FEDERAL COURT OF AUSTRALIA ACN 104 635 369 Pty Ltd (in liq) (formerly Total Plant Services Pty Ltd) v Hamilton [2015] FCA 1219 Citation: ACN 104 635 369 Pty Ltd (in liq) (formerly Total Plant Services Pty Ltd) v Hamilton [2015] FCA 1219 Parties: ACN 104 635 369 PTY LTD (IN LIQUIDATION) (FORMERLY TOTAL PLANT SERVICES PTY LTD) v WILLIAM JAMES HAMILTON IN HIS CAPACITY AS FORMER LIQUIDATOR, STEVEN ARTHUR GLADMAN IN HIS CAPACITY AS FORMER LIQUIDATOR, CHRISTOPHER DAMIEN DARIN AND GRAEME ROBERT BEATTIE, IN THEIR CAPACITY AS OFFICIAL LIQUIDATORS, AJ AZZOPARDI INDUSTRIES PTY LTD ACN 060 651 845 and AZBUILD PTY LTD ACN 089 795 639 File number: NSD 658 of 2014 Judge: GLEESON J Date of judgment: 13 November 2015 Catchwords: CORPORATIONS – determination of remuneration of liquidators – whether amounts claimed fair and reasonable – some amounts claimed prima facie fair and reasonable – where total costs of liquidation vastly excessive having regard to the value of property dealt with – 20% discount applied to claims – Corporations Act 2001 (Cth), s 511 PRACTICE AND PROCEDURE – review of exercise of power by Registrar – hearing de novo – Federal Court of Australia Act 1976 (Cth), s 35A(6) Legislation: Corporations Act 2001 (Cth), ss 436DA, 473, 477, 502, 503, 509, 511 Corporations Regulations 2001 (Cth) Federal Court of Australia Act 1976 (Cth), s 35A(6) Cases cited: ACN 104 635 369 (in liq) (formerly Total Plant Services Pty Ltd) v Combined Group Management Pty Ltd [2014] FCA 1402 ACN 104 635 369 Pty Ltd (in liq) (formerly Total Plant Services Pty Ltd) v Hamilton [2015] FCA 643 AJ Azzopardi Industries Pty Ltd v ACN 104 635 369 (formerly known as Total Plant Services Pty Ltd) (in liquidation) [2014] FCA 710 Deputy Commissioner of Taxation v Starpicket Pty Ltd (No 2) [2013] FCA 699 Date of hearing: 26 June, 22 July 2015 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 113 Counsel for the Plaintiff and Ninth Defendant: Mr D Nagle Solicitor for the Plaintiff and Ninth Defendant: Access Law Group Counsel for the Seventh Defendant: The Seventh Defendant appeared in person Counsel for the Eighth Defendant: Mr B Katekar Solicitor for the Eighth Defendant: O'Neill Partners - Commercial Lawyers Counsel for the Tenth and Eleventh Defendants: Ms A Hawkins Solicitor for the Tenth and Eleventh Defendants: Thurai Rajah Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 658 of 2014 BETWEEN: ACN 104 635 369 PTY LTD (IN LIQUIDATION) (FORMERLY TOTAL PLANT SERVICES PTY LTD) Plaintiff AND: WILLIAM JAMES HAMILTON IN HIS CAPACITY AS FORMER LIQUIDATOR Seventh Defendant STEVEN ARTHUR GLADMAN IN HIS CAPACITY AS FORMER LIQUIDATOR Eighth Defendant CHRISTOPHER DAMIEN DARIN AND GRAEME ROBERT BEATTIE, IN THEIR CAPACITY AS OFFICIAL LIQUIDATORS Ninth Defendant AJ AZZOPARDI INDUSTRIES PTY LTD ACN 060 651 845 Tenth Defendant AZBUILD PTY LTD ACN 089 795 639 Eleventh Defendant JUDGE: GLEESON J DATE OF ORDER: 13 November 2015 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to s 511 of the Corporations Act 2001 (Cth), the remuneration of the seventh defendant for work done to obtain approval of his remuneration in February 2014 and February 2015 and for work done after 3 April 2014 be fixed in the sum of $25,016.73 including GST. 2. Pursuant to s 511 of the Corporations Act 2001 (Cth), the remuneration of the eighth defendant be fixed in the sum of $146,226.61 including GST. 3. Pursuant to s 511 of the Corporations Act 2001 (Cth), the remuneration of the ninth defendants be fixed in the sum of $51,334.48 including GST. 4. The Registrar refer the papers to the Office of the Legal Services Commissioner. 5. The seventh defendant's application for remuneration otherwise be dismissed. 6. The tenth defendant's interlocutory application dated 27 May 2015 otherwise be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 658 of 2014 BETWEEN: ACN 104 635 369 PTY LTD (IN LIQUIDATION) (FORMERLY TOTAL PLANT SERVICES PTY LTD) Plaintiff AND: WILLIAM JAMES HAMILTON IN HIS CAPACITY AS FORMER LIQUIDATOR Seventh Defendant STEVEN ARTHUR GLADMAN IN HIS CAPACITY AS FORMER LIQUIDATOR Eighth Defendant CHRISTOPHER DAMIEN DARIN AND GRAEME ROBERT BEATTIE, IN THEIR CAPACITY AS OFFICIAL LIQUIDATORS Ninth Defendant AJ AZZOPARDI INDUSTRIES PTY LTD ACN 060 651 845 Tenth Defendant AZBUILD PTY LTD ACN 089 795 639 Eleventh Defendant REASONS FOR JUDGMENT 1 This decision concerns the remuneration of the various liquidators of ACN 104 635 369 Pty Ltd (in liquidation) (formerly Total Plant Services Pty Ltd) ("the company"). 2 The eighth defendant ("Mr Gladman") was the company's liquidator from 7 February 2011 to 9 July 2013. 3 The seventh defendant ("Mr Hamilton") was the company's liquidator from 9 October 2013 until 3 June 2014. 4 The ninth defendants ("current liquidators") have been the company's liquidators since 27 June 2014. 5 The relatively complex course of this liquidation is illustrated by the judgments in AJ Azzopardi Industries Pty Ltd v ACN 104 635 369 (formerly known as Total Plant Services Pty Ltd) (in liquidation) [2014] FCA 710, ACN 104 635 369 (in liq) (formerly Total Plant Services Pty Ltd) v Combined Group Management Pty Ltd [2014] FCA 1402 ("my first judgment") and ACN 104 635 369 Pty Ltd (in liq) (formerly Total Plant Services Pty Ltd) v Hamilton [2015] FCA 643 ("extension of time decision"). Determination of liquidators' remuneration 6 By interlocutory process dated 20 November 2014, the current liquidators sought orders including orders that the remuneration of each of themselves, Mr Hamilton and Mr Gladman be fixed in a sum determined by the Court. 7 On 15 December 2014, I made an order pursuant to s 511(1)(a) of the Corporations Act 2001 (Cth) ("Act") referring the proceeding to a Registrar of the Court for determination of the remuneration of each of the liquidators of the plaintiff to the extent that such remuneration had not already been fixed. 8 At that stage, the only remuneration already fixed was Mr Hamilton's remuneration for the period 9 October 2013 to 24 December 2013 in the sum of $92,095.23 including GST ($75,011.36 exclusive of GST). That remuneration was fixed by a Registrar of the Court on 12 February 2014. 9 On 13 February 2015, Registrar Tesoriero approved Mr Hamilton's remuneration in the sum of $46,009.10 excluding GST for the period 25 December 2013 to 3 June 2014, inclusive. 10 By interlocutory application dated 12 March 2015, the tenth defendant ("Azzopardi Industries") sought orders including that the 13 February 2015 order determining Mr Hamilton's remuneration be set aside. 11 By 27 May 2015, the other liquidators had applied for, but not yet received, determinations of their respective remuneration. On that day, I revoked the 15 December 2014 order after forming the view that the quickest, cheapest and most efficient procedure for determining the remuneration question was to decide the issues myself. The reason I formed this view was that it appeared likely that any other determination by a Registrar would be the subject of an application for review of the Registrar's decision, as had been the case in relation to Mr Hamilton. 12 Azzopardi Industries' application to set aside the 13 February 2015 order was made out of time. In June 2015, I made the extension of time decision. Time was extended to seek a review of the Registrar's decision dated 13 February 2015 to the extent that Azzopardi Industries sought a review of the approved remuneration for charges for "prior remuneration approval preparation" and work done after 3 April 2014. 13 Following the extension of time decision, the remuneration for me to determine comprised: (1) Mr Gladman's remuneration; (2) The current liquidators' remuneration; and (3) Mr Hamilton's remuneration for "prior remuneration approval preparation", and work done after 3 April 2014. 14 In his written submissions, Mr Hamilton sought to claim an additional three amounts, being: (1) $35,624 for the cost of preparing the remuneration affidavits in respect of Registrar Tesoriero's order of 13 February 2015; (2) $68,838.50 for the cost of recovery of amounts approved by the Court; (3) $5,629.50 for "tasks undertaken for the liquidators Worrells". 15 I have also considered those additional claims. 16 By email dated 21 September 2015, Mr Hamilton wrote to my Associate noting "that the evidence has reopened". The evidence had not re-opened. My Associate had directed two questions to the lawyers for Mr Gladman. I have disregarded that email. Amount recovered in the liquidation 17 An amount of $600,000 was recovered from the first to fifth defendants in this proceeding. 18 An amount of $5,000 was recovered from the sixth defendant. Legal framework Mr Gladman and the current liquidators 19 In my first judgment at [68], I concluded that the Court has power under s 511(1)(a) of the Act to determine the liquidators' remuneration. 20 Section 511 provides relevantly: (1) The liquidator, or any contributory or creditor, may apply to the Court: (a) to determine any question arising in the winding up of a company; or (b) to exercise all or any of the powers that the Court might exercise if the company were being wound up by the Court. (2) The Court, if satisfied that the determination of the question or the exercise of power will be just and beneficial, may accede wholly or partially to any such application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks just. 21 In Deputy Commissioner of Taxation v Starpicket Pty Ltd (No 2) [2013] FCA 699 ("Starpicket"), Gordon J identified the relevant principles concerning the quantum of liquidator's remuneration as follows: 22. The Liquidator is entitled to such remuneration as is fair and reasonable. However, the onus is on the Liquidator to establish that entitlement: see [Barbo Group Pty Ltd v Investment and Construction Enterprise Pty Ltd [2012] VSC 71] at [14]. In [Venetian Nominees v Conlan (1998) 20 WAR 96], the Court said (at 102-103): 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 s 473(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. 23. Although the Court in Venetian Nominees was determining the remuneration of a provisional liquidator, the principles extracted above are equally applicable to the present case. 24. The decision of Finkelstein J in [Re Korda, in the matter of Stockford Ltd (2004) 140 FCR 424] provides further guidance as to what is required of the Liquidator. In that case, his Honour referred (at [48]) to the following extract from Re Medforce Healthcare Services (in liq) [2001] 3 NZLR 145 at 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. 25. In considering the material proffered by the Liquidator in support of his claim, the Court must have regard to whether the Liquidator's remuneration "is reasonable, taking into account any or all of the following matters" specified in s 473(10): (a) the extent to which the work performed by the liquidator was reasonably necessary; (b) the extent to which the work likely to be performed by the liquidator is likely to be reasonably necessary; (c) the period during which the work was, or is likely to be, performed by the liquidator; (d) the quality of the work performed, or likely to be performed, by the liquidator; (e) the complexity (or otherwise) of the work performed, or likely to be performed, by the liquidator; (f) the extent (if any) to which the liquidator was, or is likely to be, required to deal with extraordinary issues; (g) the extent (if any) to which the liquidator was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case; (h) the value and nature of any property dealt with, or likely to be dealt with, by the liquidator; (i) whether the liquidator was, or is likely to be, required to deal with: (i) one or more receivers; or (ii) one or more receivers and managers; (j) the number, attributes and behaviour, or the likely number, attributes and behaviour, of the company's creditors; (k) if the remuneration is ascertained, in whole or in part, on a time basis: (i) the time properly taken, or likely to be properly taken, by the liquidator in performing the work; and (ii) whether the total remuneration payable to the liquidator is capped; (l) any other relevant matters. 26. The breadth of the statutory language – requiring the Court to take into account "any or all" of the matters listed – confers upon the Court a broad discretion as to the particular weight to be given to any of those matters, subject to the overriding requirement of reasonableness: see [Huxtable, in the matter of Timeshare Resort Club Ltd ACN 009 085 358 (in liq) 187 FCR 13] at [34]. 22 There is no reason to think that the matters specified in s 473(10) are not applicable to a determination of liquidators' remuneration under s 511(1)(a). Mr Hamilton's remuneration 23 Section 35A(6) of the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act") provides for review of the exercise of power by a Registrar. 24 In effect, Azzopardi Industries' interlocutory application sought a review of the Registrar's exercise of power in determining or approving Mr Hamilton's remuneration. 25 Starpicket involved an application for a review of a Registrar's decision under s 35A(6). The relevant decision included an order fixing the remuneration of the liquidator of Starpicket Pty Ltd (in liq) pursuant to s 473 of the Act. At [6], Gordon J noted that the hearing was a hearing de novo, at which the Court was required to rehear the case and decide the facts for itself. Mr Gladman's claim 26 Mr Gladman was the liquidator of the company from 7 February 2011 to 9 July 2013. He requests approval of the following remuneration: (1) $112,418.60 plus GST for the period 7 February 2011 to 9 July 2013; (2) $19,268.00 plus GST for the period 10 July 2013 to 8 October 2013; (3) Preparation of first affidavit in support of approval of remuneration, being the affidavit of 27 March 2015, in the sum of $8,346 plus GST. (4) $10,200.50 plus GST for the period 28 March 2015 to 23 June 2015; (5) $15,933.50 plus GST for the period 24 June 2015 to 1 October 2015, including the costs of preparing two further affidavits in support of approval of remuneration, being the affidavits of 21 July 2015 and 2 October 2015. 7 February 2011 to 9 July 2013 27 In his first affidavit, Mr Gladman summarised the tasks undertaken during this period as: (1) complying with statutory obligations as liquidator of the company, including the calling and holding of a number of meetings of creditors, undertaking statutory investigation in respect of possible recoveries in a liquidation, and identifying and preserving the assets of the company; (2) determining the current financial position and possible realisable value of assets available; (3) conducting numerous conversations and meetings with the company's directors to enquire into the historical trading position and the current financial position of the company; (4) dealing with utility providers and creditors; (5) numerous communications with Azzopardi Industries and AZBuild Pty Limited, the eleventh defendant ("Azbuild") and their legal representative in writing as well as by way of discussions and meetings, regarding potential claims against the directors and external accountant of the company, the status of the winding up of the company, and associated matters; (6) attending to preparation and lodgement of all documentation in relation to the appointment of the liquidator including the Australian Taxation Office and Australian Securities and Investments Commission ("ASIC"); (7) preparation of Reports to Creditors dated 11 February 2011, 20 March 2012 and 31 May 2013; (8) undertaking investigations associated with the affairs of the Company and preparing a detailed investigative report to ASIC pursuant to s 533(2) of the Act; (9) preparation for and attendance at meetings of creditors of the company held on 6 April 2011, 20 April 2011, 25 May 2011, 9 July 2013, 6 August 2013, 3 September 2013, 24 September 2013 and 8 October 2013, including preparation and lodgement of minutes of meeting with ASIC; (10) sundry administration tasks as required; and (11) compliance with relevant provisions of the Act, Corporations Regulations 2001 (Cth) and other legislation where applicable. 28 In his third affidavit, Mr Gladman provided the following further information: 17.1 In respect of the Appointment Period [ie 7 February 2011 to 9 July 2013], the majority of the work was undertaken by Duke Wolfgramm (as both Senior Manager and subsequently Associate), John Refalo (as Intermediate 2 and subsequently Senior 2), David Kennedy (as Junior Staff) and me (being the appointee and Partner). … the work undertaken during this period fell broadly into the categories of: 16.1.1 Initial appointment and investigation work - this work was undertaken by a range of staff in accordance with the usual Hall Chadwick work practices and the relevant staff members' experience levels; 16.1.2 communications with the creditors and their legal advisor, Thurai Rajah Lawyers (including various meetings of creditors and associated reports to creditors) - the bulk of this work was undertaken by John Refalo, but significant work was required to be undertaken by Duke Wolfgramm and me in view of the obligations to report to creditors and chair meetings, as well as the difficulty experienced in dealing with the creditors and their legal advisor; and 16.1.3 detailed investigation work into the affairs and operation of the Company particularly regarding the dealings which were ultimately the subject of the successful recovery action completed by the current liquidator of the Company, and the preparation of a detailed and lengthy Supplementary Offence Report - the bulk of this work was undertaken by John Refalo, but significant work was required to be undertaken by Duke Wolfgramm and me in view of the nature and scope of the investigations and the report which was prepared. 29 A schedule attached to Mr Gladman's 27 March 2015 affidavit ("schedule") shows that the remuneration claimed is for a total of 476.42 hours worked. Most work (approximately 238 hours) was undertaken by John Refalo, who held the position of "Intermediate 2" and then "Senior 2". 30 The schedule also shows that the time recorded falls into the following categories: Administration 139.22 hours Assets 5.7 hours Creditor 65.4 hours Investigations 265.90 hours Litigation 0.2 hours 31 It seems that, following a complaint made to ASIC in May 2011 by a former officer of the company, Mr Gladman conducted an investigation of the company's affairs. The investigation was partly funded by ASIC. The investigation resulted in a confidential report to ASIC and a supplement to the report. ASIC was not willing to fund pursuit of the matters covered by the report. The report to ASIC indicated that the company may have available causes of action relating to: (a) Breach of directors' duties; (b) Payment of a $600,000 dividend by the company; (c) Payment of a management fee exceeding $1 million to companies related to the company; and (d) Advice provided by an external accountant: AJ Azzopardi Industries Pty Ltd v ACN 104 635 369 (formerly known as Total Plant Services Pty Ltd) (in liquidation) [2014] FCA 710 at [5]. 32 Mr Gladman has verified on oath that the remuneration for which approval is sought does not relate to work for which he has been previously paid. 33 Mr Gladman convened, to be held on 9 July 2013: (1) a meeting of the creditors of the company; and (2) a final meeting of the creditors and members of the company pursuant to s 509 of the Act. 34 At the creditors' meeting, the creditors resolved, among other things, to adjourn the meeting for four weeks to allow an assignment of claims against the directors and external accountant of the company to Azzopardi Industries and Azbuild. 35 Azzopardi Industries and Azbuild also sought to adjourn the final meeting but Mr Gladman, as chairman, decided that the meeting was not capable of being adjourned because a quorum was not present. Subsequently, Mr Gladman lodged forms with ASIC in the expectation that the company would be deregistered pursuant to s 509(5) of the Act. 10 July 2013 to 8 October 2013 36 During this period, Mr Gladman chaired the adjourned creditors' meeting on 6 August, 3 September and 24 September and 8 October 2013. 37 He also sought and obtained counsel's advice in relation to the prospects of claims against the directors and external accountant of the company, and attempted to finalise the terms of a deed of assignment in respect of the claims. 38 According to the reasons of Farrell J in AJ Azzopardi Industries Pty Ltd v ACN 104 635 369 (formerly known as Total Plant Services Pty Ltd) (in liquidation) [2014] FCA 710 (at [7]), based on legal advice, Mr Gladman was ultimately unwilling to execute an assignment of the causes of action to Azzopardi Industries. After negotiations, Mr Gladman allowed Azzopardi Industries' legal advisors access to the documents on which Mr Gladman based his report to ASIC so that they could advise Azzopardi Industries about the possible actions. At [8], her Honour recorded that Azzopardi Industries had provided some funding to Mr Gladman for investigations in 2011 and it had funded storage of company documents to prevent their destruction. However, Azzopardi Industries was not prepared to fund Mr Gladman to pursue the actions against the company's former officers and accountant and it appears that Mr Gladman did not wish to undertake further investigation or actions funded by Azzopardi Industries. 39 On 8 October 2013, Azzopardi Industries served Mr Gladman with an originating process in Federal Court proceedings NSD2065/2013, seeking orders under ss 502 or 503 of the Act appointing Mr Hamilton as liquidator, under s 477(2B) approving Mr Hamilton's retainer and s 509(6) setting the date on which the company must be deregistered as 31 October 2016 instead of 15 October 2013. 40 In his third affidavit, Mr Gladman provided the following further information concerning this period: (a) the majority of the work was undertaken by John Refalo (as Senior 1) and Mr Gladman; (b) The work conducted by Mr Gladman included, but was not limited to: (i) chairing meetings of creditors; (ii) dealing with the potential deed of assignment; (iii) meetings with creditors and their legal advisor; (iv) discussions with his legal advisors; (v) conference with counsel to obtain advice on potential claims (vi) communications with Thurai Rajah Lawyers (the solicitors for Azbuild and Azzopardi Industries); and (vii) dealing with the Azzopardi Industries' 8 October 2013 application; (c) The work conducted by John Refalo included, but was not limited to: (i) preparation and lodgement of statutory forms with ASIC with regards to the finalisation process including Form 524 (Receipts and Payments), Form 505 (Cessation of Appointment) and minutes of meetings; (ii) preparation of Business Activity Statement; (iii) preparation and dispatch of reports and notices to creditors regarding adjourned meetings of creditors; (iv) draft and preparation of minutes of adjourned creditors' meetings; (v) liaising with Mr Gladman's solicitors and assisting Mr Gladman with regards to the potential deed of assignment; and (vi) liaising with Azzopardi Industries and Azbuild's legal advisor in relation to creditor meetings, obtaining a quote for counsel's advice and arranging transfer of funds into a trust account. 41 Mr Gladman's records show 45.40 hours spent by him and his staff on the liquidation during this period. The schedule shows that the time recorded falls into the following categories: Administration 7.8 hours Assets 2.5 hours Creditor 23.2 hours Investigations 0.50 hour Litigation 11.40 hours 42 On 9 October 2013, Farrell J made an order under s 502 appointing Mr Hamilton as liquidator of the company to replace Mr Gladman, who confirmed his resignation as liquidator so that it was not necessary to remove and replace him under s 503. Costs of preparing remuneration affidavit 43 In his third affidavit, Mr Gladman stated that, in respect of the preparation of the first affidavit, the majority of the work was undertaken by Duke Wolfgramm (as associate) and Mr Gladman. The work conducted by Duke Wolfgramm in the preparation of the first affidavit included, but was not limited to: (a) extracting and providing remuneration and work in progress reports to O'Neill Partners for the required periods of remuneration; (b) reviewing client files and preparation of annexures for the affidavit including retrieving relevant information from previous reports to creditors, minutes of creditors' meetings, remuneration previously approved, correspondence with Thurai Rajah Lawyers regarding costs of liquidation, correspondence with creditors, schedules of hourly rates; (c) liaising with O'Neill Partners regarding preparation of the affidavit; and (d) reviewing and amending draft versions of the affidavit, including meetings and discussions with Mr Gladman. 28 March 2015 to 23 June 2015 44 By his second affidavit, Mr Gladman gave evidence that, during the period 28 March 2015 to 23 June 2015, he and his staff undertook the following tasks: (a) Reviewing and considering the affidavits served by Azzopardi Industries and Azbuild in respect of their objections to Mr Gladman's remuneration. This was said to involve a significant amount of work because Mr Gladman understood that the objections made were extremely wide ranging, and required that he and his staff undertake a review of a large number of records and documents relating to matters referred to in the relevant affidavits; (b) Liaising with O'Neill Partners - Commercial Lawyers, Mr Gladman's lawyers ("O'Neill Partners") regarding the progress of the proceedings, orders made and correspondence exchanged between the parties regarding the determination of Mr Gladman's remuneration. 45 Mr Gladman's second affidavit annexed a schedule which showed that 21.8 hours' work was performed during this period comprising 6 hours by Mr Gladman at a charge out rate of $640 per hour, 5.3 hours by an associate at a rate of $550 per hour, 10.4 hours by a "Senior 2" at a rate of $330 per hour and 0.1 hour by a secretary. The schedule also broke down the hours into two activities, being administration (2.3 hours) and litigation (19.5 hours). 24 June 2015 to 2 October 2015 46 By his third affidavit, Mr Gladman gave evidence that, during the period 24 June 2015 to 2 October 2015, he and his staff undertook the following tasks: (a) Significant work involved in reviewing and preparing a draft response to the affidavit of Adam Azzopardi sworn 21 May 2015, which contained wide ranging objections across the whole of Mr Gladman's remuneration claim and appointment to the company, resulting in the preparation of a lengthy and detailed draft response, along with identification and collation of two lever arch files of relevant documents and correspondence. Mr Gladman said that, given the nature and range of the objections raised, this work required significant involvement from Mr Gladman, as well as other senior staff; (b) Reviewing, amending and finalising his second affidavit, including liaising with O'Neill Partners with respect to the preparation and swearing of that affidavit, which was significantly different from the previously prepared draft response as a consequence of the objections raised by Azzopardi Industries being "abandoned"; (c) Reviewing and considering his first and second affidavits, in the context of additional information sought by the Court, as well as liaising with O'Neill Partners with respect to the preparation and swearing of the third affidavit; and (d) Liaising with O'Neill Partners regarding the progress of the proceedings, submissions filed and correspondence exchanged between the parties regarding "the offer to compromise my remuneration" and to ultimately proceed with a determination of the amount of Mr Gladman's remuneration by the Court. Mr Gladman's offer was made by letter dated 17 June 2015. 47 Mr Gladman also said, in his third affidavit, concerning the period since 28 March 2015, that the majority of the work was undertaken by Erica Xu (as Senior 2) and Mr Gladman. 48 The work conducted by Mr Gladman included, but was not limited to: (a) liaising with O'Neill Partners regarding the ongoing remuneration application process; (b) reviewing and considering affidavit evidence served by the other defendants and related annexures; (c) drafting and preparing detailed response to affidavit evidence served by Azzopardi Industries and discuss the affidavit with O'Neill Partners, particularly including statements by Mr Azzopardi in relation to assertions and allegations regarding: (i) a fixed costs agreement between Mr Gladman and Azzopardi Industries; (ii) reimbursement of costs incurred by Azzopardi Industries; (iii) Mr Gladman's conduct as liquidator of the company; (iv) deficiencies within Mr Gladman's time costs recording system; (v) concerns as to disbursements incurred by Mr Gladman; (vi) concerns as to the reasonableness of Mr Gladman's remuneration; (d) reviewing, amending and signing second affidavit; (e) reviewing and discussing with his staff an email from the Court requesting further information. 49 The work conducted by Erica Xu included, but was not limited to: (a) assisting Mr Gladman with regards to preparation and retrieving information required for response to affidavit evidence served by Azzopardi Industries; (b) liaising with O'Neill Partners regarding preparation and finalisation of annexures for Mr Gladman's third affidavit; and (c) liaising with O'Neill Partners in relation to further information requested by the Court in relation to the remuneration application. 50 Mr Gladman's third affidavit annexed a schedule which showed that 36.9 hours' work was performed during this period comprising 9.1 hours by Mr Gladman at a charge out rate of $640 per hour, 6.5 hours by an associate at a rate of $550 per hour, 18.1 hours by a "senior 2" at a rate of $330 per hour and 3.2 hours by an "Intermediate 2" and a "Junior 1". The schedule also broke down the hours into two activities, being administration (14.6 hours) and litigation (22.3 hours). Evidence concerning personnel and charge out rates 51 Mr Gladman verified on oath that: (1) the remuneration for which he seeks Court approval is in respect of necessary work properly performed in the conduct of, or as a consequence of, his appointment to the company; (2) staff at the appropriate level of experience have undertaken the appropriate work. Hall Chadwick, Mr Gladman's firm, maintains a system of work practice to ensure that tasks in any insolvency appointment are undertaken by the appropriately qualified staff member(s), with a view to ensuring that the remuneration amounts charged for work undertaken are reasonable and appropriate. Consideration 52 The evidence identifies sufficiently the work undertaken. The schedules annexed to Mr Gladman's affidavit enable me to relate the remuneration claimed to the work done. I am satisfied by Mr Gladman's evidence that the personnel and charge out rates used to calculate the remuneration claimed are appropriate. 53 I note that work properly done by way of preparing a claim for remuneration falls within the scope of work for which the liquidator is entitled to be remunerated: Starpicket at [54]. 54 Having regard to the evidence set out above, I am satisfied that the amounts claimed are prima facie fair and reasonable. Current liquidators' claim 55 Mr Beattie and Mr Darin were appointed as liquidators of the company on 27 June 2014. They request approval of the following remuneration: (1) $38,323.00 plus GST for the period from 27 June 2014 to 23 February 2015 ("first period"); (2) $12,511.64 plus GST for the period since 23 February 2015 ("second period"); and (3) Up to $7,500 plus GST for work to complete the winding up. 56 In support of their claim, the current liquidators relied on Mr Beattie's affidavits sworn 20 November 2014, 25 March 2015 and 9 July 2015. 57 Work done during the period from 27 June 2014 to about 20 November 2014 is recounted in detail in Mr Beattie's 20 November 2014 affidavit, including very extensive dealings with Azzopardi Industries' legal representatives. In the 25 March 2015 affidavit, Mr Beattie refers to: (a) The requirement to commence proceedings against the directors on 30 June 2014 to avoid the possible expiry of a limitations period; (b) Attending the successful mediation on 12 August 2014, which commenced at 11 am and concluded at 10:30 pm; (c) The application for approval of the settlement on 27 November 2014. 58 I accept that each of these matters required the liquidators to undertake significant work. 59 After 20 November 2014, significant activities included attending Court on 27 November, 9 December and 15 December 2014 in connection with the application for approval of the settlement achieved at the mediation, preparing evidence for approval of the liquidators' remuneration and dealing with the claims for remuneration made by Mr Hamilton (and to a much lesser extent, Mr Gladman). 60 Mr Beattie's 25 March 2015 affidavit also discloses that substantial amounts have been expended on legal services since he and Mr Darin were appointed as liquidators. That is not surprising, having regard to the litigious history of the matter. 61 Mr Beattie's 9 July 2015 affidavit refers to the ongoing litigation since 25 March 2015, including correspondence with the other liquidators seeking approval of their remuneration. The affidavit also discloses that further substantial amounts have been expended on legal services. 62 Annexed to Mr Beattie's 9 July 2015 affidavit is a remuneration report which records, by staff member, hours worked, the hourly rate and the broad category into which the work falls. There is a summary of work performed, divided into 16 categories, which shows that a total of 101 hours and 17 minutes has been performed on the liquidation. There is also a 13-page detailed narration of the work undertaken by each staff member. 63 The remuneration report shows that approximately 73 hours (about 72% of the total hours worked) were worked by Mr Beattie and Mr Darin at hourly rates of $568.59 and $567.08 respectively. 64 12 hours and 13 minutes of work are recorded by Paul Coombes, whose position is said to be "supervisor". Mr Coombes' hourly rate is $343.86. No other person who worked on the file did more than 10 hours. 65 As to the question of future remuneration, Mr Beattie says: 23. Barring any unforeseen applications, I anticipate that I could pay out any remuneration ordered by this Honourable Court and then make a distribution to unsecured creditors. 24. The one constraint I have in that regard is that, despite repeated requests which have been outlined in earlier Affidavits, I have not had a breakdown of the petitioning creditor's costs in relation to my appointment, and those costs would ordinarily have priority in the statutory priority. 25. However, as those costs would be paid to the Tenth Defendant, and the Tenth and Eleventh Defendants are related entities, it may well be that, from a practical perspective, and subject to any release given, there would be no need to make a separate payment for that class of creditor. 26. I anticipate that the future remuneration required to finalise the liquidation could be in the range of $5,000.00-$7,500.00, and I seek approval for an amount up to $7,500.00 for that purpose, together with any necessary expenses, such as attending at the hearing in July 2015. Consideration 66 I have reviewed the 13-page detailed narration in the light of Mr Beattie's evidence. Overall, that evidence identifies sufficiently the work undertaken. The detailed narrations enable me to relate the remuneration claimed to the work done. 67 The current liquidators' consent to act provided to Azzopardi Industries' lawyers disclosed rate for the period ending 30 June 2014 included a rate for partners of $540, a rate for supervisors of $375 and a notation that the rates are increased by 6% annually. The liquidators were appointed pursuant to that consent to act. 68 The current liquidators' rates are about 5% higher than the 30 June 2014 partners' rate. They are substantially lower than Mr Gladman's rates. I am satisfied on these bases that the current liquidators' charge out rates are reasonable. 69 I have no reason to doubt that the work the subject of the claim for remuneration was in fact undertaken, or that the liquidators or their staff acted reasonably in performing that work. I also have no reason to doubt the reasonableness of the other charge out rates used by the current liquidators, particularly having regard to the fact that they are broadly consistent with the rates disclosed in the liquidators' consent to act. 70 Looking at the matter globally, and taking into account the significant level of disputation with Azzopardi Industries and the complexities arising from the claims made by former directors, I accept that the costs of the litigation have been enlarged as a result of the conduct of Azzopardi Industries. Overall, I do not consider 100 hours to be an excessive amount of time to have spent by the liquidators in addressing this matter since their appointment. Insofar as the charges relate to affidavits deployed in the proceeding, I am satisfied that each of those affidavits was appropriate and not excessively detailed. Although a significant proportion of the charges relates to work done by the liquidators, rather than more junior staff, I am satisfied that this was not inappropriate having regard to the complexity of the issues to be addressed since the current liquidators' appointment. From the itemised schedule of charges, it appears that a significant amount of the work done by Mr Beattie has involved instructing solicitors in this litigation and dealing with the solicitor for Azzopardi Industries and Mr Hamilton, all matters requiring a high degree of skill and experience. 71 I would have preferred to have received a breakdown of the charges by reference to the main activities, such as the mediation, the approval of the conditional settlement, and the approval of remuneration. However, such a breakdown would probably have involved several hours of analysis, thereby increasing the costs of the liquidation. In all the circumstances, I am satisfied that, even without that further level of analysis, that the amount of remuneration claimed by the current liquidators is prima facie fair and reasonable. 72 I accept that it is practical and appropriate to approve remuneration for the current liquidators' reasonable future work to complete the winding up to an amount of $7,500 inclusive of GST. Mr Hamilton's claim 73 Mr Hamilton's claim for "prior remuneration approval preparation" is $3,863.64, exclusive of GST. 74 His claim for work done after 3 April 2014 is $17,868.08 exclusive of GST. 75 In his written submissions, Mr Hamilton sought to claim an additional three amounts, being: (1) $35,624 for the cost of preparing the remuneration affidavits in respect of Registrar Tesoriero's order of 13 February 2015; (2) $68,838.50 for the cost of recovery of amounts approved by the Court; (3) $5,629.50 for "tasks undertaken for the liquidators Worrells". 76 Mr Hamilton's claims were supported by his affidavits dated 14 October 2014, 11 November 2014, 30 January 2015, 18 March 2015 and 14 July 2015. Prior remuneration approval preparation 77 Having had the relevant case law drawn to my attention, I accept that Mr Hamilton's remuneration may properly include the costs of work done to obtain approval of his remuneration. 78 This claim concerns the remuneration approval obtained in February 2014. 79 I have examined a MYOB schedule referred to in Mr Hamilton's submissions dated 12 June 2015, and compared it with Mr Hamilton's remuneration statement (page 107 of exhibit "WJH1" to Mr Hamilton's 14 October 2014 affidavit). I have been able to identify the tasks undertaken by Mr Hamilton (comprising eight hours' work) and Ms Doran, a personal assistant employed by WH Hamilton & Co, according to her affidavit of service sworn 12 November 2014 (2.5 hours' work), and tasks totalling four hours done by Effie Ioakimaros, apparently another of Mr Hamilton's employees. I cannot locate on the MYOB schedule the time recorded for Aakash Shah on the remuneration statement. 80 Mr Gladman gave evidence of a charge out rate of $135 per hour for a personal assistant/secretary. The rate charged for the work done by Ms Doran and Ms Ioakimaros under this heading is $136.36. On the basis of Mr Gladman's evidence, I accept that this latter rate is reasonable. 81 I am satisfied, by reference to the evidence of the other liquidators, that the charge out rates used to calculate the remuneration claimed are appropriate. 82 Accordingly, I am satisfied that the amount of ($3,864 less $68.18 equals) $3,795.82 exclusive of GST is prima facie fair and reasonable. Work done after 3 April 2014 83 In written submissions dated 3 June 2015, Azzopardi Industries identified the total charges for work done after 3 April 2014 as $19,740.78. Having reviewed the narrations for these charges, I am satisfied that this figure is not an appropriate starting point for identifying the work done after 3 April 2014 for which Mr Hamilton should be remunerated because it includes items for which he does not seek remuneration and does not include items for which Mr Hamilton does seek remuneration. 84 In written submissions dated 9 July 2015, Mr Hamilton sought to justify the sum of $17,868.08. This sum comprised: $6,518.22 for "preparation and implementation for formal mediation"; $6,130.12 for "preparation and implementation of further examinations"; $4,712.00 for "preparation of affidavit and originating process to be filed to avoid Limitations Act"; $507.72 for record management. 85 The work comprising "preparation and implementation for formal mediation" is attributed to Ms Doran (6.2 hours), Ms Ioakimaros (10 hours) and Mr Hamilton (7.9 hours). The largest item is for Mr Hamilton's work on drafting the statement of facts and contentions for the mediation. 86 The work comprising "preparation and implementation of further examinations" was identified on a worksheet attached to Mr Hamilton's 9 July 2015 submissions. It includes 10.8 hours' work by Ms Doran, 10.6 hours' work by Mr Hamilton and 2.5 hours' work by Mr Shah. The largest item is for Mr Hamilton's attendance at a conference with Mr Svehla, Ms Thurairajah and "Adam" on 23 April 2014. 87 The work comprising "preparation of affidavit and originating process to be filed to avoid Limitations Act" is attributed to Ms Doran (6.1 hours), Ms Ioakimaros (4.5 hours) and Mr Hamilton (6 hours). The largest item is for Mr Hamilton's work on an originating process and affidavit on 16 May 2014. 88 The work comprising "records management" is attributed to Mr Shah (3 hours) and includes 1 hour for "form 505 lodging" and "closing of bank account". ASIC form 505 is entitled "notification of appointment or cessation of an external administrator". 89 From the worksheet, I can relate the amount claimed to the work undertaken. I have no reason to doubt the appropriateness of the personnel selected to do the work undertaken, however, the charge out rate for Ms Doran and Ms Ioakimaros has increased to $170 per hour, substantially higher than Mr Gladman's rate for a personal assistant/secretary of $135. 90 I do not accept that it is reasonable to charge for the lodgement of the form 505 and the closing of the bank account where those activities were required as a result of Mr Hamilton's suspension as a liquidator. 91 There is no evidence as to the role performed by Mr Shah in the liquidation. 92 I am satisfied that the amounts claimed are prima facie fair and reasonable subject to reducing the rate for Ms Doran and Ms Ioakimaros to $136.36 per hour, and reducing the charges for work done by Mr Shah by one hour and his rate to $136.36 per hour. On this basis, the total amount that is prima facie fair and reasonable is $17,632.28 exclusive of GST. Preparing remuneration affidavits in support of second remuneration claim 93 Mr Hamilton claims $35,624 for this activity, which involved obtaining approval of remuneration of $46,009.10 for work done during the period 25 December 2013 to 3 June 2014, inclusive. 94 This claim is prima facie excessive. It should not cost over 75% of a claim to put together the evidence to demonstrate that claim. 95 The amount also compares unfavourably with the amounts claimed by Mr Gladman for a comparable activity, covering a much longer period of work. 96 The work involved preparing three affidavits sworn by Mr Hamilton and an affidavit of service. The MYOB spreadsheet attached to Mr Hamilton's 9 July 2015 submission shows that the work how the amount claimed relates to the work undertaken. It includes excessive time spent in drafting the affidavit. 97 The claim was not verified as fair and reasonable by an affidavit. I do not accept that this claim is fair and reasonable. An amount of $7,000 exclusive of GST for this work is prima facie fair and reasonable. Costs of recovering amounts approved by the Court 98 According to Mr Hamilton's submissions dated 9 July 2015, this amount comprises "time spent in costs raised in the MYOB times ledger [concerning] all attendances before Her Honour Justice Gleeson, correspondence between other defendants and in particular the solicitor for the liquidators, Graham Lancaster both in recover of the remuneration and out of pocket expenses." 99 I do not accept that these costs should be included as part of a liquidator's remuneration. I was not referred to any authority that the liquidator's costs include his or her costs of recovering his or her remuneration, which is an activity purely for the benefit of the liquidator. The matters set out in s 473(10) do not suggest that these costs ought to be charged to the liquidation. In any event, I consider the amount claimed to be grossly disproportionate to the amount sought to be recovered. 100 I reject this claim. Tasks undertaken for the current liquidator 101 The relevant items on the MYOB ledger are dated between 5 June 2014 and 15 July 2014. The narrations shows that the work related to the handover of the liquidation from Mr Hamilton to the current liquidators. Those costs would not have been incurred but for Mr Hamilton's suspension. I therefore do not accept that they are costs for which Mr Hamilton is entitled to be remunerated. I therefore reject the claim of $5,629.50 for "tasks undertaken for the liquidators Worrells". Amount of $8,590.97 unpaid from remuneration approved in February 2014 102 Mr Hamilton's affidavit sworn 14 July 2015 addresses the current liquidators' decision to withhold an amount of $8,590.97 from the remuneration paid to Mr Hamilton pending a reconciliation of amounts previously paid to Mr Hamilton. In particular, there is an amount of $20,000 that Mr Hamilton claims was paid to him before his appointment as liquidator and which was not referred to in the remuneration approved in February 2014. Mr Hamilton claims that the $20,000 was paid for advice and services in respect of work to replace Mr Gladman as liquidator. 103 In response to his claim, the current liquidators requested a declaration of independence, relevant relationships and indemnities disclosing the funding of $20,000 and the pre-appointment work. They also requested information from Ms Thurairajah to verify Mr Hamilton's contention. 104 Mr Hamilton did not tender a declaration of the kind requested by the current liquidators and, in a letter to their lawyers, said that there was no declaration. There was no evidence on behalf of Azzopardi Industries or Azbuild to verify Mr Hamilton's contention. 105 The declaration of relevant relationships was required by s 436DA(2) of the Act. Failure to comply with s 436DA(2) is an offence. In my view, the current liquidators are entitled to satisfy themselves about whether the payment of $8,590.97 to Mr Hamilton may result in an overpayment to him. 106 In the absence of such a declaration, and in the absence of evidence from Azzopardi Industries or Azbuild supporting Mr Hamilton's claim, I am not satisfied on the balance of probabilities that I should conclude that the liquidators have wrongly withheld payment of the amount of $8,590.97. Costs considered globally 107 So far, I have found the following amounts of remuneration are prima facie fair and reasonable: Liquidator Basis of claim Remuneration exclusive of GST Mr Gladman 7 February 2011 to 9 July 2013 $112,418.60 10 July 2013 to 8 October 2013 $19,268.00 Preparation of first affidavit for remuneration approval $8,346.00 28 March 2015 to 23 June 2015 $10,200.50 24 June 2015 to 1 October 2015 including preparation of two further affidavits for remuneration approval $15,933.50 Current liquidators 27 June 2014 to 23 February 2015 $38,323.00 Since 23 February 2015 $12,511.64 Work to complete the winding up $7,500.00 Mr Hamilton February 2014 remuneration approval $3,795.82 Work done after 3 April 2014 $17,632.28 Second remuneration claim $7,000.00 Total $252,929.34 108 If this figure were allowed, then the total costs of the liquidation including the amounts approved for Mr Hamilton in February 2014 and February 2015 (and not the subject of my review) and other legal fees referred to in the evidence is: (1) $252,929.34 plus GST equals $278,222.27; (2) $92,095.23 inclusive of GST, being the amount of Mr Hamilton's remuneration approved in February 2014; (3) $26,705.12 inclusive of GST, being the amount of Mr Hamilton's remuneration approved in February 2015 and not the subject of review; (4) $120,923.45 inclusive of GST comprising current liquidators legal fees ($72,365.56 Access Law Group, $15,798.75 Mr Nagle; $7,536.12 Access Law Group; Lancaster $11,019.27; Mr Nagle $14,203.75); (5) $12,255.38 inclusive of GST for counsel (Mr Macauley and Mr Leong) retained by Mr Hamilton; (6) $13,640.00 inclusive of GST for counsel (Mr Svehla) retained by Mr Hamilton. 109 The total of these sums of $543,841.45. 110 This amount seems vastly excessive having regard to the value of the property dealt with. 111 On the other hand, the evidence revealed that the liquidation has been significantly complicated by excessive disputation with the lawyer for Azzopardi Industries. The matter has involved hearings conducted by me on 27 November 2014, 9 December 2014, 31 March 2015, 26 May 2015, 27 May 2015 and 22 July 2015. This number of hearings, and the tortuous correspondence which occurred in the context of the hearings, as revealed in the affidavit evidence, was disproportionate for the size of the liquidation and the relative simplicity of the issues to be resolved. For this reason, I will direct the Registrar to refer the papers to the Office of the Legal Services Commissioner for his consideration of the conduct of the lawyers for Azzopardi Industries in relation to the liquidation. 112 Taking these matters into account, I consider it fair and reasonable to apply a 20% discount to the various claims I am considering. Conclusion 113 Pursuant to s 511 of the Act, I will fix the following amounts of remuneration: (a) For Mr Gladman, the sum of $146,226.61 inclusive of GST; (b) For the current liquidators, the sum of $51,334.48 inclusive of GST; (c) For Mr Hamilton, for work done to obtain approval of his remuneration in February 2014 and February 2015 and work done after 3 April 2014, the sum of $25,016.73 inclusive of GST. I certify that the preceding one hundred and thirteen (113) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate: Dated: 13 November 2015