Applicants : Mr F G A Beaumont & Mr K L Christensen

Applicants : Mr F G A Beaumont & Mr K L Christensen

Applicants : Mr F G A Beaumont & Mr K L Christensen

Re R & G Shelley Pty Ltd (In liq) (1991) 4 ACSR 515

Aboriginal and Torres Strait Island Commission v Jurnkurakurr Aboriginal Resource Centre Aboriginal Corp (In liq) [1992] NTSC 39; (1992) 10 ACSR 121

Ah Toy v Registrar of Companies (1987) 72 ALR 107

Re Anglo Moravian Junction Railway Co [1875] 1 Ch D 130

Birch Investments Pty Ltd v Lim, unreported; FCt SCt of WA; Library No 7396; 12 July 1988

Boehm v Goodall [1911] 1 Ch 155

Re The Bridal Centre Company Pty Ltd (1985) 3 ACLC 191

Re The British Bank of Australia Ltd [1893] VicLawRp 17; (1893) 19 VLR 54

Re Bruton Pty Ltd (1990) 8 ACLC 821

Re Carpentaria Trading Pty Ltd (In liq) (1982) 6 ACLR 402

Commissioner for Corporate Affairs v Harvey [1980] VicRp 64; [1980] VR 669

Re Contract Corporation (Gooch's Case) (1871) 7 Ch App 207

Davidson v Global Investments International Ltd (1996) 19 ACSR 332

Re Day & Dent Constructions Pty Ltd (1984) 9 ACLR 319

Re Dunn, Brinklow v Singleton [1904] 1 Ch 648

Re Dunquil Pty Ltd (In liq) (1985) 9 ACLR 950

Re Farrows Bank Ltd [1921] 2 Ch 164

Gilbert v Endean (1878) 9 Ch D 259

Hagenvale Pty Ltd v Depela Pty Ltd (1995) 17 ACSR 139

Interwest Investments Pty Ltd v Western National Plant Pty Ltd, unreported; SCt of WA (Master Bredmeyer); Library No 970597; 7 November 1997

Knowles v Scott [1891] 1 Ch 717

Lewkowski v Bergalin Pty Ltd, unreported; FCt SCt of WA; Library No 7675; 26 May 1989

Lewandowski v Lovell (1991) 4 WAR 311

Lloyd v Faraone [1989] WAR 154

Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd, unreported; FCt SCt of WA; Library No 970604; 13 November 1997

Re Millingens Ltd [1934] SASR 72

Muir v Harper [1900] VicLawRp 98; (1900) 25 VLR 534

Re Mysore Reefs Gold Mining Co (1887) 34 Ch 14

Re Nation Life Insurance Ltd [1978] 1 WLR 47

Re Nida Pty Ltd (1993) 10 ACSR 195

Re North Australian Properties Pty Ltd; Day v Mount [1984] FCA 96; (1984) 2 ACLC 319

Pownall v Conlan Management (1995) 12 WAR 370

Re Quality House Pty Ltd (In liq) [1969] 2 NSWR 54

The Queen v Lord Mayor of London; Ex parte Boaler [1893] 2 QB 146

Re Queensland Forests Ltd (In liq) [1966] Qd R 180

Re SBA Properties Ltd [1967] 2 All ER 615

Scanlon v American Cigarette Company (Overseas) Pty Ltd (No 1) [1987] VicRp 21; [1987] VR 261

Re Shanks Byrne Industries Pty Ltd [1979] 2 NSWLR 880

Re Standard Insurance Co Ltd (In liq) [1967] VicRp 67; [1967] VR 600

Stead Hazel and Co v Cooper [1933] 1 KB 840

Re Stewden Nominees No 4 Pty Ltd (1975) 1 ACLR 185

Re Wayland v Nidamon Pty Ltd (1987) 5 ACLC 73

Re Whitemark Pty Ltd (1992) 7 WAR 54

Wimborne v Brien (1997) 23 ACSR 576

Re J L Young Manufacturing Co Ltd [1900] 2 Ch 753

Western National Earthmoving Corporation Pty Ltd ("Corporation") was placed under provisional liquidation, then under voluntary administration, and thereafter it was wound up. The respondent was successively provisional liquidator, administrator and liquidator of Corporation. Western National Plant Pty Ltd ("Plant") was placed under provisional liquidation and the respondent was appointed provisional liquidator. Thereafter, the application to wind up Plant was dismissed and the appointment of the respondent was terminated. The dismissal of the winding up order was made "without prejudice to the provisional liquidator's right to claim remuneration and expenses".

The respondent brought applications to the learned Master in which he sought approval of the remuneration to which he said he was entitled as provisional liquidator and administrator of Corporation and as provisional liquidator of Plant. The remuneration claimed by the respondent as provisional liquidator of Corporation was $79,091.30, as administrator of Corporation $94,636.20, and as provisional liquidator of Plant, $60,563.70 together with disbursements of $101,899.06.

The three applications were heard together and the reasons for judgment given by the learned Master dealt, in a composite way, with all three. The learned Master gave two sets of reasons dealing with the applications that came before him. At the conclusion of the first set of reasons the learned Master indicated that the respondent was entitled to some remuneration, but an issue remained as to whether the respondent had claimed for work done outside the scope of his powers. The applications were then adjourned to allow more evidence to be adduced on this issue, and for further argument to take place. Thereafter, the learned Master found that the respondent was entitled to the remuneration claimed by him in each of the three applications.

Various parties appeared as objectors at the hearing before the learned Master. As regards Corporation, the objectors were creditors. The objectors in regard to Plant included Plant itself, and certain contributories. No point was made before the learned Master or before this Court as to the standing of the objectors.

The objectors are the applicants in these proceedings. They apply for leave to appeal against the learned Master's decisions approving the remuneration claimed in each instance. The applications for leave to appeal were heard together with the appeals.

At the outset, the question arises as to whether the appeals are from interlocutory orders. Higgins J in Re R & G Shelley Pty Ltd (In liq) (1991) 4 ACSR 515 held in a similar case that such orders are interlocutory, on the basis that they are part of the winding up proceedings. On appeal his conclusion in this regard was referred to by the Full Court of the Federal Court without comment: see Shirlaw v Taylor [1991] FCA 415; (1991) 31 FCR 222. Little point was made of this issue by the respondent and insofar as it may be necessary to do so, we would grant leave to appeal in each instance.

These appeals raise questions concerning the principles and procedure to be applied in determining the remuneration to which a provisional liquidator is entitled. It would be convenient at this stage if we expressed our views as to the relevant rules applicable, as these are determinative.

Generally, to paraphrase the Full Court of the Federal Court in Shirlaw v Taylor at 230, a provisional liquidator, as an officer of the court, working for the benefit of all who have legitimate interests in the assets, is entitled to look to the assets of the company of which he is a provisional liquidator to meet his remuneration and his liabilities and outgoings. Consonant with this principle, s473(2) of the Corporations Law provides:

"A provisional liquidator is entitled to receive such remuneration by way of percentage or otherwise as is determined by the court."

As Corporation is in liquidation, O81G r90 (i.e. part of the Corporation Rules) is applicable. This rule provides:

"Subject to any order of the court the provisional liquidator shall, on accounting to any liquidator, be entitled to be paid out of the property of a company all costs, charges and expenses properly incurred by him and remuneration as may be authorised by the order appointing him, or any subsequent order, and may retain out of that property the amount of his costs, charges, expenses and remuneration."

As the respondent is now the liquidator of Corporation it is appropriate for him to apply to the court pursuant to s473(2) of the Corporations Law determining his remuneration as provisional liquidator.

For his services as administrator of Corporation the respondent is entitled (in terms of s449E(1)(b)) of the Corporations Law) to "such remuneration as the court fixes". It was accepted by the parties that the relevant principles applicable to administrators are no different to those applicable to provisional liquidators, and in these reasons no distinction is made between them.

There is no liquidator of Plant as the application to wind up the company was dismissed, and it is necessary for the respondent to obtain an order pursuant to s473(2) in regard to his remuneration for his services as provisional liquidator.

In the present case, the respondent does not seek to be remunerated by way of percentage, and by s473(2) he is entitled to be remunerated on some other basis. It is of course implicit in s473(2) that, whatever the basis on which the provisional liquidator is to be remunerated, the remuneration as determined must be fair and reasonable.

The respondent is a partner of a firm of chartered accountants and several employees of his firm assisted him in carrying out his duties as provisional liquidator. The remuneration to which the respondent is entitled includes compensation for work so done for him by the employees of his firm: Re The Trustees Executors and Agency Co Ltd (Receovers and Managers appointed) (1984) 9 ACLR 497.

The applicants submitted that the respondent was not entitled to have his disbursements, properly incurred, determined under s473(2). They argued that the court is only entitled to fix the fees to which the respondent is entitled and not his disbursements (including expenses incurred in regard to matters such as printing and stationery, storage and telephone, and solicitor's fees).

As far as we are aware it has long been the practice in this Court for the remuneration of provisional liquidators to be determined on the basis that it includes disbursements of the kind presently in issue. Further, there are several instances in the cases of expenses being regarded as part of the provisional liquidator's remuneration. See, for example, Re Solfire Pty Ltd (In liq) (No 2) (1998) 16 ACLC 1156 (at 1166), where Shepherdson J, relying on the principle that a liquidator is entitled to be indemnified against expenses properly incurred, held that solicitors' "fees and outlays" for which the liquidator was liable formed part of the liquidator's remuneration (and, after reviewing the remuneration of a provisional liquidator, made orders concerning his "fees and outlays", as well). In Re Reiter Bros Exploratory Drilling Pty Ltd [1994] TASSC 42; (1994) 12 ACLC 430 (at 435), Zeeman J held that the remuneration to which a provisional liquidator was entitled included the professional fees charged by an accountant, not part of the provisional liquidator's firm, to whom the provisional liquidator had delegated work.

Nevertheless, we have come to the conclusion that the provisional liquidator's disbursements should not be determined under s473(2) as part of "remuneration". We set out the reasons for this view below.

Section 473(2) of the Corporations Law makes it a requirement for a provisional liquidator's remuneration to be determined by the court. It says nothing as to his disbursements. Order 81G (Corporations Rules) r90 preserves the distinction between "costs, charges and expenses" and "remuneration". "The ordinary meaning of remuneration is pay for services rendered" - Chalmers v Commonwealth of Australia [1946] HCA 37; (1946) 73 CLR 19, per Williams J at 37 - and would not extend to debts incurred.

By way of comparison, the established rule in relation to trusts is that a trustee is to be saved harmless from the obligations attaching to the performance of his office as trustee, and a trustee is entitled to be reimbursed out of the trust property in respect of all the charges and expenses properly incurred in the execution of the trust. Trustee legislation now commonly provides that a trustee may reimburse himself or pay or discharge out of the trust property all of the expenses incurred in or about the execution of his trusts and powers - see Jacobs, Law of Trusts in Australia, 6th edition, at 628. And see also Worrall v Harford [1802] EngR 342; (1802) 8 Ves Jun 4; 32 ER 250, at 8, 252.

In Adsett v Berlouis [1992] FCA 368; (1992) 37 FCR 201, at 209-210, the Federal Court said:

"A trustee in bankruptcy is governed by the general law relating to trustees save where the position of the trustee is modified by the Bankruptcy Act or Rules: see re Ladyman (1981) 55 FLR 383 at 394-396. The Act confers no right on a trustee to be reimbursed in respect of the costs, charges or expenses incurred in the administration of the estate. The trustee's right to an indemnity is provided under the general law. Under that law a trustee is entitled as of right to a full indemnity out of the trust estate against all costs, charges and expenses properly incurred by the trustee:

see Turner v Hancock (1882) 20 Ch D 303 at 305; re Love; Hill v Spurgeon (1885) 29 Ch D 348 at 350; re Beddoe; Downes v Cottam [1893] 1 Ch 547 at 558.

A trustee's right to remuneration for his or her own efforts, as distinct from reimbursement of outgoings, is not conferred by the general law. A trustee, generally speaking, has no right to remuneration. Neither does the right to remuneration arise out of the indemnity in respect of "costs, charges or expenses". That collocation of words does not include the value of services provided by the trustee in administering the estate. The concepts of remuneration and outgoings are distinct. It is true that in some statutory provisions - for example, section 109 of the Bankruptcy Act - the trustee's remuneration is specifically included amongst the "costs, charges and expenses of the administration of the bankruptcy". But such special provisions, giving an extended meaning to "costs, charges and expenses", do not remove the conceptual dichotomy between remuneration and outgoings. Rather, they group the two concepts to the limited purposes of the relevant sections."

See also Grime Carter & Co Pty Ltd v Whytes Furniture (Dubbo) Pty Ltd (1983) 1 NSWLR 158 at 160-161 and Burns Philp Investment Pty Ltd v Dickens (No 2) (1993) 31 NSWLR 280 at 283.

Regarded as an agent, a provisional liquidator has a right to reimbursement from the company of all his expenses - see Halsbury's Laws of England, 4th edn (Reissue) para 123.

Accordingly, there would seem to be no requirement for the disbursements incurred by a provisional liquidator being "determined", although no doubt they can be challenged.

The Corporations Law facilitates such a challenge. Under s539(1), a liquidator ( which, by s539(1A) includes a provisional liquidator) is required to include his "payments" in his half-yearly account. That account may be audited (s539(2)). Under s539(5) the liquidator (and provisional liquidator) is to give notice that the account has been made up to every creditor and

contributory. Should the liquidator (or provisional liquidator) be guilty of "misfeasance, neglect or omission" the Court may order him to make good any loss the company has sustained thereby (s536(3). Further, the Court may at any time require a liquidator (or provisional liquidator) to answer any inquiry and may direct an investigation into his books (s536(3)). A provisional liquidator is also subject to the control provided by s1321.

An administrator is liable for debts he incurs in performance of his functions (s443A(1)). Section 443D confers on an administrator an entitlement to an indemnity out of the company's property for those debts, as well as for his remuneration as fixed under s449E. In the circumstances, the respondent, as administrator of Corporation, appears not to need any specific order as to the debts he incurred (which give rise to his claim for disbursements).

In the circumstances, in our opinion, the learned Master was not empowered by s473(2) to determine, as part of the respondent's remuneration, the disbursements incurred by him.

The applicants contended further that the claim by the respondent in respect of his solicitor's fees could not be sustained without those fees having been taxed. This submission cannot be upheld: Re Western Continental Corporation Ltd (In liq) (1990) 1 WAR 402. It was open to the learned Master to be satisfied as to the reasonableness of the solicitor's fees, without those fees having been taxed. Whether the learned Master erred in being so satisfied is a matter to which we shall return.

The applicants submitted that the respondent was required to prove his remuneration by direct and admissible evidence. It was said that the learned Master ought not to have admitted certain paragraphs and annexures of the affidavits filed on the behalf of the respondent on the ground that the material in question constituted hearsay, statements of opinion or conclusions

unsupported by any admissible evidence or was not sworn to be true. We do not propose to refer to the specific paragraphs and documents said to be inadmissible. It is only necessary to deal with the issue of principle raised by this argument.

The procedure by which the remuneration is to be determined is not made clear by the relevant legislation. As Young J observed in Burns Philp Investment Pty Ltd v Dickens (No 2) (supra) at 288, when dealing with the remuneration to which liquidators are entitled, "the principles to be applied [are] in some respects obscure". Essentially, however, the procedure generally applicable is that long utilised in the passing of accounts (see Re Universal Distributing Co Ltd (In liq) [1933] HCA 2; (1933) 48 CLR 171) as set out in O45 r4. For example, in Burns Philp Investment Pty Ltd v Dickens (No 2), Young J ordered an inquiry before a Master and said (at 288):

"The contents of the directions should be a matter for the Master but I would consider they would have to involve some process whereby the plaintiffs set out the expenses claimed by the liquidator which they attack, the liquidator could file detailed accounts as to those items, there would be vouching out of court on those items and the Master would then settle the questions of principle."

It is to be borne in mind that a summary procedure is involved, not unlike that applicable to the taxation of solicitors' costs, which is not necessarily subject to all the rules that would apply in an action: Symphony Group Plc v Hodgson [1993] 4 All ER 143 at 153.

Some guidance can indeed be derived from the taxation of solicitors' costs as solicitors, like provisional liquidators, are officers of the court whose costs are fixed as part of the supervisory function of the court. In particular, it is to be observed that the rules of evidence are ordinarily not strictly observed

in the taxation of solicitors' costs. As Sir Robert Megarry V-C said in Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379 at 1385:

"My recollection over the last 15 years is that it is common enough for the parties, without objection, to refer to correspondence and other documents when costs come to be argued after judgment has been given; and this has not been limited to correspondence before action brought, or to correspondence or other documents which have been put in evidence during the trial."

"The matter, I think, is one for determination by the Judge when considering how to exercise his discretionary power to determine by whom and to what extent the costs are to be paid."

As a starting point, in our view, the onus is on the provisional liquidator to establish that the remuneration claimed is fair and reasonable. It is the function of the court to determine the remuneration by considering the material proffered and bringing an independent mind to bear on the relevant issues. The initial task is to consider whether, prima facie, the provisional liquidator has made out a case for the determination of the amounts claimed. The fact that there may be no person who objects to the claim, or any part of the supporting testimony, or that objectors advance unsustainable arguments, or do not properly formulate their objections, cannot detract from the court's duty in this respect. The judicial officer conducting an inquiry under s473(2) is required to make an independent determination of the remuneration claimed, even if there is an absence of objectors, or appropriately detailed objections, or objections advanced on arguable grounds. Of course, once the court is satisfied that the provisional liquidator has made out a prima facie case that the remuneration claimed should be allowed, the absence or inappropriateness of points taken by objectors becomes relevant.

Should the provisional liquidator fail to provide adequate evidentiary material to enable the court to determine whether the amounts claimed are fair and reasonable, no order should be made: Re Solfire Pty Ltd (In liq) (No 2). Thus, for example, the mere listing of the persons who performed the work, the hours worked by each, and the amounts claimed, may well be insufficient material for the court to come to a proper decision: Re Reiter Bros Exploratory Drilling Pty Ltd.

Ordinarily, to commence the proceedings, the provisional liquidator will provide the court with a statement of account reflecting in appropriate itemised form, details of the work done, the identity of the persons who did the work, the time taken for doing the work, and the remuneration claimed accordingly. The statement of account should also reflect in appropriately itemised form the expenses incurred by the provisional liquidator, accompanied where necessary by voucher proof. Sufficient detail should be provided to enable the court to determine whether the disbursements were reasonably incurred and that the amounts claimed are reasonable.

The statement of account should be verified by affidavit. When the remuneration claimed involves work carried out by the provisional liquidator and his staff, the verifying affidavit need state merely that the work described in the statement of account was done by the provisional liquidator or under his personal supervision, and that from personal knowledge or from the records kept by the provisional liquidator or his firm, or from some other appropriate source, he believes that the information contained in the statement of account is correct. When disbursements are claimed, the affidavit should verify that they were incurred and, if necessary, why they needed to be incurred.

In Re Solfire Pty Ltd (In liq) (No 2), Shepherdson J said at 1,164:

"In my view, when 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 ... He should identify the person or persons and the grade or grades of the person or persons engaged in the particular task concerning the provisional liquidation, he should identify that task and dates on which time was spent on it, the amount of time spent on it and he should identify the relevant rate, according to the grade of the person or persons performing the work. I also consider that he should require the person performing the work to keep reasonably detailed diary notes and time sheets which document should be open to inspection by persons entitled to see them."

In our opinion, however, it is, with respect, unnecessary to lay down an absolute rule, in such detailed terms, concerning the statement of account to be provided by a provisional liquidator. It may well be that in a particular case information particularised as suggested by Shepherdson J 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 under s473(2).

If the Master were to be satisfied that the statement of account was sufficiently detailed to enable the remuneration to be determined, but there were objections to the account, special directions should be given in regard to the mode in which the account is to be taken or vouched. The procedure set out in O45 should as far as possible be adopted. If, for example, the objector challenges whether a particular item of work was in fact done, or whether the person alleged to have done the work spent the time alleged in doing it, it may be necessary for the provisional liquidator to call direct evidence establishing the correctness of the allegations made: see generally Gava v Grljusich, unreported; FCt SCt of WA; Library No 970492; 19 September 1997.

Notice should be given of the points on which the provisional liquidator will be cross-examined (if cross-examination is allowed). The notice of

objection should be supported by affidavit. Cross-examination of the provisional liquidator and the objecting party may then occur. But care should be taken to follow the admonition of Sir Robert Megarry V-C in Computer Machinery Co Ltd v Drescher (at 1386), namely:

"It would not be right to allow anything resembling a trial of the action to take place in the guise of an argument on costs."

Having set out the general principles applicable, we turn now to the particular facts relating to these appeals.

The respondent's claims for remuneration as regards the fees of his firm were based on hourly rates. The respondent produced to the learned Master, for example, an invoice showing that, as regards Plant, for the period from 2 October 1997 to 31 January 1998, he and employees of his firm had spent between 50 and 60 hours working on tasks relating to his duties as provisional liquidator. Thus, for instance, a manager was said to have worked for 16.10 hours and 11.50 hours, a secretary or word-processor operator was said to have spent 14.30 hours and 2.50 hours, a computer operator 1.20 hours and a supervisor 7.60 hours. Various rates were then accorded to the hours spent and the aggregate of the fees charged for all persons specified was calculated as being $8,178.20. Attached to this invoice was a document which purported to set out: "Details of work performed for the periods 2 October 1997 to 31 January 1998". This document was in very general terms. It identified in an all-embracing fashion certain tasks that were performed, but did not specify who performed them, and how long each task took. Furthermore, many of the tasks were described in such a way that it was impossible to discern why they were necessary, what precisely was involved in performing them, and what level of complexity or responsibility attached to them. The descriptions tended more to conceal this kind of detail rather than reveal information essential to

the court's function of determining whether the remuneration charged was fair and reasonable. Typical examples of the descriptions were the following:

. "Discussions and correspondence to Smith Broughton and Sons regarding retention of plant and equipment pursuant to lien to satisfy outstanding fees and disbursements.

. Liaise with Marsh and McLennan, Insurance Brokers regarding insurance of WNP assets ...

. Discussions with Mr Darren Smith regarding Mr Caratti's request to replace three tyres on equipment held at Smith Broughton, discussions with Mr Kevin Pollock regarding the same and correspondence to Mr John Caratti confirming conditional access to vehicles so as to preserve the value of WNP assets.

. Discussions and correspondence with and to Smith Broughton regarding termination of provisional liquidation and retention of equitable lien over assets.

. Discussions and correspondence with Smith Broughton regarding action by WNP initiated by Mr John Caratti against Smith Broughton regarding release of plant and equipment items and liaising with Blake Dawson Waldron in relation thereto ...

. Numerous discussions, meetings and correspondence with Blake Dawson Waldron, lawyers acting on my behalf regarding various matters ..."

The information so provided gave the learned Master little opportunity to assess what work was done and what each task involved; it gave him no opportunity to determine who did the work, or how long it took for each particular category of work to be performed. Nothing was placed before the learned Master to enable him to assess what work was done by the particular persons for whose hours of work the respondent sought to charge. Nothing

was said as to how long any particular category of work took, or who performed any particular category of work.

The amounts claimed for remuneration were not insubstantial and in our view the respondent could not discharge the onus that was on him by simply proving that he and several other members of his staff spent a certain number of hours in performing work described in very broad terms. As regards disbursements, the difficulties were compounded. For example, the respondent claimed disbursements paid by him, in his capacity as provisional liquidator of Plant, to his solicitors and counsel. The amount paid to the solicitors was $27,917.48 and $4,160.00 was paid to counsel. A statement of account was received from the solicitors reflecting an "approximate total" of fees amounting to $23,000.00. The account did not specify how much was charged for each item of work performed by the solicitors. Not only was it extremely difficult for the learned Master to make any assessment as to the reasonableness of the amount claimed for the fees charged by the solicitors, but there was an unexplained discrepancy between the "approximate total" of $23,000.00 in the account and the sum of $27,917.48 for which claim was made by the respondent. In passing, it might be said that, having regard to the relatively large amounts charged, the respondent would have been well advised to have required the solictors to tax their fees under O81G r110.

Other material presented by the respondent in support of his claim revealed additional problems. It is unnecessary to go into any detail in this regard: it is sufficient to state that questions arise in the material as to whether work was duplicated and whether work was done after the termination of the provisional liquidation, for which the respondent might not be able to charge at all. Indeed, there was a consistent failure on the part of the respondent to

differentiate between work done by him prior to the termination of provisional liquidation and thereafter.

The learned Master did not make an independent assessment of the material adduced by the respondent in support of his claim. He was persuaded to allow the remuneration claimed by reason of the omission of the applicants to make proper objection thereto. The learned Master observed:

"A general objection has been taken to the provisional liquidator's claim for remuneration. At no time was he specifically advised what items of his remuneration caused concern. Not only that, in addition to providing material on affidavit to support his application, the solicitors for the provisional liquidator provided to [the applicants' solicitor] detailed time sheets of all the work done in the course of the provisional liquidation. At no time were the solicitors advised of difficulties the Objectors may have had with these time sheets. In my view, the failure of the Objectors to specify well in advance of the hearing what caused them concern significantly weakened their position."

"The Objectors filed no affidavit material at all. In my view this was a serious omission and significantly undermined the position that they took. It is apparent that they could have filed evidence from a suitably qualified provisional liquidator who could have offered an opinion as to whether or not the work done in the provisional liquidation was necessary and whether or not the amount charged was reasonable ...

But here no such affidavit was filed. It seems to me, in these circumstances, provided the evidence of the provisional liquidator is admissible it should be accepted and I am entitled to rely upon it. That does not mean that all the evidence has to accepted uncritically. It is for the court to determine what remuneration is reasonable."

No exception could be taken to any of the learned Master's observations. The difficulty however, is that, for the reasons we have set out above, the evidence of the respondent as to how he arrived at the amounts claimed by him, even if

accepted, does not establish that those amounts are fair and reasonable. True it is that the respondent asserted the reasonableness of the remuneration claimed, but this is a matter for the court to determine on the basis of the evidence before it. As that evidence did not reveal in sufficiently appropriate detail how the amounts claimed were arrived at, it was not possible for the learned Master to come to any conclusion as to the reasonableness of the remuneration as claimed. Accordingly, we would uphold the appeals on this ground (in addition to the ground regarding the determination of the respondent's disbursements). In our opinion, the orders made by the learned Master should be set aside, the applications should be remitted to him for decision according to law, directions should be given allowing the respondent to file further affidavits supplementing the evidentiary material relied upon by him, and the applicants should be given leave to file affidavits in reply.

Counsel for both the applicants and the respondent requested the Court to deal with the other issues that were raised in the appeals notwithstanding that the applicants might be successful on the ground already dealt with. It was said that when the matters are dealt with before the learned Master again, the Court's views will be helpful in the resolution of the matter. We shall accordingly deal briefly with the other issues that were fully argued.

The learned Master accepted that the respondent was entitled to charge in accordance with what is described as the IPAA rate (the rate recommended by the Insolvency Practitioners Association of Australia). In Re Fine Food Distributors Pty Ltd (1993) 11 ACLC 118, Zeeman J said at 120:

"It is not inconsistent with what was decided in Re Queensland Forests Ltd (In Liq) [1966] Qd R 180 to proceed otherwise than in accordance with the scale contended for by the applicants if there are sound reasons for so doing. If there are such sound reasons, based on evidence indicating that some other scale is appropriate, then the adoption of such other scale is also

consistent with what was decided in Re Standard Insurance Co Ltd (In Liq) [1967] VicRp 67; [1967] VR 600.

It was within the learned Master's discretion to apply the IPAA rates, and there is nothing in the papers which suggests that he erred in exercising his discretion in that regard: cf Cape v Redarb Pty Ltd (Receiver and Manager appointed) (1991) 6 ACSR 359.

The applicants submitted that the learned Master erred in finding that a manager employed by the respondent's firm could be charged out as a "manager 1" under the IPAA guidelines. In our view there was sufficient material which entitled the learned Master to make that finding.

The applicants contended that the learned Master erred in exercising his discretion in failing to allow the applicants to cross-examine the respondent. In our view, it would not be appropriate to express any opinion in regard to this issue. The question of cross-examination should be considered afresh (should that arise again) when the matter is re-heard. Should cross- examination be allowed it would be open to the learned Master to confine that cross-examination to whatever limits he considers appropriate.

The applicants contended that the learned Master should not have allowed any charges for the protection or enforcement of the respondent's equitable lien in respect of his remuneration. In our view, for reasons stated above, the learned Master erred in this respect as the material before him did not adequately establish precisely what work was done after termination and what work was done before. We think it undesirable to express any further view on this issue at this stage. We were informed that there is pending litigation - in another and separate action - concerning the existence of the lien. In so far as the applicants' contentions rest on the proposition that there was no lien in existence, it would be appropriate for any adjudication upon the respondent's right to remuneration in respect of work done for the protection of

such lien to be adjourned until his rights thereto are determined by those separate proceedings.

The applicants contended that the learned Master erred in not finding that the respondents ought not to have been remunerated because there was a potential conflict of interest in his appointment as the provisional liquidator of both Corporation and Plant. When it was pointed out to senior counsel for the applicants that, as the respondent had completed his tasks as provisional liquidator, the issue was not whether there was a potential conflict but whether there was an actual conflict, he submitted that the problem was that the applicants did not know "exactly what [the respondent] did". In other words, the applicants were not in a position to allege whether or not an actual conflict of interest existed. That being so, it is unnecessary to say anything further about this issue.

The applicants contended that the learned Master erred by allowing the respondent remuneration for work done when acting outside his powers as provisional liquidator. One of the issues of this kind concerned work done by the respondent in preparing reports as to the affairs of Corporation and Plant. The Corporations Law does not impose a duty on the provisional liquidator to compile and provide to the Court a report on the financial position of the company; by s475(7) of the Corporations Law that duty is imposed on the directors alone. It was submitted on the respondent's behalf that, in compiling the reports, the respondent was acting as an officer of the Court to assist the Court. In our view, however, having regard to the express duty imposed on directors, and to the nature of the obligations undertaken by a provisional liquidator, it cannot be said that the compilation of the reports were within the powers of the respondent: see Re Reiter Bros Exploratory Drilling Pty Ltd at 439.

A further issue so raised relates to the respondent's fees for holding discussions with and engaging in correspondence with creditors. The respondent did this in order to keep creditors informed in circumstances where they were concerned as to the financial position of the companies concerned. He also engaged in this correspondence for the purposes of identifying and locating assets and in determining the ownership of the assets and any claims that might be made to ownership or security interests in those assets. In our view these tasks fell within his powers and the respondent should be entitled to charge for them.

Other complaints were made by the applicants on the ground that the remuneration claimed related to work outside the respondent's powers. These matters are all dealt with by the learned Master in his reasons and in our view nothing has been demonstrated to show that there was any error on his part in regard thereto.

I agree with the reasons for judgment of Kennedy and Ipp JJ and with the orders proposed. There is nothing I wish to add to those reasons.