Re Willmott Forests Ltd, Carson and Crosbie (Liquidators) - [2015] VSC 251

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2014 03003

IN THE MATTER OF WILLMOTT FORESTS LTD (ACN 063 263 650)
Receivers and Managers Appointed (In Liquidation)

IAN MENZIES CARSON AND CRAIG DAVID CROSBIE (in their capacities as joint and several Liquidators of Willmott Forests Ltd) (ACN 063 263 650) (Receivers and Managers Appointed) (In Liquidation)

Plaintiffs

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JUDGE:	GARDINER AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	10, 11 February 2015 (last submissions 2 March 2015)
DATE OF JUDGMENT:	10 April 2015
CASE MAY BE CITED AS:	Re Willmott Forests Ltd, Carson and Crosbie (Liquidators)
MEDIUM NEUTRAL CITATION:	[2015] VSC 251

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CORPORATIONS – External administration – Examination being conducted under s 596B of Corporations Act 2001 (Cth) – Application by examinee for his costs of representation by senior counsel and solicitor at examination – Application refused – s 597(16) of Corporations Act 2001 (Cth).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R G Craig	Arnold Bloch Leibler
For the examinee David Armstrong	Mr G P Harris QC	Wotton + Kearney

HIS HONOUR:

On 7 August 2014 I made orders that summonses be issued pursuant to s 596B of the Corporations Act 2001 (Cth) (‘the Act’) against several persons in relation to the examinable affairs of Willmott Forests Ltd (Receivers and Managers Appointed) (In Liquidation) (‘the Company’) on the application of the Company’s liquidators Messrs Carson and Crosbie.

One of the examinees the subject of a summons was David Armstrong of Armstrong Dubois Pty Ltd, the auditors of the Company. In addition to being required to attend at the examination, Mr Armstrong was required to produce specified documents relating to the audit of the Company for the period 1 July 2006 to 30 June 2010.

The examination proceeded on 10 and 11 February 2015. At the conclusion of the hearing, counsel for the examinee Mr Armstrong, Mr Harris QC, made an oral application that the liquidators pay Mr Armstrong’s costs of having senior counsel and a solicitor appear on his behalf at the examination. Mr Harris seeks the costs of two days for senior counsel at $6,000 and $260 per hour for the cost of his instructor attending at Court, both excluding GST.

In addition to Mr Harris’ oral application, the parties have exchanged and filed outlines of submissions. Mr Armstrong also relies on an affidavit of Christy Mellifont sworn 2 March 2015. The liquidators rely on an affidavit of Shaun Stuart Clement sworn 18 February 2015. Both those affidavits are concerned with a proceeding issued by the Company against Armstrong Dubois Pty Ltd in August 2013 (the pending proceeding). Ms Mellifont and Mr Clement are solicitors involved in representing the respective parties in the pending proceeding.

Mr Armstrong’s submission is that costs ought to be awarded because litigation is now on foot between the parties by reason of the pending proceeding. Mr Armstrong is a director of Armstrong Dubois Pty Ltd and the examination related to matters connected to that…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] VSC 251
Decision Date: 10 April 2015

CaseChat Overview and Summary

The liquidators of Willmott Forests Ltd, Carson and Crosbie, applied for an examination of the company’s affairs under section 596B of the Corporations Act 2001. The application was granted, and the examination took place. An examinee sought reimbursement of his legal fees, arguing that they were reasonably necessary for his defence during the examination. The examinee argued that the liquidators had engaged in unreasonable conduct, which necessitated his engagement of senior counsel and a solicitor. The court was tasked with determining whether the fees claimed were reasonably necessary and, if so, whether they should be awarded under section 597(16) of the Corporations Act 2001.

The court considered whether the examinee had discharged the onus of proving that the fees were reasonably necessary. The court found that the examinee had not provided sufficient evidence to demonstrate that the fees claimed were necessary. The court noted that the examinee had engaged in conduct that was not entirely reasonable, which contributed to the need for legal representation. The court held that the fees claimed were not reasonably necessary, and the application for reimbursement was dismissed.

The court found that the examinee had failed to demonstrate that the fees claimed were reasonably necessary. The court held that the examinee’s conduct contributed to the need for legal representation, and that the fees claimed were not necessary. The court also found that the liquidators had not engaged in unreasonable conduct, and that the examinee’s application for reimbursement was therefore dismissed. The court held that the examinee was not entitled to reimbursement of his legal fees.

Orders