Ex Parte Trevor [No 3]
[2020] WASC 322
•7 SEPTEMBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BELL GROUP NV (IN LIQ); EX PARTE TREVOR [No 3] [2020] WASC 322
CORAM: HILL J
HEARD: 24 AUGUST 2020
DELIVERED : 7 SEPTEMBER 2020
FILE NO/S: COR 57 of 1996
MATTER: Bell Group NV (In Liq)
EX PARTE
GARRY JOHN TREVOR AS LIQUIDATOR OF BELL GROUP NV (IN LIQ) AND BELL GROUP NV (IN LIQ)
Applicant
Catchwords:
Corporations law - Winding up - Application by liquidator for direction that liquidator would be acting properly in not seeking approval for remuneration paid to him pursuant to indemnity agreements - Indemnifies released liquidator from any obligation of repayment from property recovered in winding up - Principal winding up not in Australia - Consent to remuneration by bankruptcy trustees in principal winding up - Remuneration subject to approval by judicial authority in principal winding up - Whether direction should be made
Legislation:
Corporations Act 2001 (Cth), s 479(3)
Result:
Direction made
Category: B
Representation:
Counsel:
| Applicant | : | Mr A D'Arcy |
Solicitors:
| Applicant | : | Lipman Karas |
Case(s) referred to in decision(s):
Akers as joint foreign representative of Saad Investments Co Ltd (in official liq) v Deputy Commissioner of Taxation [2014] FCAFC 57; (2014) 223 FCR 8
Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 39 WAR 1
Bell Group NV (in liq) v Western Australia [2016] HCA 21; (2016) 260 CLR 500
Nationwide News Pty Ltd v Samalot Enterprises Pty Ltd (No 2) (1986) 5 NSWLR 227
Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165
Re ACN 003 671 387 (in liq) [2004] NSWSC 368; (2004) 49 ACSR 443
Re Ansett Australia Ltd (No 3) [2002] FCA 90; (2002) 115 FCR 409
Re Bell Group Ltd (in liq); Ex parte Woodings [2013] WASC 409; (2013) 97 ACSR 117
Re English Scottish and Australian Chartered Bank [1893] 3 Ch 385
Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674
Re Great Southern Managers Australia Ltd (in liq); ex parte Jones, Weaver and Stewart [2014] WASC 312
Re Kiwi Travel International Airlines Ltd (in liq) (Unreported, QSC, 2 February 1998)
Stewart v Atco Controls Pty Ltd (in liq) [2014] HCA 15; (2014) 252 CLR 307
Westpac Banking Corporation v The Bell Group Ltd (in liq) [No 3] [2012] WASCA 157; (2012) 44 WAR 1
HILL J:
By interlocutory process dated 19 August 2020, Mr Trevor, as liquidator of Bell Group NV (in liq), and Bell Group NV (in liq) (BGNV) seek an order pursuant to s 479(3) of the Corporations Act 2001 (Cth) (Act) for directions that Mr Trevor would be acting properly in not seeking approval of his remuneration pursuant to s 473 of the Act or at all.
The basis for the application is that Mr Trevor's remuneration has been paid under indemnities given to him by third parties, who do not now require repayment. The direction is sought to enable the winding up of BGNV to be concluded as soon as practicable.
Application by Mr Trevor and approach to application
The application is advanced by Mr Trevor on two alternate grounds. First, that on a proper construction of s 473(3) of the Act, court approval is not required for a liquidator's remuneration that is not paid from the property of the company. Second, in the alternative, that BGNV, by its trustees in bankruptcy in the principal place of its liquidation, has provided its fully informed consent to the payment of Mr Trevor's remuneration.
The hearing before me proceeded on an ex parte basis. While they were not required to, the applicant's solicitors served the application on the Australian Securities and Investments Commission (ASIC) to enable them to make submissions on the proper construction of s 473(3). ASIC did not wish to be heard on the alternative position advanced by the liquidator but requested that it be provided with the opportunity to make submissions on the proper construction of s 473(3) of the Act if I determined this was required.
Counsel for the applicant informed me that the question as to whether court approval is required for remuneration paid to a liquidator under an indemnity agreement has not been the subject of judicial consideration or determination in Australia or the United Kingdom. Ultimately, I do not consider it is necessary for me to consider the proper construction of s 473(3) of the Act in determining this application. In circumstances where no contradictor appeared on the application, I do not consider it is appropriate for me to address this aspect of the application, apart to note that it was raised in the applicant's written submissions.
For the reasons that follow, I consider that it is appropriate to give the direction sought by Mr Trevor.
Background facts
The application is supported by an affidavit of Mr Trevor sworn 19 August 2020.[1]
[1] Exhibit 1.
BGNV was incorporated in the Netherlands Antilles (now Curaçao) in November 1985. Initially, BGNV was a wholly owned subsidiary of The Bell Group Limited (TBGL) but is now a wholly owned subsidiary of Bell Group Finance Pty Ltd (BGF), which itself is a wholly owned subsidiary of TBGL.
In 1985 and 1987, BGNV issued a series of bonds, which were guaranteed by TBGL. Law Debenture Trust Corporation plc (LDTC) was the trustee of each of these bond issues. The net proceeds of the bond issues were lent by BGNV to TBGL and BGF. These loans were not repaid and BGNV is an admitted creditor of both TBGL and BGF in respect of these loans.
On 3 January 1995, Troika Holding BV (Troika) was appointed as liquidator of BGNV in the Netherlands Antilles by resolution of BGF, as BGNV's sole shareholder.
On 3 April 1996, Troika applied to the Australian Securities Commission (as it then was) to register BGNV as a foreign company, which application was granted on 4 April 1996.
On 24 April 1996, Troika commenced these proceedings seeking orders for the appointment of Mr Trevor as liquidator of BGNV on the basis that BGNV was being wound up in the Netherlands Antilles. On 19 July 1996, the application was granted and Mr Trevor was appointed liquidator of BGNV.
On 23 January 1997, the Court of First Instance of the Netherlands Antilles found that BGNV was bankrupt and appointed Troika, Mr Friso Meeter and Mr Leo Spigt as trustees in bankruptcy or Curatoren. On 29 May 2018, Mr Meeter was replaced by Mr Reno Saleh, who was replaced by Mr Douwe Douwes on 10 January 2020.
On 26 March 1997, this court ordered that BGNV be wound up as an insolvent pt 5.7 body and appointed Mr Trevor as the liquidator of BGNV in Australia.
Creditors of BGNV
Mr Trevor's evidence is that there is no committee of inspection of BGNV in Australia and that, despite having placed advertisements on two occasions calling for creditors of BGNV to lodge proofs of debt, no proofs of debt have been lodged.[2]
[2] Affidavit of Garry John Trevor sworn 19 August 2020 [21] - [24].
Two parties, namely ICWA and Mr Woodings as liquidator of TBGL and BGF, have previously asserted that they are creditors of BGNV.[3] Mr Trevor has rejected each of these claims. Neither has sought to review these decisions. As a consequence, Mr Trevor believes there are no Australian creditors of BGNV.[4]
Involvement of BGNV in Bell Proceedings and Distribution Proceedings
[3] Affidavit of Garry John Trevor sworn 19 August 2020 [28] - [31].
[4] Affidavit of Garry John Trevor sworn 19 August 2020 [24].
In 1995, TBGL, BGF, BGNV and other companies within the Bell Group commenced proceedings against a syndicate of banks (Bell Proceedings).[5] BGNV and Mr Trevor, as liquidator of BGNV, were sixth and twelfth plaintiffs in the Bell Proceedings. BGNV did not seek any monetary relief in the proceedings, although other plaintiffs (including TBGL and BGF) did. The principal relief sought on behalf of BGNV was to set aside the BGNV Subordination Deed, which sought to subordinate the debts owed to BGNV by TBGL and BGF being the indebtedness of those companies to the banking syndicate. In addition to this principal relief, as a substantial creditor of TBGL and BGF, BGNV stood to share in the proceeds of any monetary relief awarded to these companies.
[5] Bell Group Ltd (in liq) v Westpac Banking Corporation[No 9] [2008] WASC 239; (2008) 39 WAR 1.
The proceedings were heard at first instance by Justice Owen for 404 days between 22 July 2003 and 22 September 2006. Judgment was delivered on 28 October 2008.[6] Final orders were made on 30 April 2009 which included orders for monetary relief in favour of some of the plaintiffs and payment by the banks of the costs of TBGL and BGF.
[6] Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9].
The banks appealed the decision and the respondents to the appeal filed cross‑appeals in respect of some aspects of the decision at first instance. The appeal was heard between 18 April and 22 June 2011. On 17 August 2012, the Court of Appeal dismissed the banks' appeal and allowed the cross-appeal in part.[7] As a consequence of the decision of the Court of Appeal, the amount payable by the banks to the respondents was increased. The banks were also ordered to pay the costs of the respondents to the appeal.
[7] Westpac Banking Corporation v The Bell Group Ltd (in liq) [No 3] [2012] WASCA 157; (2012) 44 WAR 1.
On 14 September 2012, the banks sought special leave from the High Court to appeal the decision, which was granted on 15 March 2013. Prior to the hearing of the appeal in the High Court, the parties reached agreement on a conditional settlement of the Bell Proceedings. Entry into the settlement deed was approved by Justice Allanson on 14 November 2013.[8]
[8] Re Bell Group Ltd (in liq); Ex parte Woodings [2013] WASC 409; (2013) 97 ACSR 117.
In late June 2014, the settlement became unconditional and completion occurred. As a consequence of the settlement, the banks paid to the plaintiff an amount of approximately $1.7 billion.
From approximately mid‑2014, disputes arose between the major external creditors of TBGL and BGF, including BGNV, as to how these funds should be distributed. This led to the commencement of numerous proceedings in both this court and the Federal Court of Australia (Distribution Proceedings).
On 26 November 2015, the government of the State of Western Australia passed the Bell Group Companies (Finalisation of Matters and Distribution of Proceeds) Act 2015 (Bell Act). The Bell Act was challenged in the High Court by Mr Trevor, as liquidator of BGNV, and two other creditors. On 16 May 2016, the High Court declared the Bell Act to be invalid in its entirety.[9]
[9] Bell Group NV (in liq) v Western Australia [2016] HCA 21; (2016) 260 CLR 500.
As a consequence, the Distribution Proceedings continued between the relevant parties.
In December 2019, the parties to the Distribution Proceedings entered into multiple instruments to fully and finally settle the claims and disputes between them. The settlement conditions to these instruments have now been satisfied.[10]
BGNV's funding of Bell Proceedings
[10] Affidavit of Garry John Trevor sworn 19 August 2020 [59]; orders of Hill J in COR 85 of 2020 dated 20 August 2020.
The Bell Proceedings were funded by BGNV, Insurance Commission of Western Australia (ICWA), LDTC and the Commonwealth of Australia pursuant to various agreements for indemnification. The funding provided by BGNV was in turn provided by Plaza BV (Plaza), under separate funding agreements entered into between Plaza and the Curatoren.
In 1999, BGNV ceased to fund the liquidators. Under agreements that were entered into between the funders (ICWA, the Commonwealth and BGNV) and the liquidators of TBGL and BGF at that time, the liquidator of TBGL and BGF was required to use his best endeavours to procure that a s 564 order be made requiring him to distribute to the funders in agreed percentages two-thirds of the amounts recovered in the Bell Proceedings.
It was a term of this agreement that ICWA indemnify Mr Trevor for his reasonable costs and expenses after 31 March 1999 in connection with BGNV's participation in the Bell Proceedings. Mr Trevor's remuneration (together with that of his partners and staff) was calculated by reference to the hourly rates recommended by the Insolvency Practitioners Association of Australia (WA Branch). There was an agreed dispute mechanism in the event that any of his costs were objected.[11]
[11] Affidavit of Garry John Trevor sworn 19 August 2020 [77] - [79].
ICWA's obligations under this agreement ceased on 30 April 2009,[12] when Owen J entered final orders.
Funding of BGNV and indemnity agreements
[12] Affidavit of Garry John Trevor sworn 19 August 2020 [80], 'GJT23'.
Mr Trevor's evidence is that BGNV did not have sufficient funds to pay his remuneration and that he has never been paid from the property of BGNV.
The remuneration of Mr Trevor associated with the liquidation of BGNV has been paid by Troika, ICWA and Plaza pursuant to indemnities provided by each of them. Over the course of the liquidation, from December 1996 until 30 July 2020, he has received remuneration of $4,944,312.[13] Of this, a little more than $550,000 was paid by ICWA under the agreement referred to in [27] and [28], with the remainder paid by Plaza.
[13] Affidavit of Garry John Trevor sworn 19 August 2020, 'GJT-22'.
On or about 30 December 1996, Mr Trevor entered into a deed of indemnity with Troika, as the liquidator of BGNV in Curaçao. Subsequently, on about 10 January 1997, he entered into an agreement with Plaza whereby Plaza guaranteed the obligations of Troika.[14]
[14] Affidavit of Garry John Trevor sworn 19 August 2020 [70], 'GJT2'.
Under these agreements, it was agreed that Mr Trevor would be indemnified for 'his reasonable remuneration and expenses' calculated by reference to the time spent by him, his partners and staff at 90% of the hourly rates recommended by the Insolvency Practitioners Association of Australia, and that the agreement did not prevent him from recovering in full his remuneration from the assets of BGNV from time to time. In the event that he had under his control sufficient assets of BGNV, the money paid to him under the indemnity agreement would be treated as an advance and Mr Trevor would be required to repay all the amounts he had received.[15]
[15] Affidavit of Garry John Trevor sworn 19 August 2020 'GJT2' cl 5.
Subsequently, in November 1998, following receipt of funds which would have triggered Mr Trevor's entitlement to be paid the 10% shortfall, Plaza paid these amounts to Mr Trevor directly.[16]
[16] Affidavit of Garry John Trevor sworn 19 August 2020 [94].
Mr Trevor entered into two further funding agreements with Plaza. The first, in September 2009, was for the funding of BGNV's participation in the appeal of Owen J's decision to Court of Appeal and the second, in October 2013, for the funding of BGNV's participation in settlement discussions in relation to the Bell Proceedings and to pursue BGNV's interests in the Distribution Proceedings.[17] Under each of these agreements, Plaza agreed to pay all of Mr Trevor's fees and costs as set out in a Monthly Statement of Expense. The parties agreed a mechanism for the resolution of any dispute concerning items in the monthly statement.[18]
[17] Affidavit of Garry John Trevor sworn 19 August 2020 [81] - [86], 'GJT5', 'GJT6'.
[18] Affidavit of Garry John Trevor sworn 19 August 2020 [83], [86]; 'GJT5' cl 2, 'GJT6' cl 2.
Approval for the entry into each of these funding agreements was obtained by Mr Trevor from this court.[19]
[19] Order of Simmonds J made 25 September 2009 and order of Master Sanderson made 24 October 2013 in COR 57 of 1996.
Since 1 May 2009, Mr Trevor has issued monthly accounts which have been paid by Plaza.[20] Mr Trevor's evidence is that his accounts have been reviewed and approved by the Curatoren as well as the Judge Commissioner who is responsible for the administration of the liquidation of BGNV in Curaçao.[21]
Release by ICWA and Undertaking of Plaza
[20] Affidavit of Garry John Trevor sworn 19 August 2020 [90].
[21] Affidavit of Garry John Trevor sworn 19 August 2020 [90.2].
Under the settlement of the Distribution Proceedings, ICWA has agreed to release BGNV from its right to be repaid the amounts it paid to Mr Trevor.[22]
[22] Affidavit of Garry John Trevor sworn 19 August 2020 [88].
In respect of the amounts paid by Plaza, Mr Trevor's evidence is that these amounts will be reimbursed to Plaza by the Curatoren as a cost of the liquidation of BGNV in Curaçao.[23] Plaza has undertaken not to seek repayment from Mr Trevor or the property of BGNV in Australia of the advances it made to him.[24]
[23] Affidavit of Garry John Trevor sworn 19 August 2020 [90].
[24] Affidavit of Garry John Trevor sworn 19 August 2020 [91], 'GJT25'.
Accordingly, provided that completion of the settlement of the Distribution Proceedings occurs, none of Mr Trevor's remuneration will be paid out of the property of BGNV in Australia.
Finalisation of liquidation of BGNV
It is anticipated that completion of the settlement of the Distribution Proceedings will occur on or about 11 September 2020 (Completion).[25] On Completion, BGNV will receive $619.6 million (subject to the agreed adjustments under the settlement agreements). In relation to these funds, $50 million will be paid into an account with the Public Trustee with the remainder paid into Mr Trevor's trust account. Upon a replacement guarantee being provided by Plaza, the funds held in the account with the Public Trustee will also be paid to Mr Trevor.
[25] Affidavit of Garry John Trevor sworn 19 August 2020 [61].
Following Completion, subject to retaining sufficient funds to enable him to complete the final matters required in the liquidation, Mr Trevor intends to remit the payments received by him to the Curatoren within three days of their receipt, archive the books and records of BGNV for a period of five years and apply to the court to be released and for ASIC to deregister BGNV.
Once the funds are remitted by him to the Curatoren, the Curatoren will distribute the funds in accordance with the laws of the principal liquidation in Curaçao. Mr Trevor's evidence is that under those laws:
(a)the majority of the funds will be paid to Plaza, the funder of BGNV;
(b)after meeting any other priority claims, the balance will be paid to LDTC (both in its own right and as trustee for the bondholders);
(c)any distribution received by LDTC as trustee for the bondholders will then be distributed to bondholders.
Statutory regime
Part 5.7 of the Act governs the winding up of bodies other than companies. Section 583 provides that, subject to pt 5.7, the pt 5.7 body may be wound up under ch 5 subject to such adaptations as are necessary. Pursuant to s 583, there are three circumstances in which a pt 5.7 body can be wound up, namely:
(a)the body is unable to pay its debts, has been dissolved or deregistered, or has ceased to carry on business;
(b)it is just and equitable that it be wound up;
(c)on a report from ASIC.
The duties of the liquidator of a registered foreign company are set out in s 601CD(15) of the Act. Relevantly, this includes the duty to recover and realise the property of the foreign company in the jurisdiction and pay the net amount to the liquidator of the foreign company in its place of origin. The net amount is the amount realised from the property in this jurisdiction less (at least) the costs of realisation, namely the costs and expenses of the liquidator.[26]
[26] Re Kiwi Travel International Airlines Ltd (in liq) (Unreported, QSC, 2 February 1998) (Dowsett J).
The provisions governing the remuneration of a liquidator of a pt 5.7 body are not expressly dealt with in that Part. Accordingly, the usual provisions as to the remuneration of liquidators (in s 473(3) or now under sch 2, Insolvency Practice Schedule, div 60) apply. Section 473(3) relevantly provides:
A liquidator is entitled to receive such remuneration by way of percentage or otherwise as is determined:
(a) if there is a committee of inspection ‑ by agreement between the liquidator and the committee of inspection; or
(b) if there is no committee of inspection or the liquidator and the committee of inspection fail to agree:
(i) by resolution of the creditors; or
(ii) if no such resolution is passed ‑ by the Court.
Where the liquidator's remuneration is determined by the committee of inspection or resolution of creditors, the remuneration may be reviewed by the court.[27]
[27] Corporations Act s 473(5) and (6).
Legal Principles
Application for directions
BGNV was ordered to be wound up by orders of the court made before 1 September 2017. Accordingly, pursuant to s 1581 of the Act, the Insolvency Practice Schedule (Corporations) does not apply to BGNV.
For this reason, Mr Trevor's application for directions is made pursuant to s 479(3) of the Act.
The approach of the court on an application for directions by an external administrator is well-established. As Goldberg J stated in Re Ansett Australia Ltd (No 3):[28]
There must be something more than the making of a business or commercial decision before a court will give directions in relation to, or approving of, that decision. It may be a legal issue of substance or procedure, it may be an issue of power, propriety or reasonableness, but some issue of this nature is required to be raised.
[28] Re Ansett Australia Ltd (No 3) [2002] FCA 90; (2002) 115 FCR 409 [65].
The power of the court to give directions to a liquidator is not unfettered. In considering whether it is appropriate to make the directions sought, the court must have regard to the circumstances of the liquidator. As was noted by Pritchard J in Re Great Southern Managers Australia Ltd:[29]
[T]he court will be reluctant to give directions if only commercial considerations are involved, but special circumstances may warrant directions being given. Those special circumstances may include where the liquidator is operating in an acrimonious environment in the liquidation, and the liquidator's proposed decision risks being subjected to criticism by a particular creditor or creditors as being unreasonable or made in bad faith, or where there is a degree of personal risk of litigation attached to the liquidator that could negatively affect the winding up process. It will suffice if such an attack is in prospect. (footnotes omitted)
[29] Re Great Southern Managers Australia Ltd (in liq); ex parte Jones, Weaver and Stewart [2014] WASC 312 [61].
Subject to the liquidator making full and fair disclosure of the material facts, the effect of a direction is to protect the liquidator from claims that they have acted unreasonably, inappropriately, or in breach of their duties; it does not determine rights and liabilities that arise out of the proposed transaction. Put another way, the order of the court sanctions a proposed course of conduct by the liquidator.[30]
Winding up of pt 5.7 Body and payment of remuneration
[30] Re GB Nathan & Co Pty Ltd (in liq)(1991) 24 NSWLR 674, 679 ‑ 680.
In this case, an order or direction is sought in terms that the plaintiff would be acting properly in not seeking approval of his remuneration under s 473(3) of the Act, on the basis that his remuneration has been paid under indemnities given to him by ICWA and Plaza, who do not now require repayment, and the Curatoren, as the bankruptcy trustees of BGNV, have consented to his remuneration.
The winding up of BGNV in Australia is ancillary to the principal insolvent administration in its place of domicile, Curaçao. In these circumstances, the primary duties of Mr Trevor, as liquidator of BGNV in Australia, were to first, invite all creditors in Australia to make a claim against the company and lodge a proof of debt in the administration, second, to recover and realise all property located within the jurisdiction and third, to pay the net amount recovered to the liquidator in the principal administration.[31]
[31] Corporations Act s 601CC(14). See also Akers as joint foreign representative of Saad Investments Co Ltd (in official liq) v Deputy Commissioner of Taxation [2014] FCAFC 57; (2014) 223 FCR 8.
As a court-appointed liquidator, the applicant occupies a fiduciary position. As a fiduciary, he may be exonerated from a breach of fiduciary duty by obtaining the fully informed consent of his principal.[32]
[32] Re ACN 003 671 387(in liq) [2004] NSWSC 368; (2004) 49 ACSR 443 [35], [38] (Austin J).
In Re ACN 003 671 387 (in liq), Austin J held that:[33]
While there appears to be no direct authority, it seems that a court‑appointed liquidator, like a solicitor acting in litigation, owes a duty to the court, in addition to his or her fiduciary duty to the principal, to avoid any undisclosed conflict of interest. In the case of a solicitor, the duty to the court arises from the court's concern that it should have the assistance of independent legal representation for the litigating parties.
By parity of reasoning, a court-appointed liquidator has a general duty to the court to avoid anything that would or might compromise his or her impartiality, which implies a duty not to deal with the company's assets for his or her own benefit, or otherwise place himself or herself in a position of actual or possible conflict between personal interest and the duties of office. The court-appointed liquidator's duty is at least as strong as the lawyer's, and might be even stronger, having regard to the quasi-judicial functions that a liquidator is expected to perform.
Presumably the court, as the beneficiary of this duty, has an inherent power to exonerate the liquidator from performance of the duty, and the exoneration might conveniently take the form of granting leave to the liquidator to enter into the transaction. It is unnecessary to decide whether that leave, if granted in a case where the liquidator has also breached the fiduciary duty, would also absolve the liquidator from breach of fiduciary duty, because in this case the liquidator is protected from breach of fiduciary duty by the consent of his principal.
Though the power to exonerate therefore exists, it seems to me that it will only rarely be exercised. The court will be very careful to preserve the integrity of the winding-up procedure. (citations omitted)
[33] Re ACN 003 671 387 (in liq) [43] ‑ [46].
As a fiduciary, this includes the duty not to make a profit from the office without the fully informed consent of the beneficiaries of the duty. Generally, a liquidator, as an officer of the court, is entitled to look to the assets of the company of which they are liquidator to meet their remuneration and liabilities and outgoings. Section 473(3) of the Act confers a statutory entitlement on a liquidator to remuneration and gives the court the power to determine that remuneration.[34]
[34] Nationwide News Pty Ltd v Samalot Enterprises Pty Ltd (No 2) (1986) 5 NSWLR 227, 230.
It is not uncommon for the assets of the company to be insufficient to meet the liquidator's remuneration. In Stewart v Atco Controls Pty Ltd (in liq), the High Court noted that there was nothing unusual about creditors providing an indemnity to a liquidator to enable actions to be brought and that this was encouraged by s 564 of the Act which enables a preferential distribution to be made to a creditor who provided the indemnity. Specifically, the court stated:[35]
It is an incident of such an agreement that an indemnifier has a right to reimbursement of all monies paid under the indemnity. The indemnifier has a right of subrogation to all the rights and remedies of the party indemnified and any monies recovered by that party.
[35] Stewart v Atco Controls Pty Ltd (in liq) [2014] HCA 15; (2014) 252 CLR 307 [50].
Disposition
In this case, the applicant was ordered to be wound up under pt 5.7 of the Act. The evidence before me is that BGNV is subject to a concurrent liquidation in Curaçao. While a pt 5.7 winding up is not always an ancillary winding up, in contrast to a winding up under s 601CL(14) of the Act, I accept that in this case the winding up of BGNV is properly considered to be ancillary to the concurrent winding up in Curaçao. As an ancillary winding up, the general principal is to 'let the Court of the country of domicil act as the principal Court to govern the liquidation, and let other Courts act as ancillary, as far as they can, to the principal liquidation'.[36]
[36] Re English Scottish and Australian Chartered Bank [1893] 3 Ch 385, 394 (Vaughan Williams J).
The applicant is a court‑appointed liquidator. For this reason, the applicant owes duties not only to the creditors of BGNV but a general duty to the court. The court, as the beneficiary of the duty, has an inherent power to exonerate the liquidator from any performance of their duty. This power will only be exercised rarely to ensure that the integrity of the winding up procedure is preserved.
In this case, as noted at [57], the relevant duty is the duty of a fiduciary not to make any profit at the expense of the beneficiary of the duty. This rule essentially provides that a fiduciary cannot obtain a profit from their fiduciary position without the fully informed consent of those to whom the duty is owed.[37]
[37] Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165, 199 (McHugh, Gummow, Hayne & Callinan JJ).
The evidence before me is that the Curatoren have provided their fully informed consent to the payment of Mr Trevor's remuneration. The question for determination by this court is whether the court should exonerate Mr Trevor from the obligation to obtain approval of his remuneration.
While this power will only be exercised rarely, I consider that for the following reasons, it is appropriate in the unusual circumstances of this case to exonerate the liquidator from the requirement, if any, to seek court approval of his remuneration.
First, this is an ancillary insolvent winding up with the principal winding up occurring in Curaçao. There are no creditors in Australia. The liquidator has realised all property of Bell Group NV in Australia and has sought and obtained approval to remit the funds to the Curatoren.
Second, as an insolvent winding up, the fiduciary duty is owed to the BGNV and its creditors as a whole. There are no creditors in Australia. The Curatoren represent BGNV in Curaçao. The evidence before me is that the Curatoren consent to the remuneration which Mr Trevor has received.
Third, Mr Trevor's remuneration has been calculated by reference to the accepted schedule in Australia for calculating liquidator's remuneration, the agreements provide a mechanism for the review of any dispute raised by the indemnifier and is subject to review by both the Curatoren and a judicial officer in Curaçao. The evidence before me is that no objection has been taken regarding the applicant's remuneration by the indemnifiers and that the Curatoren and judicial officer have approved his remuneration.
Finally, the remuneration of the applicant has been paid under indemnity agreements entered into between the liquidator on the one hand and ICWA and Plaza on the other. Approval for entry into these agreements was obtained from this court. That is, the remuneration that Mr Trevor has received is a contractual entitlement. Under the express terms of these agreements, ICWA and Plaza have a right to reimbursement of all monies paid under the indemnity. The evidence before me is that both ICWA and Plaza have released the applicant from any obligation to reimburse them for the monies they have paid under these agreements. Accordingly, no claim is made on the property of BGNV in Australia.
I turn then to the question as to whether a direction under s 479(3) of the Act should be given. For the following reasons, I am satisfied that it is appropriate that a direction be given in the terms sought by the applicants.
First, I consider that the subject matter of the direction, namely a proposal not to seek approval for his remuneration from the court, is a matter which calls for the exercise of legal judgment. Such a direction is one on which directions are often sought and given.
Second, the direction will facilitate the efficient conclusion of the winding up of BGNV in Australia and avoid unnecessary and costly applications for approval of Mr Trevor's remuneration being brought.
Third, having regard to the extremely long time over which BGNV has been in liquidation, the complexity of the liquidation and its history, and the acrimonious history of litigation concerning the various Bell Group companies, I consider there is a risk of further disputation if the direction sought is not given.
Fourth, there is no suggestion of unreasonableness or bad faith on the part of Mr Trevor nor is there any evidence that any person challenges his remuneration.
Conclusion
For the reasons set out above, I consider it is appropriate to make the direction sought by the applicants. I will hear from the applicants on the precise form of the orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MG
Research Orderly to the Honourable Justice Hill7 SEPTEMBER 2020
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