Court backs $12.2M Crown Group fee tab

The NSW Supreme Court has approved approximately $2.7 million in additional remuneration for the provisional liquidators and receivers of the Crown Group, rejecting arguments by one of the group's ultimate shareholders that the practitioners had been profligate and failed to control costs.

Andrew Sallway and Duncan Clubb of BDO Australia were appointed as provisional liquidators of 38 Crown Group entities between January and June 2025, as well as receivers of there entities. The appointments arose from a governance deadlock between Crown Group founders and ultimate shareholders Paul Sathio and Iwan Sunito. Unlike a conventional insolvency administration, the Crown Group entities are solvent. At the time of appointment, the group had a property portfolio valued at approximately $600 million and secured debt of about $350 million. The provisional liquidators presently estimate net assets of between $66 million and $90 million.

The latest application was the practitioners' fourth remuneration request. Including the amounts now approved, their remuneration totals approximately $12.22 million including receivership fees. Justice Brereton acknowledged that it had been "an expensive provisional liquidation", but found the fees reasonable and proportionate given the scale and complexity of the administration.

Mr Sathio and associated company PNR International Pty Ltd opposed the application, arguing that the provisional liquidators had exercised insufficient cost discipline. Their objections focused on alleged duplication between BDO's accounting work and the Crown Group's internal finance team, taxation work undertaken by BDO rather than the group's longstanding external accountants, and time spent reviewing and correcting thousands of internal time entries.

Justice Brereton rejected those criticisms. Although there was overlap between BDO's accounting processes and the Crown Group's internal systems, the Court accepted evidence that the group's existing software did not produce the information required for reporting to ASIC, the ATO and the Court. The Court also accepted that BDO had appropriately allocated work by seniority and that the shareholder dispute increased the level of oversight and risk involved.

The Court similarly accepted BDO's decision to undertake tax work internally after concerns arose about the standard of work produced by the group's external accountants. It also found that spending 127.5 hours reviewing more than 9,000 time entries for the previous remuneration application was a prudent quality-control exercise rather than an improper attempt to charge for correcting BDO's own mistakes.

Justice Brereton emphasised that the Court's task is not to conduct a line-by-line audit of practitioners' time records. The relevant question is whether the work was necessary and properly performed, and whether the remuneration represents a fair and proportionate reward having regard to factors including complexity, responsibility, risk and the value of the assets under administration.

The Court also dispensed with the requirement to notify creditors of the remuneration application, noting that the Crown Group entities remain solvent, a substantial surplus is expected to be available for shareholders and the ultimate shareholders had been given notice.

Read the decision here.

• Michael Rose of 9 Wentworth Chambers and Johnson Winter Slattery acted for the provisional liquidators.

• Shelley Scott of University Chambers and Vincent Young Lawyers acted for PNR International Pty Ltd and Paul Sathio