Any insolvency remuneration review as sought by ASIC “would be unprincipled and ultimately, wholly pointless”

From the opening paragraphs, one can foresee the outcome of this decision, about ASIC’s “unprincipled and pointless” intervention to deny voluntary administrators of GD Pork their remuneration because of some claimed lack of independence: [2021] WASC 428.

Jones and Smith had been appointed as the joint voluntary administrators of two related corporations in October 2018 pursuant to s 436A of the Corporations Act. They had attended to their tasks over a 7 month period until the appointment of separate liquidators in May 2019.

ASIC’s case

The creditors approved their remuneration in May 2019.  ASIC took issue with those and earlier approvals.

“ASIC’s primary grievance is that Messrs Jones and Smith should not ever have taken up their appointments as voluntary administrators – given that their firm Ferrier Hodgson, had earlier provided advice to the two corporations in a private capacity. On this basis, ASIC contends that conflict of interest and bias concerns arose and hence that the administrators’ approved remuneration determinations by the creditors should be a subject of a court conducted review and to a corresponding substantial reduction in approved remuneration”.

ASIC’s challenge was only directed at the remuneration based on a claimed lack of independence, even though the

“work itself is not a subject of any criticism by ASIC, as to its utility or value. …307 ASIC’s objection position is simply that, by reason of the prior engagement of Ferrier Hodgson, that Messrs Jones and Smith should not have taken up and then continued in their appointments as voluntary administrators at and after 31 October 2018”.

“the advocated ‘back door’ remuneration reduction punishment (which it is) does not relate to the crime, if there ever was a crime”

Further, Justice Kenneth Martin said:

“333 ASIC’s stated grievances as to an asserted lack of independence or a potential conflict of interest do not, on my assessment, logically or causatively translate as factors that support the advocated substantial denying to Messrs Jones and Smith of their reasonable remuneration towards their undoubtedly valuable work, performed across a roughly seven‑month period whilst in their roles as voluntary administrators. I point out again that no level of criticism was directed against the quality or value of any of their work by creditors, shareholders or any other source – other than by ASIC. But ASIC’s grievance seems not only to be without precedent but it is as well, conceptually misdirected in my assessment.

334 Denying or dramatically reducing the level of remuneration as was approved by the creditors, for circumstances when that remuneration is otherwise not challenged as to the level of its reasonableness by regard to any of the s 6012(a) – (l) matter respects (save only by ASIC under the s 6012(m) ‘sundries’ provision) presents to me, as unfair, illogical and misconceived, conceptually. To put it more colloquially, the advocated ‘back door’ remuneration reduction punishment (which it is) does not relate to the crime, if there ever was a crime”.

The law and facts

The Judge discusses the numerous case authorities on independence of insolvency practitioners, including Network Ten.

An affidavit “riddled with much non-factual content”

As to ASIC’s evidence, an affidavit of 845 pages was “vulnerable to inadmissibility objections – on a basis that it is seen to be … riddled with much non-factual content”, rather than “in the nature of submission or argument …”.


In his conclusions, Justice Kenneth Martin said any remuneration review as sought by ASIC “would be unprincipled and ultimately, wholly pointless”.

ASIC’s concerns as to conflict of interest, or of ostensible bias, were not established. But even if they were, that would be an insufficient basis to deny the administrators their reasonable remuneration for the valuable benefit they provided to the corporations by their services across the 7 month period of administration.

Tainted work?

ASIC had attempted to separate out valid work from tainted work.  The Judge rejected

“ASIC’s notion that a contended path of remuneration reduction under arbitrarily apportioned percentages applied well after the event, by reference to time sheets, carries any level of principled or supportable rationale. My contrary assessment is that the apportionment exercise as contended for by ASIC by way of remuneration reductions … proceeds on an erroneous premise. It was never viable to differentiate work that was said to be ‘tainted’, from work said not to be. If it is ASIC’s primary grievance that the administration appointment should never have been taken up at 31 October 2018, then logically, the entirety of the remuneration claimed by Messrs Jones and Smith for the work carried out during a seven-month period of administration, should then be denied. But that only exposes the unfairness in what is currently advocated by ASIC”.


The decision bears close reading.  It supports a view that there is a certain undue fixation upon the independence of insolvency practitioners that does not allow for commercial reality, that fixation given more by the regulators and the professional bodies than by the courts and the law.  That can have a negative impact in other respects. Regulator guidance and codes of conduct did not get a mention in the judgment, only the law.

See MARTIN BRUCE JONES joint and several administrators GD PORK HOLDINGS PTY LTD (ACN 126 978 676) (ADMINISTRATORS APPOINTED) AS TRUSTEE FOR THE GD PORK UNIT TRUST [2021] WASC 428 (1 December 2021) (

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3 Responses

  1. I would have thought that it would be fairly obvious that an attack by the Regulator is appears to have been made would have been doomed to fail. Absent there being proof of relevant disentitling conduct on the part of the External Administrator’s they are entitled to their fair reasonable and proportionate remuneration in or about the administration. Nothing that you referred to in the article – I have not read the judgement yet, suggests that there was a level of impropriety. What appears to have been suggested by the ASIC is that the External Administrator’s were in a position of conflict of interest and duty either in breach of the legislative provisions or the professional standards applicable to their position such that they ought not to have taken on the job. Nothing improper, prima facie, has been established about this and it appears that the creditors have been made fully aware. It is a pity that the ASIC did not take a similar approach in connection with certain note aureus large administrations where there was an apparent conflict of interest and duty!

  2. They’ve never gotten over Sakr. The arbitrary percentages is what they argued in the NSWCA (although suggesting it was up to the court to determine what that arbitrary percentage would be!).

  3. What an incredible lack of judgement by ASIC. They have been beaten like a hired bongo drum this year. Perhaps it is time for a complete clean out of the executive charged with oversight of the Insolvency Profession, It’s time…

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