Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 11] - [2016] WASC 365

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: COMPUTER ACCOUNTING AND TAX PTY LTD (in liq) -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 11] [2016] WASC 365

CORAM: MASTER SANDERSON

HEARD: 2 SEPTEMBER 2015, 11 MARCH 2016,
14 APRIL 2016

DELIVERED : 11 NOVEMBER 2016

FILE NO/S: CIV 2265 of 2006

BETWEEN: COMPUTER ACCOUNTING AND TAX PTY LTD (in liq)
Plaintiff
AND
PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Defendant
DONALD CAMPBELL SMITH as Executor of the Estate of MARTIN PAUL BANNING
Second Defendant

Catchwords:

Receiver's remuneration - Receiver appointed to sell share - Turns on own facts

Legislation:

Civil Judgments Enforcement Act 2004 (WA)
Civil Judgments Enforcement Regulations 2005 (WA)
Civil Procedure of Western Australia
Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA)

Result:

Remuneration set at $75,000

Category: B

Representation:

Counsel:

Plaintiff:     No appearance
First Defendant             :     Mr T R Stephenson
Second Defendant         :     Mr T R Stephenson
Receiver:     Ms M L Coulson

Solicitors:

Plaintiff:     No appearance
First Defendant             :     Eastwood Sweeney Law
Second Defendant         :     Eastwood Sweeney Law
Receiver:     Coulson Legal

Case(s) referred to in judgment(s):

Boehm v Goodall [1911] 1 Ch 155
Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318
Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 4] [2009] WASC 407
Cuckmere Brick Co Ltd v Mutual Finance [1971] 2 All ER 533
Jan De Tastes v Carr & Co (Unpublished, WASC, 18 May 2015)
Pendlebury v Colonial Mutual Life Society Ltd (1912) 13 CLR 676
Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96

MASTER SANDERSON: This is an application by Graeme Trevor Lean in his capacity as a receiver. The application was said to be brought pursuant to s 425 of the Corporations Act 2001 (Cth). It is doubtful whether that section has any application in the circumstances of this case. Mr Lean was a court appointed receiver and therefore his remuneration is to be assessed by the court not pursuant to the Corporations Act. However, that distinction is really of no moment.
The application is brought in the context of this long running (and perhaps never ending) dispute. It is a sideshow to the main proceedings. Nonetheless it has raised issues which are factually complex and which on the application of the first and second defendants led to lengthy cross‑examination of Mr Lean. Thousands of pages of documents have been filed and over 50 pages of submissions were lodged.
Mr Lean (the receiver) was appointed on 21 November 2008 by order of Justice Simmonds for a limited purpose of appropriating and realising one share in the company Banning Holdings Pty Ltd owned by the deceased estate of Martin Paul Banning (the original second defendant in the action). The appointment was made expressly for the payment of a judgment debt as an enforcement order pursuant to s 86(1)(b) or (e) of the Civil Judgments Enforcement Act 2004 (WA). The practice to be applied in regard to the appointment is therefore that pursuant to O 51 of the Rules of the Supreme Court 1971 (WA) with necessary changes.
Pursuant to order 8 of the orders of appointment the receiver was required to tax his costs unless they were assessed by a master. Justice Simmonds initially ordered that the payment of the receiver's tax costs was to be made by the defendants to the judgment creditor (the plaintiff) within such time as the master may allow on taxation or assessment or otherwise ordered by the court. This is obviously unlike the usual position where a court appointed receiver is required to seek payment of his remuneration out of the property taken into his possession: see Boehm v Goodall [1911] 1 Ch 155, 161.
The appointment of the receiver was cancelled on 10 November 2010 by Justice Simmonds: see Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 2] [2010] WASC 318. At the time of the order of appointment was made the plaintiff was not in liquidation. It was placed in liquidation at the time the receiver's appointment was cancelled. Consequently, after May 2010 the receiver could not continue to act in that capacity.
On 10 November 2010 Justice Simmonds granted the receiver an 'equitable lien' over the one share in Banning Holdings Pty Ltd and required the receiver to submit his accounts for passing under reg 57 of the Civil Judgments Enforcement Regulations 2005 (WA). An order allowing the defendants to satisfy their obligation to pay the taxed or assessed costs direct to the receiver was also made. Clearly the receiver has delayed bringing his remuneration claim ‑ it was not made until almost four years after the order of Justice Simmonds. No detailed explanation of the delay is offered. It does not seem to me to follow that the receiver is disqualified from making an application. That is the basis on which I have proceeded.
As the appointment was made pursuant to the Civil Judgments Enforcement Act it is a fundamental proposition that the receiver was appointed by the court and is an officer of the court. That was not doubted by Justice Simmonds in Computer Accounting and Tax Pty Ltd (in liq) v Professional Services of Australia Pty Ltd [No 4] [2009] WASC 407 [94]. Accordingly the receiver is under a duty to act impartially and in accordance with the directions of the court in administering the property the subject of the receivership. Furthermore the property of which the receiver takes possession does not vest in him and it would follow that the property is not the receivers to deal with as he likes. The receiver is not an agent of the parties and is not subject to their control or direction. However, the receiver does owe duty of a fiduciary character to all persons with an interest in the property seized by him.
A receiver owes a duty to use his powers of sale 'in good faith' and not to recklessly sacrifice the asset. This statement of principle is based upon the long standing authority of Pendlebury v Colonial Mutual Life Society Ltd (1912) 13 CLR 676. It has never been the law in Australia that a receiver can be liable for his negligent conduct. That is the position in the United Kingdom: see Cuckmere Brick Co Ltd v Mutual Finance [1971] 2 All ER 533. On behalf of the defendants, counsel submitted the higher United Kingdom standard ought apply to court appointed receivers. That submission ought be rejected. It runs counter to authority and does not reflect the law in Australia.
There is no doubt that a receiver appointed by the court is subject to the inherent powers and discipline of the court. Accordingly, the court has the power when dealing with receiver's remuneration to prevent exorbitant demands for remuneration and to ensure the remuneration appropriately reflects the work done. It may also be the case the court has the power to order a receiver to pay costs personally in relation to serious derelictions of duty. As I understand the defendants' position that is not their case. What they did say is that the amount claimed by the receiver was above and beyond what was reasonable because the way he undertook his duties. It might well be the result of awarding the receiver less than he claimed was that he was not paid for some of the work he did. That is a different concept from requiring the receiver to actually pay costs occasioned by a breach of duty.
The approach to the court to claims by an external administrator of a company for remuneration was considered by the Full Court in Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96. That appeal had to do with a claim for remuneration by a provisional liquidator which was made under s 473(2) of the Corporations Law. The case itself mandated a regime which has been adhered to Australia wide since the decision was published. It was counsel for the defendants' position as the Venetian Nominees decision related to the Corporations Law it had no relevance to a court appointed receiver. Counsel made that submission as part of a wider submission Mr Lean's claim for remuneration ought be referred to a registrar for assessment. Tempting though it was to accept counsel's submission and refer the matter to a registrar, it is my view the principles enunciated in Venetian Nominees apply to court appointed receivers and I should assess the costs.
There is some support for counsel's submission to be found in the Venetian decision. Kennedy and Ipp JJ in delivering the judgment of the court said at [102]:
Some guidance can indeed be derived from the taxation of solicitors' costs as solicitors, like provisional liquidators, are officers of the court whose costs are fixed as part of the supervisory function of the court.
Having said that however the court went on to mandate a regime which anticipated the fixing of the costs by the master with no suggestion there should be an assessment of costs by a registrar. In my view the fact the application was brought under the Corporations Law and there may have been some question as to the jurisdiction of a registrar under the Corporations Law it is still the case that an assessment of remuneration of an external administrator should be made by the court. Doubtless the rules could mandate the work be undertaken by a registrar. But unless and until that occurs it seems to me the assessment should be made by the master.
Although the statement of principle found in Venetian has been set out on countless occasions it is worth repeating because it sets the framework for this application. Their Honours said:
Some guidance can indeed be derived from the taxation of solicitors' costs as solicitors, like provisional liquidators, are officers of the court whose costs are fixed as part of the supervisory function of the court. In particular, it is to be observed that the rules of evidence are ordinarily not strictly observed in the taxation of solicitors' costs. As Sir Robert Megarry V-C said in Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379 at 1385:
'My recollection over the last 15 years is that it is common enough for the parties, without objection, to refer to correspondence and other documents when costs come to be argued after judgment has been given; and this has not been limited to correspondence before action brought, or to correspondence or other documents which have been put in evidence during the trial.'
His Lordship went on to say (at 1385-1386):
'The matter, I think, is one for determination by the Judge when considering how to exercise his discretionary power to determine by whom and to what extent the costs are to be paid.'
As a starting point, in our view, the onus is on the provisional liquidator to establish that the remuneration claimed is fair and reasonable. It is the function of the court to determine the remuneration by considering the material proffered and bringing an independent mind to bear on the relevant issues. The initial task is to consider whether, prima facie, the provisional liquidator has made out a case for the determination of the amounts claimed. The fact that there may be no person who objects to the claim, or any part of the supporting testimony, or that objectors advance unsustainable arguments, or do not properly formulate their objections, cannot detract from the court's duty in this respect. The judicial officer conducting an inquiry under s 473(2) is required to make an independent determination of the remuneration claimed, even if there is an absence of objectors, or appropriately detailed objections, or objections advanced on arguable grounds. Of course, once the court is satisfied that the provisional liquidator has made out a prima facie case that the remuneration claimed should be allowed, the absence or inappropriateness of points taken by objectors becomes relevant.
Should the provisional liquidator fail to provide adequate evidentiary material to enable the court to determine whether the amounts claimed are fair and reasonable, no order should be made: Re Solfire Pty Ltd (In liq) (No 2). Thus, for example, the mere listing of the persons who performed the work, the hours worked by each, and the amounts claimed, may well be insufficient material for the court to come to a proper decision: Re Reiter Bros Exploratory Drilling Pty Ltd.
Ordinarily, to commence the proceedings, the provisional liquidator will provide the court with a statement of account reflecting in appropriate itemised form, details of the work done, the identity of the persons who did the work, the time taken for doing the work, and the remuneration claimed accordingly. The statement of account should also reflect in appropriately itemised form the expenses incurred by the provisional liquidator, accompanied where necessary by voucher proof. Sufficient detail should be provided to enable the court to determine whether the disbursements were reasonably incurred and that the amounts claimed are reasonable.
The statement of account should be verified by affidavit. When the remuneration claimed involves work carried out by the provisional liquidator and his staff, the verifying affidavit need state merely that the work described in the statement of account was done by the provisional liquidator or under his personal supervision, and that from personal knowledge or from the records kept by the provisional liquidator or his firm, or from some other appropriate source, he believes that the information contained in the statement of account is correct. When disbursements are claimed, the affidavit should verify that they were incurred and, if necessary, why they needed to be incurred.
In Re Solfire Pty Ltd (In liq) (No 2), Shepherdson J said (at 1,164):
'In my view, when a provisional liquidator seeks to have his remuneration determined by the court he should provide a document not dissimilar in form to the bill of costs in taxable form provided by a solicitor to his client ... He should identify the person or persons and the grade or grades of the person or persons engaged in the particular task concerning the provisional liquidation, he should identify that task and dates on which time was spent on it, the amount of time spent on it and he should identify the relevant rate, according to the grade of the person or persons performing the work. I also consider that he should require the person performing the work to keep reasonably detailed diary notes and time sheets which documents should be open to inspection by persons entitled to see them.'
In our opinion, however, it is, with respect, unnecessary to lay down an absolute rule, in such detailed terms, concerning the statement of account to be provided by a provisional liquidator. It may well be that in a particular case information particularised as suggested by Shepherdson J would be appropriate. In other cases less detailed information may be required. Every case depends on its own circumstances. But the overriding principle remains: sufficient information must be provided to the court to enable it to perform its function under s 473(2).
If the Master were to be satisfied that the statement of account was sufficiently detailed to enable the remuneration to be determined, but there were objections to the account, special directions should be given in regard to the mode in which the account is to be taken or vouched. The procedure set out in O45 should as far as possible be adopted. If, for example, the objector challenges whether a particular item of work was in fact done, or whether the person alleged to have done the work spent the time alleged in doing it, it may be necessary for the provisional liquidator to call direct evidence establishing the correctness of the allegations made: see generally Gava v Grljusich, unreported, Supreme Court, WA, Full Court, Library No 970492, 19 September 1997.
Notice should be given of the points on which the provisional liquidator will be cross-examined (if cross-examination is allowed). The notice of objection should be supported by affidavit. Cross-examination of the provisional liquidator and the objecting party may then occur. But care should be taken to follow the admonition of Sir Robert Megarry V-C in Computer Machinery Co Ltd v Drescher (at 1386), namely:
'It would not be right to allow anything resembling a trial of the action to take place in the guise of an argument on costs' [102] ‑ [104].
This detailed statement of principle is in fact unworkable in practice. When an external administrator applies for remuneration the application is accompanied by an affidavit which routinely annexes timesheets completed by the administrator and his staff. But looking at the timesheets achieves nothing. The description of the work done is often cryptic and understandably so. But the real problem is to put the work done in context. There is no real way of knowing simply by looking at a timesheet whether three aliquots of six minutes spent on a telephone discussion with a particular person was time well spent. Frequently the claims for remuneration run into hundreds of thousands of dollars. There may be thousands, even tens of thousands, of time costing entries. Even random sampling of these entries does not give any real picture of whether or not the work undertaken was necessary. That means that so long as the timesheets are provided and a broad statement of what work was undertaken and why is provided in the affidavit anyone looking at the accounts must be 'satisfied that the statement of account was sufficiently detailed to enable the remuneration to be determined'.
A further problem arises with respect to how the assessment is to be undertaken. While 'it would not be right to allow anything resembling a trial of the action to take place' it is hard to see an alternative. This case provides a perfect example of the problem. Mr Lean filed an affidavit sworn 29 October 2014 (the first affidavit) which I was satisfied was sufficiently detailed to enable remuneration to be determined. Counsel for the defendants maintained Mr Lean had undertaken a whole raft of work which was unnecessary. Counsel's criticism of Mr Lean's work was so extensive it was not really possible for Mr Lean to call direct evidence of the correctness of all claims he made. What counsel for the defendants wished to do was cross‑examine Mr Lean at large. Initially I was sceptical as to whether that was consistent with Venetian and whether or not it would actually achieve the defendants' aims. Counsel filed what became preliminary submissions which detailed what he said were the failings in Mr Lean's conduct. I was eventually convinced by counsel's submissions there was sufficient substance to warrant the defendants being given the opportunity to cross‑examine Mr Lean. As a result of my deciding to allow cross‑examination ‑ something which is anticipated by the Venetian decision ‑ Mr Lean filed three further affidavits dated 12 June 2015, 28 January 2016 and 3 March 2016. The combined affidavit material filed by the parties extended to over 1,000 pages. Cross‑examination extended over two days. In the end, the whole application looked suspiciously like a trial.
In his first set of written submissions (dated 27 August 2015) counsel for the defendants set out a number of statements of principle which he submitted should govern the claim for remuneration. He relied upon and adapted what was said in Civil Procedure Western Australia at [51.4.2] and [51.4.4] and [51.4.5]. Counsel acknowledged that there are differences in relation to enforcement of judgments and other pre‑judgment situations. Nonetheless I am satisfied the statement of principles is accurate and should be accepted. These principles are as follows:
(a)The Receiver should be allowed his or her costs in so far as they have been incurred in activities reasonably undertaken incidentally to performing the function created by his or her appointment ‑ see Wayland v Nidamon Pty Ltd (1986) 11 ACLR 209 @ 222. It would not be reasonable to claim for costs of duplicated work, or, work completed after cessation of the role of the Claimant - Venetian supra @ p 19 - 20 or if work was completed outside of the scope of his powers Venetian supra @ p 23 ‑ 24.
(b)It is necessary for the receiver to justify the reasonableness and prudence of the tasks undertaken for which remuneration is sought, and, failure to discharge the burden of establishing that the remuneration claimed is reasonable by failure to provide adequate evidentiary material may lead to no order for remuneration being made. Should the receiver fail to provide sufficient material to enable the Court to conclude the costs were fair and reasonable no Order should be made ‑ see Re Solfire Pty Ltd (in liq) (No 2) (1998) 16 ACLC 1156 approved in Venetian Nominees Pty Ltd & Ors v Conlan unreported lib No 980576 del 2 October 1998 @ p 15. The mere listing of persons who performed the work, the hours worked by each, and the amounts claimed may well be insufficient material for the Court to come to a proper conclusion ‑ Venetian supra @ p 15. It is implicit that detailed diary notes and time sheets should be kept so these may be inspected ‑ Venetian supra @ p 15 ‑ 16 quoting Re Solfire supra @ p 1164.
(c)The expenses incurred by the receiver must be itemised and vouched if necessary. It would follow by analogy from (a) that there must be some proof offered as to how the expenses incurred related to the activities reasonably undertaken incidentally to performing the function created by his or her appointment. When disbursements are claimed the affidavit should verify that they were incurred and if necessary why they were incurred ‑ Venetian supra @ p 15.
(d)The evidence adduced must enable the Court to reach a conclusion as to what is a fair compensation for what the receiver has actually done. The Court will usually work off timesheets created in the receiver's office provided that they do significantly more than merely detail the total number of hours spent by the receiver and officers of particular grades on his or her staff. The evidence adduced must satisfy the Court as to the time actually taken for doing the work.
(e)The Court's objective is to award a sum, or, devise a formula which will reasonably compensate the Receiver for the time and trouble expended in the execution of his or her duties and, to some extent, the responsibility he or she has assumed. It must follow therefore that the Receiver bears the burden of establishing that the work for which a claim is made reasonably relates to the duties for which the Receiver was appointed.
(f)The procedure to be followed is a matter for the Court to determine and may include cross‑examination of the Receiver/claimant on notice - Venetian supra @ p 16 ‑ 17.

Counsel for the defendants put as his prime submission Mr Lean should only be allowed his costs in so far as the activities were reasonably undertaken and incidental to performing the function created by his appointment - that is to say valuing and selling the share in Banning Holdings Pty Ltd and reporting to the court and/or the judgment creditor from time to time. While that statement of principle may be correct, the real difficulty is in establishing what aspects of the receiver's activities fell within the rubric of 'activities reasonably undertaken and incidental' to performing his function. The first claim made by Mr Lean was for remuneration in an amount of $159,777.10. That claim was made in the affidavit sworn 29 October 2014. Subsequently the claim was reduced to $123,762.50. It was submitted on behalf of the defendants there was little explanation as to why the reduction in fees had been made. There is some substance to that complaint. Mr Lean's affidavit sworn 12 June 2015 does not really clarify the position.
Up to and including the sale of the one share of Banning Holdings to Mr and Mrs Frigger on or about 10 March 2009 and the receiver's report to the court lodged on 10 March 2009 the total fees claimed were $29,021 with disbursements of $15,044. Inclusive of GST that is a total of $47,951.50. Counsel for the defendants pointed out that means an amount of $75,811 was said to have been incurred after the sale of the share. Counsel maintained there was no clear connection between the sale of the share and other matters incidental to performing the functions of the receiver and selling the share and reporting to the court. That formed part of the overall complaints made about Mr Lean's claim. These complaints can be considered under a number of separate headings.

The valuation of the share

It is clear the receiver appreciated he needed to value the share and appropriately sought expert valuers to provide him with sworn valuations of the real estate assets and vintage motor vehicles. He thereafter decided to value the share himself. The defendants complained Mr Lean had no specialised expertise in that process. However he was an experienced liquidator and he received valuations of the underlying assets. In my view it was open to him to put at least an indicative value on the share in that the way that he did.
There is no substance in the claim by the defendants the receiver fundamentally misunderstood his obligations. Nor do I accept that he was obliged to take legal advice in relation to the sale. Consistent with the Pendlebury decision he was obliged to sell the share by taking reasonable steps to ensure a proper price and without sacrificing the asset. That was the limit of his duty.
The defendants complain that although Mr Lean knew of the existence of the partnership R & S Motors he did not conduct an evaluation of the 'goodwill' of what the defendants maintain was a longstanding profitable partnership business. In my view in this respect Mr Lean acted properly. His experience told him, probably correctly, that the goodwill was either 'of not much value' or 'worthless'. Any potential purchaser of the shares would have been going into business with Mrs Banning and Mr Lean assessed this was most unlikely to happen. That was a reasonable conclusion.
In his report to the court dated 24 December 2008 Mr Lean valued the share at between $45,000 and $100,000. This conclusion was criticised by counsel for the defendants. He submitted the 'realisable' value of the share should have been the value of the assets as sold in an orderly fashion less the costs of sale. While he acknowledged the possibility this might involve a winding up he criticised Mr Lean for not making any such calculation. He says that had he done so the realisable value of the assets was over $1.4 million. That being so the value of the share was considerably more than was suggested by Mr Lean.
In my view there is no substance to this criticism. The fact is the receiver was required to sell one share in Banning Holdings. As a necessary precursor he had to work out what that share was worth. He also had to find a willing buyer. Any buyer of that share was taking on a myriad of problems. The possibility of the person walking into such a minefield was surely remote. The idea that someone might buy the share with a view to liquidating the company in a war with other shareholders seems to me to be fanciful. Valuation of any asset is an inexact science. Valuation of this share in Banning Holdings was particularly uncertain. In my view the receiver approached the valuation process in an entirely reasonable manner and his actions cannot be criticised as 'a complete waste of time'.

The sale of the share

It was submitted by counsel that the receiver should have known at the outset of the sale process that Banning Holdings had a memorandum and articles of association that was likely to contain a standard 'pre‑emptive rights' clause. That is the case for most private companies and it could perhaps have been expected that a liquidator with Mr Lean's experience would have been aware there was likely to be such a provision in the company's constitution. In fact Mr Lean did not investigate the existence of a memorandum and articles until after Mrs Frigger brought it to his attention. This aspect of Mr Lean's conduct is open to criticism.
Counsel for the defendants submitted that notwithstanding Mr Lean's awareness of the potential existence of pre‑emptive rights he went ahead and sold the share in March 2009. It is difficult to see any justification for the receiver's conduct in this regard. Furthermore Mr Lean admitted that he did not follow the process laid out in the memorandum articles and therefore there was a risk that the sale would be in breach of the company's constitution: see ts 4477.
Counsel further criticised Mr Lean's actions because it was said he was aware that the first defendant was proposing to enter into a deed of company arrangement with the expressed intention of paying the whole of the judgment debt and legal costs using the same assets of Banning Holdings which formed the value of the share he was selling. Mr Lean says he did not pay any attention to this DOCA proposal because it was up to the judgment creditor to tell him whether to stop the sale of the share. Counsel pointed out the DOCA proposal in February 2009 was expressly subject to the share not being sold and Mr Lean was aware that were the DOCA to pass he would have to comply with it. It must be acknowledged that Mr Lean's conduct with respect to the DOCA proposal is difficult to reconcile without accepting as was submitted by the defendants, he was acting at the behest of what counsel described as the 'Frigger parties'. Counsel submitted the receiver should have sought the advice of the court both with respect to the sale of the shares and how that was possible given the terms of the company's constitution and as to the role the DOCA played in the sale process.

The conduct of the receiver after sale of the share

The conduct of the receiver after the sale of the share was subject to detailed criticism by counsel. What Mr Lean actually did must be put in the context of the position he found himself in after the share had been sold. There was clearly a tension between the capacity to sell as mandated by the company's constitution and the fact of the sale. In fact what Mr Lean did was issue a proceeding (CIV 1727 of 2009) seeking to register the transfer of the share. There was no need for him to take that action. Mr Lean should have approached the court for directions and it is difficult to see why he did not do so. Counsel for the defendants spent some time in his submissions speculating that Mr Lean was really acting to benefit Mr and Mrs Frigger. No decision needs to be made on that question. I accept that actions taken by Mr Lean after the sale of the share were not appropriate and any amount charged by him should not be the subject of an order for remuneration.
There are other detailed criticisms of Mr Lean's conduct in counsel's submissions. These were explored in excruciating detail during cross‑examination. But in the end it comes down to this. First, I am satisfied that the valuation process undertaken by Mr Lean was both proper and appropriate. Second, there is no doubt that the sale process was flawed. Mr Lean ignored the memorandum and articles of association without justification and the mayhem which followed was directly attributable to his not handling the sale process in a proper and appropriate fashion. While other criticisms can be made of Mr Lean's conduct it seems to me these two points lie at the heart of assessing what remuneration Mr Lean ought be paid.
Assessing costs is one of the dark arts. In this court it is generally undertaken by registrars and the fact that there are so few appeals from the decisions of registrars indicates the expertise they have in this area. The approach to assessing costs was set out by Registrar S Boyle in Jan De Tastes v Carr & Co (Unpublished, WASC, 18 May 2015). The decision had to do with a review of an assessment conducted by the registrar. During the course of her reasons the registrar said:
It is my view that to assess requires me to apply overall to the bills rendered the criteria set out in the Act and estimate or evaluate the reasonableness of the charges. This does not mean that the taxing officer necessarily undertakes a line by line examination of the bill and allows and disallows specific items. That can occur but it does not have to occur. In fact when assessing pursuant to the terms of a costs agreement, which the Act also requires that I apply (section 302), a line by line assessment is not a fair or reasonable way of making the assessment. In any bill there might be a small error that a minute examination may reveal. That does not equate with the concept of overall unreasonableness of the work done, the way it was carried out or necessarily the costs charged.
Of course as I have been at pains to explain above the regime mandated by Venetian Nominees is the regime which is to be applied in this case. Nonetheless it is true that a line by line assessment of the costs charged by Mr Lean is not appropriate. That being so I have come to the conclusion Mr Lean's costs should be allowed in an amount of $75,000. In broad terms I accept that up until the sale of the shares the amount claimed of $47,951.50 is reasonable. It may also be the case that Mr Lean was required thereafter to undertake some further work consequent upon the sale of the share. I am not satisfied it would be appropriate to allow him the full amount he claimed because the work undertaken after the sale of the share does not seem to have been strictly necessary. I am satisfied on balance an award of $75,000 would in all the circumstances be reasonable.
On publication of these reasons I will hear the parties further as to the appropriate form of the orders and as to costs of this application.