Re Gunns Plantations Ltd (No 3)

[2017] VSC 777

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT
CORPORATIONS LIST

S CI 2013 2095

IN THE MATTER OF GUNNS PLANTATIONS LIMITED (ADMINISTRATORS APPOINTED) (RECEIVERS & MANAGERS APPOINTED) (ACN 091 232 209) in its capacity as the responsible entity of the managed investment schemes listed in Schedule 1

DANIEL MATHEW BRYANT, IAN MENZIES CARSON and CRAIG DAVID CROSBIE (in their capacities as joint and several Voluntary Administrators of GUNNS PLANTATIONS LIMITED (ADMINISTRATORS APPOINTED) (RECEIVERS & MANAGERS APPOINTED) (ACN 091 232 209)) Liquidators

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	23 February 2017
DATE OF JUDGMENT:	19 December 2017
CASE MAY BE CITED AS:	Re Gunns Plantations Ltd (No 3)
MEDIUM NEUTRAL CITATION:	[2017] VSC 777

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CORPORATIONS – Application by liquidators of managed investment schemes for further directions pursuant to s 511 of the Corporations Act 2001 (Cth) for entitlement to remuneration, costs and expenses including those that are expected to be incurred prior to conclusion of liquidation – Directions sought under s 50 of the Evidence Act 2008 (Vic) that evidence be given in summary form.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Dr O Bigos	Arnold Bloch Leibler
Mr T Burdon and Mr Musgrave appeared in person

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Summary of activities carried out by the liquidators in the Relevant Period........................ 8

Great Southern Schemes – sale related activities..................................................................... 8

Gunns Woodlot Schemes – sale related activities................................................................... 8

Tasmanian Forestry Estate sale......................................................................................... 8

Tumbarumba Estate sale.................................................................................................... 9

Tumbarumba Estate - non-sale related activities......................................................... 10

Australian Forestry Plantation sale completion........................................................... 11

Forestry Tasmania settlement.......................................................................................... 11

Third Party Landowner activities............................................................................................. 12

Sale related activities in relation to the Schemes.......................................................... 12

Non‑sale related activities in relation to the Schemes................................................. 12

Distribution tasks........................................................................................................................ 13

Income Tax and GST advice and class rulings....................................................................... 13

Resolution of Custodian accounts............................................................................................ 18

General Scheme activities.......................................................................................................... 19

Management of the Schemes............................................................................................ 19

Second Liquidation Costs Application and Third Liquidation Costs Application 19

Stakeholder liaison............................................................................................................ 20

Scheme wind-up................................................................................................................ 20

Liaising with ASIC............................................................................................................. 20

Other administrative Scheme related activities............................................................ 21

Assessment of activities carried out by the liquidators in the Relevant Period................... 21

Analysis of expenditure and remuneration................................................................................ 21

The Liquidators’ allocation methodology.............................................................................. 21

Summary spreadsheet for the Relevant Period...................................................................... 24

The claim for remuneration, disbursements, legal costs and third party costs....... 27

Liquidators’ remuneration............................................................................................... 28

Liquidators’ disbursements............................................................................................. 33

Legal costs.......................................................................................................................... 34

Third party costs................................................................................................................ 37

Claim for Future Costs...................................................................................................... 37

Liquidators’ remuneration............................................................................................... 41

Liquidators’ disbursements............................................................................................. 43

Legal costs.......................................................................................................................... 44

Third party costs................................................................................................................ 44

Allocation............................................................................................................................ 44

HIS HONOUR:

Introduction

1. On 20 March 2015, I delivered reasons[1] for orders that I made in deciding an application made by the first plaintiffs by interlocutory process dated 29 September 2014 (the ‘previous application’).  The previous application sought directions and orders in relation to the costs, expenses and remuneration which the first plaintiffs (‘the liquidators’) had incurred as liquidators of Gunns Plantations Limited (‘GPL’) in its capacity as responsible entity of the managed investment schemes known as the Gunns Woodlot Schemes and the Great Southern Schemes (together ‘the Schemes’) in the period 1 December 2013 to 30 June 2014. 

   [1]ReGunns Plantations Ltd (in liq) (recs and mgrs apptd) [2015] VSC 102 (‘my earlier reasons’).

1. The liquidators, by an interlocutory process filed 3 November 2016, make a similar application for directions in relation to costs, expenses and remuneration which they have incurred and which they expect will be incurred in relation to the Schemes during the periods of liquidation from 1 July 2014 to 31 May 2016 and from 1 June 2016 until the completion of the liquidation or the ending of the Schemes (together ‘the Relevant Period’). Other ancillary orders are also sought including an order under s 50 of the Evidence Act 2008 (Vic) (‘Evidence Act’) that the liquidators adduce their evidence as to the quantum of their claims in the form of a summary as contemplated by those provisions.

1. The total amount for which approval is sought under this application  exceeds $10 million.  The amounts claimed do not include remuneration and expenses relating to the general costs of the liquidation.

1. As my earlier reasons reveal, there had been two earlier applications of this character in the Gunns insolvency administration.  The first was heard by Ferguson J in Re Gunns Plantations Limited (No 4)[2] and the second by Judd J in Re Gunns Plantations Limited (In Liquidation) (Receivers & Managers Appointed).[3]  These reasons should be read in light of the decisions of Judd and Ferguson JJ and together with my earlier reasons. I will adopt the terminology employed in my earlier reasons here.

   [2][2013] VSC 595 (‘the administration application’).

   [3][2014] VSC 239 (‘The first liquidation application’).

1. The liquidators, both partners of PPB Advisory (‘PPBA’) were appointed as administrators of the Gunns group of companies on 25 September 2012 and then as liquidators of the group on 5 March 2013.  The liquidators control the second plaintiff, GPL, in its capacity as responsible entity of the Schemes. Receivers and managers were appointed to the Gunns group on 25 September 2012 and have since controlled the other companies in the Gunns group.

1. This application is concerned with the liquidators’ costs, expenses and remuneration for the Relevant Period. As such, it is something of a repeat of the earlier applications and involves the application of the same principles and approaches then adopted to the evidence relied upon by the liquidators in this application.  I have adopted the same methodology that I employed in considering the previous application.

1. In this application, the liquidators rely on the following affidavit material:

(a)   an affidavit of Craig David Crosbie, sworn 2 November 2016 (the fifth Crosbie affidavit);

(b)   the affidavit of Craig David Crosbie, sworn 21 May 2013 (the first Crosbie affidavit);

(c)    the sixth affidavit of Daniel Matthew Bryant, affirmed 1 November 2013 (the sixth Bryant affidavit); and

(d)  the twelfth affidavit of Daniel Matthew Bryant, affirmed 20 December 2013 (the twelfth Bryant affidavit).

1. Exhibited to the fifth Crosbie affidavit is a spreadsheet setting out the scheme related costs incurred during the Relevant Period for the Schemes. [4]  This is accompanied by a supporting spreadsheet providing a further breakdown of the scheme related costs and the proposed methods of allocation of those costs.

   [4]Exhibit CDC-5 to the fifth Crosbie affidavit.

1. Subsequent to the hearing of this matter, the liquidators filed a further affidavit of Mr Crosbie sworn 6 March 2017 which exhibits several volumes containing the original time sheets and other documentation comprising the primary source documents from which these summary spreadsheets were prepared (the ‘primary source documents’).[5] Using that material, I have conducted the same random selection exercise that I carried out in relation to the previous application which is described in my earlier reasons.[6]

   [5]Exhibit CDC-6 to the affidavit of Craig David Crosbie sworn 6 March 2017.

   [6]See paragraphs 30-32 of my earlier reasons.

1. The liquidators and GPL are the only parties to this proceeding, however, the following parties have been served:

(a)   ASIC;

(b)   the receivers and managers of the Gunns group of companies;

(c)    the Grower[7] Committee;

[7]As outlined in my earlier reasons [11], the members of the Schemes are referred to as ‘Growers’.

(d)  the Committee of Inspection;

(e)   Trevor Burdon, a Grower in the 2001 and 2002 Gunns Wood Lot Schemes, who filed a Notice of Appearance;

(f)     Adam Musgrave, a Grower in the 2005 Gunns Wood Lot Schemes, who filed a Notice of Appearance; and

(g)   Primary Securities Ltd, the replacement responsible entity for the 2000 and 2001 Gunns Wood Lot Schemes, which filed a Notice of Appearance.

1. The Court documents were also publicly accessible via the liquidators’ website, and the liquidators’ solicitors’ website. 

1. The general background of the Schemes, the ensuing insolvency administrations, and the applications made to Ferguson J and Judd J are described in my earlier reasons.[8] In the first liquidation application, Judd J observed that:

The complexity of a liquidation of managed investment schemes, in conjunction with a receivership of assets, cannot be underestimated.  There were 18 forestry schemes, spread across all six states.  There were approximately 226,000 hectares of land under management.  There were thousands of individual growers.  Scheme documentation is complex.  Management and administration structures were complex.  There is ambiguity surrounding the structures, documentation and grower rights.[9]

[8][10]–[22].

[9][76].

1. During the hearing for this application, Counsel for the liquidators observed that the Gunns administration had by that time necessitated 46 sitting days before several judges of this Court. 

1. Mr Burdon and Mr Musgrave appeared and made submissions at the hearing of this application.  In addition, one of the liquidators, Mr Crosbie, was cross‑examined by Mr Musgrave on the issues of the need for and cost of engaging expert advice on the issue of incidence of GST.  I reminded Messrs Burdon and Musgrave, as I did at the hearing of the previous application,  that this application was one concerned with the determination of remuneration and not an occasion for airing general grievances in regard to the conduct of the liquidations and the decisions made by the liquidators in the course of their responsibilities. It is obvious that they are both quite disenchanted with the conduct of the Gunns insolvency administration and in particular with the remuneration claimed and costs incurred by the liquidators.  They each filed written submissions and addressed those submissions at the hearing of the application.

1. In their interlocutory process, the liquidators seek the following directions:

Notice of Application to Growers

1.A direction pursuant to rule 54.02 of the Rules and/or s 511 of the Act that the Liquidators would be justified in giving sufficient notice of this interlocutory process to all members of the Schemes (‘Growers’) by:

(a)causing this interlocutory process and the November 2016 Crosbie Affidavit to be published on the websites of the Liquidators ( and the Arnold Bloch Leibler ( and

(b)notifying the Growers by email that this interlocutory process and the November 2016 Crosbie Affidavit have been so published and details of a phone number which any Grower may use to request a paper copy or electronic copy of those documents; and

(c)causing an advertisement to be published in a nationally circulated newspaper that this interlocutory process and the November 2016 Crosbie Affidavit have been so published and details of a phone number which any Grower may use to request a paper copy or electronic copy of those documents.

Great Southern Scheme Related Costs

2.A direction pursuant to rule 54.02 of the Rules and/or s 511 of the Act that the Liquidators are justified and otherwise acting properly and reasonably in claiming the costs, expenses and remuneration incurred in relation to the Schemes numbered 10 to 18 in Schedule 1 (‘Great Southern Schemes’) during the period between 1 July 21014 until 31 May 2016 (‘Relevant Period’) (‘Great Southern Scheme Related Costs’) as costs, expenses and remuneration reasonably incurred in caring for, protecting and preserving the assets and/or realisation of property of the Great Southern Schemes.

3.A direction that the Liquidators of GPL are entitled to a lien over the scheme property of the Great Southern Schemes in respect of the Great Southern Scheme Related Costs for the Relevant Period. 

Gunns Woodlot Scheme Related Costs

4.A direction pursuant to rule 54.02 of the Rules and/or s 511 of the Act that the Liquidators are justified and otherwise acting properly and reasonably in claiming the costs, expenses and remuneration incurred in relation to the Schemes numbered 1 to 9 in Schedule 1 (‘Gunns Woodlot Schemes’) during the Relevant Period (‘Gunns Woodlot Scheme Related Costs’) as costs, expenses and remuneration reasonably incurred in caring for, protecting and preserving the assets and/or realisation of property of the Gunns Woodlot Schemes.

5.A direction that the Liquidators and GPL are entitled to a lien over the scheme property of the Gunns Woodlot Schemes in respect of the Gunns Woodlot Scheme Related Costs for the Relevant Period.

Great Southern Scheme Prospective Future Costs

6.A direction pursuant to rule 54.02 of the Rules and/or s 511 of the Act that the Liquidators are justified and otherwise acting properly and reasonably in claiming the costs, expenses and remuneration incurred since 1 June 2016 and that, it is anticipated, will continue to be incurred in relation to the Great Southern Schemes (‘the Great Southern Scheme Prospective Future Costs’) until the Great Southern Schemes end or the liquidation of GPL ends, whichever is the later (‘the Great Southern Future Period’), as costs, expenses and remuneration reasonably incurred in caring for, protecting and preserving the assets and/or realisation of the Great Southern Schemes.

7.A direction that the Liquidators and GPL are entitled to a lien over the scheme property of the Great Southern Schemes in respect of the Great Southern Scheme Prospective Future Costs for the Great Southern Future Period.

Gunns Woodlot Scheme Prospective Future Costs

8.A direction pursuant to rule 54.02 of the Rules and/or s 511 of the Act that the Liquidators are justified and otherwise acting properly and reasonably in claiming the costs, expenses and remuneration incurred since 1 June 2016 and that, it is anticipated, will continue to be incurred in relation to the Gunns Woodlot Schemes (‘the Gunns Woodlot Scheme Prospective Future Costs’) until the Gunns Woodlot Schemes end or the liquidation of GPL ends, whichever is the later (‘The Gunns Woodlot Future Period’), as costs, expenses and remuneration reasonably incurred in caring for, protecting and preserving the assets and/or realisation of the Gunns Woodlot Schemes.

9.A direction that the Liquidators and GPL are entitled to a lien over the scheme property of the Gunns Woodlot Schemes in respect of the Gunns Woodlot Scheme Prospective Future Costs for the Gunns Woodlot Future Period.

Surplus Prospective Future Costs

10.A direction pursuant to rule 54.02 of the Rules and/or s 511 of the Act that, in the event that:

(a)there are surplus funds after the liens have been fully exercised; and

(b)those surplus funds are less than the costs of distributing those surplus funds to Growers,

(‘the Low Surplus Funds’), the Liquidators are justified and otherwise acting properly and reasonably by not distributing the Low Surplus Funds to Growers and treating the Low Surplus Funds as undistributed money under s 601NG of the Act, or as otherwise directed by the Court.

Competing Claims

11.A direction pursuant to rule 54.02 of the Rules and/or s 511 of the Act that the Liquidators are justified and otherwise acting properly and reasonably in claiming an administration fee of $150 from each of those Growers with unresolved competing claims with their financier in relation to the proceeds, in the circumstances referred to in paragraphs 118 to 123 of the November 2016 Crosbie Affidavit, as costs, expenses and remuneration reasonably incurred in caring for, protecting and preserving the assets and/or realisation of property of the Gunns Woodlot Schemes.

Other Matters

12.A direction that, pursuant to s 50 of the Evidence Act 2008 (Vic) the Liquidators may adduce the evidence in respect of the Great Southern Scheme Related Costs and the Gunns Woodlot Scheme Related Costs in the form of a summary.

13.An order that the Liquidators be indemnified in respect of their costs of this application out of the scheme property of the Great Southern Schemes and the Gunns Woodlot Schemes and that they be entitled to a lien over the scheme property of the Great Southern Schemes and the Gunns Woodlot Schemes in respect of those costs.

1. In my earlier reasons, I described the source of the Court’s power to give directions.[10] In summary, section 511 of the Corporations Act 2001 (Cth) (‘the Act’) confers on the Court power to give directions to liquidators in a voluntary winding up and Rule 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 confers on the Court power to give directions to trustees.  The Court has a discretion as to whether giving directions will be of advantage in the relevant liquidation or trust and it will give directions where it can summarily solve a difficulty which has arisen in an economic and efficient manner.

   [10][6]–[9].

1. In order to claim an indemnity for the expenditure and remuneration incurred for the Relevant Period, the liquidators must satisfy the Court that (a) there is and, in respect of the claim for prospective remuneration, will be, a sufficient nexus between the expenditure and remuneration and the liquidation of the Schemes, and (b) the amounts claimed are prima facie reasonable.[11] The liquidators must establish that the costs, expenses and remuneration were incurred exclusively in the care, preservation and realisation of the property and assets of the Schemes and, where multiple schemes are involved, the claims under consideration are referrable to a particular scheme.[12]

   [11]Administration application [9], citing Davies J in Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144 [42] (‘Thackray’).

   [12]See the first liquidation application [77] (Judd J), citing Thackray at [38]–[42].

1. The liquidators contend that the expenditure and remuneration is related to the Schemes, was reasonable, and accordingly falls within direction 5 of Ferguson J’s orders of 9 September 2013 made in the administration application.[13]

   [13]Direction 5 of Ferguson J’s orders is extracted  [16] of my earlier reasons.

1. As to establishing that there is a sufficient nexus between the expenditure and remuneration and the liquidation of the Schemes, the fifth Crosbie affidavit describes the activities that the liquidators were (and will be) involved in during the Relevant Period and for which a claim is made. What follows is in the nature of a summary of such matters. As I have said, these reasons need to be read with my earlier reasons in order to understand their  context and the terminology employed.

Summary of activities carried out by the liquidators in the Relevant Period

Great Southern Schemes – sale related activities

1. The trees located on land owned by Trust Company (Australia) Limited in its capacity as trustee of the Forestry Investment Trust (‘Trust Company’) were sold by the liquidators by contracts dated 25 October 2013 (‘Trust Company Sale’).  The liquidators applied to the Court and obtained orders for the allocation and distribution of the proceeds of the Trust Company Sale.  The liquidators incurred costs during the Relevant Period in completing the Trust Company Sale following receipt of the Court’s orders. 

Gunns Woodlot Schemes – sale related activities

1. The Gunns Woodlot Schemes sale tasks included tasks associated with the sale of the Tasmanian Forestry Estate, the sale of the Tumbarumba Estate, sale of the AFP Scheme land and the Forestry Tasmania settlement.

Tasmanian Forestry Estate sale

1. A significant proportion of the land used in the Gunns Woodlot Schemes was owned by Gunns Limited and other Gunns group entities and leased to GPL (‘Gunns Scheme Land’).  The Gunns Scheme Land and the trees situated upon that land (comprising the Tasmanian Forestry Estate) were sold by the receivers along with other assets of the Gunns group (‘TFE Sale’). 

1. As described in my earlier reasons, the liquidators applied to the Court and obtained directions in August 2014 that they were justified in exercising their powers to terminate Growers’ rights to allow completion of the business sale contract for the Tasmanian Forestry Estate and to enter into and perform the sale agreement.[14]  In October 2014, the liquidators applied to the Court and obtained directions that they were justified and were otherwise acting reasonably in allocating the proceeds of the TFE Sale between the Gunns Woodlot Schemes in accordance with a report previously provided by URS Corporation. 

   [14][34(f)].

1. During the Relevant Period, the liquidators undertook further work in relation to the Tasmania Forestry Estate. This included drafting and circulating an Explanatory Notice to Growers in relation to the allocation and distribution application made in May 2015, and preparing and executing certain deeds of assignment and deeds of surrender in relation to the Gunns Scheme Land the subject of the TFE Sale. In addition, they corresponded with taxation advisers in relation to GST and income tax implications associated with the TFE Sale, liaised with URS Corporation regarding their report, corresponded with the Growers who intervened in the liquidators’ application seeking directions in relation to the TFE proceeds (Mr Burdon and Mr Musgrave), considered the timing and steps necessary to effect the distribution of the TFE proceeds in accordance with the orders subsequently made by Judd J on 18 August 2015,[15] and responded to an interlocutory application filed by Mr Burdon.[16] 

   [15]See Re Bryant and Others (in their capacities as joint and several liquidators of Gunns Plantations Ltd (ACN 091 232 209) (in liq) (recs and mgrs. apptd)) (No 5) [2015] VSC 420.

   [16]Fifth Crosbie Affidavit [24]-[30].

Tumbarumba Estate sale

1. Each of the GPL Schemes offered investors multiple options (‘Scheme Options’),[17] with each Scheme Option effectively being treated as a separate scheme in and of itself.[18]  In 2006, 2008 and 2009, three Scheme Options were offered within the Gunns Woodlot Schemes (‘the Gunns Woodlot (Third Option) Schemes’).  Option 3 to the Gunns Woodlot (Third Option) Schemes involved an investment in pine.  The Tumbarumba Estate comprises the trees planted on Tumbarumba land and belonging to investors in Option 3 to one or more of these Schemes (‘Scheme Pine Trees’), and additional Tumbarumba Land owned by Gunns Limited and planted with pine trees also owned by Gunns Limited.

   [17]No such options were offered in the GSP Schemes.

   [18]Fifth Crosbie Affidavit [138]–[139].

1. In May 2015, the liquidators applied to the Court and subsequently obtained orders for directions in relation to the sale of the Tumbarumba Estate, the allocation of the Scheme proceeds from the sale of the Tumbarumba Estate between the Gunns Woodlot (Third Option) Schemes, and the distribution of the Scheme proceeds to the third Option investors within those Schemes (‘Tumbarumba Application’). 

1. The liquidators also undertook additional tasks during the Relevant Period in relation to the sale of the Scheme Pine Trees and the sale of the Tumbarumba Estate as a whole. This included (i) developing a strategy for the sale of the Scheme Pine Trees, (ii) engaging in negotiations with the receivers in relation to the sale process for the joint sale of the Tumbarumba Estate as a single package, (iii) considering the reasonableness of the receivers’ opinion on the estimated realisable amount for the Tumbarumba Estate (as compared to their internal assessments), and (iv) negotiating with the receivers in relation to the proposed allocation of the purchase price between the various assets on the Tumbarumba Estate, and in relation to the sale process for the Tumbarumba Estate and the allocation for the Scheme Pine Trees. As regards the terms of the sale process agreement with the receivers, they liaised with URS Corporation in relation to their report. This involved reviewing and corresponding with the receivers in relation to bids received for the purchase of the Tumbarumba Estate, commencing and conducting the Tumbarumba Application, and corresponding with taxation advisers in relation to GST and income tax implications associated with the Tumbarumba Estate Sale.[19] 

   [19]Fifth Crosbie affidavit [40].

Tumbarumba Estate - non-sale related activities

1. The liquidators undertook additional tasks in the Relevant Period in relation to the Tumbarumba Application which were not associated with the sale of the Tumbarumba Estate, including maintaining a PPBA hotline, GPL hotline, PPBA Grower email address, and GPL Grower email address in relation to the GPL allocation and distribution hearing. These facilities were created to address Growers’ queries in relation to the Tumbarumba Application. The liquidators were also involved in drafting and circulating a ‘Grower Update’ in relation to the Tumbarumba Application and in obtaining insurance for the Tumbarumba Estate plantations.[20]

   [20]Fifth Crosbie affidavit [41].

Australian Forestry Plantation sale completion

1. During the Relevant Period, the liquidators completed the sale of the Australian Forestry Plantation (‘AFP’) Scheme Land. This involved the execution of the surrender deeds in respect of the AFP Leases and AFP Sub‑Leases (as defined in the Mr Bryant’s affidavit of 22 November 2013 (‘AFP Affidavit’)), liaising with the AFP Receivers, obtaining legal advice in relation to the invoicing and payment of the Liquidators’ Value Allocation (as defined in the AFP Affidavit), and corresponding with taxation advisers in relation to GST and income tax implications associated with the AFP Sale.[21]

   [21]Fifth Crosbie affidavit [42]–[43].

Forestry Tasmania settlement

1. The liquidators responded to a breach notice issued by Forestry Tasmania to GPL on 28 August 2013 in respect of eighteen forestry right deeds for non‑payment of rent for the period 1 July 2012 to 30 June 2013 (‘Breach Notices’).  The liquidators subsequently responded to a notice of termination issued by Forestry Tasmania to GPL on 19 December 2013 for failure to remedy the breach the subject of the Breach Notices.[22]

   [22]Fifth Crosbie affidavit [44]–[47].

1. The liquidators reserved the Growers’ rights in relation to trees on the land which was owned by Forestry Tasmania and on which the Gunns Woodlot Schemes were partly conducted (‘FT Land’), engaged in negotiations with Forestry Tasmania, and issued a letter of demand to Forestry Tasmania.  This letter of demand put Forestry Tasmania on notice of a claim in restitution by GPL (in its capacity as responsible entity of the Gunns Woodlot Schemes) in respect of the trees on the FT Land (‘Restitution Claim’).  During the Relevant Period, the liquidators attended a mediation, and subsequently reached a settlement agreement with Forestry Tasmania in relation to the Restitution Claim.[23] 

   [23]Fifth Crosbie affidavit [48]–[50].

Third Party Landowner activities

1. Other than Trust Company, there are 61 landowners that lease land to GPL (‘Third Party Landowners’) pursuant to 68 separate leases in respect of the Great Southern Schemes (‘Third Party Leases’). The liquidators incurred further costs in relation to these Third Party Landowners, including costs in relation to both the Schemes’ sale tasks, and in relation to other non-sale related costs in respect of the Schemes.

Sale related activities in relation to the Schemes

1. The liquidators applied for and, on 21 May 2014, obtained directions from the Court that they would be justified in entering into and performing agreements with the Third Party Landowners in accordance with various options.[24] 

   [24]Re Gunns Plantations Limited (in liquidation) (Receivers and Managers Appointed) [2014] VSC 239 (Judd J).

1. Since obtaining those orders, the liquidators sought to reach agreement with as many Third Party Landowners as possible by entering into negotiations and holding landowner meetings, reviewing offers, obtaining counsel’s advice in relation to complex legal issues and contracts of sale, preparing deeds and obtaining taxation advice.[25] 

   [25]Fifth Crosbie affidavit [53]–[55].

Non‑sale related activities in relation to the Schemes

1. The liquidators undertook tasks relating to the Third Party Leases that were not associated with the sale of trees, including analysing various lease agreements, lease options and forestry inspection reports, processing and reconciling harvest proceeds in relation to harvesting of trees on land of the Third Party Landowners, maintaining the master lease schedule and a register of communications with Third Party Landowners, updating Third Party Landowners and reviewing and responding to general enquiries from Third Party Landowners.[26]

   [26]Fifth Crosbie affidavit [56].

Distribution tasks

1. In the fifth Crosbie affidavit, Mr Crosbie describes the distribution process to Growers as a complex task by reason of, among other things, the number of Schemes and Scheme Options, the number of Growers and the different status of some Growers within Schemes.[27]

   [27]Fifth Crosbie affidavit [59]–[69].

1. During the Relevant Period, the liquidators prepared for the distribution of sale proceeds by (i) considering the timing and steps necessary to effect the distribution of proceeds from each separate sale, (ii) building and maintaining separate distribution models for the Schemes, (iii) reviewing and auditing the models, (iv) preparing documentation outlining the Scheme proceeds and costs and the allocation of proceeds and costs between the Schemes and Scheme Options, and (v) communicating with Growers.[28] 

   [28]Fifth Crosbie affidavit [58].

Income Tax and GST advice and class rulings

1. Mr Crosbie deposed that the distribution of the sale proceeds involved complex taxation issues. PPBA does not have in-house taxation advisers and on 17 December 2014, the liquidators engaged PriceWaterhouseCoopers (‘PwC’) which has specialist taxation advisers to provide advice on these questions. The advice required had both legal and accounting aspects.  In the Relevant Period, the liquidators incurred costs in briefing PwC with the necessary documents, attending numerous meetings and conference calls with PwC and in engaging PwC to obtain a number of tax rulings from the Australian Taxation Office (‘ATO’) in December  2015 and  September 2016 in relation to various tax issues which affected the Growers.[29]

   [29]Fifth Crosbie affidavit [59]–[69].

1. Mr Crosbie stated that for each individual sale, the liquidators needed to determine whether the sale proceeds:

(a)   were taxable in the hands of GPL as the responsible entity;

(b)   were taxable in the hands of Growers and, if so, in what financial year it is assessable; and

(c)    attracted GST and, if so, how it would be paid.

1. Mr Crosbie stated that PwC were briefed with the Scheme documents, each of the separate sale agreements and other relevant documents including background information on the Schemes and the liquidators’ communications with Growers.  The liquidators also held numerous meetings and conference calls with PwC to explain and discuss the intricacies of each of the different sale agreements and how the characterisation of proceeds affected the tax treatment. Once the liquidators had obtained PwC’s advice, they engaged PwC to obtain tax rulings from the ATO in relation to income tax and GST on the sale proceeds. The ATO required an understanding of the legal nature of the arrangements and potential tax implications PwC had identified before it was willing to issue tax rulings.

1. On 23 December 2015, the ATO issued a guidance letter to the liquidators in relation to the treatment of the sale proceeds for income tax purposes.  The ATO agreed to allow an ‘administrative approach’ in respect of the proceeds.  The ATO guidance letter stated:

(a)   none of the proceeds were taxable in the hands of GPL as the responsible entity;

(b)   the proceeds were taxable as income in the hands of the Growers however, the Growers could elect to include the proceeds received as assessable income in the year in which the funds were received or in any earlier taxation period (without penalty but subject to interest). 

1. Mr Crosbie stated that the ATO guidance letter provided comfort for both the liquidators and Growers as to how the ATO would treat the proceeds for income tax purposes.  This was regarded by the liquidators as important given the facts and previous ATO Product Rulings that did not adequately contemplate the income tax treatment of proceeds upon the appointment of  liquidators. The guidance also had the added benefit of providing flexibility for Growers as to which year to return the income.  If the administrative approach was adopted by Growers, it would align the taxation of the distributions to the income year in which the cash was received and avoid the need for Growers to amend prior year tax returns.

1. On 23 December 2015, the ATO also issued a guidance letter to the liquidators in relation to the GST treatment of the sale of the GSP Scheme and GPL Scheme assets to the respective landlords and any related distributions to the Growers but the guidance was regarded as too general in nature to be of sufficient comfort.  Accordingly, on 15 February 2016, PwC, on the liquidators’ behalf, formally lodged a GST class ruling request to confirm the GST treatment of the various sale proceeds.

1. On 29 February 2016,  the ATO issued ‘Class Ruling - Income Tax: Liquidation - Great Southern Plantation and Gunns Plantations Limited Woodlot Schemes’ (‘Class Ruling’) which provided a legally binding guidance to Growers as to how any proceeds received in relation to the Schemes should be declared in their income tax return.  Mr Crosbie stated that the Class Ruling would benefit the Growers by resolving any queries they had in relation to declaring proceeds and  reduced the cost to the liquidators in having to deal with individual enquiries on this issue.

1. On 12 August 2016 the ATO issued a draft GST class ruling addressing the  Growers’ GST liability upon GPL disposing of GSP Scheme and GPL Scheme assets in its capacity as the responsible entity and making a subsequent distribution to the Grower.  The draft ruling concurred with the liquidators’ submission that the Growers were not making a taxable supply when GPL disposed of the relevant assets or when GPL made a distribution to Growers.  The effect of this was that:

(a)   Growers had no liability to pay GST in respect of these transactions; and

(b)   GPL would remit any GST in respect of these transactions.

1. The final ATO ruling was published on 15 September 2016.  Mr Crosbie stated that this ruling provided certainty to all parties and ensured that compliance costs were minimised in order to maximise distributions to Growers.  It also significantly reduced distribution costs because the liquidators were not required to calculate and remit payments for individual Grower’s GST liability to the ATO.

1. The engagement of PwC to advise on the issue of GST was the subject of strong criticism by Mr Musgrave. In his submissions, Mr Musgrave described himself as an indirect tax practitioner with over 15 years’ experience in that field.  He stated that that he had specialist knowledge in GST and stamp duty, he had worked in various professional services firms and was currently working as a taxation lawyer at a law firm in Sydney.  His central criticism of the liquidators was the need for and the cost of obtaining a GST class ruling from the ATO. The GST class ruling ultimately issued by the ATO was that GPL was not the agent of the Growers however Mr Musgrave contended that the issue was not one of any complexity and did not warrant the engagement or the expense of external specialists.

1. Mr Crosbie was asked in cross examination  by Mr Musgrave why, if ABL had been engaged as the liquidators’ lawyers, it was necessary to engage PwC given ABL’s expertise in taxation matters and incur the extra cost involved in engaging alternative advice. Mr Crosbie accepted that ABL had a taxation practice but stated that his co-liquidator, Mr Bryant, was concerned about ABL’s approach to the matter and wished to obtain the advice of PwC, a firm known by them as having specific expertise in GST.

1. The liquidators had remitted $3.850 million GST to the ATO with the December 2013 BAS and the advice of PwC was that this was most likely not the correct course of action.  PwC also advised that there were issues around whether the GST should be remitted by the Growers or by GPL as the responsible entity.  Mr Crosbie stated that the chief concern of the liquidators was that if a distribution was made and they had not allocated the tax appropriately, the ATO would look to the liquidators to meet the liability. It was considered that the risk was not insignificant and involved the potentially inappropriate dispersal of funds of the order of $8 million. During cross-examination, Mr Crosbie stated that PwC are experts in indirect taxation and the issues involved both legal and taxation considerations and PwC had accountants and lawyers versed in this area. Mr Crosbie stated that the ruling issued by the ATO enabled the liquidators to deal with the funds in a fashion which did not require them to administratively discern in each particular case what the incidence of GST would be and inform the Grower.

1. Mr Musgrave submitted that if ABL had been consulted, because the issue was so clear cut they would have promptly advised that there would be no GST payable in respect of the distribution of the sale proceeds. This is  because the majority of the Growers were not registered for GST and had no requirement to be registered by reason of the  GST turnover threshold of $75,000.00 a year, a figure greater than the potential distributions. In addition, Mr Musgrave contended that Mr Crosbie failed to track PwC’s charges against the original fee estimate when he should have done so.

1. I have considered Mr Musgrave’s criticisms and come to the conclusion that the engagement of PwC to advise and obtain the necessary rulings and guidance was an appropriate course to take in the circumstances. In my view, the liquidators were entitled to seek the highest level and best quality advice to protect themselves and the Gunns insolvency administration from an exposure to substantial liability to the ATO if they embarked on a distribution of sale proceeds which was not in accordance with the correct position. This involved the obtaining of a number of guidelines and rulings in order that an acceptable level of protection could be obtained by the liquidators. Towards the conclusion of the liquidation a decision had to be made as to the appropriate course to take in regard to the distribution of funds to the Growers. Mr Musgrave, with his expertise in the area of indirect taxation, may consider that the matters that the liquidators consulted PwC about involved no controversy or complexity but I accept the liquidators’ rationale for engaging PwC. My view in that regard is confirmed by my review of the documentation in regard to the involvement of PwC[30] in the ruling applications and the subsequent ATO rulings.

   [30]Exhibit CDC-8 to the affidavit of Craig David Crosbie sworn 6 March 2017.  This bundle of documents was provided to Mr Musgrove.

1. The PwC invoices  in respect of the work done by the liquidators together with correspondence regarding fees, memoranda of advice and documentation in relation to the dealings with the ATO including rulings were exhibited to Mr Crosbie’s affidavit of 6 March 2017.[31]  PwC gave a 20% discount rate on the hourly rates normally charged to clients  to the liquidators.

   [31]Exhibit CDC-8.

1. I have reviewed that material and in particular the narrative in PwC’s invoices which describes the nature of the work performed, as well as the applications for the rulings lodged by PwC and the rulings issued by the ATO. The fees charged are for work performed over a year long period from January 2015  to February 2016 and relate to both income tax and GST issues. The ruling application documentation is complex and in my assessment would have involved research, careful drafting and finessing before submission. The PwC tax invoices show that the fees charged are high but I consider that prima facie they are reasonable and were reasonably incurred by the liquidators. The amounts charged by PwC appear to be proportionate to the value provided to the liquidators by PwC when regard is had to the importance and complexity of the work performed and  the protection it afforded the liquidators from exposure to potential liabilities of several million dollars.

Resolution of Custodian accounts

1. The receivers asserted a claim in relation to the amount held in the custodian accounts for each of the Schemes (being the sum of $3,006,658.23 as at 8 April 2016) (‘Custodian Funds’).  To resolve the receivers’ claim, the liquidators undertook a reconciliation of the Custodian Funds to understand the source of the funds and thereby determine whether the funds were payable to the Growers or to GPL in its personal capacity (and therefore captured by the lenders’ charge to which the receivers were appointed).  The liquidators’ reconciliation resulted in a determination that $2,554,681.19 of the Custodian Funds were Grower funds and the remaining $450,081.67 were captured by the lenders’ charge.

General Scheme activities

Management of the Schemes

1. During the Relevant Period, the liquidators maintained the Schemes by:

(a)   preparing and maintaining the purchase order register and maintaining the cash flow model for GPL;

(b)   reviewing and maintaining the receipts and payments received in relation to the Schemes;

(c)    liaising with those GPL employees who were retained in order to undertake scheme related work, including assisting in addressing Grower and landowner queries and helping to prepare for distributions to be made;

(d)  assessing potential realisation opportunities for the trees on the plantations the subject of the Schemes; and

(e)   liaising and negotiating with the receivers in relation to invoices issued under the management services agreement.

Second Liquidation Costs Application and Third Liquidation Costs Application

1. During the Relevant Period, the liquidators:

(a)   applied to the Court and obtained directions in respect of scheme related costs incurred in relation to the Great Southern Schemes, the sale of assets associated with the Gunns Woodlot Schemes, and other Scheme related costs incurred during the period 1 December 2013 to 30 June 2014 (‘the Second Liquidation Costs Application’); and

(b)   commenced the preparation of documentation in support of this Costs application (‘Third Liquidation costs Application’).[32] 

[32]Fifth Crosbie affidavit [77]–[79].

1. Mr Crosbie deposed that the calculation of the costs the subject of the Second Liquidation Costs Application and the Third Liquidation Costs Application involved (i) an in‑depth and careful review by members of the staff of all PPBA timesheets (on a line‑by‑line basis), (ii) a detailed review of both the invoices issued to the liquidators for out‑of‑pocket expenses and the internal accounting database for overhead expenses, and (iii) the collation and preparation of the PPBA timesheets and summary spreadsheets of the total costs claimed, and of the remuneration, disbursements, legal costs, and third party costs in particular.[33]  It also involved anticipated costs relating to the notification to Growers of the Second Liquidation Costs Application, preparation for hearings in the Second Liquidation Costs Application and the provision of source documents to various individuals and groups.

   [33]Fifth Crosbie affidavit [80]–[85].

Stakeholder liaison

1. The liquidators kept Growers informed during the Relevant Period by releasing ‘grower updates’ and explanatory notices and maintaining the various Grower hotlines and email enquiry services in order to receive and respond to queries made by Growers (and often their financiers).  The liquidators liaised closely with GPL staff in relation to Grower queries and in seeking Grower and Third Party Landowner information required for Grower updates and mail‑outs.  The liquidators also called a meeting of the GPL Committee of Inspection in order to seek approval to enter into the necessary agreements to effect the Trust Company Sale, the TFE Sale, and the sale of the Tumbarumba Estate.[34]

   [34]Fifth Crosbie affidavit [102]–[104].

Scheme wind-up

1. During the Relevant Period, the liquidators commenced the winding up of the Schemes pursuant to s 601NC of the Act, on the basis that the Schemes could no longer achieve their purpose, by preparing and lodging ‘notices of intention to wind‑up’ for the Great Southern Schemes and the Gunns Woodlot Schemes with ASIC.[35]

   [35]Fifth Crosbie affidavit [105]–[107].

Liaising with ASIC

1. The liquidators continued to engage with ASIC by way of fortnightly teleconference updates in relation to various Scheme related matters.[36]

   [36]Fifth Crosbie affidavit [108]–[109].

Other administrative Scheme related activities

1. The liquidators undertook other general administrative Scheme related tasks, including establishing and maintaining Grower specific bank accounts, reviewing third party invoices, engaging in media relations, and attending internal strategy meetings and maintaining internal files.[37]

   [37]Fifth Crosbie affidavit [110].

Assessment of activities carried out by the liquidators in the Relevant Period

1. In relation to the period of administration, and in relation to the first and second phases of the period of liquidation, the types of costs categories as summarised on a task by task basis above were considered to give rise to a Universal Distributing[38] indemnity and lien.  In Thackray, similar types of costs categories (under the broader headings of operational costs, legal costs and liquidators’ remuneration) were regarded as giving rise to a Universal Distributing indemnity and lien.[39] 

   [38]Re Universal Distributing Company Ltd (in Liq) (1933) 48 CLR 171 (‘Universal Distributing’).

   [39]Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144 [72]–[74].

1. I have considered the evidence of Mr Crosbie contained in his fifth affidavit which is summarised above. I am satisfied that each of the tasks described and the expenses incurred, for which an indemnity and lien is claimed, can be characterised as relating exclusively to the care, preservation and realisation of the assets of the Schemes so as to give rise to a Universal Distributing lien. I also consider that the tasks were necessarily performed and that the liquidators acted reasonably in incurring the expenses and performing the work.   

Analysis of expenditure and remuneration

1. The liquidators must satisfy the Court that there was or is a sufficient nexus between the expenditure and remuneration on the one hand, and the liquidation of each particular Scheme on the other. 

The Liquidators’ allocation methodology

1. Where work was done by the liquidators in relation to more than one trust (or scheme), or work was done for one or more trusts as well as in relation to the general liquidation, the liquidators must estimate the costs and expenses incurred insofar as they relate to each trust and only charge those costs to the trust on whose behalf the work was performed.[40]

   [40]13 Coromandel Place Pty Ltd v CL Custodians Pty Ltd (in liq) (1999) 30 ACSR 377, 386.

1. Mr Crosbie deposes that the liquidators have allocated the work undertaken by applying the following methodologies with a view to ensuring each Scheme was only charged for the work relating to it:

(a)   ‘Method 1’ - costs which relate to some but not all of the Schemes.  It is proposed that these costs are allocated amongst the Schemes to which they related in proportion to the number of hectares in each scheme; [41]

[41]Fifth Crosbie Affidavit [135].

(b)   ‘Method 2’ - general scheme-related costs which were not referrable to any one or group of Schemes.  It is proposed that these costs are allocated amongst all Schemes in proportion to the number of hectares in each Scheme; [42]

[42]Fifth Crosbie Affidavit [135].

(c)    ‘Method 3’ was relevant to previous cost applications but has not been used in this application.[43]

[43]Fifth Crosbie Affidavit [135].

(d)  ‘Method 4’ - costs relating to the sale of the various assets.  It is proposed that these costs are allocated amongst the Schemes to which each sale related in proportion to the proceeds of sale received for each scheme;[44]

(e)   ‘Method 5’ - costs relating to Third Party Land.  It is proposed that these costs be allocated amongst the Schemes which operated on land owned by Third Party Landowners in proportion to the number of hectares of land owned by Third Party Landowners in each Scheme;[45]

(f)     ‘Method 6’ - distribution costs.  It is proposed that these costs are allocated amongst the Schemes in proportion to the number of Growers receiving a distribution in each Scheme.[46]

[44]Fifth Crosbie Affidavit, [136].

[45]Fifth Crosbie Affidavit, [149(b)].

[46]Fifth Crosbie Affidavit, [158].

1. As mentioned in paragraph 25 above, each of the Gunns Woodlot Schemes offered investors multiple options,[47] with each Scheme Option effectively being treated as a separate scheme.[48]  In light of this, the liquidators propose that for the Gunns Woodlot Schemes, each of the methods identified are broken down again between each Scheme Option as follows:

   [47]Fifth Crosbie Affidavit, [138]. No such options were offered in the GSP Schemes.

   [48]Fifth Crosbie Affidavit, [138]–[139].

(a)        ‘Method 1A’ - This methodology is a variation of Method 1.  Method 1 involves the allocation amongst the Schemes to which the cost relates on a per hectare basis.  Method 1A involves the allocation amongst the Scheme Options to which the cost relates on a per hectare basis. 

(b)        ‘Method 2A’ - This methodology is a variation of Method 2. Method 2 involves the allocation amongst all Schemes on a per hectare basis.  Method 2A involves the allocation amongst all Scheme Options on a per hectare basis; and

(c)        ‘Method 4A’ - This methodology is a variation of Method 4.  The Sale Costs  (excluding the Third Party Landowner Costs) incurred during the Relevant Period are allocated between the Scheme Options in proportion to the sale proceeds allocated to each of the Scheme Options of the relevant sale to which those costs relate.[49]

[49]Fifth Crosbie Affidavit, [141].

1. The liquidators’ summary[50] breaks down the proposed allocations by reference to the Scheme Options and methods categories described.

   [50]Exhibit CD-5 to the fifth Crosbie affidavit.

1. Mr Crosbie details in his affidavit what specific methodology would be applied to  the various categories of costs, being Sale costs,[51] Third Party Landowner Sale Costs,[52] Non Sale Costs,[53] Distribution Costs,[54] Taxation Issues Costs,[55] Custodian account Costs,[56] General Scheme Costs,[57] Winding Up Costs,[58] and the costs incurred or anticipated to be incurred from 1 June 2016 until the Scheme are wound up or the liquidation ends (‘Future Costs').[59]

   [51]Fifth Crosbie Affidavit [143]–[148].

   [52]Fifth Crosbie Affidavit [149]–[153].

   [53]Fifth Crosbie Affidavit [154]–[157].

   [54]Fifth Crosbie Affidavit [158]–[159].

   [55]Fifth Crosbie Affidavit [160]–[162].

   [56]Fifth Crosbie Affidavit [163]–[164].

   [57]Fifth Crosbie Affidavit [165]–[168].

   [58]Fifth Crosbie Affidavit [169]–[170].

   [59]Fifth Crosbie Affidavit [171].

1. In my opinion, the proposed allocation process, to be conducted by reference to the methodologies detailed in Mr Crosbie’s affidavit to the several categories of costs mentioned, across the Schemes appears to be appropriate, fair and reasonable. It follows the types of methods of allocation which have been endorsed by the Court in Thackray[60] and also in the previous applications by the liquidators in relation to the Gunns Schemes.[61]

   [60]Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144, [75](f).

   [61]The administration application [17]-[18] (Ferguson J); the first liquidation application [87], [102] (Judd J); my earlier reasons [79].

Summary spreadsheet for the Relevant Period

1. The total costs for the Great Southern Schemes for the period of liquidation during the Relevant Period from 1 July 2014 to 31 May 2016 is $3,615,459.08 plus GST.[62] 

   [62]Fifth Crosbie affidavit [112].

1. The total costs for the Gunns Woodlot Schemes for the period of liquidation during the Relevant Period is $5,962,416.09 plus GST.[63]

   [63]Fifth Crosbie affidavit [112].

1. These  amounts are the subject of the liquidators’ present claim for indemnity and lien.

1. Following the process adopted in the previous applications,[64] the liquidators sought a direction that they be permitted to adduce the evidence in respect of the expenditure and remuneration in the form of summary spreadsheets,[65] as contemplated by s 50 of the Evidence Act, rather than be required to provide copies of all supporting documents including receipts, time sheets, and invoices.  The source documents[66] are even more voluminous than those the basis of the previous applications. It was submitted that it would not otherwise be possible to conveniently examine the evidence because of the volume and complexity of the documents in question and I agree.[67]

   [64]See my earlier reasons [40].

   [65]Exhibit CDC–5 to the Fifth Crosbie Affidavit.

   [66]See described in the Fifth Crosbie Affidavit [173].

   [67]See s 50(1) of the Evidence Act.

1. The liquidators have followed the procedure set out in section 50 of the Evidence Act, namely by (a) serving on each other party of a copy of the summary that discloses the name and address of the person who prepared the summary;[68] and (b) providing each other party with a reasonable opportunity to examine or copy the documents in question. The summary spreadsheets were compiled by Ms Louise Downie of the liquidators’ staff and provide a breakdown of the following:

   [68]Exhibit CDC–5 to the Fifth Crosbie Affidavit.

(a)   PPBA’s remuneration in respect of the Great Southern Schemes (‘GSP Remuneration Summary’) and the Gunns Woodlot Schemes (GPL Remuneration Summary);

(b)   PPBA’s disbursements in respect of the Great Southern Schemes (‘GSP Disbursement Summary’) and the Gunns Woodlot Schemes (‘GPL Disbursement Summary’);

(c)    Legal Costs in respect of the Great Southern Schemes (‘GSP Legal Cost Summary’) and in respect of the Gunns Woodlot Schemes (‘GPL Legal Cost Summary’);

(d)  Third Party Costs in respect of the Great Southern Schemes (‘GSP Third Party Cost Summary’) and in respect of the Gunns Woodlot Schemes (‘GPL Third Party Cost Summary’); and

(e)   the Future Costs for each of the Schemes.[69]

[69]Fifth Crosbie Affidavit [172].

1. In respect of that exercise, Mr Crosbie deposes that Ms Downie had regard to the following:[70]

   [70]Fifth Crosbie Affidavit [173].

(a)   PPBA’s timesheets for the GSP Remuneration Summary and the GPL Remuneration Summary;

(b)   invoices issued to the liquidators (for out-of-pocket expenses) and their internal accounting database (for overhead expenses) for the GSP Disbursement Summary and the GPL Disbursement Summary;

(c)    ABL’s invoices to the liquidators for the GSP Legal Cost Summary and the GPL Legal Cost Summary;

(d)  invoices issued to the liquidators for the GSP Third Part Cost Summary and the GPL Third Party Cost Summary;

(e)   the assumptions set out in paragraphs 118 to 130 of the Fifth Crosbie Affidavit; and

(f)     a PPBA memorandum directed to the issue of Future Costs estimations  (comprising exhibit ‘CDC-4’ to Mr Crosbie’s fifth affidavit).

1. Each of the persons served with the court documents was given a copy of the summary and a reasonable opportunity to inspect the documents.

1. In the previous applications, the Court made directions under section 50 in similar circumstances.[71]  Such a direction was also made in the application by the receivers of the Great Southern Schemes.[72]

   [71]The administration application [12]–[14] (Ferguson J); the first liquidation application [104] (Judd J); my earlier reasons [40]–[49].

   [72]Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144, [65]–[71].

1. In applications by insolvency practitioners for remuneration, the court would ordinarily expect detailed evidence of the type described in Venetian Nominees v Conlan[73] to enable it to assess whether the claim is reasonable. In these circumstances, however, I consider that the only practical way to deal with the volume of the evidence in respect of remuneration and expenditure is by resort to the use of the section 50 summary regime. It is simply not practicable for the court to examine the overwhelming volume of material making up the source documents which contain thousands of entries. I am satisfied that the source data has been appropriately maintained and recorded by the liquidators and their solicitors from which the s 50 summaries could be prepared.

   [73](1998) 20 WAR 96.

1. I will make the order sought by the liquidators in respect to the use of the summaries. Notwithstanding this, I have, as I did in the previous application which came before me,[74] called for and been provided with the several volumes of source documents from which I directed my associate to randomly select 200 entries involving a claim for a cost or remuneration in excess of $750. I then proceeded to consider whether, on a prima facie basis, the claim for each task appeared to be in order.

   [74]My earlier reasons [32].

The claim for remuneration, disbursements, legal costs and third party costs

1. The GSP Scheme Related Costs during the Relevant Period for which the liquidators claim a lien is comprised of the liquidators’ remuneration, disbursements, legal costs, and other third party costs as follows:

Item	Amount ($) (excl GST)
	Great Southern Schemes
PPBA Time Costs	2,164,078.00
PPBA Disbursements	41,751.45
Legal Costs	281,564.41
Third Party Costs	1,128,065.22
Total Claimed GSP Scheme Related Costs ($) (excl GST)	3,615,459.08

1. The GPL Scheme Related Costs incurred during the Relevant Period is comprised of the liquidators’ remuneration, disbursements, legal costs, and other third party costs as follows:

Item	Amount ($) (excl GST)
	Gunns Woodlot Schemes
PPBA Time Costs	3,086,352.50
PPBA Disbursements	57,820.00
Legal Costs	1,024,787.06
Third Party Costs	1,793,456.53
Total Claimed GPL Scheme Related Costs ($) (excl GST)	5,962,416.09

1. A small proportion of the legal costs referred to in paragraphs [81] and [82] above relate to Scheme related costs incurred before the Relevant Period.  Those costs are included in this application (as opposed to earlier costs applications) either because they are legal disbursements incurred prior to the Relevant Period but only billed to the liquidators during the Relevant Period, or because they were inadvertently omitted from the earlier costs applications.

1. An analysis of the summary spreadsheet of the Scheme related remuneration and costs incurred during the Relevant Period reveals the following:

Liquidators’ remuneration

1. The remuneration of the liquidators and their staff (PPBA) claimed in this application comprises:

(a)   $2,164,078.00 for work relating to the Great Southern Schemes carried out in the Relevant Period from 1 July 2014 to 31 May 2016 (being a period of 23 months);

(b)   $3,086,352.50 for work relating to the Gunns Woodlot Schemes carried out in the Relevant Period from 1 July 2014 to 31 May 2016.[75]

The allocation of such costs among the Schemes is summarised on the second page of the spreadsheet in accordance with the methodology describes in paragraphs [66] and [67] above.

[75]Exhibit CDC-5 to the Fifth Crosbie Affidavit.

1. Mr Crosbie states that the scale of fees charged by the liquidators has remained constant throughout the liquidation;  the fees have not increased since the liquidators’ appointment four years ago, despite the level of fees being charged by insolvency practitioners increasing during that period.[76]  He states that the rates are comparable to other large national corporate restructuring and insolvency firms.[77] I consider that the rates charged are comparable with those that I have had occasion to review which are  appended to liquidators’ consents to act which are filed in the Corporations List of this court in the winding up jurisdiction, albeit at the higher end.

   [76]Fifth Crosbie Affidavit [181].

   [77]Fifth Crosbie Affidavit [180].

1. Mr Crosbie deposes that during the Relevant Period, the liquidators allocated tasks within PPBA to the staff member with the appropriate level of experience.  The liquidators have provided a breakdown of remuneration during the Relevant Period by level of experience and charge out rate.[78]

   [78]Fifth Crosbie Affidavit [184].

1. Based on the liquidators’ timesheet entries, most of the remuneration claimed by them during the Relevant Period was respectively undertaken by the following levels of the hierarchy in PPBA:

Position	Hourly Rate	% of remuneration (rounded to the nearest %)
Liquidator/partner	$675	14.12%
Senior Manager	$510	21.95%
Manager	$465	11.24%
Assistant Manager	$445	6.94%
Senior Analyst	$395	27.43%
Analyst 1[79]	$310	9.67%

[79]It was indicated in oral submissions that an analyst is the level in the hierarchy immediately above a graduate.

1. In my view, the spread of delegated tasks is what one would expect to see in this level  of insolvency administration.

1. Mr Crosbie states that none of the PPBA fees the subject of this application (some being incurred almost 3 years ago) have been paid.[80]

   [80]Fifth Crosbie Affidavit, [185].

1. He further deposes that the liquidators have continued to calculate their fees on a time based methodology (i.e., hourly rates) and that he considers this to be the most reasonable method.  He says that due to the complexity of the liquidation and, in particular, the scheme structure, it has not been possible to reasonably estimate what work will be required.  Accordingly, it would not have been possible to offer a fixed fee model.  Also, many of the tasks cannot be correlated with value because some tasks are necessary even if they do not generate any return at all (for example, Grower liaison); other tasks have benefited Growers despite not generating a return (for example, resolving claims with Third Party Landowners).  Accordingly, Mr Crosbie is of the opinion that a fee model based on returns was not appropriate.[81] 

   [81]Fifth Crosbie Affidavit, [180].

1. He observes that the charge out rates were considered by Judd J in the first liquidation application in 2014 and found to be reasonable and proper.[82]  Those rates remain unchanged. 

   [82]At [106].

1. Mr Burdon who was a grower in Gunns plantations and who owned a number of woodlots renewed the criticisms that he made before me in relation to the liquidators’ claims for remuneration in the previous application.  His submissions in the previous applications are referred to in my earlier reasons.[83]  He filed a written submission and made oral submissions at the hearing of this application.  The central focus of his submissions was the level of fees charged by PPBA coupled  with  sharp criticism of the insolvency administration of Gunns conducted by the liquidators.  He described “the margin” as he called it applied to the fees as being extortionate.  He criticises the Grower Committee as being elusive and not able to be contacted by Growers.  He submitted that much of the work conducted by the liquidators’ staff could have been much more economically achieved by outsourcing to similarly qualified contracted professionals.  In his submissions[84] he stated:

…PPBA’s hourly rates are staggeringly high for the positions described; that the majority have no associated liquidation licence, and carry no particular or associated professional liability; that they are not filled by individuals making important judgments and setting precedents; that their work is no more complex than professionals working in a similar capacity in other industries; the large liquidation should give reason for a reduction in fees not an increase, and that the application should be based on daily rates rather than hourly ones.

[83]My earlier reasons [27]–[29].

[84][15].

1. His other criticisms of the liquidators include the engagement of PwC which was the subject of Mr Musgrave’s submissions and that the outcomes for Growers are ‘appallingly poor’.  Mr Burdon elaborated at length on these matters in his oral submissions. 

1. As I emphasised to Mr Burdon both in this and the previous application, this application is not an occasion for voicing general disenchantment with the financial outcome of the insolvency administration.  Rather my task as it was in the previous applications and those that were conducted before Ferguson J and Judd J was to determine whether the remuneration and costs were fair and reasonable and proportionate to the tasks undertaken. 

1. Mr Crosbie has explained why the liquidators have made application for their fees on a time based hourly rates basis. This is outlined in paragraph [91] above including why a fixed fee or alternatively realisation basis was not practicable. 

1. The Gunns insolvency administration is at the  high end of the complexity spectrum.  As Judd J observed in the first liquidation application[85] there were 18 forestry schemes conducted in all six states and 226,000 hectares of land under management.  There were thousands of individual Growers and the documentation in respect of the schemes is complex.  The liquidation of such an enterprise involves high levels of responsibility and technical expertise.  As I have said previously, the hourly rates charged by insolvency practitioners are to a lay person extraordinary but they are in my assessment within the range of the ‘market’ and those fees have not increased since the beginning of the Gunns insolvency administration. 

   [85]At [76].

1. Until several years ago this Court published practice notes[86] which provided a recommended guide for  the hourly rates of remuneration for insolvency practitioners but this no longer occurs.  In my experience dealing with remuneration applications in this State, the quantum of remuneration  is  almost invariably based on time based charging and the practice has become almost imbedded as the default method of calculation by the insolvency practitioners and the courts considering such applications..  To my mind despite the high hourly rates claimed there is no obvious alternative which would work a more economic result.

   [86]See for example Practice Note No.2 of 1995

1. In McPherson’s Law of Company Liquidation,[87] the author opines:[88]

In Australia the time basis of assessment appears to be more common; but in England it has been said that the courts favour the percentage basis because this means that remuneration is calculated according to results achieved – a small estate pays a small sum and a large estate a large sum, depending on the amount of the divisible assets.  Some misgivings have been expressed in relation to the use of time costing but despite the fact that it has been said that the time spent by the liquidator and her or his staff affords a most unreliable test which is to be used only where the assets realised are so small that assessment on a percentage basis would not operate to give a fair remuneration for the work involved, or where the administration is ‘complex or large’, it is probably too late in the day for it to be dispensed with.  …  The courts have in the past accepted as reasonable the hourly rates recommended by the Australian Restructuring Insolvency and Turnaround Association (‘ARITA’) (previously Insolvency Practitioners Association of Australia), and those rates have been used increasingly in court liquidations.  But the courts are not in any event bound to apply those rates.  In Victoria, the rates set out in the ARITA guide were applied prima facie.  The rates referred to in the guide may be discounted in some circumstances, for example the guide implies that rates lower than those recommended might well be appropriate in the case of quite small companies where there are no special circumstances increasing the level of responsibility imposed on the practitioner.  The ARITA scale has, however, not been updated since 2000, and has not been replaced by any other set scale, with ARITA recommending to members that they use their usual hourly rates.  The absence of any up to date and generally accepted method of determining appropriate amounts for liquidators remuneration causes uncertainty and other difficulties.  It is submitted that would be appropriate for the legislature to intervene and set an appropriate basis for remuneration (whether by percentage, updated hourly rates or some other means) by regulation. 

[87]Thompson Law Book Company, Gronow.

[88]At [8.2470] (citations omitted).

1. Until the legislature formulates a different methodology for remuneration of insolvency practitioners the time based method is the standard basis for assessing the claims of insolvency practitioners for remuneration.

1. I do not think it practicable as Mr Burdon suggests that substantial costs savings would take place if the liquidators’ outsourced tasks.

1. I have conducted a random survey of PPBA’s timesheets for the period 1 July 2014 to 31 May 2016 which are contained in exhibit CD-6 of Mr Crosbie’s 6 March affidavit and from the entries that I have sampled the charges levied for the work performed appear to be prima facie reasonable and the tasks carried out by persons of the appropriate level in the hierarchy of PPBA.  I consider that the hourly rates charged by PPBA are fair and reasonable and proportionate to the responsibility of tasks undertaken by them in the Gunns administration.  On occasion in remuneration applications the amounts claimed are reduced by percentage amounts  but I can see no reason for doing that in this instance.

1. In my view the liquidators have established a prima facie entitlement to an indemnity and lien for the remuneration they have claimed for the period up until 30 May 2016. I shall deal with the claim for future costs and remuneration later in these reasons.

Liquidators’ disbursements

1. The disbursements the liquidators and their staff (PPBA) have claimed in this application comprise:

(a)   $41,751.45 for disbursements relating to the Great Southern Schemes carried out in the Relevant Period from 1 July 2014 to 31 May 2016;

(b)   $57,820.00 for disbursements relating to the Gunns Woodlot Schemes carried out in the Relevant Period from 1 July 2014 to 31 May 2016.[89]

[89]Fifth Crosbie Affidavit [172(b)(ii)], exhibit CDC–5, third page headed ‘PPBA disbursements’.

1. The disbursements relate to out-of-pockets (eg travel costs to attend landowner meetings, advertising costs, mail house costs to post updates to Growers) and overheads (eg, photocopying, printing, postage).[90]  

   [90]Fifth Crosbie Affidavit [186].

1. The disbursements incurred during the Relevant Period are broken down into the following categories:

(a)   travel costs incurred by PPBA staff, including the costs associated with travelling to landowner meetings to update and negotiate with landowners (30%);

(b)   IT consumables and hosting costs (35%);

(c)    photocopying and printing costs (13%);

(d)  postage costs and fees charged by mailing houses for mail-outs to Growers, including advertising costs (19%); and

(e)   stationery and storage costs (3%).[91]

[91]Fifth Crosbie Affidavit [186].

1. The third page of the summary spreadsheet shows the allocation of such disbursements amongst the Schemes using methodology detailed in paragraphs [66] and [67] and I consider that this is a reasonable method of allocation.

1. In my view the liquidators have established a prima facie entitlement to an indemnity for the disbursements they have claimed for the period up until 30 May 2016. I shall deal with the claim for future disbursements later in these reasons.

Legal costs

1. The legal costs charged by ABL and  claimed in this application are as follows :

(a)   $281,564.41 for legal work relating to the Great Southern Schemes carried out in the Relevant Period from 1 July 2014 to 31 May 2016;

(b)   $1,024,787.06 for legal work relating to the Gunns Woodlot Scheme carried out in the Relevant Period from 1 July 2014 to 31 May 2016.[92]

[92]Fifth Crosbie Affidavit [172(b)(iii) and page 4 of exhibit CDC-5].

1. Those legal costs are further broken down in the summary spreadsheet as follows :

(a)   General Scheme related costs totalling $135,573.39 for the Great Southern Schemes and $114,159.75 for the Gunns Woodlot Schemes[93] (it is proposed to allocate these costs partly under method 1 and partly under methods 2 and 2A described earlier in these reasons);

[93]Exhibit CDC-5 to the Fifth Crosbie Affidavit.

(b)   AFP Receivers and Forestry Tasmania related costs totalling $71,425.50 for the Gunns Woodlot Schemes only;[94] (it is proposed to allocate these under method 1A);

(c)    third party costs totalling $131,570.74 for the Great Southern Schemes and $177,303.90 for the Gunns Woodlot Schemes (it is proposed to allocate these under methods 5 and 5A respectively);[95] and

(d)  costs relating to the sale totalling $14,420.28 for the Great Southern Schemes and $661,897.91 for the Gunns Woodlot Schemes[96] (it is proposed to respectively allocate these under methods 4 and 4A).

[94]Exhibit CDC-5 to the Fifth Crosbie Affidavit.

[95]Exhibit CDC-5 to the Fifth Crosbie Affidavit.

[96]Exhibit CDC-5 to the Fifth Crosbie Affidavit.

1. The fourth page of the spreadsheet sets out the proposed allocation of those costs amongst the Schemes using methodology described above and I consider this to be a reasonable method of allocation of legal costs. 

1. The legal costs have been charged in relation to a very complex insolvency administration which has run for several years.  In my view, the retainer has called for a level of legal expertise considerably above the level found in the average run of the mill insolvency administration.  The charge out rates are set out in the Fifth Crosbie Affidavit.[97] Those rates have marginally increased from those previously charged. Mr Crosbie deposes that he has been informed by Ms MacKay of ABL and verily believes that ABL’s charge out rates are currently:

   [97]At [190].

Position	($) Per/Hr (excl GST)
Partner	760 – 925
Senior Associate	580 – 700
Lawyer	465 – 555
Law Graduate	365
Legal Executive/Paralegal	200 – 500

1. Mr Crosbie states that from his experience, these rates remain comparable to other large corporate law firms and reflect the skill level required for a complex insolvency administration of this nature.[98] 

   [98]Fifth Crosbie Affidavit [191].

1. ABL’s charge out rates were considered by Judd J in the first liquidation application.  His Honour pointed out that the legal costs had been charged by a reputable legal firm experienced in insolvency work[99] in a very large and complex insolvency administration.[100] He found the rates to be reasonable and proper.[101]  The charge out rates were also considered by me in the Second Liquidation Costs Application and found to be reasonable and proportionate to the services undertaken.[102]

   [99]First liquidation application [106].

   [100]First liquidation application [76].

   [101]First liquidation application [106].

   [102]My earlier reasons [79].

1. None of ABL’s Legal Costs the subject of this application have been paid and ABL has not charged any interest on these amounts. No claim is made in respect of ABL fees which are not related to the Schemes.

1. I have conducted a random survey of ABL’s timesheets which are contained in exhibit CD-6 of Mr Crosbie’s 6 March affidavit and from the entries that I have sampled the charges levied for the work performed appear to be prima facie reasonable and the tasks carried out by persons of the appropriate level in the hierarchy of ABL. In my view the liquidators have established a prima facie entitlement to an indemnity for the legal costs that  they have claimed for the period up until 30 May 2016. I consider the method of allocation proposed to be  fair and reasonable. I shall deal with the claim for future legal costs  later in these reasons.

Third party costs

1. The third party costs comprise expenditure on maintenance costs, office costs, costs of storage of Scheme records, and professional costs incurred by Ents Forestry, URS and PwC during the Relevant Period.[103]  In relation to the Great Southern Schemes, the total figure is $1,128,065.22.[104]  In relation to the Gunns Woodlot Schemes, the total figure is $1,793,456.53.[105]  It is proposed to allocate these partly by methods 1 and 1A and partly by methods 2 and 2A.[106]

   [103]Fifth Crosbie Affidavit [195].

   [104]Fifth Crosbie Affidavit [172(b)(iv)].

   [105]Fifth Crosbie Affidavit [172(b)(iv)].

   [106]Exhibit CDC-5 to the Fifth Crosbie Affidavit.

1. I have conducted a random survey of the Third Party invoices  which are contained in exhibit CD-6 of Mr Crosbie’s 6 March affidavit and from the invoices that I have randomly sampled the amounts billed for the work performed or services supplied appear to be prima facie reasonable.

1. In my view the liquidators have established a prima facie entitlement to an indemnity and lien for the third party costs that they have claimed for the period up until 30 May 2016 and I consider the method of allocation proposed to be  fair and reasonable.  I shall deal with the claim for future third party costs  later in these reasons.

Claim for Future Costs

1. In addition to seeking orders in respect of actual Scheme costs incurred from 1 July 2014 to 31 May 2016, the liquidators also seek orders in respect of the Scheme related costs they have incurred and/or anticipate incurring from 1 June 2016 until the Schemes are wound up and/or the liquidation of GPL ends (‘Future Costs’).

1. In order to calculate the amount to be distributed to Growers, it is necessary for the liquidators to know the total quantum of Scheme related costs, including the Future Costs, to be deducted from the proceeds prior to such distribution.

1. The broad topics in respect of which the liquidators have already incurred since 31 May 2016, and that they anticipate will be incurred, for Future Costs in relation to the Schemes can be  summarised as follows:

(a)   the costs of this application;

(b)   finalising the settlement deed in relation to the compromise of the Restitution Claim, and the associated Court application;

(c)    finalising the GST tax ruling;

(d)  maintenance and monthly reconciliation of the 43 bank accounts, as well as bank fees charged on those accounts;

(e)   continuing negotiations with a Third Party Landowner in respect of final harvest activities for trees on land owned by a Third Party Landowner, and also seeking to reach agreements with certain remaining Third Party Landowners;[107]

[107]Fifth Crosbie Affidavit [55].

(f)     correspondence and negotiations with the Receivers regarding maintenance and service costs and related interest;

(g)   preparing for and monitoring distributions to Growers;

(h)   preparing Grower updates and dealing with Grower queries;

(i)     keeping the GPL office open and staffed until about 30 June 2017 (it is anticipated that the GPL staff will continue until about 30 June 2017 to assist the liquidators with responding to Grower queries and document requests, as well as general Scheme winding up tasks);

(j)     reporting to ASIC and responding to ASIC enquiries;

(k)   winding up the Schemes, including preparation of financial reports for each Scheme.[108]

[108]Fifth Crosbie Affidavit [126].

1. These types of costs categories were regarded as giving rise to a Universal Distributing indemnity and lien in relation to the earlier costs applications for the period of administration and the first and second phases of the liquidation,[109] and also in Great Southern.[110]

   [109]The administration application, [15]–[16] (Ferguson J); my earlier reasons [36], [83].

   [110]Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144 [83]-[86].

1. In Re Traditional Values Management Ltd (in liq) (No 4),[111] in the context of an application for prospective costs, I stated:

[T]he terms of s 473(10), which were introduced by the Corporations Amendment (Insolvency) Act 2007 (Cth), clearly contemplate that a court, when going about the exercise of determining a liquidator’s remuneration, can, if adequate evidence and information is provided, determinate a liquidator’s remuneration prospectively. … Provided there is adequate evidence to ascertain whether the prospective remuneration sought is reasonable, I would consider it appropriate to make a determination or award for such prospective remuneration.[112]

[111][2016] VSC 520.

[112][2016] VSC 520 [64].

1. Prospective remuneration orders have also been made in other cases, for example, in the liquidation of Willmott Forests Limited.[113]  I consider that it is appropriate to make the orders sought in respect of future costs.  I was initially to do so but I am satisfied that there is adequate evidence to enable me to be satisfied that the amounts sought are reasonable.  The making of such an order also avoids what are very costly applications to the Court at a later time.  The liquidators, being registered liquidators, are offices of the Court and are no doubt very mindful of their responsibilities in relation to the incurring of such future costs. 

   [113]Order made on 26 November 2012 by Randall AsJ in proceedings S CI 2011 6762 and S CI 2011 6816.

1. The liquidators have filed detailed evidence in respect of the incurred and anticipated Future Costs, including the memorandum of assumptions and calculations forming exhibit CDC-4 to the Fifth Crosbie Affidavit.

1. The liquidators’ evidence in relation to Future Costs reveals the matters summarised below.

1. The total Future Costs, incurred and anticipated, for the Great Southern Schemes for the period of liquidation from 1 June 2016 until the end of the Great Southern Schemes and/or the liquidation of GPL ends, is estimated to be  $3,021,819.80 plus GST.[114]

   [114]Fifth Crosbie Affidavit [116].

1. The total Future Costs, incurred and anticipated, for the Gunns Woodlot Schemes for the period of liquidation from 1 June 2016 until the end of the Gunns Woodlot Schemes and/or the liquidation of GPL ends, is $2,975,461.12 plus GST.[115]

   [115]Fifth Crosbie Affidavit [117].

1. Mr Crosbie states that the liquidators will only charge to the Schemes the Future Costs that are actually incurred.[116] That is to say, as one would expect, if the costs actually incurred are less than the Future Costs estimates, the liquidators will only charge the actual costs.[117]  If that is the case and there are surplus funds after the Schemes and/or GPL are wound up, it is the liquidators’ intention that:

(a)   if there are sufficient funds, they will be distributed to Growers; and

(b) if the surplus funds available for distribution are less than the costs of distributing those funds to Growers and such distribution is therefore uneconomic, they will be treated as undistributed money under section 601NG of the Corporations Act 2001 (Cth) and I consider that this is an appropriate course.[118]

[116]Fifth Crosbie Affidavit [118].

[117]Fifth Crosbie Affidavit [118].

[118]Fifth Crosbie Affidavit [118].

1. The liquidators contend that the Future Costs relate to the Schemes and are reasonable, and accordingly fall within direction 5 of Ferguson J’s orders of 9 September 2013.[119]

   [119]See above n 17.

1. The liquidators’ application for Future Costs is limited to remuneration and expenses incurred or expected to be incurred in relation to the Schemes.  The amounts claimed in this application as Future Costs do not include remuneration and expenses relating to the general costs of the liquidation.

1. Exhibit CDC-4 is a detailed memorandum prepared by the liquidators, setting out the assumptions and calculations used by the liquidators in calculating the Future Costs.  A summary of the analysis of the memorandum reveals the following matters.

Liquidators’ remuneration

1. The liquidators estimate that their remuneration during the Future Costs period (ie, from 1 June 2016 until the Gunns Woodlot Schemes and Great Southern Schemes are wound up and/or the liquidation of GPL ends) comprises:

(a)   $1,758,512.97 for Future Costs relating to the Great Southern Schemes;[120]

(b)   $1,954,839.47 for Future Costs relating to the Gunns Woodlot Schemes.[121]

[120]Fifth Crosbie Affidavit [116].

[121]Fifth Crosbie Affidavit [117].

1. Classified by task, the liquidators anticipate their own and their staff’s Future Costs will be spread as follows across the following tasks:

(a)   GST tax ruling resolution, including corresponding with the ATO, reviewing draft rulings, reviewing the final ruling and preparing an update on the effect of the ruling - $12,276.00;

(b)   resolution of the Restitution Claim, including finalising the settlement deed and applying to the Court for orders - $45,270;

(c)    general Scheme tasks, including maintenance and reconciliations of bank accounts, negotiations with banks, managing the Gunns hotline, correspondence with stakeholders (including Growers, Grower loan financiers, land owners), negotiating recovery of remaining debts, managing GPL staff, team meetings, scheme documentation management, and preparing of statutory reports - $1,549,945.43;

(d)  negotiating and managing final harvest and reconciling harvest proceeds - $10,350;

(e)   reporting to ASIC, including fortnightly calls - $21,606.86;

(f)     preparing, filing, and attending this costs application - $159,870.00;

(g)   remuneration modelling, monitoring and allocation - $591,854.57;

(h)   winding up the Schemes - $248,136.00;

(i)     resolving the 184 outstanding private landowner leases as at 1 June 2016 - $358,248.00;

(j)     distributing proceeds, including preparing distribution models, preparing mail outs to Growers, answering Grower questions, reconciliations - $715,795.58.[122]

[122]Exhibit CDC-4 to the Fifth Crosbie Affidavit.

1. The liquidators’ estimate of its remuneration during the Future Costs period includes an administration fee in the sum of $150 in respect of each Grower who has an unresolved competing claim with their financier in relation to an entitlement to distribution proceeds (a ‘competing claim’).[123] There are 2041 Growers with loans.[124]  The fee represents the liquidators’ best estimate of the cost of the work that they will be required to undertake in order to deal with the unresolved competing claims.  The fees will be charged directly to the relevant Grower and not the Scheme.  The liquidators consider that a competing claim will very likely arise where a Grower has not provided a ‘direction to pay form’ at the date of distribution, or where a Grower has provided a ‘direction to pay form’ but the direction is inconsistent with Grower financier records.[125]  There are 1679 Growers who fall into either of those categories.[126]  In competing claim circumstances, the liquidators estimate they will incur the $150 in each instance, in order to:

   [123]Fifth Crosbie Affidavit [120].

   [124]Fifth Crosbie Affidavit [121(a)].

   [125]Fifth Crosbie Affidavit [122].

   [126]Fifth Crosbie Affidavit [123].

(a)   confirm the validity of the direction to pay received;

(b)   liaise with financiers to confirm loan balances;

(c)    if a Grower indicates only part payment of their distribution is to be directed to the financier, ascertaining with the Grower and/or financier the reasons for only part payment being directed; and

(d)  providing instructions particular to each case to the third party service provider to process the distribution.[127]

[127]Fifth Crosbie Affidavit [120].

1. The liquidators’ evidence details further how they derived the $150 estimate.[128]

   [128]Fifth Crosbie Affidavit [121]–[124].

1. In his submissions Mr Musgrave objected to the exaction of this fee, but I consider that it is fair and appropriate to only levy the  Growers concerned rather than charge the general body of Growers, most of whom do not fall into these categories, for this expense.  I consider the amount to be charged to be reasonable having regard to the work involved.

Liquidators’ disbursements

1. The liquidators’ disbursements (ie, PPBA disbursements) that the liquidators estimate will be incurred as Future Costs comprise:

(a)   $85,642.44 for disbursements relating to the Great Southern Schemes;[129]

(b)   $50,681.51 for disbursements relating to the Gunns Woodlot Schemes.[130]

[129]Fifth Crosbie Affidavit [116].

[130]Fifth Crosbie Affidavit [117].

1. The liquidators’ estimate of disbursements for the Future Costs period covers general PPBA disbursements (including printing, scanning, photocopying, postage, couriers, stationary, storage, travel, and IT server maintenance), distribution disbursements (including postage charges) and scheme winding up disbursements.[131]

   [131]Exhibit CDC–4 to the Fifth Crosbie Affidavit 9, 10.

Legal costs

1. The legal fees and disbursements of the liquidators’ lawyers (ABL) that the liquidators estimate will be incurred as Future Costs comprise:

(a)   $118,867.83 for legal fees and disbursements relating to the Great Southern Schemes;[132] and

(b)   $238,632.17 for legal fees and disbursements relating to the Gunns Woodlot Schemes.[133]

[132]Fifth Crosbie Affidavit [116].

[133]Fifth Crosbie Affidavit [117].

1. The liquidators’ estimate of legal fees and disbursements for the Future Costs period covers general legal costs (including legal advice and representation to finalise the tax ruling and to wind up the Schemes, representation in this costs application, and reviewing and advising on stakeholder communications), legal costs to advise on and resolve the 184 unresolved private landowner leases, and legal costs to resolve the Restitution Claim and apply to the Court for consequent orders.[134]

   [134]Exhibit CDC-4 to the Fifth Crosbie Affidavit 11, 12.

Third party costs

1. The estimate for Future third party costs comprise expenditure on forestry maintenance, office costs (including staff costs), harvesting costs, and third party distribution costs (including of Link Market Services and a third party mail house).[135]  In relation to the Great Southern Schemes, the estimate Future Costs of third parties is $1,058,796.55.[136] In relation to the Gunns Woodlot Schemes, the estimate Future Costs of third parties is $731,307.97.[137]

   [135]Exhibit CDC-4 to the Fifth Crosbie Affidavit 13, 14.

   [136]Fifth Crosbie Affidavit [116].

   [137]Fifth Crosbie Affidavit [117].

Allocation

1. The liquidators propose allocating Future Costs in the same manner in which those types of costs have been apportioned for the Relevant Period, as set out above.  The liquidators state for example, any future Forestry Tasmania Costs will be apportioned in the same way that the Forestry Tasmania Costs incurred during the Relevant Period have been apportioned (ie, Method 4A).[138]  I consider that this is a reasonable method of allocation for Future Costs. 

   [138]Exhibit CDC-4 to the Fifth Crosbie Affidavit 9.

1. I am satisfied that the liquidators have demonstrate a prima facie entitlement to an indemnity and lien for the Future Costs of the liquidation.  This will mean that a further application in respect of the costs for the final period of the liquidation is avoided with all the attendant costs.  Liberty to apply will be reserved to the liquidators to approach the Court if such a course is necessary.  The liquidators have indicated, as is of course to be expected, that they will only charge for those costs which are actually incurred and any balance will be dealt with in the manner described in paragraph 130 above. 

1. The plaintiffs’ solicitors should submit orders which comply with these reasons.