Blackadder v McQuinn & Ors (No.2) - [2017] NTSC 57

CITATION:Blackadder v McQuinn & Ors (No.2) [2017] NTSC 57
PARTIES:BLACKADDER, Paul Gordon

v
MCQUINN, Justin
and
NTRDS PTY LTD
and
BLAIR PLEASH AND KATHLEEN VOURIS, VOLUNTARY ADMINISTRATOR OF NTRDS PTY LTD (ADMINISTRATORS APPOINTED)

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION
FILE NO:61 of 2016 (21632618)
DELIVERED ON:  26 July 2017
DELIVERED AT:  Darwin
HEARING DATE:  22 June 2017
JUDGMENT OF:  HILEY J
CATCHWORDS:

PROCEDURE - COSTS - Proceedings brought to determine the validity of appointment of voluntary administrator of a company – Where the court declared that the appointment was invalid – Duties of purported administrator to question the validity of the appointment - Administrators did not breach any relevant duty - Administrators are entitled to remuneration and costs.
PROCEDURE – COSTS – Remuneration - External administrator invalidly appointed is entitled to make a claim for remuneration on a quantum meruit basis – Administrators put their claim for remuneration on the basis of an implied request
PROCEDURE – COSTS – Costs of interlocutory process in proceedings concerning validity of appointment of voluntary administrators – Voluntary administrators and their lawyers complied with their duties - entitled to costs of interlocutory process.
CORPORATIONS – Administration – Voluntary administrators – Equitable lien – Administrators entitled to lien to secure any reasonable remuneration, costs and disbursements incurred by them in their capacity as purported voluntary administrators.
Coad v Wellness Pursuit Pty Ltd (In Liq) [2009] WASCA 68; (2009) 71 ACSR 250, Applied
Blackadder v McQuinn & Ors [2017] NTSC 29; Conlan v Adams [2008] WASCA 61; (2008) 65 ACSR 521; David Lewis Clout in his capacity as Liquidator of Mainz Developments Pty Ltd (In Liq) [2016] NSWSC 1146; Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 557; (2000) 34 ACSR 422; In the matter of Condor Blanco Mines Ltd (No 2) [2016] NSWSC 1304; In the Matter of Lime Gourmet Pizza Bar (Charlestown) Pty Ltd [2015] NSWSC 244; In the Matter of Warwick Keneally as administrator of Australian Blue Mountain International Cultural & Tourist Group Pty Ltd (admin appointed) [2015] NSWSC 2037; Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635; Monks v Poynice (1987) 8 NSWLR 662; Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221, Referred to
In the matter of Condor Blanco Mines Ltd [2016] NSWSC 1196; Wilson v Manna Hill Mining Company Pty Ltd [2004] FCA 1663; 51 ACSR 404, Distinguished
Corporations Act 2001 (Cth) s 439A(6), s 447A
REPRESENTATION:
Counsel:
Plaintiff:M Crawley
First Defendant:  P Cozens
Second Defendant:  No appearance
Third Defendant:  A Smith
Solicitors:
Plaintiff:Paul Maher
First Defendant:  Cozens Johansen
Second Defendant:  Self-represented
Third Defendant:  HWL Ebsworth
Judgment category classification: B
Judgment ID Number:  Hil1711
Number of pages:  26

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Blackadder v McQuinn & Ors (No. 2) [2017] NTSC 57

No. 61 of 2016 (21632618)
BETWEEN:

PAUL GORDON BLACKADDER

Plaintiff

AND

JUSTIN MCQUINN

First Defendant

AND

NTRDS PTY LTD

Second Defendant

AND

BLAIR PLEASH AND KATHLEEN VOURIS, VOLUNTARY ADMINISTRATOR OF NTRDS PTY LTD (ADMINISTRATORS APPOINTED)

Third Defendant

CORAM: HILEY J
REASONS FOR JUDGMENT
(Dated 26 July 2017)
Introduction

On 13 April 2017 I declared that the Appointment of the Third Defendant as voluntary administrators (the administrators) of the Second Defendant (NTRDS) was invalid. I provided my reasons for that decision[1] (the Reasons) and indicated that I would hear the parties further concerning the other matters raised in the Interlocutory Process filed 22 March 2017.
Those matters are the Third Defendant’s application for the following:
[7]… an order pursuant to section 447A Corporations Act 2001, and/or all other enabling powers that the reasonable remuneration, costs and disbursements of the [Third Defendant] incurred in their capacity acting as purported or actual voluntary administrators of the Company be payable from the assets of the Company.
[8]A declaration that the [Third Defendant] are entitled to a lien to secure any reasonable remuneration, costs and disbursements incurred by the [Third Defendant] in their capacity as purported voluntary administrators.
[9]The reasonable costs and remuneration of the [Third Defendant] in respect of and arising from this application be payable from the assets of the Company.
Procedural matters
Following unsuccessful attempts to have the parties exchange written submissions and agree on these orders the Court heard submissions on 22 June 2017. Counsel for the plaintiff had provided written submissions on 20 June 2017. Counsel for the administrators provided written submissions on the morning of the hearing.
On 20 June 2017, following a request from his solicitors which included his promise to abide by any order the Court may make in relation to the relief sought by the Third Defendant and or the plaintiffs in relation to the matters before the Court on 22 June 2017, the First Defendant was excused from appearing at the hearing.
The Second Defendant, NTRDS, did not appear at the hearing either. HWL Ebsworth Lawyers, the solicitors for the Third Defendant, had also acted for NTRDS when it was in voluntary administration. They cease to act for NTRDS on 24 April 2017. Counsel for the Third Defendant was not able to establish that NTRDS was aware of the hearing date, but advanced a number of reasons why it must have been so aware. The main reason was that the First Defendant was the sole director and one of the two shareholders of NTRDS (the other being the plaintiff) and knew through his solicitors that the matter was to be heard on 22 June 2017. Rather than putting the parties to further expense, particularly as counsel had travelled from interstate to appear, I permitted to hearing to proceed. It was clear from the plaintiff’s submissions that the plaintiff was strongly resisting the main orders being sought by the administrators and thus a contradictor. Also, the fact that Mr McQuinn was content not to appear and to abide the outcome of the hearing, suggested that NTRDS would have the same attitude as Mr McQuinn and would not oppose the orders sought by the administrators.
Out of an abundance of caution I ordered that the Third Defendant serve all of the relevant materials, including the written submissions, on NTRDS, and advise NTRDS that I had granted leave for the Second Defendant to apply by a certain date to relist the matter in order to make any applications or submissions it saw fit in respect of the relief sought by the Third Defendant.
The plaintiff’s submissions included submissions that NTRDS should pay the plaintiff’s costs of the application. This was mainly because the plaintiff had assumed the role of contradictor to the validity of the appointment of the administrators, and was successful. This application was not pressed at the hearing, mainly because no notice of it had been given to NTRDS.
During the hearing counsel for the administrators submitted that in addition to the relief sought I should embark upon the process of assessing the remuneration and costs claimed by the administrators. I declined to undertake this task, partly because NTRDS should have the opportunity to participate in that process, and partly because such assessment would be more conveniently carried out by the Master. Even if NTRDS did not wish to be heard on the question of its liability to pay the administrators’ remuneration and costs it may well wish to be heard in relation to quantum.
Entitlement to remuneration, costs and disbursements
An external administrator invalidly appointed is entitled to make a claim for remuneration on a quantum meruit basis.[2]
Acceptance of the appointment
In his written submissions the plaintiff contended that the administrators are not entitled to recover any remuneration or costs incurred by them because they were incurred in breach of a duty owed at the time of and following their appointment. Alternatively, at least no costs should be recoverable in proceedings which were entirely necessary as a result of such breach.[3]
The plaintiff’s position softened during the hearing. Counsel accepted that the administrator should be entitled to recover reasonable costs and fees in respect of work that was of incontrovertible benefit to the company.
Duty and breach of duty
Counsel for the plaintiff did not clearly describe the duty which he says was breached by the administrators. It seems that it was a duty not to accept the appointment and / or to make further enquiries before they did.
Counsel contended that it should have been obvious to Mr Pleash before he accepted the appointment that NTRDS was not insolvent, nor likely to become so. This is because of some of the positive things Mr Bell told him about the financial situation of the company and because Mr Bell had provided him with the valuations of Bizval and Mark Bruce that suggested a healthy financial position. These communications occurred over the weekend following Mr Bell’s initial email to Mr Pleash at 4 pm on the Saturday.
Counsel also contended:
Further, that should have caused Mr Pleash to query the motives of the director. Moreover, Pleash was informed the current proceedings involved a dispute between the shareholders on the share value; that the company would be put in administration if a settlement offer between the shareholders was not accepted. In those circumstances, Pleash could not have been satisfied that the proposed appointment was regular. Simply asking the director whether he considered the company was insolvent was insufficient to address that.[4]
The main authority relied on by counsel for the plaintiff was the decision of Barrett AJA in In the matter of Condor Blanco Mines Ltd[5] where his Honour discussed the obligations upon an administrator to assess the validity of his or her appointment. However the part of the case, and its sequel, In the matter of Condor Blanco Mines Ltd (No 2)[6], that related to the administrator’s costs, concerned the payment of costs in the proceedings brought by the company against the administrator. Those proceedings were brought by the company for the purpose of obtaining a declaration that the appointment of the administrator was invalid. The administrator had refused to bring an action concerning the validity of his appointment notwithstanding a number of requests on behalf the company for him to do so.
In Condor Blanco Barrett AJA said:
[139] Both at the time of the appointment and subsequently, an administrator must be attentive to any matter coming to his or her notice that may call into question the premise upon which the appointment is made, that is, that directors genuinely holding the requisite opinion concerning solvency have validly and regularly passed a resolution in terms of s 436A. Two matters will therefore have to be tested: first, the formal validity of the resolution and, second (and to the extent that testing is possible on the materials available to the administrator), whether the directors voting for the resolution appear to hold the stated opinion at the time of voting. It may be expected that an administrator will make some inquiry of those by whom he or she is approached with a view to gaining insight into the company’s financial position and thereby to subject the expressed opinion of directors to a rough check. Publicly available information will also be examined. In that way, the administrator will discover who the directors are. The administrator must see that the board consisting of those directors has adopted due process to pass, by a majority of votes, a resolution in appropriate terms. But there, in my opinion, the responsibility ends in all but very exceptional cases.
[140] In saying this, I intend to indicate an opinion that, in general, it is not part of the administrator’s responsibility, in assessing the validity of his or her appointment, to delve into any purpose or motive of the directors beyond that of resort to Part 5.3A administration as a response to actual or impending insolvency. …
[142] If it were as plain as a pikestaff, without any form of inquiry, that directors were resorting to administration for an extraneous purpose (because, for example, they actually said so or immediately obvious and observable circumstances left no alternative explanation), the practitioner asked to accept appointment would fail to discharge the relevant responsibility by accepting. Beyond any such patently obvious case, however, there can be no expectation that the responsibility at the time of appointment extends to considering possibilities of improper purpose and abuse of process.
The situation in the Condo Blanco cases is quite different to the present matter. Here it was the administrators who approached the Court, not NTRDS or one or more of its directors. Further, the administrators applied to the Court as soon as they realised that their appointment might have been invalid. Also, the main issue now being argued is whether the administrators should receive any remuneration and reimbursement for the work they did for the company. The question of costs of the proceedings, which will now include the costs of this argument, is of lesser importance.
The only other authority referred to by counsel for the Plaintiff in relation to the duties of an administrator invalidly appointed was Wilson v Manna Hill Mining Company Pty Ltd.[7] Counsel quoted the following passage, at [63] of the decision:
Where the minute containing the appointing resolution, the appointing resolution or the circumstances surrounding the passing of the resolution or any other circumstances particular to the company involved contain some feature which ought to put an administrator on notice, the duty to inquire will oblige the administrator to carry out whatever reasonable enquiries are necessary to satisfy the administrator that the appointment has been validly and regularly made. What is reasonable will depend upon the facts and circumstances of each individual case.
(emphasis italics added by me)
Although Wilson did indirectly relate to the remuneration of the administrators who had been invalidly appointed, like the Condor Blanco cases and unlike the present case, it concerned the duties of an administrator after appointment (as is apparent from the words that I have italicised in the passage quoted above). Similar to the situation in the Condor Blanco cases the administrators had been put on clear notice, after their appointment, that the validity of their appointment was being challenged. From two days after their appointment on 11 February 2004 the administrators had been put on notice that the applicants - two people who claimed to be directors of the company - disputed that the company was solvent, asserted that the meeting at which the resolution appointing the administrators was invalidly convened, asserted that that resolution was invalid, asserted that the resolution had been passed for collateral purposes, asserted that the resolution was in contravention of orders made by another judge and would oppose any claim for remuneration by the administrators.[8] Notwithstanding such notice, the administrators carried out their normal functions as administrators for another five months or so until the Court declared their appointments void and of no effect on 16 July 2004.
After expressing the view in [63] (the passage quoted above and relied upon by the plaintiff in the present matter) Lander J upheld the applicants’ submission that the minute containing the appointing resolution disclosed matters which should have alerted the administrators to the possibility of invalidity. His Honour pointed out that enquiries could have been made by contacting the three directors and finding out who was present at the directors meeting, whether they had all been advised of the meeting, why a particular person who was not a director was present, who had voted for the resolution and why the chair exercised a casting vote.[9] His Honour also concluded that: the administrators failed to take reasonable steps to satisfy themselves, immediately after their appointment, that the meeting was validly convened or that the resolution purportedly appointing them as administrators was valid; by 13 February 2004 the administrators were on notice that the applicants asserted that the meeting was invalidly convened and that the resolution was invalid; and the administrators could have but did not apply to the Court seeking a declaration whether or not the appointment was valid.[10]
Lander J also referred to views expressed by Austin J in Deputy Commissioner of Taxation v Portinex Pty Ltd[11] about the duty of an administrator to promptly inquire into the validity of his or her appointment after receiving notification of the appointment. Austin J said that there is a duty on the administrator to satisfy himself that the resolution of the directors authorising the appointment and the instrument of appointment appear on their face to be valid. Such a duty would not require the administrator upon appointment to “trawl back through the records of the company to ensure that there is no defect prior to the resolution of appointment, if the resolution appears ex facie to be valid.”[12]
Following the passages in Condor Blanco at [139] – [142] quoted above, Barrett AJA referred to the observations of Lander J in Wilson and in particular to what his Honour said at [63] of that judgment. He said, at [144]:
[144] Despite the apparent breadth of that statement, Lander J made it clear (at [64]) that the relevant responsibility to make enquiries is a limited responsibility related to the resolution and that it goes only to contextual matters such as whether the meeting of directors was validly convened, who was present at the meeting, whether all directors had been advised of the meeting, why any absent director was not present and why the chair had exercised a casting vote. Lander J was not suggesting that the administrator had any general responsibility to inquire into the directors’ motives and purpose.
As I have said the basis of the plaintiff’s opposition to the administrators’ claims appears to be that they were under a duty to decline to accept the appointment and or to make further enquiries before they did. One would normally assume that such a duty, if it existed, would be owed to the company. The company would be the party most likely to suffer detriment as a result of losing control and having its business run by the administrators.[13] However the content of such a duty, if it existed, would be difficult to identify where it was the company that requested and made the appointment in the first place. This would be particularly so in the present matter where the company effectively comprised a single director who made the decision to place NTRDS into voluntary administration.
This is quite different to a situation such as that in the Condor Mines cases which involved a publicly listed company with several directors and in Wilson where there were at least three directors and another two people who claimed to be directors. Here there was a single director, Mr McQuinn. Also, as I have already noted, both those cases concerned the conduct of the administrator after his appointment, rather than at the time of his appointment.
As I said in paragraph [17] of the Reasons a voluntary administrator is not required to “undertake some form of independent verification of the factual basis” on which he or she has been appointed at or before the appointment.[14] At its highest, a voluntary administrator need only satisfy him or herself as to whether “the resolution appointing [them] appeared, on its face, to be valid.”[15] To those references I would add the passages in Portinex and Wilson referred to above.
What more should Mr Pleash have done before accepting the appointment?

In addition to the points made in his written submissions noted in paragraphs [13] - [14] above, counsel for the Plaintiff:
(a)referred to the notes that Mr Pleash made during the second telephone call with Mr Bell at about 3.30pm on the Saturday;
(b)stressed that at no time did Mr Pleash swear that he was satisfied of the validity of the appointment before he accepted it;[16]
(c)pointed out that Mr Pleash was aware of the imminent hearing concerning the value of the shares in NTRDS.
In relation to Mr Pleash’s notes made during the second telephone call counsel contended that some of them were unclear and that there appeared to be some omissions. However, he submitted, the figures noted there suggested NTRDS was not insolvent, as a result of which Mr Pleash should not have accepted the appointment without making further enquiries at that time. Counsel contended that those figures were largely consistent with the figures to which Mr Pleash referred in paragraph [96] of his affidavit of 22 March, following which he expressed the view, in paragraph [97], that NTRDS may not have been insolvent or likely to become insolvent at the time of his appointment.
There are a number of reasons why this argument cannot be accepted.
(a)By the time Mr Pleash expressed the view that NTRDS may not have been insolvent or likely to become insolvent at the time of his appointment (a month or so after the appointment), further enquiries had been made, including enquiries of the company’s former accountants, and the administrators had carried out further work such as ascertaining the current financial situation.[17]
(b)Further, as counsel pointed out, some of the entries on Mr Pleash’s notes were unclear. These included entries “MYOB $227,000”, “$56,000 insurance ?” and the word “Justin” and on the next line “475,000”. One of the things Mr Bell said to Mr Pleash during that telephone conversation was that: “The director [presumably Justin McQuinn] is owed money. His initial contribution to the business wasn’t properly accounted for; it wasn’t recorded as a director loan but it should have been.”[18] It is possible that the entry “$475,000” beneath the word “Justin” on Mr Pleash’s notes related to that loan.
(c)The administrators, in particular Mr Pleash, were not given opportunity to answer these points. The plaintiff did not request Mr Pleash to be available for cross-examination and did not raise these points until responding during oral submissions.
I also reject the argument based upon Mr Pleash’s failure to swear that he was satisfied of the validity of the appointment before he accepted it. There was no obligation on him to do that, and no basis to assume that he would have accepted the appointment unless so satisfied at the time. For the plaintiff to make any use of this kind of contention, prior notice of it should be given and Mr Pleash given the opportunity to answer it.
Nor do I consider it of any particular relevance that Mr Pleash was aware of the dispute between the shareholders concerning the value of the shares.
Importantly there was nothing apparent from the face of the resolution of the appointment documents that should have put Mr Pleash on notice that the appointment might not be valid. It was only after the appointment and after a significant amount of work had been done that the administrators reached the view that NTRDS may not have been insolvent or likely to become insolvent at the time of his appointment.
Unlike cases where an administrator is reliant mainly on the information provided by the directors, it is significant that Mr Pleash’s main informant was Mr Bell. Mr Bell was, and has been for some time, a reputable accountant with considerable experience in the Northern Territory. He was assisting Mr McQuinn and NTRDS over the weekend in preparation for the matter which was to be heard by the Master a few days later. Mr Pleash would have been entitled to rely on the strong opinions expressed by Mr Bell to the effect that NTRDS was insolvent or was likely to be insolvent.
These included the views and concerns expressed by Mr Bell in the first email sent at 1.20pm on the Saturday, which included that:
(a)the two valuations were “grossly wrong as they were based on the 2015 and 2016 unreconciled accounts where the tax returns have not been lodged, so [sic] the in-house MYOB has not been properly reconciled since 1.07.14 and neither accountant has bothered to look at the year to date trading result, which is a loss year to date.”
(b)The “NT construction industry has falling off a cliff and building approvals are down by 35%”;
(c)“the matter should not be going to Court to argue over the unreconciled accounts, as I can see that the trial balance on debtors is $100k overstated compared to the debtors ledger to start with.”
Those views were supplemented during the further emails and telephone conversations between Mr Bell and Mr Pleash later that day and the following day.
There is no reason to find that by the time of the appointment of the administrators, either of them had any reason to second guess the views expressed by Mr Bell prior to then or to doubt the assertions contained in the resolutions passed by NTRDS or the validity of the appointment. Mr McQuinn too was concerned about the financial situation of the company at that time, partly after his bookkeeper had told him the company was operating at a loss[19] and no doubt following Mr Bell’s advice to him that the company was insolvent or likely to be insolvent.[20] He too was reliant upon the expertise of Mr Bell in that regard.
Although I previously found that a substantial purpose of Mr McQuinn when making the appointment was to have the validation proceedings adjourned and that that was not a proper purpose[21] there is no basis to conclude that Mr Pleash was aware of that or that the administrators were in any way a party to the execution of such a purpose.
The administrators did not breach any relevant duty. They are entitled to remuneration and costs.
Entitlement to Remuneration
As I have already noted an external administrator invalidly appointed is entitled to make a claim for remuneration on a quantum meruit basis.[22]
It is accepted that such remuneration may be claimed on the basis of an “implied request” or on the basis that the work done was of “incontrovertible benefit” to the company.
There is an implied request where there is “a request expressed or implied for the performance of the service. This is quantum meruit in its most basal form.”[23]
In Lumbers v W Cook Builders Pty Ltd (In Liq)[24] the plurality observed that:
The doing of work, or payment of money, for and at the request of another, are archetypal cases in which it may be said that a person receives a ‘benefit’ at the ‘expense’ of another which the recipient ‘accepts’ and which it would be unconscionable for the recipient to retain without payment.[25]
In cases of a claim for quantum meruit premised upon an implied request, the quantum of any claim:
Involves … the payment of an amount which constitutes, in all the relevant circumstances, fair and just compensation for the benefit or “enrichment” actually or constructively accepted. Ordinarily, that will correspond to the fair value of the benefit provided (e.g. remuneration calculated at a reasonable rate for work actually done or the fair market value of materials supplied (emphasis added).[26]
The second category is what is referred to as incontrovertible benefit. Per Young J in Monks, at 664:
… there is a class of case where the service conferred incontrovertible benefit on the [company to which the voluntary administrator was appointed] and it would be unconscionable for the [company to which the voluntary administrator was appointed] to keep the benefit of the service without paying a reasonable sum therefor. … notwithstanding that there has been no acceptance of service, the company is benefitted incontrovertibly by the acts of the claimant, then the claimant has a right against the company to be remunerated.
The administrators put their claim for remuneration on the basis of implied request. I agree that they are entitled to be remunerated on that basis.
From the outset there was the express request of NTRDS for the administrators to accept appointment. In his capacity as director of the company Mr McQuinn executed and returned to Mr Pleash the relevant resolution, the appointment, and a detailed document entitled “Pre-appointment proposed basis of Remuneration disclosure”.
Following their appointment the administrators undertook various actions including:
(a)various steps to enable NTRDS to continue to trade during the voluntary administration of the company;[27]
(b)obtaining a valuation of the assets of NTRDS;[28]
(c)continuing the engagement of De Castro Sullivan Lai Chartered Accountants to finalise the accounts for the company for the financial years ended 30 June 2015 and 30 June 2016[29] which resulted in the production of final drafts of the financials and income tax returns for the company for the periods ended 30 June 2015 and 2016;[30]
(d)taking steps to reconcile the superannuation liabilities of NTRDS to its present and past employees;[31]
(e)collecting money owing by debtors of NTRDS ($147,488.00 of which were collected by 30 March 2017);[32] and
(f)reconciling and analysing the MYOB records of NTRDS with the financials prepared by De Castro Sullivan Lai.[33]
These were all things that NTRDS is likely to have done and was content for the administrators to do on its behalf and for its benefit. Most of those things would have been done with the knowledge and approval of Mr McQuinn. The plaintiff was also aware of the appointment. Nothing was said by either the plaintiff or Mr McQuinn to suggest that the administrators could not carry out their usual functions such as those listed above. Indeed Mr McQuinn appreciated the administrators performing the work on the accounts which he had not been able to do.
Further, as counsel for the administrators said, in deciding to trade on the business of the company during the voluntary administration of the company, the administrators exposed themselves to significant financial risk including liabilities to third parties. The trade on of the business of NTRDS was a decision made on the basis that it was in the best interests of the company.[34]
Similarly the decision to file the interlocutory process and seek orders pursuant to section 439A(6) Corporations Act 2001 to extend the convening period pending determination of the validity of their appointment was, inter alia, informed by the concern of the administrators “not to interfere with the status of the company any more than necessary pending determination [of the interlocutory process]” and a concern “not to incur any additional costs which are involved in preparing and disseminating a report to creditors … and thereafter holding a second meeting of creditors of the company.”[35]
As I have indicated I consider that the assessment of the remuneration should be carried out after NTRDS is aware of these reasons and orders, and after there has been an opportunity for the company to assess the administrators’ claims and hopefully reach an agreement on quantum. The administrators have the onus of proving that the remuneration they seek is reasonable.[36] That said, to the extent that a court is satisfied that the remuneration sought is reasonable, an evidentiary onus falls upon the company to establish otherwise.[37]
Administrators costs of these proceedings
In Condor Blanco (No 2) Barrett AJA said that in circumstances where a voluntary administrator “acted in and about the litigation in a way that constructively facilitated resolution of the important issue of [the validity of their appointment] and, in so doing, did not abandon a position of neutrality in favour of some partisan role, there is a case for making a costs order in [their] favour.”[38]
As I noted in the Reasons, the administrators and their lawyers conducted this litigation in the appropriate way. They continued to so do in the course of these remuneration and costs arguments.
The administrators are entitled to recover their costs of the interlocutory process from one or other of the other parties.
I consider that NTRDS and or Mr McQuinn should pay the administrators’ costs of the proceedings conducted on 7 April that resulted in the declaration that the appointment of the Third Defendant as voluntary administrators was invalid. However neither NTRDS nor Mr McQuinn resisted the administrators’ claims for remuneration, costs and the lien. But for the plaintiff’s strenuous objection to those claims, it is likely that those orders would have been made on the papers without the need for a further hearing and for the Court to provide substantive reasons.
I will therefore allow time for the parties to provide written submissions as to who should pay the administrators’ costs of these two parts of the interlocutory process.
Lien
As counsel for the administrators pointed out, where a person claims an interest in a fund of money or property by reason of, inter alia, that person having taken steps to get in, realise or preserve that money or property, a court will recognise the right of that person to an equitable lien over that fund or money.[39]
I see no reason why the administrators should not be entitled to a lien of the kind sought in [8] of the interlocutory process.
Orders and directions
I order that:
1.The reasonable remuneration, costs and disbursements of the Third Defendants in their capacities as former joint and several voluntary administrators of the Second Defendant be paid from the assets of the Second Defendant.
2.The Third Defendants are entitled to a lien to secure any reasonable remuneration, costs and disbursements incurred by them in their capacity as purported voluntary administrators.
3.The Third Defendants are entitled to be paid their reasonable costs and remuneration in respect of and arising from the interlocutory process dated 22 March 2017, such monies to be paid by one or more of the other parties.
4.Unless any party contends otherwise within 14 days, the Second Defendant is to pay the Third Defendant's costs referred to in Order 3 on an indemnity basis.
5.In the event that any party contends that the Second Defendant should not pay the Third Defendant's costs referred to in Order 3 on an indemnity basis, that party shall file submissions in support of such contention within 14 days, and any other party may file contentions in response within a further 14 days.
6.The hearing of the interlocutory process dated 22 March 2017 is certified fit for counsel.
7.The Third Defendant is to serve a copy of these orders on the Second Defendant within 24 hours.

-----------------

[1] Blackadder v McQuinn & Ors [2017] NTSC 29.

[2] In the Matter of Warwick Keneally as administrator of Australian Blue Mountain International Cultural & Tourist Group Pty Ltd (admin appointed) [2015] NSWSC 2037 at [2].

[3] Plaintiff’s submissions [9] – [10].

[4] Plaintiff’s submissions [8]

[5] [2016] NSWSC 1196 (Condo Blanco).

[6] [2016] NSWSC 1304 (Condo Blanco No 2).

[7] [2004] FCA 1663; 51 ACSR 404 (Wilson).

[8] Wilson [45].

[9] Wilson [64].

[10] Wilson [65] – [66].

[11] [2000] NSWSC 557; 34 ACSR 422 at 432 [5] (Portinex).

[12] Ibid.

[13] An administrator has very wide powers. See s 437A of the Act.

[14] In the Matter of Lime Gourmet Pizza Bar (Charlestown) Pty Ltd [2015] NSWSC 244 at [72] cited with apparent approval in In the matter of Condor Blanco Mines Ltd [2016] NSWSC 1196 at [138] – [139].

[15] Ibid.

[16] Transcript of 22 June 2017 at p 83.

[17] See for example Reasons at [53] – [60]

[18] Affidavit of Blair Pleash sworn on 22 March 2017 at [28.4] (The First Pleash Affidavit).

[19] Reasons [73].

[20] Reasons [72].

[21] Reasons [109].

[22] In the Matter of Warwick Keneally as administrator of Australian Blue Mountain International Cultural & Tourist Group Pty Ltd (admin appointed) [2015] NSWSC 2037 at [2].

[23] Monks v Poynice (1987) 8 NSWLR 662 at 664 (Monks).

[24] [2008] HCA 27; 232 CLR 635.

[25] Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635 at [79].

[26] Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; 162 CLR 221 at 263.

[27] e.g. First Pleash Affidavit at [62] and [77]ff.

[28] First Pleash Affidavit at [63]ff.

[29] First Pleash Affidavit at [73] - [75].

[30]Affidavit of Blair Pleash sworn on 23 March 2017 (The Second Pleash Affidavit)at [2] and Annexures BP-24 – BP-31.

[31] First Pleash Affidavit at [91], Third Pleash Affidavit at [21] – [22], [25] – [26] and Annexures BP-38 – BP-42 and BP- 44.

[32] Affidavit of Blair Pleash sworn on 30 March 2017 (The Third Pleash Affidavit)at [28] – [34] and Annexure BP-46.

[33] Third Pleash Affidavit at [39].

[34] First Pleash Affidavit at [78]

[35] First Pleash Affidavit at [82] – [84].

[36] David Lewis Clout in his capacity as Liquidator of Mainz Developments Pty Ltd (In Liquidation) [2016] NSWSC 1146 at [164]; Conlan v Adams [2008] WASCA 61; 65 ACSR 521 at [28].

[37] Conlan v Adams [2008] WASCA 61; 65 ACSR 521 at [28].

[38] In the Matter of Condor Blanco Mines Ltd (No 2) [2016] NSWSC 1304 at [15] and see also the commentary at [7] – [15].

[39] Coad v Wellness Pursuit Pty Ltd (In Liq) [2009] WASCA 68; 71 ACSR 250 at [41] – [43], [47] – [49], [52], [64], [71] and [77].