover insurance in calculating his costs, I am not prepared to allow all of the costs claimed for this item.

Head office fees, employee costs and other overheads

109 This is not an item where a large amount of costs have been claimed. For staff costs, the liquidator claims $5,126.72. For overhead costs, including office rent, overheads and mail outs, the liquidator claims $3,204.49.

110 Primary submits that these costs would have been incurred regardless of the demands of the 95-99 scheme. In particular, it relies on the evidence of Toni Smith, the plantation manager employed by Primary. Ms Smith collected rent for houses and agistment on Bombala land which went to WFL in its own right. That was confirmed by Mr Crosbie.

111 In relation to staff costs, Primary also submits it is not clear whether the summary has properly accounted for the discount on employee costs agreed by the Receivers.

112 Mr Crosbie, when cross-examined, gave the following evidence in that regard:

Just before I ask you specifically about what that says, the position in relation to the arrangements between you and the receivers in respect of the ongoing employment of forestry staff was that the receivers paid it upfront and then you reimbursed?---That's correct, yes.

So in relation to the discount and it refers to the Bombala regions, what arrangement is - what's happened in relation to that? Have you - has the receiver refunded to you costs in respect of the - - - ?---No. Indeed I don't believe we've even paid the receiver at this stage for those costs.

Sorry, you haven't actually passed the money through to the receiver yet?Correct. That's correct.

All right. But you'll now be paying less?---Um, I don't recall that to be perfectly honest but it would certainly appear to be the case, yes.

By a significant discount, is that correct?---Yes.

So if that's right, presumably the amounts - or do you know whether the amounts that are disclosed in your documents before his Honour in relation to seeking to get back from the members of the 1995 scheme your costs in relation to staff, has this discount been taken into account?---I believe it has, yes.

How do we - is there any way - I don't want to, at the moment, Mr Crosbie, go to all those documents, or the three folders of them anyway, but how do we find out that that's correct? That they have been discounted?---Um, it's certainly my understanding. Um, I'm probably not in a position to - to demonstrate it here. I'd have to verify that.

I don't want to - I'm not suggesting you're making this up, Mr Crosbie?Thank you.

But you did say to me a moment ago that you weren't familiar with the discounting having occurred. I'm just not sure how you cannot be familiar with the discount having occurred and yet believe that the discounting was taken into account - - - ?---Well I - - -

- - - or have I missed something?---I presume that the - the discount, once it was agreed, was then reflected into the amounts that have been claimed now. Yep.

All right. So you're just making an assumption about that, you don't actually know - - - ?---It would certainly have to be verified, yes.[38]

113 Mr Crosbie agreed that the discount would have to be verified. Again, I will take this into account in assessing the liquidators' costs and expenses. As to the necessity of these costs, it is my view that the head office fees, employee costs and overheads were needed so that the liquidators could perform their task properly and preserve the assets.

114 The liquidators have claimed bank interest in the sum of $5,747.92 as a mixed cost. The Willmott Group was without funds and the main source of funding under which the liquidators financed the administration was a $5 million loan granted to them in their personal capacity by the Commonwealth Bank of Australia. They drew down approximately $2.5 million for a loan to pay some of the costs incurred which included essential services, essential works, some of the remuneration, some legal fees and costs, and some other professional fees, including the Poyry report.

115 Bank interest was payable on amounts drawn down on the loan. Forty-four per cent of that related to scheme related costs, and 56 per cent related to non-scheme related costs. The liquidators' therefore split the bank interest charge on that basis. The 44 per cent of the Willmott Group was then allocated to the schemes. Primary submits that this item is a general liquidation expense used to cover costs associated with sale, remuneration and so forth. It says the split between scheme and nonscheme cannot be justified.

116 In my view, the interest cost is a cost that should be allowed. It had to be paid by the liquidators' so that they could obtain funding to discharge their responsibilities in relation to the scheme. It was required to preserve the assets.

117 The liquidators' seek the cost of compiling remuneration reports and other tasks associated with the scheme related costs in the sum of $10,956.40 as a general cost (method one). Primary states this is a general cost of liquidation.

118 The evidence given by Mr Crosbie was that remuneration reports were compiled in respect of his remuneration and they were related to all schemes. He could not tell off the top of his head how many reports were prepared.[39] Remuneration reports are in my view part of the liquidation.

119 Primary submits that it is not clear that all costs specifically relating to other schemes have been excluded from the analysis. In particular, the 95-99 scheme should not bear any costs associated with dealing with the Willmott Action Group. The Willmott Growers Group was focussed on the 95-99 scheme. The other grower group was known as the Willmott Action Group, and the two action groups, according to Mr Crosbie, did not traverse the same issues.

120 The Willmott Action Group, according to Mr Crosbie, was representing everybody, but it turned out that only the Willmott Growers Group was focussed on the 9599 scheme.[40] Any costs associated with the Willmott Action Group will therefore not be allowed.

121 Primary submits that there are incorrect entries in the time sheets. Mr Crosbie was cross-examined in relation to the incorrect time sheets and gave the following evidence:

Now, in respect of the - the work done by PPB in that period, there's a reference there in April 2011 to reviewing updated lists from Macpherson & Kelley regarding grower claims. Reviewing and responding to an email from Ms Birmingham of Willmott Acton Group and reviewing correspondence sent by Willmott Action Group to growers. So this is April - in April 2011, Mr Crosbie. You knew, didn't you, by that stage that the Willmott Action Group was a group that was dealing with matters other than the 1996 scheme?---Yes, that's correct.

So do we take it from this then that you're seeking on method two, in respect of general scheme costs, to have the growers in the 1995 scheme pay for scheme specific costs but scheme specific costs relevant to a completely different scheme or set of schemes?---Once again, without seeing the underlying documents, it's difficult to say but yet, certainly they're getting an allocation in that instance.

Yes. When you came to do this process, Mr Crosbie, are you aware as to whether or not any work was done to identify - obviously work was done to identify 1995-1999 scheme specific costs and they were taken out and identified separately and we have the detail here but where work was done in relation to scheme specific costs that were explicitly relevant to a different scheme, were they taken out as well?---Yes.

Can you think of any examples where that happened?---I can't but once again it would be within the spreadsheets which put all this together.

...

Just over the page, Mr Crosbie, you'll see that further reference has been made to the Willmott Action Group. I won't go through the same series of questions but if I were to, would your answers be the same? Namely that you're not able to be sure but they do appear to relate to matters unrelated to the 95-99 scheme?---I think that's correct, yes.

If we then go over to July 2011, it's two pages further on, the -there're couple of items there I wanted to ask you about for July, Mr Crosbie. The first telephone discussion with the Australian Taxation Office regarding the status of growers leases. Is that a telephone conversation that - that you had or were aware of?---I believe I am, yes.

And what did that relate to?---The ATO was concerned about the deductibility of certain schemes.

Do you remember whether that included the 95-99 scheme?---I don't recall.

What about the next item, reviewing a letter from Carneys Lawyers litigation against two growers. Were those growers in the 1995-1999 scheme?---I don't know based on that. I'd have to look at the underlying document again.[41]

122 The evidence given by Mr Crosbie leaves me with some doubt as to whether all of the scheme specific costs related to this scheme or to another scheme. I have no way of ascertaining whether there are any other incorrect timesheets. Again, this will need to be taken into account.

123 Primary states that there is nothing owing to the liquidator in respect of the amount said to be the subject of the lien. Mr Crosbie gave evidence that his fees and the fees of their lawyers have already been paid.[42] This does not mean that the liquidators, in my view, are barred from claiming a lien for their costs and expenses and their lawyers costs.

124 In Ncon Australia Limited v Spotlight Pty Ltd,[43] Robson J, when assessing damages, referred to the well-established principle that the difficulty in estimating damages does not relieve the Court from estimating damages as best it can. He also stated that where damages are uncertain for lack of evidence, difficulties in assessment are in general resolved against the party who could or should have provided the evidence.[44]

125 Here, I am assessing costs and expenses and not damages, but I believe the same principle should apply. I am unable to calculate with precision what the quantum should be. There have been numerous documents prepared which relate to the costs and expenses. To ask the liquidators to provide further documents would be expensive and time consuming and not an efficient way of conducting this litigation and contrary to the overarching obligations of the Civil Procedure Act 2010 (Vic). I will therefore do the best I can and where there is a lack of evidence resolve the difficulties against the liquidators by discounting the liquidators' claims.

126 Taking into account Primary's objections, which I have considered, I believe the following reductions should be made to the costs and expenses claimed by the liquidator:

- Reviewing Statutory Notices and related legislation $0;

- Head Office fees, employee costs and other overheads $1,000.00;

127 I have found that Scheme specific costs may have been claimed regarding other schemes. In addition, I have found that there may have been incorrect timesheets. Finkelstein J in Re Korda; in the matter of Stockford Limited ('Re Stockford'),[45] took a new approach to how remuneration should be determined. His Honour stated:

1. It seems to me that the proper approach is first to establish what in the United States cases fixing the fees of trustees and attorneys under the Bankruptcy Code is called the 'lodestar' amount. This amount is reached by the number of hours reasonably spent by the insolvency practitioner multiplied by a reasonable hourly rate: In re Boston and Maine Corporation v Moore [1985] USCA1 425; 776 F 2d 2, 7 (1st Circ 1985); Copeland v Marshall [1980] USCADC 250; 641 F 2d 880, 891 (DC Circ 1980). This step will require the tribunal to decide whether the work performed was necessary to the administration, whether it was performed within a reasonable time and whether the rate is reasonable having regard to what the practitioner, and other practitioners, usually charge their clients. The 'lodestar' amount should then be adjusted (up or down) to reflect other factors including the quality of the work performed, the complexity in the administration over and above the normal complexity of such work, the novelty and difficulty of the issues that confronted the administrator as well as the ultimate result obtained by him.
2. To have his fees fixed it will be necessary for the administrator to do more than simply state the amount of time spent and the rate to be charged for that time, as happened in this case. The amount of detail to be provided in support of a claim must be proportionate to the size of the estate and the amount of time spent. A useful discussion of what is required appears in Re Medforce Healthcare Services Ltd (In Liquidation) [2001] 3 NZLR 145, 155:

In our view the exercise which must be undertaken by the court in fixing the reasonable costs of the liquidator is similar to that which is undertaken when approving solicitor and client costs or costs for legal aid purposes. In each case what is required is enough information to enable an assessment to be made as to whether the total costs charged are reasonable.

As a minimum it seems to us that what is required is a statement of the work undertaken during the course of the liquidation, together with an expenditure account sufficiently itemised to enable the charges to be made related to the work done. The detail would have to be sufficient to enable the judicial officer to determine whether the personnel involved in the liquidation and their respective charge-out rates were appropriate to the nature of the work undertaken. This information may in some cases raise concerns as to whether there has been overservicing and overcharging. If there are suggestions of this in the information provided, the Court can request further information.

See also Mirror Group Newspapers plc v Maxwell (No 2) [1998] 1 BCLC, 638, 648: ('[The office holder] must explain the nature of each main task undertaken, the considerations which led them to embark upon that task and, if the task proved more difficult or expensive to perform than at first expected, to persevere in it. The time spent needs to be linked to this explanation, so that it can be seen what time was devoted to each task'); Re Solfire Pty Ltd (in liq) No. 2 [1999] 2 Qd R 182, 191: ('[W]hen a provisional liquidator seeks to have his remuneration determined by the court he should provide a document not dissimilar in form to the Bill of Costs in taxable form provided by a solicitor to his client ...'); Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96, 103: ('It may well be that in a particular case information particularised as suggested by [the judge in Re Solfire Pty Ltd (in liq) No. 2] would be appropriate. In other cases less detailed information may be required. Every case depends on its own circumstances. But the overriding principle remains: sufficient information must be provided to the court to enable it to perform its function ...').[46]

128 Subject to the Scheme specific costs and some incorrect timesheets, I am satisfied that the rate charged by the liquidator is fair and reasonable. I am also satisfied that the work performed was done in a reasonable time. I am not satisfied that all of the costs claimed are appropriate and I also note that there have been numerous other objections by Primary, as in the annexure hereto they agree that only part of the costs have been paid. In applying Re Stockford, I believe a lodestar amount of 90% on the balance due should be allowed. I will therefore allow costs and expenses in the sum of $322,418.80 (($387,243.11 - $29,000.00) x 90%).

129 The liquidators submit that the lienable property comprises the property held on trust by WFL as Responsible Entity of the 9599 scheme which is now held on trust by Primary from 22 December 2011 and/or all property held on trust by Primary which was created by or benefitted from the work performed by the liquidators. They submit that as the trees were purchased and planted using the contributions of investors, they are part of scheme property of the 9599 scheme.

130 In support of their submission, the liquidators rely on Capelli v Shepard,[47] where the Court of Appeal stated:

His Honour then concluded that, since the trees were purchased and planted using the contributions of investors, they are 'property acquired directly or indirectly with, or with the proceeds of contributions'. Accordingly, they are part of scheme property and the declaration set out above was made. In the context of the debate between the investors and ASIC, on the one hand, and the receivers and managers and EIL, on the other, as to whether the trees were part of the property to be wound up, his Honour was correct in concluding that they did.[48]

131 The Court of Appeal noted that the submissions before the Court exposed a problem that when the trees were planted they became part of the land and that the rights of the investors and those of the scheme liquidator in respect of the trees must accommodate the fact that when planted these rights were less than rights of ownership.[49]

132 The Court of Appeal when considering this issue, determined as follows:

Accordingly, it was said that the scheme property includes, not ownership of the trees, but rather the rights with respect to them, which rights the scheme acquired using the contributions. Likewise, it includes the like rights with respect to the leases themselves. We think that this is correct. What these rights are in a given case we are unable to determine. Mr Shepard's affidavit describes the complexity of the PYEP scheme and the projects which are included in it. We mention by way of example that the owners of the allotments differ in differing projects within the scheme.

It was contended on behalf of ASIC that it is legally possible for the owner of land to deal with standing timber separately from the land on which it stands and that the scheme documents, in particular cl 7 of the lease, achieve this. In this sense, it might be said that property in the trees can pass from the lessor to the scheme. Accordingly, ownership of the trees is part of the scheme property and may be converted into money by the scheme liquidator. We consider that the scheme documents do not achieve this objective. The right conferred by cl 7 is to require the purchase of the investor's 'right of title and interest in the trees'.[50]

133 The Court of Appeal further stated: [51]

The scheme documents do not vest legal title in the trees in the investors. They acknowledge, as is plainly correct, that the investors have an interest in the trees and rights and obligations with respect to them. The rights in respect of the trees of the investors as lessees of the land depend upon the terms of the scheme documents, notably, the lease - cl 2.1 (right to cultivate and harvest) and cl 7 (right to require the landlord to purchase the investors' rights in the trees). These rights are part of the scheme property available to the scheme liquidator upon a winding up of the scheme.

His Honour posed, as an absurd consequence, an outcome which would deny the scheme liquidator access to the standing trees for the purposes of a winding up until they are harvested some years in the future. Notwithstanding that the absurdity may not be surprising, we, too, shrink from the conclusion contended for on behalf of the investors. Clause 2.1 of the lease gives to the investors extensive rights to use the demised land for the establishment and harvesting of a plantation of trees. These rights are part of a venture pursuant to which the investors hope to receive financial return from a primary production business. It is to be expected that, I the venture should fail, the assets of the venture might be realised to satisfy creditors and, where appropriate, to be distributed among the venturers. We agree with his Honour that the scheme property does include present rights to and interests in the standing trees in so far as those rights and interests were acquired by the application of contributions.

We return now to the terms of the declaration. It will be apparent that we consider that the relevant part of the scheme property is not the trees themselves; it is the rights of the parties to the scheme with respect to those trees. Accordingly, read literally, his Honour was not correct to express the declaration in the terms that the 'trees ... are part of scheme property'. Nevertheless, it is abundantly clear that in formulating the declaration, his Honour had in mind, not the trees, but rights over and interests in the trees. This is apparent from the manner in which the question arose in the trial below and from his Honour's judgment.

134 Therefore, according to the Court of Appeal, the liquidator had a right of title and interest in the trees.

135 Primary submits that the wording used in key scheme documents for the 9599 scheme suggests that growers in the 9599 scheme retained certain rights in respect of trees. They rely on the lease documents which provides:

A. If the Lessee elects to plant the demised land with Trees and to use and maintain it for purposes of afforestation:

(i) He shall not be obliged to engage any particular contractor for the performance of the desired works and services whether nominated or recommended by the Lessor or by any other company firm or person but the Lessee shall have and retain the unrestricted freedom of choice of contractor or he may perform the requisite works and services himself.

136 Primary also relies on clause 9.1(a) of the Investment Deed that established the 9599 scheme which was replaced by the constitution in 1999. That clause states:

Except as otherwise provided in this Deed and subject to the Corporations Law, the Manager and the Representative shall recognise the Grower his executors or administrators as the absolute owner of the Hectares as set out in the Register and all persons may act accordingly and the Manager and the Representative shall not sae as herein otherwise provided or except as ordered by a Court of competent jurisdiction or as by statute required be bound to take notice of any trust, or equity whether express implied or constructive affecting the ownership of any Hectare or the rights incidental thereto and the receipt by such Grower his executors or administrators for any moneys payable in respect of the said Hectares shall be good discharge to the Manager and the Representative.

137 Clause 9(1)(a) of the Investment Deed was not replicated in the constitution, but clause 13 of the constitution stated:

The harvesting and sale of grower's trees is carried out by the grower unless otherwise agreed with the manager.

138 'Grower' was defined in clause 25 of the constitution as "the person Registered as the holder of the hectare and includes persons jointly or deemed jointly to be so Registered". 'Hectare' was defined at clause 25 of the constitution as an interest in the hectare and land and all improvements to the land pursuant to a project document.

139 Primary therefore submits that the property of Primary must be rights or interests in trees held on behalf of growers (and subject to the grower's individual rights). They also submit that instead of referring to the trees, the liquidators' must be clear about how they consider such rights and interests in trees will be made subject to any equitable lien.

140 Even though there are some differences in the wording of the scheme documents in Capelli v Shepard to the 9599 scheme, it is my view that Capelli v Shepard applies. I am prepared to order that the property held on trust by Willmott Forests Limited as the Responsible Entity of the 9599 scheme which is now held on trust by Primary on 22 December 2011 is lienable property. It is not subject to growers individual rights. As to property held on trust by Primary which was created by or benefitted from the work performed by the liquidators, the liquidators should be more specific as to what that property is.

1. What categories of costs are being claimed by the plaintiffs?

The specific, general and mixed costs identified in Appendices 3, 6, 7 and 9 to exhibit CDC-33.

2. What categories of costs are recoverable on a Re Universal Distributing basis?

Part of the costs identified in Appendices 6, 7 and 9 to exhibit CDC-33.

3. What categories of costs are recoverable on a Re Berkeley Applegate basis?

4. For those categories of costs recoverable on a Re Universal Distributing basis, what amounts are recoverable?

5. For those categories of costs recoverable on a Re Berkeley Applegate basis, what amounts are recoverable?

6. For the amounts recoverable, to what assets does the plaintiffs' lien attach?

The property held on trust by Primary that was created or benefitted from the work performed by the liquidators.

WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 063 263 650)

First Plaintiff and First Defendant by Counterclaim

IN HIS CAPACITY AS LIQUIDATOR OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 063 263 650)

IN HIS CAPACITY AS LIQUIDATOR OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 063 263 650)

PRIMARY SECURITIES LTD (CAN 089 812 635) IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE WILLMOTT FORESTS 1995-1999 PROJECT (ARSN 089 598 612)

WILLMOTT FORESTS INVESTMENT MANAGEMENT PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 098 718 837)

[1] [1933] HCA 2; (1933) 48 CLR 171.

[2] (1989) 2 Ch 32.

[4] [2009] WASCA 68.

[6] [2011] VSC 380 [48].

[7] [2014] HCA 15.

[9] Stewart v Atco Controls Pty Ltd (In Liq) [2014] HCA 15 at [29].

[12] In re Contract Corporation (Gooch's Case) (1872) LR 7 Ch App 207 at 211.

[13] Re Tavistock Ironworks Co (1871) 24 LT 605 at 605 per Lord Romilly.

[14] Corporations Act 2001 (Cth) s 477(2)(a).

[15] Stewart v Atco Controls Pty Ltd (In Liq) [2014] HCA 15 at [64].

[17] [2011] VSC 380; (2011) 85 ACSR 144 at [4].

[18] Stewart v Atco Controls Pty Ltd (In Liq) [2014] HCA 15 at [58].

[19] [1998] FCA 472.

[21] [2009] VSC 225, [273].

[23] [2011] VSC 417.

[24] [1999] FCA 144; (1999) 30 ACSR 377.

[25] Thackray v Gunns Plantations Ltd [2011] VSC 380; (2011) 85 ACSR 144 at [45].

[26] 13 Coromandel Place v C L Custodians [1999] FCA 144; (1999) 30 ACSR 377, 385.

[27] This relates to 32 per cent of the overhead costs not met by the receivers of Willmott Forests Limited.

[43] [2012] VSC 604.

[44] Ibid [291]. See also Adams v Morellini [2010] WASC 61 (Blaxell J).

[45] [2004] FCA 1682.

[47] [2010] VSCA 2; (2010) 29 VR 242.