Traditional Values Management Limited (In Liquidation) - Application by Andrew Stewart Reed Hewitt as special purpose liquidator [2015] VSC 338 (15 July 2015)

IN THE MATTER OF TRADITIONAL VALUES MANAGEMENT LIMITED (IN LIQUIDATION) (SPECIAL PURPOSE LIQUIDATOR APPOINTED) (ACN 055 106 100)

ANDREW STEWART REED HEWITT in his capacity as Special Purpose Liquidator of Traditional Values Management Limited (in liquidation) (Special Purpose Liquidator appointed) (ACN 055 106 100)

Plaintiff

JUDGE:	GARDINER AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	15 July 2015
CASE MAY BE CITED AS:	Traditional Values Management Limited (In Liquidation) – Application by Andrew Stewart Reed Hewitt as special purpose liquidator
MEDIUM NEUTRAL CITATION:	[2015] VSC 338

CORPORATIONS – External administration – Application by special purpose liquidator for determination of his remuneration.

The plaintiff has served all parties required to be served with notice of his intention to make this application including the Liquidators. No such party appeared to oppose or contradict it. It was considered appropriate to deal with the application without the necessity for the plaintiff to attend at Court.

1 On 3 September 2014 the plaintiff Andrew Hewitt was appointed as special purpose liquidator of Traditional Values Management Limited (In liquidation) (‘TVM’) pursuant to orders made by Ferguson J (as she then was), in proceeding S CI 2014 3849 (‘the Orders’).[1] In accordance with paragraph 3 of her Honour’s Orders, Mr Hewitt was appointed to:

2 In these reasons, I will refer to Mr Hewitt’s appointment as the ‘Special Purpose Liquidation Task’.

3 Mr Hewitt now makes application by interlocutory process filed 7 May 2015 pursuant to Order 6(f) of Ferguson J’s Orders for a determination that he is entitled to remuneration in the sum of $215,640 exclusive of GST in relation to work that he completed as special purpose liquidator of TVM for the period 3 September 2014 to 20 February 2015. Orders are also sought that Mr Hewitt’s costs of and incidental to making the application be ‘Expenses’ in the liquidation of TVM as that term is defined in the Orders; in addition an order is sought pursuant to Order 6(f)(ii) of the Orders that the application be dealt with in the absence of the public and without attendance by, or on behalf of, Mr Hewitt or his legal representatives.

4 In regard to the last element of the application, I am satisfied that the parties required to be served in Order 6(c)(i) to (iii) of the Orders have been served with notice of this application. In an affidavit of Vincenzo Murano sworn 7 May 2015 the identity of the parties who have been served is detailed. These included each of the five largest unit holders in the scheme operated by TVM. ASIC and the Liquidators appointed in the winding up of TVM, Messrs Morgan and Handberg (‘the Liquidators’) have also been notified. Those parties were each served with a notice in accordance with Form 16 of the Supreme Court (Corporations) Rules 2003 (‘the Rules’), a copy of the affidavit filed by Mr Hewitt in support of his application for remuneration together with a copy of the orders made on the application. The documentation was served on Neil Campbell who has previously contradicted remuneration applications by the Liquidators of TVM. This was done in compliance with Order 6(c)(ii) and Order 7 of the Orders. Mr Murano deposes that as at the date of affirming his affidavit, Mr Hewitt has not received any notice of objection to the application nor have his solicitors, Clayton Utz.

5 As contemplated by Order 6(f)(ii) of her Honour’s Orders, I consider it appropriate to deal with the application in the absence of the public and without the necessity of any attendance by Mr Hewitt or his legal advisors.

6 The principal affidavit in support of the application is that of Mr Hewitt sworn 7 April 2015.

7 The appointment of Mr Hewitt as special purpose liquidator arose as a result of complaints made by certain investors in the scheme conducted by TVM known as the Blue Diamond Deposits Trust No 1 (‘the Trust’), in relation to the conduct by the Liquidators. It was alleged that there had been negligence by the Liquidators and, prior to that by them in their capacity as the administrators of TVM in their administration of TVM. These complaints were made in a letter dated 4 July 2014 from CFS for those unit holders to Mills Oakley Lawyers. This is the letter described as the CFS letter in paragraph 3 of Ferguson J’s Orders. This resulted in Mr Hewitt’s appointment as special purpose liquidator. On 20 November 2014 Mr Hewitt completed a special purpose liquidator’s report which was filed in the Court pursuant to the Orders.

(b) Member of Institute of Chartered Accountants in Australia & New Zealand;

(d) Member of the Australian Restructuring Insolvency & Turnaround Association.

9 Mr Hewitt has over 20 years’ experience as an insolvency practitioner during which time he has undertaken and managed engagements in various industries, including real estate and construction, transport, professional services, education services, finance, hotels and accommodation, car dealerships, retail and wholesale.

10 Mr Hewitt deposes that he has worked on many voluntary administrations, receiverships and liquidations and has particular expertise in relation to investigative accountant reports and pre-lending reviews on behalf of banks and finance companies.

11 On 14 August 2006, a number of secured creditors loaned TVM and the Trust $4,000,000 which was secured by a fixed and floating charge granted by TVM over the Timeshare Loan Portfolio.

12 On 17 December 2009, the Liquidators were appointed Joint and Several Administrators of TVM pursuant to a resolution of the board of directors under section 436A of the Corporations Act 2001 (Cth) (‘the Act’).

13 On 3 February 2010, Messrs Morgan and Handberg were appointed as joint and several Liquidators of TVM.

14 On 2 August 2011, Richard Rohrt of Hamilton Murphy was appointed as receiver of the Timeshare Loan Portfolio pursuant to the fixed and floating charge that had been granted to the secured creditors.

15 On 10 August 2013, in order to facilitate the payment of outstanding debt of $717,500 owed to the secured creditors by TVM, the Liquidators entered into the Deed.

16 In March 2014, a Ms Philistin admitted to the Liquidators that she had created fraudulent loan entries in relation to the Timeshare Loan Portfolio and stolen $1,053,350 from TVM between 27 January 2004 and 29 May 2007. Ms Philistin was the bookkeeper responsible for managing and reporting in relation to the Timeshare Loan Portfolio from before the appointment of the Administrators until her employment was terminated on or about 4 March 2014.

17 Prior to the appointment of the administrators on 17 December 2009, the auditors of TVM had completed the following reports that had not uncovered the fraud perpetrated by Ms Philistin:

(a) full year audit reports for TVM from financial year 2003/2004 to financial year 2007/2008; and

(b) half yearly audit reports for TVM during the period from financial year 2002/2003 to financial year 2006/2007.

18 On 6 June 2014, the Liquidators filed a writ in the Supreme Court of Victoria commencing proceedings against the auditors. As at the date of Mr Hewitt swearing his affidavit, the writ in the auditors’ proceeding had not been served.

19 On 27 June 2014, Eighty Second Agenda Pty Ltd and G.J.R. Investments Pty Ltd who were secured creditors of TVM commenced proceedings against the Liquidators.

20 In the CFS letter, Mr Charles’ clients contended that the Liquidators were negligent and had caused them loss and damage by failing to detect the fraud perpetrated by Ms Philistin.

21 Mr Hewitt deposes that his role as special purpose liquidator was a challenging one. It involved gaining an understanding of:

(b) the manner in which Ms Philistin had allegedly defrauded TVM in respect of the Timeshare Loan Portfolio and how she recorded data on TVM’s Mission software system (Mission); and

(c) reporting structures the Liquidators had put in place to oversee work completed by Ms Philistin in relation to the Timeshare Loan Portfolio.

22 Mr Hewitt deposes that in order to perform his role as special purpose liquidator it was necessary for him to form an opinion in relation to the Liquidators’ alleged negligence in managing the Timeshare Loan Portfolio generally; and by not identifying the fraud perpetrated by Ms Philistin; and identify arrangements that were in place between the Liquidators and TVM’s creditors in relation to the Liquidators’ remuneration.

23 In order to form the opinions referred to in the previous paragraph, Mr Hewitt deposes that he and his staff:

(b) reviewed the Liquidators’ files, books and records, including file notes, in relation to TVM;

(c) reviewed and developed an understanding of Mission, the computer software system used by TVM to record and monitor the Timeshare Loan Portfolio;

(d) reviewed the extent to which the Administrators and Liquidators reported to secured creditors on the Timeshare Loan Portfolio. This involved reviewing documents such as:

(i) the report from the Administrators to the Secured Creditors dated 15 January 2010;

(ii) the report from the Liquidators to Noel Reynolds and Geoffrey Rice dated 2 March 2010;

(iii) the report from the Liquidators to the Receiver dated 2 September 2011;

(iv) the monthly reports from the Liquidators to the Secured Creditors for the period 17 December 2009 to 28 April 2011;

(vi) various file notes made by the Administrators and Liquidators prior to, and after, their respective appointments; and

(vii) various emails between the Secured Creditors and the Administrators and Liquidators prior to, and after, their respective appointments;

(e) reviewed the reporting processes implemented by the Liquidators in relation to Ms Philistin's management of the Timeshare Loan Portfolio;

(f) considered whether Ms Philistin manipulated Mission in order to conceal her allegedly fraudulent activities from the Liquidators;

(i) circumstances surrounding Ms Philistin's continued employment during the time the Administrators and Liquidators were appointed; and

(ii) how the Liquidators identified the alleged fraud perpetrated by Ms Philistin;

(h) reviewed the manner in which Ms Philistin allegedly defrauded TVM through the Timeshare Loan Portfolio, which included:

(i) procuring TVM to forward funds to people who had cancelled their loan applications during the cooling-off period and redirecting those funds to herself;

(ii) procuring TVM to forward funds to people whose loan applications had been refused and redirecting those funds to herself;

(iii) using Mission to reactivate previously settled loans in an attempt to conceal the fraud outlined in paragraphs 23 (h)(i) and 23 (h)(ii) above;

(iv) the theft of cash payments made by Timeshare Loan Portfolio debtors; and

(v) manipulating cheques provided by Timeshare Loan Portfolio debtors to make those cheques payable to herself;

(i) reviewed the circumstances in which the Liquidators executed the Deed and the alleged conflict of interest in relation to clause 4 of the Deed, which allowed the Liquidators to retain one third of repayments received by TVM from borrowers in relation to the Timeshare Loan Portfolio;

(j) reviewed the amount of $437,964.75 claimed by the Liquidators for their remuneration in relation to the care, preservation and realisation of the Timeshare Loan Portfolio between 17 December 2009 and 2 August 2011, which involved:

(i) considering the remuneration application made by the Liquidators in the Supreme Court of Victoria dated 18 March 2011 and the subsequent interlocutory process to fix the Liquidators' remuneration (Remuneration Proceedings);

(ii) considering documents filed in the Remuneration Proceedings, including:

B. the amended notice of objection filed by certain creditors of TVM on 29 September 2011; and

C. submissions filed in the Remuneration Proceedings by a representative party on behalf of himself and all unit holders in the Trust on 7 June 2011 and 7 June 2012;

(iv) reviewing the Administrators' report to creditors pursuant to section 439A of the Act dated 22 January 2010;

(v) reviewing the minutes from the second meeting of creditors held on 3 February 2010 during TVM’s voluntary administration;

(vi) reviewing the Liquidators' report to creditors under section 508 of the Act dated 2 May 2011; and

(vii) reviewing minutes from the annual general meeting of TVM’s creditors held on 17 May 2011;

(k) reviewed the Act and the Liquidators' Declaration of Independence, Relevant Relationships and Indemnities dated 14 December 2009 in relation to the allegation in the CFS Letter that the Liquidators have or will soon breach section 532(2)(a) of the Act; and

(i) reviewed the writ dated 6 June 2014 filed by the Liquidators in the Auditor Proceeding;

(ii) considered whether the Liquidators would have a conflict of interest if they were joined as joint tortfeasors in the Auditor Proceeding or alleged to be negligent in relation to their management of the Timeshare Loan Portfolio; and

C. half yearly audit reports for TVM during the period from financial year 2002/2003 to financial year 2006/2007; and

(a) consider the affidavit dated 28 July 2014 and filed by the Liquidators in Supreme Court of Victoria proceeding S CI 2014 3849 in support of their application under section 511 of the Act for directions and orders, including the appointment of a special purpose liquidator;

(c) confer with and seek advice from his solicitors, Clayton Utz, in relation to his appointment as special purpose liquidator.

25 In his affidavit, Mr Hewitt deposes that his remuneration has been calculated on a time-cost basis in accordance with the procedures detailed by the Australian Restructuring Insolvency & Turnaround Association. An electronic system known as Advanced Professional Solutions (‘APS’) was used by Mr Hewitt and his staff to record details of the time expended on tasks in fulfilling his role as special purpose liquidator of TVM. Mr Hewitt deposes for the period 3 September 2014 until 20 February 2015 he and his staff expended 478.6 hours on tasks resulting in work in progress in the sum of $215,640 exclusive of GST.

26 A document titled ‘Remuneration Request Approval Report’ dated 16 March 2015 is exhibited to Mr Hewitt’s affidavit. This document summarises the work completed by Mr Hewitt and his staff. The report contains extracts from the APS system which set out:

(d) a classification of each task by reference to the following six general categories of task:

27 The affidavit contains a table which identifies the persons at Mr Hewitt’s firm, describes their position in the hierarchy of the firm, the hourly rate charged by them and a summary of the total number of hours respectively worked by them in the Special Purpose Liquidation Task. That table stated as follows:

Name	Classification	Hourly rate (exclusive of GST)	Hours worked
Andrew Hewitt	Partner	$630.00	42.6
Christopher Sequeira	Senior Manager	$490.00	148.8
Raffi Dishoian	Assistant Manager	$410.00	279.0
Steven Lai	Undergraduate	$200.00	4.7
Jonathan Sammut	Filing	$160.00	2.5
Peter McCabe	Filing	$160.00	1.0

28 I note that the rates being charged are at the higher end of the rates charged by liquidators in Melbourne according to the fee schedules I sight which are appended to consents to act filed by liquidators in winding up applications in this Court. Despite such high rates, they are still within the range of what I would describe as the ‘market’. I consider that the Special Purpose Liquidation Task was not a common place appointment and called for heightened experience, judgement and responsibility.

29 In his affidavit Mr Hewitt provides further details of the tasks completed by him and his staff during the period the subject of the application. These are broken up by reference to the six categories of task described in para (i)–(vi) above.

30 Mr Hewitt and his staff spent 9.1 hours, resulting in fees of $2,976 exclusive of GST, in the ‘administration’ category of tasks for TVM. Those tasks primarily concerned:

(b) reviewing and actioning correspondence received in relation to TVM and preparation of the Report; and

(c) reviewing TVM’s books and records and associated administrative tasks, such as record keeping and relocating records.

31 Mr Hewitt and his staff spent 14 hours, resulting in fees of $6,644 exclusive of GST, in the ‘appointment/planning’ category of tasks for TVM. Those tasks primarily concerned:

(a) attending to tasks associated with Mr Hewitt’s appointment as special purpose liquidator, including completing a Declaration of Independence Relevant Relationships and Indemnities and lodging appointment documents with ASIC;

(c) discussions amongst Mr Hewitt’s staff regarding the investigations that were to be conducted and the structure and scope of the Report; and

(d) reviewing correspondence from the Liquidators and their solicitors and from Clayton Utz in relation to his appointment as special purpose liquidator.

32 Mr Hewitt and his staff spent 380 hours, resulting in fees of $172,994 exclusive of GST, in the ‘investigations’ category of tasks for TVM. Those tasks primarily concerned:

(a) over a period of 5 days, inspecting the Liquidators’ books and records of TVM to identify documents relevant to the Report;

(b) holding 5 meetings with the Liquidators and their staff to gather information relevant to the Report;

(c) holding 2 meetings with the Liquidators and their solicitors to gather information relevant to the Report;

(f) reviewing information provided by Mills Oakley Lawyers (solicitors for the Liquidators) and CFS (solicitors for certain creditors of TVM);

(g) corresponding with K&L Gates (solicitors for a unit holder in the Trust) in relation to their investigations into the Liquidators’ remuneration claims;

(h) holding 2 meetings with secured creditors of TVM and their solicitors to gather information relevant to the Report;

(i) reviewing affidavits relating to litigation involving TVM and the Liquidators;

33 Mr Hewitt and his staff spent 24.4 hours, resulting in fees of $11,756 exclusive of GST, in the ‘legal’ category of tasks for TVM. Those tasks primarily concerned:

(a) holding 2 meetings with Mills Oakley Lawyers (solicitors for the Liquidators);

(c) holding 1 meeting with Clayton Utz regarding legal issues relating to the conduct of the special purpose liquidator’s investigations and the production of the Report; and

(d) reviewing correspondence from Mills Oakley Lawyers, CFS and Clayton Utz.

34 Mr Hewitt and his staff spent 38.3 hours, resulting in fees of $15,598 exclusive of GST, in the ‘finalisation of report’ category of tasks for TVM. Those tasks primarily concerned:

35 Mr Hewitt and his staff spent 12.8 hours, resulting in fees of $5,672 exclusive of GST, in the ‘remuneration application’ category of tasks for TVM. Those tasks primarily concerned:

(a) attending to correspondence relating to the remuneration application associated with Mr Hewitt’s affidavit;

(b) providing work in progress updates to Mills Oakley Lawyers (solicitors for the Liquidators);

(c) reviewing work in progress for the purposes of making the remuneration application associated with Mr Hewitt’s affidavit; and

36 As at the date of swearing his affidavit in support of the application, Mr Hewitt had not taken any receipts on TVM’s behalf nor made any payments.

37 Mr Hewitt contends that the work performed by him and his staff was of required quality and involved dealing with complex issues, which are detailed above in paragraphs [22] to [[2]].2 He contends that he and his staff were required to deal with issues which were out of the ordinary and which are detailed at paragraphs [21] to [[3]] above.3 He contends that the fact of his appointment as a special purpose liquidator in a step of the liquidation is in itself out of the ordinary. He states that in order to form an opinion and adequately report to the Court on the alleged fraud committed by Ms Philistin and the Liquidator’s alleged negligence in not identifying that fraud, Mr Hewitt and his staff were required to conduct a detailed analysis of TVM’s books and records and its corporate governance policies and procedures. He states that after he and his staff had conducted that factual analysis, it was necessary to apply the legal principles of negligence in the particular circumstances of the liquidation of a company. Mr Hewitt states that the undertaking of such analysis in relation to the conduct of Liquidators is a step outside the usual course of a liquidation.

38 Mr Hewitt states that throughout his appointment as special purpose liquidator, he and his staff were required to deal with the Liquidators, the Secured Creditors and unit holders in the trust. He states that the nature of the property dealt with by him and his staff included secured property in the form of the Time Share Loan Portfolio.

39 Like the application which I have previously dealt with in regard to the remuneration of Messrs Handberg and Morgan as liquidators of TVM, the present application is not one in which I exercise the jurisdiction of determining and fixing Mr Hewitt’s remuneration under statutory provisions of the Act. Rather, Ferguson J’s Orders involve the exercise of the inherent equitable powers of the Court. Nonetheless, the criteria which I apply to the exercise of determining and fixing remuneration in this application is very much akin to that process.[4] As such, in my view, it is appropriate to apply the statutory criteria set out in s 473(10) of the Act in relation to the determination of remuneration of Liquidators.

40 Section 473(10) of the Act provides criteria for courts in going about the determination of remuneration of Liquidators. The sub-section provides:

41 The criteria set out in sub-section (10) direct the Court to the factors that are to be taken into account but it will be seen when examined that the question is ultimately whether the remuneration claimed is reasonable. Before applying those criteria, I shall briefly survey the relevant case law applicable to this type of application.

42 In Thackray & Ors v Gunns Plantations Ltd & Ors,[5] Davies J summarised the principles to be applied in applications regarding insolvency practitioners' remuneration by reference to the decision of the Full Court of the Western Australian Supreme Court in Venetian Nominees Pty Ltd v Conlan[6] (‘Venetian Nominees’) as follows:

(a) A summary procedure is involved, not unlike that applicable to the taxation of solicitors' costs, which is not necessarily subject to all the rules that would apply in an action.

(b) The initial task of the court is to consider whether the liquidator has made out a prima facie case on the evidence before the court that the remuneration claimed is fair and reasonable. The court must make that assessment ‘bringing an independent mind to bear on the relevant issues’ even though at that point there is no objector.

(c) There is no absolute rule regarding the amount of detail required to support a remuneration claim. But the evidence relied on should be sufficient to enable potential objectors to review the amounts claimed and ascertain whether there are matters to which objection should be taken. If there is inadequate evidence supporting the claim, no order should be made.

(d) If the liquidator establishes a prima facie case, the court should allow for an objection procedure to enable objections to be made.

(e) If there are objectors to the claim or any part, the court should then establish the validity of those objections.[7]

44 In ASIC v Australian Foods Co Pty Ltd,[9] in an application for remuneration by a court appointed receiver and manager, the receiver manager put forward a detailed statement of time, costs and disbursements, itemising the details of the work done, the identity of the persons who did the work, the grade of the person who did the work, the time taken to do the work, and the rates charged. The annexures to the supporting affidavit provided considerable detail as to what was done. Master Sanderson stated:

45 Master Sanderson concluded that the information provided established prima facie that the work was done and the costs were reasonably incurred. His reservations were first, that the material did not provide a sense of what the receiver and his colleagues were attempting to achieve and the overall purpose behind those actions, and, secondly, the fact that such significant costs had been incurred in a relatively short space of time.

46 In ACN 004 323 184 Pty Ltd v Spark,[11] Dodds-Streeton J considered an application for remuneration by a liquidator under s 473(3)(b) of the Act. In the affidavit in support of the application, the liquidator summarised the tasks performed by each staff member with that person's charge rate, level or position, hourly rates and total hours worked, together with full descriptions of the work performed. At [43], her Honour stated:

47 In Venetian Nominees,[12] the Court stated that the application for remuneration must provide adequate evidentiary material to enable the Court to determine whether the amounts claimed are fair and reasonable. The evidence should be presented as a statement of account reflected in an appropriate itemised form, details of work done, the identity of the persons who did the work, the time taken for doing the work and the remuneration claimed accordingly which is verified by affidavit. The Court observed that such a document should be similar in form to a bill of costs in taxable form provided by a solicitor to their client.

48 As I have noted above, Mr Hewitt exhibits a document described as a remuneration request approval Report dated 16 March 2015. It is a comprehensive document. It breaks down the six task areas into more detailed descriptions of what is involved for that particular task, summarises expenses (which are modest) and details the legal fees incurred by Clayton Utz as the special purpose liquidator’s legal advisor for the period in question. A major part of the document (30 pages) consists of spread sheets detailing work in progress with respect to the Special Purpose Liquidation Task. In a typical entry it describes the category of task being undertaken, the person who carried out the task, a narrative as to what the particular task in question involved, the date it was performed, the time occupied and the amount charged having regard to that person’s hourly rate.

49 I consider that the Remuneration Request Approval Report complies with the requirements of r 9.4(7) of the Rules and establishes that the remuneration sought is fair and reasonable.

50 In coming to that determination, I have not examined each and every entry in the spread sheets closely but instead have chosen at random 100 entries for which the amount being charged was in excess of $500 and assessed having regard to the narrative and the time and amount charged whether the claim appears to be reasonable and whether the task being performed was necessary in the circumstances.

51 In my view, the information contained in the spread sheet complies with the standard required and described in Venetian Nominees Pty Ltd.[13] The tasks described in the narration appear to have been carried out by a person in the appropriate position within the hierarchy of Mr Hewitt’s firm. As best as I can tell, it also appears that the time involved in respect of each entry I have chosen is reasonable. Most of the day to day activities of the administration appear to have been appropriately delegated down the hierarchy to a person appropriate for the level of task involved. As the table in paragraph 27 reveals, much of the work done has been performed by Mr Sequeira, a senior manager and a Mr Dishoian, an assistant manager.

52 As I have said, I consider that the evidence filed in support of the application demonstrates that Mr Hewitt has made out a prima facie case that his claim is fair and reasonable. It also adequately addresses the matters mentioned in s 473(10)(a)–(d). Those matters, when considered together, essentially amount to an assessment as to whether the claim made is fair and reasonable. As to the matters mentioned in s 473(10)(e)–(g) which relate respectively to the complexity of the works performed, the extent to which Mr Hewitt was required to deal with extraordinary issues and the extent to which he was required to accept a higher level of risk or responsibility as is usually the case, I consider that the Special Purpose Liquidation Task which is outlined above, was certainly of some considerable complexity and attracted more than the usual level of responsibility by reason of this.

53 In a similar way, the criterion in s 437(10)(h), which deals with value and nature of property dealt with, is not really apt for application in the Special Purpose Liquidation Task as Mr Hewitt was not liquidating property as such but performing an investigatory role. Similarly, Mr Hewitt was not involved with dealing with receivers in relation to performing realisation work as s 473(10)(i) mentions. As to the criteria mentioned in s 473(10)(j) in relation to dealing with creditors, his appointment as special purpose liquidator did not involve such matters. Finally, as to the matter mentioned in s 473(10)(k), if the remuneration as ascertained in whole or in part on a time basis, whether the time was properly taken by the liquidator in performing the work, I have already observed, based on my random selection of the items and my close consideration of them, that I am prepared to come to the conclusion that the amount claimed is fair and reasonable.

54 I will make orders in terms of paragraphs 1, 2 and 3 of Mr Hewitt’s interlocutory process filed 8 May 2015.

IN THE MATTER OF TRADITIONAL VALUES MANAGEMENT LIMITED (IN LIQ) (ACN 055 106 100)

GEOFFREY NIELS HANDBERG AND BRENT LEIGH MORGAN (in their capacity as joint and several Liquidators of Traditional Values Management Limited (In Liquidation) (ACN 055 106 100))

Plaintiffs

JUDGE:	The Honourable Justice Ferguson

DATE MADE:	3 September 2014

ORIGINATING PROCESS:	Originating Process filed 29 July 2014

HOW OBTAINED:	At the hearing of the Originating Process.

ATTENDANCE:	Mr P D Crutchfield QC with Ms C van Proctor of Counsel for the Plaintiffs.

OTHER MATTERS:	Not applicable.

1. The costs agreements entered into by the Plaintiffs with Mills Oakley Lawyers, Finlayson’s and Davies Maloney are not invalid by reason of the Plaintiffs not having sought prior approval under s 477(2B) of the Corporations Act 2001 (Cth).

2. The Deed of Agreement between the Plaintiffs and Richards Trygve (in his capacity as receiver of Traditional Values Management Limited (In liq) (recs apptd) and others made 24 August 2011 is not invalid by reason of the Plaintiffs not having sought prior approval under s 477(2B) of the Corporations Act 2001 (Cth).

3. Andrew Hewitt of Grant Thornton Australia is appointed as a liquidator of TVM (Special Purpose Liquidator) to investigate, respond to and otherwise act on behalf of TVM in respect of the matters alleged by certain unit holders in the Managed Investment Scheme known as Blue Diamond Deposits Trust No 1 in correspondence from Charles Fice Solicitors to Mills Oakley Lawyers dated 4 July 2014, and any proceedings arising out of or relating to those matters.

4. The Special Purpose Liquidator shall by 4.00pm on 17 October 2014 provide to the Court and to the Plaintiffs a report as to the investigation and other matters referred to in paragraph 3 of these Orders.

5. Paragraph 1 of the Orders made in proceeding SCI 2011 01355 on 14 June 2011 be varied by inserting between the words “and the special purpose liquidator appointed pursuant to paragraph 5 of the Orders made on 3 September 2014 in proceeding SCI 2014 3849” between the words “plaintiffs” and “(Liquidators)”.

6. The Definitions in the Orders made in proceeding SCI 2011 01355 on 14 June 2011 be varied to insert after subparagraph (r) of the definition of “Remuneration” a new subparagraph as follows: “(s) investigating, responding to and otherwise acting on behalf of TVM in respect of the matters alleged by certain unit holders in BDT No 1 in correspondence from Charles Fice Solicitors dated 4 July 2014 and any proceedings arising out of or relating to those matters”.

7. The Plaintiffs’ remuneration, costs and expenses of the proceeding be paid from the Scheme Assets on an indemnity basis.

8. Liberty to apply is reserved to the Plaintiffs and the Special Purpose Liquidator.

IN THE MATTER OF TRADITIONAL VALUES MANAGEMENT LIMITED (IN LIQ) (ACN 055 106 100)

GEOFFREY NIELS HANDBERG AND BRENT LEIGH MORGAN (in their capacity as joint and several Liquidators of Traditional Values Management Limited (In Liquidation) (ACN 055 106 100))

Plaintiffs

JUDGE:	The Honourable Justice Ferguson

DATE MADE:	15 October 2014

ORIGINATING PROCESS:	Originating Process filed 29 July 2014

HOW OBTAINED:	On the papers.

ATTENDANCE:	None.

OTHER MATTERS:	Minutes of Consent and correspondence placed on the Court file.

1. Paragraph 4 of the orders made by the Honourable Justice Ferguson on 3 September 2014 (September Orders) be vacated.

2. The Special Purpose Liquidator shall, by 4.00pm on 14 November 2014, provide to the Court and to the Plaintiffs a report as to the investigation and other matters referred to in paragraph 3 of the September Orders.

3. Paragraph 6 of the September Orders be amended such that it is in the following terms:

The Definitions in the Orders made in proceeding SCI 2011 01355 on 14 June 2011 be varied to insert:

(a) after subparagraph (r) of the definition of “Remuneration” a new subparagraph as follows: “(s) investigating, responding to and otherwise acting on behalf of TVM in respect of the matters alleged by certain unit holders in BDT No 1 in correspondence from Charles Fice Solicitors dated 4 July 2014 and any proceedings arising out of or relating to those matters”; and

(b) after subparagraph (i) of the definition of “Expenses” a new subparagraph as follows: “(j) investigating responding to and otherwise acting on behalf of TVM in respect of the matters alleged by certain unit holders in BDT No 1 in correspondence from Charles Fice Solicitors dated 4 July 2014 and any proceedings arising out of or relating to those matters”.

^[1] The Orders set out in a schedule to these Reasons. On 15 October 2014, those orders were the subject of amendments by consent orders made by Ferguson J.

^[11] [2002] VSC 353. Although this decision predated the introduction of s 449E of the Act, the principles set out still have application.