Litigation and Dispute Resolution

Equitable estoppel – aiding victims of broken non-contractual promises

10 March, 2015


Insolvency Practitioners (IPs) commonly adopt time-based costing for the calculation of their remuneration, primarily on the basis that it ensures that the IP is only remunerated for the work actually undertaken and it ensures that remuneration reflects the simplicity or complexity of particular tasks.  Three other ways in which remuneration are common calculated are ‘fixed fee’, ‘percentage’ (such as in respect of recoveries/realisations) and ‘contingency’ bases.

Creditors can, and commonly do, approve IPs’ remuneration, but if those fees are not approved IPs are able to obtain orders from the Court.  IPs, among others, also have certain rights of review in terms of decisions made by creditors.

Applications to Court to consider IPs’ remuneration are regulated by the Corporations Act 2001 (the Act), and the Supreme Court (Corporation) Rules 1999.  Both s.504 (which relates to creditors’ voluntary windings up) and s.473 (in relation to windings up in insolvency or by the Court) set out an identical list of facts which the Court is required to have regard to in considering IPs’ remuneration. Those matters include:

  • the extent to which the work performed by the liquidator was reasonably necessary;
  • the quality of the work performed, or likely to be performed, by the liquidator;
  • the complexity (or otherwise) of the work performed, or likely to be performed, by the liquidator;
  • the value and nature of any property dealt with, or likely to be dealt with, by the liquidator;

The Act also requires the Court to consider “any other relevant matter”.

Whilst the factors to be considered by the Court involve questions of necessity, complexity and so on, the overriding principle is that the remuneration must be “reasonable”.


Applications for remuneration are well-trodden and usually straight-forward, particularly where remuneration is calculated on the basis of time spent and the work undertaken has been captured and described properly, and where an IP is able to justify time spent or complexities encountered in a particular appointment.

However, the issue of remuneration has come under increasing scrutiny by the courts in recent times. In a series of cases, determined by Justice Brereton, the Supreme Court of New South Wales has emphasised the importance of liquidator remuneration being proportionate to the realisations in the external administration. The recent decision in David Lewis Clout in his capacity as Liquidator of Mainz Developments Pty Ltd (in liquidation) [2016] NSWSC 1146 (Mainz) sheds light on this trend.

The case of Mainz

David Clout (Clout) was appointed the liquidator of Mainz Developments Pty Ltd (the Company). The Company was the registered owner of a property in North Sydney. Clout entered into a contract for the sale of land to sell the property at the price of $240,000.

After settlement, but prior to exchange, a number of unsecured creditors of the Company registered caveats over the property which prevented the sale to proceed. Following a lengthy negotiation process between Clout and the creditors, the creditors agreed to withdraw their caveats in exchange for the balance of the proceeds of sale being paid to the court pending determination over the competing claims for the funds.

After the mortgage was discharged and all other fees from the sale were paid, proceeds from the sale were $47,000. Clout filed a motion seeking that the entire amount be paid to him on account of his remuneration and expenses, totalling approximately $60,000. The creditors opposed the motion stating that Clout should only be entitled to a specific percentage of the realised value of the property, that being 2% or a mere $4,800.

In reaching this number the creditors had seized upon the Brereton J decision In the matter of Independent Contractor Services (Aust) Pty Ltd ACN 119 186 971 (in liq) (No 2) [2016] NSWSC 106, where it was stated, following a discussion concerning the importance of proportionality as a factor in determining remuneration, that:

Indicatively, I would be inclined to allow 2% on realisations, reflecting the very limited work done by the Liquidator in respect of realisations.”

In Mainz, Robb J was not convinced to apply this figure as the creditors had failed to reconcile the fact that, ultimately in Independent Contractor Services, Brereton J allowed 14% of gross realisations for the whole of the winding up (where the 2% cited related to the realisation of a particular asset), and the creditors had further failed to address a number of other recent cases where considerably different percentages had been applied (discussed below).

Robb J stated that the process in determining a proportionate figure “does not involve the direct adoption of any particular proportion or percentage”, rather a number of discretionary factors need to be considered with other cases to be used as a “guide”.  His Honour said:

“It is not correct to say that the process by which the court determines the amount of remuneration to be allowed to liquidators has evolved to the point where the determination involves the selection of a percentage, divorced from all of the other relevant circumstances of the winding up.”

Ultimately, Robb J concluded that the remuneration sought by Clout was too high, as much of it arose from the lengthy negotiation process with the creditors that could have been avoided by agreeing to place the balance of the sale into a fund earlier. However, his Honour was not able to directly quantify a proportionate figure due to a lack of evidence. His Honour simply invited the parties to further consider their positions and suggest directions for further conduct of the dispute.


While in Mainz there was no specific order as to the amount that would be “proportionate” in the circumstances, the decision provides valuable commentary on the trend of courts to consider whether fees charged are proportionate to the liquidator’s realisations rather than accepting hourly rate fees.

Robb J considered a number of judgments delivered by Brereton J over the last two years, and stated that while the percentage of realisations that were found to be proportionate varied significantly (from as low as 2% to as high as 20%), there was no inconsistency between them. This is because of the various circumstances and discretionary factors within each case.   His Honour summarised:

“◦(1) In AAA Financial Intelligence Ltd (in liq) (No 2) at [53] the court allowed remuneration of $36,000, which was about 20% of the value of the assets realised.

◦(2) In Re Hellion Protection Pty Ltd (in liq) [2014] NSWSC 1299 at [9] the court allowed 10% for the first $50,000 realised, and 5% for subsequent receipts.

◦(3) In Re Gramarkers Pty Ltd (No 2) [2014] NSWSC 1405 at [10] the court determine the remuneration on the basis of 10% of the first $100,000 realised, and 5% on the balance of the total of $495,000.

◦(4) In Re Sakr Nominees Pty Ltd [2016] NSWSC 709 at [22] the court considered alternative bases to assist it with assessing the appropriate remuneration for the liquidator. First, the court considered the result of allowing 2.5% on realisations of $3.72 million, and 3% on distributions of $3.3 million. That gave a comparable amount to allowing 10% on the first $100,000 of realisations, and then 5% thereafter. However, due to the liquidator’s difficulty in identifying the contributories in that case, the court at [25] allowed an additional $20,000 of remuneration.

◦(5) Finally, in the Independent Contractor Services Pty Ltd case, the court at [48] started with an allowance of 2% on realisations (reflecting very limited work done by the liquidator) plus 15% on distributions. However, the court allowed an uplift (having regard to the totality of the work undertaken and the time expended by the liquidator) to give remuneration of $30,000, which was approximately equal to 14% of gross realisations.”

Of particular note is that of the five decisions of Brereton J considered by Robb J, four of them involved a liquidator that had sought remuneration based on time expended.  Robb J noted that the figure calculated by liquidators on that basis is a “rational and objective starting point”, but, inescapably, it is subject to the Court’s consideration of reasonableness in the context of other factors arising from the specific facts. The court will ultimately “adopt an appropriate percentage having regard to the court’s experience of other cases as a guide”.

Where to from here?

The decision of Brereton J in Independent Contractor Services is widely acknowledged as being one of the first of now many watermarks on the issue of proportionality and IPs’ remuneration.  Gone are the days (if they ever existed) where IPs could sit comfortably behind their timesheets which comprehensively and accurately recorded time-based tasks.

With proportionality analysis comes a level of uncertainty, with time spent by the liquidator becoming simply a “starting point”. IPs are encouraged to carefully reflect on the amount of remuneration they anticipate might be necessary in respect to proportion of prospective realisations.

As IPs continue to adjust to the recent trends and scrutiny, we believe that there will be a corresponding change to how IPs consider how to approach the realisation of assets, particularly those which have small or speculative value or where there are going to be significant complexities in recovery, such as contested litigation.

Whilst Mainz is a further reminder of the Court’s close scrutiny of remuneration, it confirms that there are no hard and fast rules. Courts will consider the whole of the circumstances in addition to raw figures of realisations.

IPs should be encouraged to obtain appropriate legal advice at an early stage of appointment to assist with an early assessment of an entity’s assets and how best to realise those assets. Advice should also be obtained in relation to the drafting of creditors reports and the disclosure and explanation of remuneration to increase the prospect of obtaining approval from creditors.

Recent Insights

View all
Litigation and Dispute Resolution

Canadian Court elevates thumbs-up emoji to signature status

In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract.   Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed.   Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph [18], Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)."   Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and   The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and   The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter.   Judgment At paragraph [36], Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship.   Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph [63]: "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest.   What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.

Published by Foez Dewan
29 August, 2023

Venues NSW ats Kerri Kane: Venues NSW successful in overturning a District Court decision

The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane [2023] NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. In addition, VNSW challenged the findings that the steps met the definition of a 'stairwell' under the BCA as well as the trial judge's assessment of damages. Decision on Appeal The Court of Appeal found that primary judge's finding of breach of duty on the part of VNSW could not stand for multiple reasons, including that it proceeded on an erroneous construction of s5B of the Civil Liability Act 2002 and the obvious nature of the danger presented by the steps. As to the determination of breach of duty, the Court stressed that the trial judge was wrong to proceed on the basis that the Court simply has regard to each of the seven matters raised in ss 5B and 5C of the CLA and then express a conclusion as to breach. Instead, the Court emphasised that s 5B(1)(c) is a gateway, such that a plaintiff who fails to satisfy that provision cannot succeed, with the matters raised in s 5B(2) being mandatory considerations to be borne in mind when determining s 5B(1)(c). Ultimately, regarding the primary question of breach of duty, the Court found that: The stadium contained hazards which were utterly familiar and obvious to any spectator, namely, steps which needed to be navigated to get to and to leave from the tiered seating. While the trial judge considered the mandatory requirements required by s5B(2) of the CLA, those matters are not exhaustive and the trial judge failed to pay proper to attention to the fact that: the stadium had been certified as BCA compliant eight years before the incident; there was no evidence of previous falls resulting in injury despite the stairs being used by millions of spectators over the previous eight years; and the horizontal surfaces of the steps were highly slip resistant when wet. In light of the above, the Court of Appeal did not accept a reasonable person in the position of VNSW would not have installed a handrail along the stepped aisle. The burden of taking the complained of precautions includes to address similar risks of harm throughout the stadium, i.e. installing handrails on the other stepped aisles. This was a mandatory consideration under s5C(a) which was not properly taken into account. As to the question of BCA compliance, the Court of Appeal did not consider it necessary to make a firm conclusion of this issue given it did not find a breach of duty.  The Court did however indicated it did not consider the stepped aisle would constitute a "stairway" under the BCA. The Court of Appeal also found that there was nothing in the trial judge's reasons explicitly connecting the risk assessment she considered VNSW ought to have carried out, with the installation of handrails on any of the aisles in the stadium and therefore could not lead to any findings regarding breach or causation. As to quantum, the Court of Appeal accepted that the trial judge erred in awarding the plaintiff a "buffer" of $10,000 for past economic loss in circumstances where there was no evidence of any loss of income. The Court of Appeal set aside the orders of the District Court and entered judgment for VNSW with costs. Why this case is important? The case confirms there is no obligation in negligence for owners and operators of public or private venues in NSW to have a handrail on every set of steps. It is also a welcome affirmation of the principles surrounding the assessment of breach of duty under s 5B and s 5C of the CLA, particularly in assessing whether precautions are required to be taken in response to hazards which are familiar and obvious to a reasonable person.

Published by Leighton Hawkes
18 August, 2023
Litigation and Dispute Resolution

Expert evidence – The letter of instruction and involvement of lawyers

The recent decision in New Aim Pty Ltd v Leung [2023] FCAFC 67 (New Aim) has provided some useful guidance in relation to briefing experts in litigation.

Published by Justin Pennay
10 August, 2023