Supreme Court New South Wales Medium Neutral Citation: In the matter of VSH Investment Pty Ltd [2023] NSWSC 1590 Hearing dates: 11 December 2023 Date of orders: 15 December 2023 Decision date: 15 December 2023 Jurisdiction: Equity - Corporations List Before: Nixon J Decision: See [78] Catchwords: CORPORATIONS – Winding up – Liquidators – Corporation was trustee of a unit trust and acted solely in that capacity – Liquidator sought be appointed receiver of assets of trust – Orders made appointing liquidator as receiver and permitting liquidator to sell trust assets to enforce right of indemnity and recover costs of receivership and winding up. CORPORATIONS – Winding up – Liquidators – Remuneration – Remuneration determination made by resolution of the creditors in respect of liquidator's remuneration to conclusion of winding up – Liquidator's affidavit failed to explain substantial delay in liquidation and in bringing application – Liquidator failed to explain in what respects winding up had proved more complex than was perceived at time of remuneration determination – Concerns raised by sole shareholder of Company and sole unitholder of trust regarding extent of remuneration and expenses – Consideration of quantum of charge over trust assets in respect of liquidator's remuneration and expenses to date. Legislation Cited: Corporations Act 2001 (Cth) s 477(2); Sch 2, ss 60-10, 60-11 Cases Cited: Bastion v Gideon Investments Pty Ltd (in liq) [2000] NSWSC 939 Bruton Holdings Pty Ltd (in liq) v Federal Commissioner of Taxation (2009) 239 CLR 346; [2009] HCA 32 Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (2019) 268 CLR 524; [2019] HCA 20 Federal Commissioner of Taxation v Bruton Holdings Pty Ltd (in liq) and Others (2008) 173 FCR 472; [2008] FCAFC 184 Hosking, in the matter of Business Aptitude Pty Ltd (in liq) [2016] FCA 1438 In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396 In the matter of Wealth Street Pty Ltd (in liq) [2023] NSWSC 1482 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 Re Banksia Securities Ltd (in liq) (recs and mgrs apptd) [2017] NSWSC 540 Re Idylic Solutions Pty Ltd as trustee for Super Save Superannuation Fund and others [2016] NSWSC 1292 Re North Food Catering Pty Ltd [2014] NSWSC 77 Re Sakr Nominees Pty Ltd [2016] NSWSC 709 Re Stansfield DIY Wealth Pty Ltd (in liq) [2014] NSWSC 1484 Sanderson, as liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38 Category: Principal judgment Parties: David Ian Mansfield in his capacity as liquidator of VSH Investment Pty Ltd (in liq) (1st Applicant) VSH Investment Pty Ltd (in liq) (2nd Applicant) Wei Ru Niu (1st Respondent) Pei Long Wu (2nd Respondent) SHD Investment Pty Ltd as trustee of GYBY Trust (3rd Respondent) Representation: Counsel: D A Woods (Applicants) H W Somerville (3rd Respondent) Solicitors: Stacks Champion (Applicants) Dong & Partners (3rd Respondent) File Number(s): 2018/351237 Publication restriction: Nil Judgment Introduction 1. By an interlocutory process filed on 14 September 2023, the first applicant in his capacity as liquidator (the Liquidator) of the second applicant, VSH Investment Pty Ltd (the Company), seeks to be appointed as receiver of the assets of a trust known as the GXGY Unit Trust, of which the Company was trustee (the Trust). The Liquidator also seeks an order that he have, as receiver, the power to sell the property of the Trust, so as to enforce the Company's indemnity as trustee or former trustee of the Trust and apply the proceeds in respect of liabilities incurred by the Company in that capacity, and so as to enable the Liquidator to recover the costs of the receivership and the general costs of the winding up. 2. In addition, the Liquidator seeks an order that he is justified in making payment of his proper remuneration and expenses both of the winding up and of the receivership from the assets of the Trust; and a declaration that land situated at Lot 8, Beacon Hill Road, Brookvale in New South Wales (the Brookvale Property) be charged with all amounts required to satisfy the Company's right of indemnity, and to pay the Liquidator's proper remuneration and expenses, to the extent that such remuneration is properly incurred and is approved by the Court. 3. Finally, the Liquidator seeks an order that the quantum of the charge over the Brookvale Property for the Liquidator's proper remuneration and expenses in the period up to and including 11 December 2023 is the sum of: 1. $112,825.50 (excluding GST) for the Liquidator's remuneration for the period from 28 February 2019 to 15 August 2023; 2. $68,176.82 (excluding GST) for the Liquidator's disbursements, including legal costs, for the period from 24 February 2019 to 17 August 2023; 3. $5,911.50 (excluding GST) for the Liquidator's remuneration for the period from 16 August 2023 to 11 December 2023; and 4. $17,408.00 (excluding GST) for the Liquidator's disbursements, including legal costs, from 17 August 2023 to 11 December 2023. 1. The first respondent (Ms Niu) and the second respondent (Mr Wu) are persons who have notified claims in respect of the Brookvale Property and have lodged proofs of debt in the liquidation of the Company. Each has been notified of this application. Neither has filed a notice of appearance, or indicated to the Liquidator any opposition to the relief sought. 2. The third respondent, SHD Investment Pty Ltd as trustee of the GYBY Trust (SHD Investment), is the sole shareholder of the Company and is the sole unitholder of the Trust. SHD Investment appeared on the application, but it consented to much of the relief, and the issues raised by it were confined principally to the quantum of the Liquidator's remuneration and expenses. 3. The Liquidator swore two affidavits in support of this application, and also tendered the detailed time records of both the Liquidator's staff and solicitors. SHD Investment relied on an affidavit of its solicitor, Ms Gong, which identified concerns about a number of aspects of the Liquidator's claimed remuneration and expenses. 4. I will briefly outline the factual background below, and then deal with those proposed orders which were not the subject of any controversy, before turning to the disputed issue of quantum. Factual Background 1. The Company was incorporated on 28 May 2012. Its sole shareholder is SHD Investment. Its sole director and shareholder was, at the time of the Liquidator's appointment, Ms Hung Shang (Director). 2. On 28 February 2019, the Liquidator was appointed by this Court as liquidator of the Company. The winding up application was made by the Chief Commissioner of State Revenue who, as at February 2019, was owed a debt of $50,990.95, and had served a statutory demand on the Company in respect of that debt. This debt arose from unpaid land tax in respect of the Brookvale Property. 3. The Company holds an 80/100 share interest in the Brookvale Property as a tenant in common with Ms Niu, who holds the remaining 20/100 interest. 4. The Company's interest in the Brookvale Property is the only material asset of the Company that the Liquidator has identified. Otherwise, the Company held three accounts with Westpac, the balances of which amounted to only $338.71 in total at the time of the Liquidator's appointment. One of those accounts is in the name of the Company as trustee of the Trust, and another is in the name of the Trust. At the Liquidator's request, all debit transactions were frozen on these accounts in March 2019. 5. On 4 March 2019, the Liquidator forwarded a director's package containing a demand for the Director to submit a Report on Company Activities and Property of the Company (ROCAP), and to deliver the books and records of the Company to him. On 14 June 2019, the Director provided a completed ROCAP form, but no books and records. The ROCAP provided scant, and incorrect, information to the Liquidator. For example, the Director stated (incorrectly) that the Company owned no real property or other assets, and held no property on trust. 6. The Liquidator knew those statements were incorrect at the time he received the completed ROCAP. He had already ascertained, from searches and inquiries, that the Company held an interest in the Brookvale Property, and that the Company was trustee of the Trust. 7. On 24 March 2019, the Liquidator was provided with a copy of the Trust Deed of the Trust, which was dated 20 May 2012. 8. The Trust is a unit trust, and SHD Investment is the sole unitholder. 9. The Trust Deed contains an ipso facto clause to the effect, relevantly, that a trustee of the Trust will ipso facto cease to be trustee if, being a corporation, it goes into liquidation. Accordingly, the Company ceased to be trustee of the Trust when the winding up order was made. Although the Director sent an email to the Liquidator's staff on 27 May 2019, claiming that a new trustee, Shang Investment Pty Ltd, had been appointed to the Trust, the Liquidator deposed (and SHD Investment did not dispute) that the documentation provided by the Director did not support this statement. On that basis, the Company remains as bare trustee of the Trust. 10. The Liquidator's investigations have revealed that the Company is a special purpose vehicle, which was established in order to acquire, as trustee of the Trust, an interest in the Brookvale Property for the purposes of development. 11. Ms Niu was formerly the sole owner of the Brookvale Property, having purchased it in July 2011 for $1.638m. 12. As at May 2012, there was a development approval pertaining to the Brookvale Property allowing for the clearing of 4,665 square metres of the land. 13. On 18 May 2012, the Director, Ms Niu and Mr Wu signed a "Joint Development Agreement". The Liquidator explained that this appears to be a proposed joint venture pursuant to which the parties would acquire interests in the Brookvale Property and develop it pursuant to the development approval. The parties to the joint property development, and their respective interests, are recorded as being Ms Niu as to 20%, Mr Wu as to 20%, and the Director "or a trust name" as to 60%. The initial purchase price for the Brookvale Property was stated as $3m, which was payable in accordance with the proposed percentage interest, that is, $1.8m by the Director or a trust name, and $600,000 by each of Ms Niu and Mr Wu. The agreement also recorded an obligation on the part of the Director to pay $600,000 to Ms Niu for "interest, D/A fees, court service fee and other related expenses". 14. The Company is not a party to the Joint Development Agreement, which was signed on the same date that the Company was registered. 15. On 23 May 2012, a few days after the date of the Trust Deed, Ms Niu and the Director, on behalf of the Company as trustee of the Trust, entered into a contract for sale whereby the Company was to purchase a 60% interest in the Brookvale Property. 16. The Liquidator deposed that additional agreements appear to have been subsequently entered by the Director, Ms Niu and Mr Wu in order to resolve a dispute as to whether the value of the Brookvale Property was $3m or $4m. The Liquidator explained that the general effect of these two agreements was that the purchase price for each party's investment would remain the same; that Ms Niu would take out an additional $600,000 loan from the Director at an interest rate of 10% per annum; that the proposed loan from the Director to Ms Niu was to be secured by a mortgage; that the registered interest of the Director in the Brookvale Property would be recorded as 80%, although the "actual investment proportion" of the parties would remain as set out in the Joint Development Agreement; and that Ms Niu must immediately repay the $600,000 loan if the project ceases development or sells, otherwise the $600,000 will be considered as an investment into the development and the Director's actual investment proportion will be considered to be 80% rather than 60% at the election of the Director. 17. On 21 June 2012, the solicitors acting for the parties in relation to the Contract for Sale of the Brookvale Property exchanged letters agreeing to vary the interest to be acquired by the Company as trustee of the Trust from 60% to 80%. 18. A historical title search shows the registration of a discharge of a mortgage and a transfer on 2 August 2012 for the Company's 80% interest in the Brookvale Property. 19. Since August 2012, the development of the Brookvale Property has been stagnant. The development consent to clear the land and subdivide the Brookvale Property lapsed in around 2016 or 2017, and the land has since been rezoned from R2 to E2. 20. The Liquidator had various communications, in 2019 and 2020, with each of Ms Niu, Mr Wu and the Director in relation to their interests in the Brookvale Property and their claims in respect of the Company. In addition, the Liquidator has received from Ms Niu and Mr Wu statements in Chinese regarding the history of the transaction, documents said to support their claims, and proofs of debt. Those proofs of debt have been disputed by the Director. 21. The Liquidator has formed the view, having regard to the information and documents provided to him to date, that there is a dispute about a portion of the Company's interest in the Brookvale Property. In particular, the Liquidator is of the view that, subject to the enforceability of the various agreements referred to above, upon which Ms Niu and Mr Wu rely: 1. the Brookvale Property may be the intended property of a joint venture or partnership in which the parties were to be, or are, the Company as trustee of the Trust (as nominee of the Director) as to 60%, Ms Niu as to 20%, and Mr Wu as to 20%; and 2. there are competing claims as to the Company's interest in the Brookvale Property to the extent of 20%, namely: 1. Ms Niu has made a claim to the effect that 20% of the Brookvale Property held by the Company as trustee of the Trust is held by it as mortgagee to secure the repayment of a $600,000 loan that was made or due to be made by the Director (or the Company) to Ms Niu; 2. Mr Wu has made a claim to the effect that it was his intended 20% interest in the Brookvale Property that was pledged as security for the loan to Ms Niu; and 3. the Director disputes that Ms Niu or Mr Wu has any interest to 20% of the Brookvale Property owned by the Company. 1. The Liquidator has formed the view that, if he is to realise the assets of the Company in order to pay the debts of the Company and his costs and remuneration, it is necessary for him to be appointed as receiver of the assets of the Trust; and that, unless he finds a purchaser of the Company's interest in the Brookvale Property, realising the assets of the Trust will involve selling the Brookvale Property. 2. The creditors or potential creditors of the Company of which the Liquidator is currently aware all relate to the Company's part ownership of the Brookvale Property or to the Joint Development Agreement. 3. The Brookvale Property is not subject to any mortgage. The Liquidator has formed the view that, if the Brookvale Property is sold, the property-related debts or liabilities are likely to comprise local council rates, Sydney Water rates, land tax, costs of demolition, restoration and maintenance work to the Property, and the reconciliation of debts as between the co-owners, partners, venturers or third parties for payments made towards property-related debts. For example, there appear to have been payments made for local council rates, for land tax, and for costs of rectification work required by Northern Beaches Council, and at least some of those appear to have been paid by Ms Niu or the Director. 4. The Liquidator's investigations have revealed that the Company did not act in any capacity other than as trustee of the Trust. The only additional potential debts or liabilities of the Company as trustee of the Trust, other than those noted above, of which the Liquidator is currently aware are: 1. a claim by Ms Niu in the amount of $600,000, which appears to be either an unpaid unsecured amount due under the Joint Development Agreement or, as claimed by Ms Niu in her proof of debt, an unpaid portion of the purchase price for the Company's purchase of an interest in the Brookvale Property; 2. a claim by the Director (or any related entity) for any loan provided to the Company at the time of the purchase of the Brookvale Property; and 3. the Liquidator's remuneration and expenses and general costs of the liquidation of the Company. 1. The Liquidator deposed that, based on the information currently available to him, he has no reason to believe that the debts related to the Brookvale Property of which he is currently aware could not be paid in full from the proceeds of sale of the Brookvale Property. 2. SHD Investments did not, in its affidavit evidence or submissions, dispute any of the matters outlined above. Appointment as Receiver of Trust 1. The Liquidator seeks an order that he be appointed receiver without security of the assets of the Trust. He also seeks an order that he have, as receiver, the power to do all things necessary or convenient to enable him to sell and convert into cash the property of the Trust, so as to enforce the Company's indemnity as trustee or former trustee of the Trust and apply the proceeds to discharge the liabilities of the Company as trustee or former trustee of the Trust, and so as to enable the Liquidator to recover the costs of the receivership and the general costs of the winding up. 2. SHD Investments, despite at one stage in submissions querying whether the costs of the winding up could be paid out of the assets of the Trust, ultimately confirmed that it had no objection to orders being made in the terms sought by the applicants. 3. I have formed the view, based on the evidence and submissions before me, that the orders sought in respect of the Liquidator's appointment as receiver of the assets of the Trust should be made. 4. It is well established that a trustee has a right to be indemnified out of, and exonerated from, the assets of the trust in respect of all liabilities that it has incurred as trustee of the trust; that its right to indemnity and exoneration constitutes a proprietary interest in the assets of the trust, and gives the trustee a charge or right of lien over those assets; and that its right to indemnity and exoneration survives, and is not otherwise affected by, its removal as trustee: Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367 and 370; Chief Commissioner of Stamp Duties for New South Wales v Buckle (1998) 192 CLR 226 at [47]-[50]; [1998] HCA 4; Bruton Holdings Pty Ltd (in liq) v Federal Commissioner of Taxation (2009) 239 CLR 346 at [43]; [2009] HCA 32; Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (2019) 268 CLR 524; [2019] HCA 20 at [32]-[33]. 5. The effect of the Company's removal as trustee of the Trust, by operation of the ipso facto clause, is that it now holds the Brookvale Property as a bare trustee, with the limited duty of protecting that asset: Federal Commissioner of Taxation v Bruton Holdings Pty Ltd (in liq) and Others (2008) 173 FCR 472 at [79]; [2008] FCAFC 184. 6. In Re Stansfield DIY Wealth Pty Ltd (in liq) [2014] NSWSC 1484 at [31], Brereton J reviewed the authorities and held that it is open to a liquidator of a corporate trustee (or former trustee) to seek appointment as a receiver of the trust, by way of enforcement of the lien over the trust's assets for liabilities incurred by a corporate trustee in that capacity. In Hosking, in the matter of Business Aptitude Pty Ltd (in liq) [2016] FCA 1438 at [17]-[19] and [21], Gleeson J noted that the general ground upon which the Court appoints a receiver is the protection or preservation of property for the benefit of persons who have an interest in it; that, where a trustee is removed, it retains a right of indemnity from the trust assets secured by an equitable charge over them for its liabilities incurred by reason of acting as trustee; and that "it is well-established that a receiver and manager can be appointed over trust property to secure the trustee's right of indemnity out of the assets of the trust". 7. In addition, it is well-established that a liquidator of a corporate trustee has a right to access trust assets to meet his or her remuneration and costs and disbursements. In circumstances where all of the company's assets are trust assets, this extends to the right to recover the costs of the winding up as well as the costs of the receivership. For example, in Bastion v Gideon Investments Pty Ltd (in liq) [2000] NSWSC 939, which was such a case, Austin J held at [71] that "the liquidator is entitled to be paid his reasonable remuneration, costs and expenses both for the work done to date as liquidator (including the costs of these applications), and the work done to date on behalf of the trust, out of the assets of the company". Similarly, in Re North Food Catering Pty Ltd [2014] NSWSC 77 at [9]-[17], Brereton J reviewed the authorities and held (at [17]) that "the liquidators are entitled to be paid their remuneration, whether for administering the trust assets or for general liquidation work, out of the trust assets, since the company has no assets other than the trust assets". 8. For those reasons, I will make the direction sought by the applicants to the effect that the Liquidator is justified in making payment of his remuneration and expenses of both the winding up of the Company and the receivership from the assets of the Trust; and the declaration sought by the applicant to the effect that the Company's interest in the Brookvale Property is charged with all amounts required to satisfy the Company's right of indemnity as trustee or former trustee of the Trust, and to pay the Liquidator's proper remuneration and expenses of the winding up of the Company and the receivership, to the extent that such remuneration is properly incurred and is approved. 9. That raises the question of what amount of remuneration has been properly incurred, and should be approved, which was the main area of dispute on this application. Quantum of remuneration and costs 1. There was no dispute about the relevant principles in respect of an application for approval of a liquidator's remuneration, which may be shortly stated. 2. In Re Banksia Securities Ltd (in liq) (recs and mgrs apptd) [2017] NSWSC 540, Gleeson JA referred to the Court of Appeal's decision in Sanderson, as liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38, and summarised (at [44]-[46]) the principles which arose from Bathurst CJ's judgment in that case as follows: "First, the onus is on the special purpose receivers to establish that the remuneration claimed is reasonable. It is the function of the Court … to determine the remuneration by considering the material provided and bringing an independent mind to bear on the relevant issues: Sakr at [54]. Second, many of the factors in s 425(8), in particular, pars (d)-(e) and (g)-(h) can be seen to have as their unifying theme the concept of proportionality. The question of proportionality in terms of work done as compared with the size of the property the subject of the insolvency administration or the benefit to be obtained from the work, is an important consideration in determining reasonableness: Templeton v Australian Securities and Investments Commission (2015) 108 ACSR 545; (2015) FCAFC 137. The work done must be proportionate to the difficulty and importance of the task in the context in which it needs to be performed. This is what is encompassed in assessing the value of the services rendered: Sakr at [55]. Third, the mere fact that the work performed does not lead to augmentation of the funds available for distribution does not mean that the special purpose receivers are not entitled to be remunerated for it. In the present case, the Trustee fee application and the time spent consulting with the committee of creditors on various issues, including obtaining approval of the special purpose receivers' remuneration will not result in the augmentation of the funds available for distribution. Provided it was reasonable to carry out the work and the amount charged is reasonable, there is no reason a liquidator should not recover remuneration for undertaking the work: Sakr at [57]–[58]." 1. In Re Banksia Securities, Gleeson JA, in dealing with a receiver's claim for remuneration, noted (at [37]) that common bases for calculation of remuneration included time-based charging and a commission based on a percentage of recoveries, and that the approach to be adopted is directed to securing reasonable remuneration in the circumstances. 2. In Re Idylic Solutions Pty Ltd as trustee for Super Save Superannuation Fund and others [2016] NSWSC 1292 at [58], Black J observed that it is not the Court's role, as constituted by a judge, to undertake a line by line review of the relevant narratives in an insolvency practitioner's billing record, but his Honour reviewed the relevant narratives in a broad way in order to satisfy himself that they supported the other evidence led in respect of the claimed remuneration. Gleeson JA adopted the same approach in Banksia Securities at [48]. 3. In respect of disbursements, no Court approval or specific order is necessary in the absence of a challenge. However, a liquidator may seek a direction that he or she would be justified in paying certain disbursements in order to obtain prior protection in respect of such a disbursement: In the matter of Say Enterprises Pty Ltd [2018] NSWSC 396 at [6] per Brereton J, referring to Re Sakr Nominees Pty Ltd [2016] NSWSC 709 at [8]. 4. Section 60-5 of the Insolvency Practice Schedule (Corporations) set out in Schedule 2 to the Corporations Act 2001 (Cth) (the IPS) provides that an external administrator of a company is entitled to receive remuneration for necessary work properly performed by the external administrator in relation to the external administration, in accordance with the remuneration determinations (if any) for the external administrator. 5. Section 60-10 of the IPS provides that remuneration determinations may be made by resolution of the creditors, by a committee of inspection (if any) or, in the absence of a resolution of creditors or any committee of inspection, by the Court. Section 60-10(4) provides that, if a determination under this section specifies that the external administrator is entitled to receive remuneration worked out wholly or partly on a time-cost basis, the determination must include a cap on the amount of remuneration worked out on a time-cost basis that the external administrator is entitled to receive. 6. Although the Liquidator did not frame his application as an application under s 60-10, the effect of the orders which he sought was to seek approval for his remuneration in a certain sum. That is because he sought a declaration that the Company's interest in the Brookvale Property is charged with all amounts required to pay his properly incurred remuneration as approved by the Court, and sought an order regarding the amount of the charge for remuneration to date, thereby in effect seeking the Court's approval of remuneration in that amount up to 11 December 2023. 7. However, any application for the Court to approve the Liquidator's remuneration in a particular amount for the work done to date must take into account that resolutions have been passed by the creditors, which were notified to ASIC in June 2019, to the effect that: 1. the remuneration of the Liquidator for the period 28 February 2019 to 22 May 2019, calculated at hourly rates as detailed in the report to creditors of 27 May 2019, is approved for payment in the sum of $29,988.50, plus GST of $2,998.85 and that the Liquidator can draw the remuneration immediately or as required; 2. the future remuneration of the Liquidator from 23 May 2019 to completion of the liquidation is determined at a sum equal to the cost of time spent by the Liquidator and their partners and staff, calculated at the hourly rates as detailed in the report to creditors of 27 May 2019, up to a capped amount of $50,000.00, plus GST of $5,000, and that the Liquidator can draw the remuneration on a monthly basis, or as required; 3. the internal disbursements of the Liquidation from 28 February 2019 to 22 May 2019, calculated at the rates as detailed in the remuneration report dated 27 May 2019 is approved for payment in the sum of $497.49 plus GST of $49.74 and that the Liquidator may draw the disbursements immediately or as required; and 4. the future internal disbursements of the Liquidation from 23 May 2019 to Completion of the Liquidation is determined at a sum equal to the cost spent by the Liquidator and his partners and staff, calculated at the rates as detailed in the remuneration report dated 27 May 2019, such sum to be capped at the amount of $625.00, plus GST of $62.50, and that the Liquidator may draw the disbursements on a monthly basis or as required. 1. In proposing the resolution in respect of his future remuneration, the Liquidator noted to creditors that: "Should a greater amount be incurred, only the capped amount approved by creditors will be charged and I may seek further approval of the additional fees incurred." The Liquidator also noted that he was only seeking approval for internal disbursements, noting that all disbursements for "Externally provided professional services such as legal fees" and "Externally provided non-professional costs such as travel, accommodation and search fees" would be "recovered at cost". 2. Having regard to the matters outlined above, there has been a remuneration determination made by resolution of creditors through to the conclusion of the winding up. While more than one determination may be made in relation to a particular external administration (s 60-10(5) of the IPS), the Court only has power to make a determination in circumstances where a determination has not been made by resolution of creditors or by a committee of inspection (s 60-10(1)(c) of the IPS). This condition is not satisfied. 3. The Liquidator, as an officer of the Company, may apply for a review of the remuneration determination made by resolution of the creditors (s 60-11(1)(c) of the IPS) and on such an application, the Court may, if it considers it appropriate to do so, review and either affirm, vary or set aside the remuneration determination (s 60-11(4) of the IPS). While the present application was not framed as an application for review and variation of the remuneration determination made by the June 2019 resolutions, it could be treated as such. However, a more significant problem in that regard is that the Liquidator has not addressed matters which one would expect to be addressed on such an application, including what has occurred since the June 2019 resolutions which has meant that the initial estimate was inadequate, what is the correlation between the work done to date and the work that was taken into account in the initial estimate that was put to the creditors, and what is the updated estimate of the costs, on the information currently available, to the conclusion of the winding up. 4. The Liquidator did give evidence that he and his staff had undertaken various tasks in relation to the identification, care and preservation of the Brookvale Property, including: "a. initial investigations with the Director to ascertain the basis on which the Brookvale Property was purchased; b. obtaining and considering documents from Revenue NSW to assist me determining the capacity in which the Brookvale Property was held by the Company; c. protecting the Company's right of exoneration/lien in relation to debts incurred by it by instructing my solicitors to lodge a caveat over the Brookvale Property; d. enquiries made with Mr Wu and Ms Niu in relation to their claims to the Brookvale Property or as potential creditors of the GXGY Unit Trust; e. liaising with the Northern Beaches Council and Ms Niu in relation to the demolition order…and instructing my solicitors to write to Northern Beaches Council informing it of my proposed application to the Court; f. investigating and considering any claims by statutory bodies against the Company and/or against the Brookvale Property (including land tax, Council rates and water rates); g. enforcing the Company's rights by the commencement of the present application including the time taken by my staff and I in preparing this affidavit and for the application generally; and h. instructing solicitors and counsel to assist me (including providing advice) with the interlocutory process and preparation of this affidavit." 1. The Liquidator also gave evidence that he and his staff have performed tasks that would otherwise be referred to as general litigation tasks, such as: "a. initial investigations as to whether the Company had at any time acted in its own capacity; b. lodgement of all forms relating to the liquidation with ASIC; c. dealing with any creditor enquiries via written correspondence and telephone; d. administrative correspondence relating to the report on company activities and property (ROCAP); e. preparation of relevant advertisements placed on the ASIC Published Notices portal; f. writing to all major banks informing them of my appointment and querying the existence of any bank accounts held; g. attending to preliminary investigations in the first days of my appointment into the affairs of the Company; h. preparing the initial notification to creditors, initial remuneration notice and other reports to creditors; i. writing to the NSW Roads & Maritime Services requesting a search of their database to identify any vehicles held in the Company's name; j. liaising with the Director with respect to the options for the termination of the liquidation of the Company; k. issuing demands for books and records to accountants and other parties pursuant to Section 530B of the Act; l. liaising with the ATO regarding tax lodgements of the Company in its own capacity and details to log onto Tax portal; m. investigating whether there are any employees of the Company and whether the Company undertook any business operations; n. preparation of my investigation report to ASIC pursuant to Section 533 of the Act; o. following up with creditors with respect to general voting purposes; p. steps undertaken to obtain remuneration approval from creditors; and q. internal meetings to discuss the general status of the liquidation." 1. The Liquidator explained that he and his staff have entered their time in Deloitte's electronic practice management system known as "SWIFT". These entries typically record the date the task was undertaken, the activity to which the task related, a short description of the task, and the time spent on the task. 2. There was no dispute that the Liquidator and his staff have performed the work set out in the records extracted from SWIFT, which were in evidence, or that this work has taken the time recorded. Nor was any submission made by SHD Investment that the hourly rates are unreasonable. Likewise, there was no challenge to the Liquidator's opinion that the work which has been performed was carried out by staff with the appropriate level of experience to perform that work. 3. Instead, SHD Investment raised three main concerns. 4. The first concern is that there appears to be some duplicate work, which is identified in the affidavit of SHD Investment's solicitor, Ms Gong, by reference to the time records. The Liquidator did not lead any evidence in relation to the entries identified. For example, he did not lead any evidence to show that tasks performed around the same date with the same description in fact involved different work. Nor did he make any submissions in respect of individual entries challenged by Ms Gong, or regarding Ms Gong's assessment of the quantum of the duplicate work. 5. This duplicate work was said by Ms Gong to total $9,457.00 in respect of the first period, to 14 August 2023, and some $2,047.00 in respect of the second period, from 17 August to 7 December 2023, totalling $11,504. Having reviewed the entries, I consider there is cause for concern about the entries highlighted by Ms Gong. For example, there are instances of time being recorded apparently on the same task in around the same period, where such tasks do not, from their description, seem to be complicated. A couple of illustrations will suffice to make the point: 1. on 28 February 2019, 4 hours of time are recorded on "Company searches for the Company. Summary of the ppsr, company search, afsa search, director search, lpi searches on the director and company, abn search summary of the property's value". On the following day, 1 March 2019, 5.7 hours of time are recorded on apparently the same task, with an almost identical narrative. 2. on 18 March 2019, 3 hours of time are spent on the task: "Prepared the Initial Notice to Creditors". On 25 March 2019, an identical amount of time is spent on apparently the same task: "prepared the initial notice and associated tasks". 1. In circumstances where the onus is on the Liquidator to show that his remuneration is reasonable, where a concern has been raised about entries in the time sheets and this concern appears to be reasonably based, and where the Liquidator has not led any evidence or made any submissions in response to any of the particular time entries which have been queried, I consider that there are grounds for putting to one side these entries, totalling $11,504, when seeking to assess reasonable remuneration to date. 2. The second concern raised by Ms Gong is that there is some work which she considers to have been "overcharged" amounting to $10,067.50. Most of the work in this category is recorded as being for "bank reconciliation". This has been done at least once a month (and on some occasions, twice a month) since March 2019, despite the bank balances being minimal and the accounts being frozen for the whole of that period of well over four years. The Liquidator did not provide any explanation for these entries and, in those circumstances, his counsel accepted that it would be open to make a reduction in respect of this element of the work. 3. The third concern related to the delay in bringing this application and, in particular, the fact that the preparation of the interlocutory process and the Liquidator's affidavit took some 45.5 hours (excluding any time of solicitors and counsel) and spanned some two-and-a-half years. The amount of the Liquidator's remuneration referrable to this work was calculated as being $21,939. 4. I am concerned about the Liquidator's delay in bringing this application. This delay is not addressed, let alone explained, in the Liquidator's affidavit. I do not need to undertake a line-by-line analysis of the dozens of entries over some 30 months relating to this work done on the application and affidavit to accept the proposition that such delay is likely to increase significantly the costs of the task. In any case, a broad review of the entries in the time records shows that there have been substantial intervals between work done on the preparation of materials for this hearing, over an extended period of time. By way only of example, time was spent on preparing and reviewing drafts of the affidavit in the period from July 2021 onwards, which led up to an entry in October 2021: "Follow up email to solicitor re final affidavit for execution". There followed a period of almost a year, with minimal activity in respect of this application, until September 2022 when there was a "Complete review of draft affidavit". Again, a period of a number of months followed in which there was limited activity, and then in May 2023 further time was spent on the "review" of the "affidavit for Court". Where busy professionals return to the preparation of Court materials on a number of occasions, at intervals of around 6 or 12 months, over the course of some years, it is likely that there will be an increase in the time and cost expended on the task in comparison to the (more efficient) approach of preparing the material within one short period. 5. Counsel for SHD Investment pointed out that in the recent decision of In the matter of Wealth Street Pty Ltd (in liq) [2023] NSWSC 1482 at [94], Williams J held that, in circumstances of similar and unexplained delay, the amount of the remuneration claimed "principally [for] reviewing draft versions of the Liquidator's affidavit, reviewing time records to be included in the exhibit to the affidavit, and collating and reviewing other documents to be included in the exhibit" was unreasonable, and should be reduced by 75%, having regard to the quality of the work, such as the failure to address the issue of delay. 6. In this case, the affidavit has been prepared over an even longer period than in Wealth Street, the amount claimed by way of remuneration for the preparation of the interlocutory process and affidavit is higher, and there are some significant deficiencies in the evidence, such as the lack of an explanation for the delay in bringing the application, and the lack of an explanation for why the costs have increased above the capped amount approved by the creditors' resolution. 7. In those circumstances, I accept the submission that the amount of remuneration that can be claimed in respect of this aspect of the Liquidator's work should be significantly reduced. I consider that an appropriate reduction would be 75%, so that the amount that would be reasonable for this aspect of the Liquidator's remuneration would be approximately $5,484.75, a reduction of some $16,454.25. 8. If the deductions which I have identified above in relation to the three concerns identified by Ms Gong are summed, the total reduction would be $38,025.75. 9. Applying this reduction to the amount claimed by way of remuneration would leave a total for the Liquidator's reasonable remuneration to date of some $80,711.25 (excluding GST). Based on a broad review of the time entries, and the Liquidator's description of the work done to date which, as one would expect, contains some element of complexity (in terms of steps to investigate claims in relation to an apparent joint venture arrangement) and some element of routine matters (in terms of making standard searches, and sending out standard form correspondence), I consider that this amount of $80,711.25 in respect of remuneration is reasonably proportionate to the work done to date. 10. Coincidentally, this is close to the amount that was approved by the creditors' resolutions being a total of $81,110.99 (excluding GST), comprising $29,988.50 for past remuneration, a capped amount of $50,000 for future remuneration, $497.49 for past internal disbursements and $625 for future internal disbursements. Of course, that amount was a capped amount for the work through to the end of the winding up. However, the resolution in question noted that amounts would be charged for future work determined at a sum equal to the cost of time, and permitted the Liquidator to draw the remuneration up to the capped amount "as required". 11. In light of the matters set out above, including that: 1. the Court does not have power to make a remuneration determination unless such a determination has not been made by creditors' resolution or the committee of inspection; 2. while the Court has power to review a remuneration determination on application by a liquidator, such an application has not been made, and the liquidator has not led the evidence that would be expected on such an application; 3. the existing remuneration determination permits the Liquidator to draw up to $81,110.99 (excluding GST) for remuneration and internal disbursements "as required"; and 4. having taken into account each of the concerns raised by SHD Investment, I have found that reasonable remuneration for the work done to date would be some $80,711.25 (excluding GST); 5. I consider that the appropriate course is to order that the quantum of the charge on the Brookvale Property, so far as concerns the element of the Liquidator's remuneration up to 11 December 2023, is $80,711.25 (which is below the total amount that the creditors' have approved for the Liquidator to draw, for his remuneration and internal disbursements, as required). When the assets of the Trust are realised, the Liquidator would be entitled to draw this amount, in respect of his remuneration for the work done to date. The Liquidator is, of course, able to bring an application for the amount of the remuneration determination made by the creditors' resolution through to the conclusion of the winding up to be varied, and in particular for the cap to be increased; and an application for the quantum of the charge to be increased in respect of remuneration and expenses incurred after 11 December 2023. If such an application is brought in due course, it should be supported by evidence regarding the matters which I have identified. 1. The external disbursements are in a different category. The Liquidator claims an amount of $68,176.82 (excluding GST) for external disbursements in the period from 24 February 2019 to 17 August 2023, and a further $17,408.00 (excluding GST) for the period from 17 August 2023 to 11 December 2023. Over 99% of this amount consists of legal costs ($78,355.87), with the remainder attributable to matters such as searches, filing fees, lodgement fees ($528.95). 2. There is no dispute that the legal work in respect of which the claim is made has been performed. There was no suggestion that the rates are unreasonable. The only substantive issue raised by Ms Gong's affidavit in respect of the legal fees was that "the nature of legal work undertaken by the liquidator's solicitors should be properly articulated as it bears upon the reasonableness of the claims by the liquidator for remuneration in circumstances where the relevant remuneration relates in large part to matters that were primarily attended to by the solicitors, for example, the preparation of this application and the evidence in support". This is an issue concerning the level of the liquidator's remuneration, not the level of legal fees. I have already addressed this issue above, by indicating that the Liquidator's remuneration in respect of the preparation of this application and the supporting affidavit should be substantially reduced. 3. Otherwise, only a handful of entries amounting to around $543.00 were highlighted by Ms Gong as potentially amounting to overcharging. I do not have a sufficient basis to conclude that there has been any overcharging from the narratives given for those entries, and in any case, I note that the total of these entries is significantly less than the amount which the Liquidator's solicitors have voluntarily written off ($2,741.00). 4. Having regard to those matters, I consider that the Liquidator's external disbursements to date, including legal costs, should be approved in full. Orders 1. For the reasons set out above, I make the following orders: 1. Order that David Ian Mansfield in in his capacity as liquidator (Liquidator) of VSH Investment Pty Ltd (in liq) (VSH Investment) be appointed as receiver without security of the assets of the GXGY Unit Trust until further order of the Court. 2. Order that the Liquidator, as receiver, has the power to do all things necessary or convenient to be done for or in connection with the attainment of the following objectives: 1. to enable the receiver to sell and convert into cash the property of the GXGY Unit Trust so as to enforce VSH Investments' indemnity as trustee or former trustee of the GXGY Unit Trust, and apply the proceeds to discharge the liabilities of VSH Investment as trustee or former trustee of the GXGY Unit Trust; and 2. to enable the receiver to recover the costs of the receivership and the general costs of the winding up of VSH Investment; 3. together with the powers that a liquidator would have in respect of the property of a company under section 477(2) of the Corporations Act 2001 (Cth). 1. Direct, pursuant to section 90-15 of the Insolvency Practice Schedule (Corporations), that the Liquidator is justified in making payment from the assets of the GXGY Unit Trust of: 1. his properly incurred remuneration in respect of the winding up of VSH Investment and the receivership, up to the amount approved by the remuneration determination made by the creditors' resolutions of June 2019 (the Remuneration Determination), subject to any application to review and vary the amount of the Remuneration Determination; and 2. his expenses of the winding up of VSH Investment and the receivership. 1. Declare that VSH Investments' interest in the land comprised in folio identified 8/1035344, being the land situated at and known as Lot 8, Beacon Hill Road, Brookvale NSW 2100 (Brookvale Property) is charged with all amounts required to: 1. satisfy VSH Investments' right of indemnity as trustee or former trustee of the GXGY Unit Trust; and 2. pay the Liquidator's: 1. properly incurred remuneration of the winding up of VSH Investment and the receivership, up to the amount approved by the Remuneration Determination (subject to any application to review and vary the amount of the Remuneration Determination); and 2. expenses of the winding up of VSH Investment and the receivership. 1. The quantum of the charge referred to in order 4(b) up to and including 11 December 2023 is the sum of the following: 1. in respect of the Liquidator's remuneration from 28 February 2019 to 11 December 2023, the amount of $80,711.25 (exclusive of GST); and 2. in respect of the Liquidator's expenses from 28 February 2019 to 11 December 2023, the amount of $85,584.82 (excluding GST). 1. The costs of the Interlocutory Process are costs in the winding up of VSH Investment. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 December 2023