Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd (in liq)

Bidald Consulting Pty Ltd brought an application against Miles Special Builders Pty Ltd (in liquidation) to terminate a Deed of Company Arrangement and subsequently obtained orders for the winding up of the defendant. Following the termination of the Deed, Bidald applied to vary the costs orders made in its favour. The legal issues before the court involved determining whether the costs incurred by Bidald in terminating the Deed were costs in respect of the winding up application under section 556(1)(b) of the Corporations Act 2001 (Cth). Another issue was whether the statutory requirement under section 466 of the same Act, which mandates that the applicant for winding up bear its own costs until a liquidator is appointed, precluded the plaintiff from recovering its costs. Additionally, the court had to consider if the costs incurred by Bidald in terminating the Deed could be classified as expenses properly incurred by the deed administrators under section 556(1)(a) or as other expenses of deed administrators under section 556(1)(dd) of the Corporations Act 2001 (Cth).

The court addressed these issues by examining the statutory provisions and policy considerations. It found that the termination of the Deed was a statutory precondition to the making of the winding up order, which aligned with the principle that costs incurred in relation to the winding up should be borne by the estate. The court concluded that the costs of the deed termination application were indeed costs in respect of the winding up application. However, the statutory requirement under section 466 did not bar Bidald from recovering its costs, as these costs were incurred prior to the appointment of the liquidator. Furthermore, the court held that Bidald's costs of deed termination proceedings could not be characterised as expenses properly incurred by the deed administrators or as other expenses of deed administrators. The court also considered the implications of the order of priority of claims in winding up and the administrator's right of indemnity, noting that the right of indemnity was secured by a lien over the property of the estate.

In conclusion, the court allowed Bidald's application to vary the costs orders, permitting the recovery of costs incurred in terminating the Deed as costs in respect of the winding up application. The court's decision ensured that Bidald was not precluded from recovering these costs and clarified the classification of the costs under the relevant statutory provisions.