What costs are recoverable by examinees?

Can a receiver and manager summonsed to attend a mandatory public examination and directed to produce documents, recover his or her remuneration for preparation and attendance at the examination?

This was the question for determination in the recent case of Neil Raymond Cribb in his capacity as liquidator of Phoenix Shutdown Services Pty Ltd (Receivers and Managers Appointed) (in liq).1

The issue

Here, a receiver and manager of the company (Mr Bellamy) was summonsed by the liquidator (pursuant to section 596A of the Corporations Act 2001 (Cth) (Act)) to appear for public examination and to produce documents.  Mr Bellamy sought, what the Court described as, “reasonable remuneration and expenses associated with his production of documents in compliance with the summons and his attendance at the examination hearing”.2

Mr Bellamy’s application for remuneration was opposed by the liquidator on the basis that:

  • the costs of an examination under section 596A of the Act are only payable if the examination was obtained “without reasonable cause”;3
  • a person required by law to give evidence before a court, as a general rule, is obliged to comply and is not entitled to compensation;
  • Mr Bellamy had not responded to requests for information from the liquidator;
  • Mr Bellamy had claimed privilege against self incrimination in relation to 157 of his answers given in the examination; and
  • the Form 524 lodged by Mr Bellamy with ASIC (Presentation of accounts and statement) was incorrect.

In support of his application for remuneration, Mr Bellamy asserted that although he was appointed a receiver and manager of the company, he had an almost complete lack of involvement in, or knowledge of, the affairs of the company (in particular he submitted that he was an ‘outsider’ rather than an ‘insider’).4

The authorities

Master Sanderson considered Re Medici Institute Pty Ltd; McVeigh v Brumley [2009] VSC 668 in which Gardiner As J reviewed the authorities and distilled the following points:5

  • If the examinee is not directly concerned in the management of the company, he or she is entitled to the cost of attendance at the examination and in gathering together the documents, but not costs for his legal representation;
  • An examinee is not entitled to be awarded an hourly rate which includes a profit margin. A more appropriate scale is that applying to allowances to witnesses in the court rules;
  • Examinees who are not concerned with the management of the company are entitled to be paid for their out of pockets in a reasonable search for material and in attending the examination;
  • Generally, the preferable procedure in regard to documents is that the liquidators should be given the documents to copy at their own expense although examinees may need to deal with the documents and charge photocopying and expenses for looking at the documents at cost;
  • As to the question of who is a company 'insider' or 'outsider', insiders are characterised as being the directors, secretary and employees of the company and all others, even if they are technically officers of the company, such as auditors, are outsiders;
  • It would be unjust to require a person who had not been an officer of the company to attend for examination without provision being made in respect of their reasonable expenses for such attendance where those expenses would be substantial;
  • It would reasonable in the appropriate case to allow compensation for searching for documents, but the public interest is against making provision for a witness to confer with their staff or associates or with solicitors and Counsel or otherwise obtaining information from others which might be used in their evidence on the examination;
  • No allowance should be made for the examinee familiarising themselves with documents in order to prepare for the examination.6


Master Sanderson held that Mr Bellamy had not engaged in misconduct by claiming privilege or the error on the Form 524 and that he was not unreasonable in the level of assistance he provided to the liquidator, ultimately deciding that he was not entitled to the remuneration sought as:

  • section 597B of the Act only provides for costs to be ordered as payable where the examination was obtained without reasonable cause and in this case there was no suggestion that section 597B applied;
  • a witness who is compelled by law to attend and be examined is entitled to travel and related expenses, but not to compensation for their time and legal advice; and
  • in the Master’s view, a receiver, even if they may be considered an outsider, has no special entitlement to compensation for their time and legal costs incurred for complying with an examination summons (unless section 597B of the Act applies).

Lavan comment

This case provides guidance on what remuneration will be payable where (and ultimately mandatory public examinations are utilised) where the summons has been reasonably obtained.  Specifically, travel and accommodation costs will be payable to examinees but not professional remuneration or legal costs for their preparation or attendance.

This should give comfort to liquidators as to the costs which may be incurred and be recovered, where they wish to utilise the powerful tool of mandatory public examinations to aide their investigations.

Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.