In the matter of BCA National Training Group Pty Ltd (in liq)

[2023] NSWSC 366

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of BCA National Training Group Pty Ltd (in liq) [2023] NSWSC 366

Hearing dates:

31 March 2023

Date of orders:

13 April 2023

Decision date:

13 April 2023

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Direct the parties to submit agreed short minutes of order to give effect to this judgment, including as to costs, within 7 days and, in the event of disagreement, their respective draft minutes of order and submissions not exceeding 5 pages in Arial font 12 and one and a half spacing as to the differences between them.

Catchwords:

CORPORATIONS – Application for directions as to whether s 561 of the Corporations Act requires preferred creditors to be paid in priority to liquidator’s remuneration and expenses in a winding up – Where secured debt paid out from non-circulating assets.

Legislation Cited:

- Companies Act 1928 (UK), s 264

- Companies Act 1948 (UK), ss 94, 319

- Companies Code 1981 (NSW), s 446

- Corporations Act 1989 (Cth), s 561

- Corporations Act 2001 (Cth), ss 433, 553, 556, 561

- Insolvency Act 1986 (UK), ss 40, 175

- Insolvency Practice Schedule (Corporations), s 90-15

- Personal Property Securities Act 2009 (Cth), s 142

- Preferential Payments in Bankruptcy Amendment Act 1897 (UK), s 2

- Uniform Companies Act 1961 (NSW), s 292

Cases Cited:

- Aldi Foods Pty Ltd v Shop, Distributive and Allied Employees Association (2017) 262 CLR 593; [2017] HCA 53

- Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; [1993] HCA 15

- Brash Holdings Ltd (admin apptd) v Katile Pty Ltd [1996] 1 VR 24

- Buchler v Talbot [2004] 2 AC 298

- Certain Lloyd’s Underwriters v Cross (2012) 248 CLR 378; [2012] HCA 56

- CIL Realisations Ltd (In Liquidation) [2001] BCC 3000

- Cook v Italiano Family Fruit Company Pty Ltd (in Liq) (2010) 190 FCR 474; [2010] FCA 1355

- Duckworth (as trustee for the Ocean Farm Trust) v Water Corporation (2012) 261 FLR 185; [2012] WASC 30

- Equititrust Ltd (In Liq) (Receiver Appointed) (Receivers and Managers Appointed) (No 4) [2017] FCA 1133

- Kirman v RWE Robinson & Sons Pty Ltd (in liq) [2019] FCA 372

- Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55

- Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28

- Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) [2022] NSWSC 1106

- Re GL Saunders Ltd [1986] 1 WLR 215

- Re Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556

- Re Pearl Maintenance Services Ltd [1995] BCC 657

- Re RCR Tomlinson Ltd (admins apptd) [2020] NSWSC 735

- Re Universal Distributing Company Ltd (in liq) (1933) 48 CLR 171; [1933] HCA 2

- Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252; [2010] HCA 23

- Saker, in the matter of Great Southern Ltd [2014] FCA 771

- Selim v McGrath (2003) 47 ACSR 537

Category:

Principal judgment

Parties:

Bradley Tonks in his capacity as liquidator of BCA National Training Group Pty Ltd (in liq) (Plaintiff)
Commonwealth of Australia as represented by the Department of Employment and Workplace Relations (Interested Party)

Representation:

Counsel:
B Katekar SC (Plaintiff)
J Moore KC/S Friere (Interested Party)

Solicitors:
O’Neill Partners Commercial Lawyers (Plaintiff)
Mills Oakley (Interested Party)

File Number(s):

2022/00337170

Judgment

Nature of the application

1. The Plaintiff, Mr Tonks as liquidator of BCA National Training Group Pty Ltd (in liq) (“Company”) seeks directions in respect of issues as to the application of interplay of ss 556 and 561 of the Corporations Act 2001 (Cth) (“Act”) in the distribution of funds in the winding up of the Company. The Commonwealth of Australia, represented by the Department of Employment and Workplace Relations, which is subrogated to employee claims paid under the Fair Entitlements Guarantee (“FEG”), put a contrary position to that advanced by Mr Tonks.

2. Mr Tonks contends that, by s 556 of the Act, his remuneration and expenses ranks in priority to claims of preferred creditors under s 556(1)(e), (g) or (h) of the Act. The Commonwealth conversely contends that preferred creditor claims must be paid out first under s 561 of the Act. That section relevantly provides that:

“Priority of employees' claims over circulating security interests

So far as the property of a company available for payment of creditors other than secured creditors is insufficient to meet payment of:

(a) any debt referred to in paragraph 556(1)(e), (g) or (h); …

payment of that debt or amount must be made in priority over the claims of a secured party in relation to a circulating security interest created by the company and may be made accordingly out of any property comprised in or subject to the circulating security interest.”

3. Mr Tonks properly seeks a direction from the Court under s 90-15 of the Insolvency Practice Schedule (Corporations) in this regard. I summarised the circumstances in which such a direction can be given to an insolvency practitioner in Re Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556 and Re RCR Tomlinson Ltd (admins apptd) [2020] NSWSC 735 (“RCR Tomlinson”) at [6] as follows:

“The Court’s power to give a direction under s 90-15 of the [Insolvency Practice Schedule (Corporations)] at least allows the Court to give a liquidator advice as to the proper course of action for him or her to take in a liquidation, and may give directions that provide guidance on matters of law and the reasonableness of a contemplated exercise of discretion, although it typically will not do so where a matter relates to the making and implementation of a business or commercial decision, where no particular legal issue is raised and there is no attack on the propriety or reasonableness of the decision. The power to give directions under this section is wider than its power to give such directions under former s 479(3) of the Act … .”

4. In Equititrust Ltd (In Liq) (Receiver Appointed) (Receivers and Managers Appointed) (No 4) [2017] FCA 1133 at [7], in considering the analogous power to give judicial advice to a trustee under the trustee legislation of each State, Jagot J observed that that:

“(a)    the jurisdiction or power to give judicial advice is not constrained by any implications or limitations not found in the express words of the section;

(b)    the Court’s discretion is confined only by the subject matter, scope and purpose of the legislation, and there are no implied limitations on the discretionary factors that may arise or rules governing the relative importance of such factors;

(c)    the judicial advice procedure is intended to be summary in character;

(d)    a judicial advice application is in the nature of ‘private advice’ and a departure from usual Court proceedings in which there are multiple, adversarial parties. Accordingly, a person served with documents in respect of a judicial advice application is not thereby a ‘party’ to the application;

(e)    the right to obtain judicial advice protects the trustee, but it thereby also protects the interests of the [t]rust, by enabling the trustee to act in the interests of the [t]rust without fear of being personally liable for costs;

(f)    the function of the Court in a judicial advice application is to determine what should be done in the best interests of the trust;

(g)    the usual form of order is that the trustee “would be justified” in taking the relevant course of action;

(h)    in order to ensure the protection of the trustee, it is necessary that the statement of facts fully discloses the relevant matters, but it is not necessary for the trustee to “prove” the facts to a certain standard of proof as would be the case in adversarial litigation; and

(i)    the practice of the Court has been to look for, and in appropriate cases, rely upon, a memorandum of opinion from counsel …” [citations omitted]

5. I also summarised the applicable principles in Re Banksia Securities Ltd (recs and mgrs apptd) (in liq) [2022] NSWSC 1106 at [35]ff, on which I have drawn for the summary that appears above. I recognise that a court will generally refrain from giving a direction in relation to a commercial or business judgment within an insolvency practitioner’s discretion where no particular legal issue is raised for consideration and there is no attack on the propriety or reasonableness of the decision in respect of which the direction is sought. That is not the position here, since this application raises potentially complex issues as to the interaction of ss 556 and 561 of the Act.

Affidavit evidence and agreed facts

6. Mr Tonks read two affidavits dated 10 November 2022 and 10 February 2023 in the application. The parties also tendered an Agreed Statement of Facts (“ASOF”) and supplementary facts as to the approval of Mr Tonks’ remuneration and the Commonwealth tendered two reports of creditors in the application. I set out those facts below, drawing upon the affidavits, ASOF and tendered documents.

7. The Company was incorporated on 24 May 1989 and carried on business as a registered training organisation, providing education and training in Sydney, Darwin, Brisbane, Perth and online (Tonks 10.11.22 [8]).

8. On 27 March 2012, the Company entered into a General Security Agreement (“Westpac Security Interest”) with Westpac Banking Corporation (“Westpac”) as security for the Company’s obligations in respect of a business overdraft facility taken out on or about the same date (“Westpac Facility”) (Tonks 10.11.22 [10.1). Westpac was granted security over all the Company’s present and after-acquired property under that agreement. On 24 April 2012, the Westpac Security Interest was validly and effectively registered on the Personal Property Securities Register (“PPSR”) (Ex A1, 49).

9. On 18 March 2019 (“Appointment Date”), Mr Tonks was appointed as liquidator of the Company by a resolution of its members (Tonks 10.11.22 [7]). As at the Appointment Date, the Company’s unaudited balance sheet recorded that the Company’s current liabilities included a debt of $30,000 owing to Westpac (Tonks 10.11.22 [9.2]). The bank statements for the Westpac Facility recorded that, at 31 December 2019, the Westpac Facility was overdrawn in the amount of $21,500.39 (Tonks 10.11.22 [10.2]).

10. Creditor claims totalling $1,995,450.33 have been made against the Company in the liquidation (Tonks 10.2.23 [9.1]). These include secured creditor claim of $26,480.55, being the amount owing under the Westpac Facility as secured by the Westpac Security Interest (Tonks 10.11.22 [19.2]). Preference claims falling within s 556(1)(e), (g) or (h) of the Act total $480,293.65 (Tonks 10.2.23 [9.2]) and comprise claims by the Commonwealth in respect of the amounts advanced to former employees of the Company on account of unpaid employee entitlements in the amount of $417,424.24; by former employees of the Company, whose claims total $44,887.39; by the Department of Human Services of $5,035.45; and by the Deputy Commissioner of Taxation of $12,946.57 (Tonks 10.11.22 [10.7.2]). Ordinary unsecured creditor claims total $1,488,676.13 (Tonks 10.11.22 [10.7.3]). During the winding up of the Company, Mr Tonks realised property of the Company comprising non-circulating assets totalling $168,709.91 (Tonks 10.11.22 [10.4]) and circulating assets totalling $550,344.64 (Tonks 10.11.22 [10.6]). The total asset realisations was $719,054.55, or $692,574 after paying out the Westpac Security Interest.

11. On 29 April 2019, Mr Tonks’ remuneration for the period 18 March 2019 to 22 March 2019 was approved in the amount of $58,600. The Commonwealth did not vote on that resolution. There is no evidence of the extent of expenses incurred by Mr Tonks at that date.

12. By Mr Tonks’ second creditor’s report dated 18 June 2019, he noted that a dividend “may be paid to priority employee creditors”, that he was unable to provide an estimate of the likely return unless all assets had been realised and that he did not expect any other class of creditors to receive a dividend. That report indicated that he had not identified any voidable transactions, although he also noted that the Company may have had solvency challenges from at least 30 June 2018 and identified the possibility of statutory defences available to the director if a claim for insolvent trading was brought.

13. On 19 August 2019, creditors of the Company approved Mr Tonks’ remuneration for the period 23 March 2019 to 31 May 2019 in the amount of $139,811.50, with the Commonwealth supporting that resolution, bringing Mr Tonks’ total approved remuneration to that date to $198,411.50. There is no evidence of the amount of expenses that he had incurred at that date. On 17 June 2020, creditors approved Mr Tonks’ remuneration for the period 1 June 2019 to 30 April 2020 in the amount of $98,151, with the Commonwealth supporting that resolution, bringing Mr Tonks’ total approved remuneration to that date to $296,562.50. There is no evidence of the amount of expenses that he had incurred at that date. On 9 March 2021, creditors approved Mr Tonks’ remuneration for the period 1 May 2020 to 5 February 2021 in the amount of $69,000.50, with the Commonwealth again supporting that resolution, bringing his total approved remuneration to that date to $365,563. There is no evidence of the amount of expenses he had incurred at that date.

14. In late April or May 2021, Mr Tonks paid the amount of $26,480.55 to Westpac in full and final satisfaction of all amounts owing by the Company to Westpac which were subject to the Westpac Security Interest and that payment was made from non-circulating asset realisations (Tonks 10.11.22 [21], correcting an error in the year of the payment; ASOF [13]). On 15 May 2021, Westpac discharged the registered Westpac Security Interest on the PPSR (ASOF [14]). Mr Moore, with whom Mr Friere appears for the Commonwealth, contended for an additional finding of fact that it was not until May 2021 that Mr Tonks was able to satisfy himself that the Westpac Security Interest had been validly registered; the debt secured by it totalled $26,480.55; the whole of the debt secured by that agreement was able to be met from the realisations of the Company’s non-circulating assets; and no recoveries were available from voidable transactions or other actions. The evidence suggests that the position in respect of the Westpac Security Interest was apparent at a significantly earlier date although Westpac delayed providing confirmation of that position. It is not necessary to reach a finding as to that matter, given the conclusions that I reach below.

15. Mr Tonks’ seventh report to creditors dated 7 June 2021 (Ex A1, 143) foreshadowed an anticipated dividend payable to priority creditors of 100 cents in the dollar in respect of wages and superannuation, about 79 cents in the dollar in respect of leave entitlements and nil for redundancy and pay in lieu of notice, and anticipated that there would be no dividend to ordinary unsecured creditors. That report also noted that:

“Westpac held an ALL-PAP security over the Company. Despite numerous requests following my appointment, Westpac did not provide my office with any information regarding their security interest. Westpac recently confirmed that its security interest relates to the Company’s overdraft facility and that the amount owing under the facility totalled $26,641.13 as of 6 May 2021. I confirm that the Company has now paid the debt in full, and Westpac has removed its registration on the Personal Property Securities Register …”.

16. On 29 June 2021, creditors approved Mr Tonks’ remuneration for the period 6 February 2021 to 31 May 2021 in the amount of $37,209.50, with the Commonwealth not voting, bringing his total approved remuneration to that date to $402,772.50. There is again no evidence of the amount of expenses incurred at that date. On the same date, creditors approved Mr Tonks’ remuneration for the period 1 June 2022 onwards in the amount of $20,385.00, with the Commonwealth again not voting, bringing his total approved remuneration to $423,157.50. The approved amount of Mr Tonks’ remuneration under the resolution dated 29 June 2021 was reached on 9 August 2021 and Mr Tonks proposes to seek additional remuneration for the period 9 August 2021 to 30 April 2022 of $52,134, which has not yet been approved by creditors or the Court. As at 10 November 2022, Mr Tonks had claims to $365,563 in creditor-approved remuneration, $109,728.50 in remuneration for which approval had not yet been sought and had incurred $95,321.94 in expenses, totalling $570,613.44. Mr Katekar, who appears for Mr Tonks, notes that, in these circumstances, the property of the Company available for payment of creditors other than the secured creditor, Westpac ($692,574), is insufficient to meet payment of both Mr Tonks’ remuneration and expenses ($570,613.44) and the preferred creditor claims ($480,293.65). I should add that the practical problem in this case appears to arise from the amount of Mr Tonks’ remuneration as approved by creditors, including the Commonwealth on several occasions, which is arguably disproportionate to the amount of recoveries in the liquidation.

The applicable principles of statutory construction

17. Before turning to the parties’ respective positions, I should address the applicable principles of statutory construction. Mr Moore recognises that the construction of s 561 of the Act is to be determined by its text, context and purpose and refers to Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 (“Blue Sky”) and also recognises the relevance of the statutory history of s 561 and its predecessors, referring to Re RCR Tomlinson Ltd (admins apptd) [2020] NSWSC 735 at [14]. I proceed on the basis that the construction of the section is to be determined by its language and text, read in the relevant context: Blue Sky at 381; Aldi Foods Pty Ltd v Shop, Distributive and Allied Employees Association (2017) 262 CLR 593; [2017] HCA 53 at [16]. I also have regard to the history and object of s 561 of the Act which originates from s 2 of the Preferential Payments in Bankruptcy Amendment Act 1897 (UK) and has a long statutory history, with its other predecessors including s 264 of the Companies Act 1928 (UK), s 319 of the Companies Act 1948 (UK), s 292 of the Uniform Companies Act 1961 (NSW), s 446 of the Companies Code 1981 (NSW) and s 561 of the Corporations Act 1989 (Cth).

18. The High Court has also emphasised the primacy of the text of the statute over extrinsic materials. In Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252; [2010] HCA 23 the majority observed (at [31]) that an inquiry as to legislative “intention” is directed to the intention as manifested by the legislation, determined by a careful consideration of the words of the statute to ascertain its meaning. In Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55, the joint judgment of the High Court observed (at [39]) that:

“‘This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text.’ So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.” [Footnotes omitted]

19. Similarly, in Certain Lloyd’s Underwriters v Cross (2012) 248 CLR 378; [2012] HCA 56, French CJ and Hayne J observed (at [25]-[26]) that the purpose of a statute resides in its text and structure; that a determination of a statutory purpose does not permit or require a search for what was in the mind of those who promoted or passed the legislation when it was enacted; and the Court must avoid making an a priori assumption about a statute’s purpose in construing it.

19. Both parties accepted that s 561 of the Act reflects a broad legislative policy that, where a creditor with security over circulating assets allows the company’s business to be conducted such that the company’s circulating assets are augmented by employees’ efforts, it is appropriate that that secured creditor is postponed to the employees’ claims against those circulating assets. Mr Tonks accepts that that policy is applicable under s 561 (and also s 433 of the Act) where a secured creditor lays claim to the company’s circulating assets in competition with preferred creditors, but submits that it does not inform the priority between the preferred creditors and the claims of a liquidator for the costs of the winding up. I do not disagree with the parties’ identification of the broad policy underlying the section, but it seems to me that it is of limited assistance here, where attention should properly be given to the terms of the section as applied in the particular facts.

The parties’ respective positions

21. After the conclusion of the hearing, I directed the parties to submit schedules identifying the propositions of fact and law for which they contended and I have drawn on those schedules to identify the issues to be determined in this judgment. I address the parties’ respective positions successively because they largely adopted different analytical and logical structures, identifying different issues to be decided, rather than identifying common issues on which they took different views.

22. Turning initially to Mr Tonks’ position, first, Mr Katekar submits that, in assessing whether “the property of the company available for payment of creditors other than secured creditors is insufficient to meet payment of” the preferred creditors’ claims for the purposes of s 561 of the Act, Mr Tonks’ remuneration and expenses are to be deducted from the amount of “available property of the company”. He puts that submission on the basis that, first, Mr Tonks is not a “creditor” of the Company, because he is not a person who would be entitled to prove in a winding up of the company under s 553 of the Act: Brash Holdings Ltd (admin apptd) v Katile Pty Ltd [1996] 1 VR 24 at 33; Selim v McGrath (2003) 47 ACSR 537 at 554-5. I accept that submission. Second, Mr Katekar submits that “[p]roperty of the company available for payment of creditors other than secured creditors” distinguishes between property which is available for general creditors and charged assets, after deducting the liquidator’s fees and expenses, and refers to Cook v Italiano Family Fruit Co (in liq) (2010) 190 FCR 474; [2010] FCA 1355 (“Cook”) at [72], [73]; and Saker, in the matter of Great Southern Ltd [2014] FCA 771 (“Saker”) at [23], [27]. Mr Moore also draws attention to the discussion of the concept of property that is “available” for the purposes of s 561 of the Act in Cook at [72]. Finkelstein J there observed that:

“the reference in s 561 to property being ‘available’ for payment to creditors other than secured creditors … distinguishes between property which is available for general creditors (ie the company’s free assets) and charged assets. In this respect, the expression is similar to the ‘property available for payment of debts’ taken from bankruptcy law: see eg Pt VI Div 3 of the Bankruptcy Act 1966 (Cth). That expression has a well understood meaning in bankruptcy law, and is used to distinguish between property available for payment to creditors and property excluded or exempted from payment to creditors.”

23. In response, the Commonwealth accepts that account must be taken of the liquidator’s remuneration and expenses in assessing whether “the property of the company available for payment of creditors other than secured creditors is insufficient to meet payment of” the preferred creditors’ claims under s 561 of the Act. However, it contests the proposition that the costs of the winding up are a first claim on the fund under s 556 of the Act, relying on s 561 of the Act in that regard.

24. Second, Mr Katekar submits that the time for assessing whether there is an “insufficiency” in the assets available to preferred creditors is when enough is known about the company’s affairs to make that assessment, referring to Cook at [70] and Saker at [22]-[25]. The Commonwealth broadly accepts this proposition, although formulating it in somewhat different terms, which I address below.

25. Third, Mr Katekar contends that s 561 operates as between a secured party and preferred creditors, to give the preferred creditors an entitlement to be paid ahead of the secured party out of the company’s circulating assets. He refers to the approach taken in Saker in support of that submission. As Mr Katekar points out, GSL had there borrowed $380 million from three banks, secured by floating charges over all its assets. Receivers were appointed, GSL’s assets were realised, the banks were paid out in full and the receivers were paid over $6 million in fees. Before the receivership came to an end, the receivers obtained orders from the Supreme Court of Western Australia providing for them to pay the liquidators of GSL “sufficient floating charge property to pay the priority debts and amounts referred to in section 561” when the receivership terminated. When that occurred, the receivers paid about $1.2 million to GSL’s liquidators, representing the amounts of the preferred creditors’ claims against GSL. The liquidators then incurred fees of about $1.9 million and a contest arose between the liquidators for their fees and the preferred creditors’ claim to the $1.2 million.

26. As Mr Katekar points out, McKerracher J there found that s 561 allowed the preferred creditors a contingent statutory right against the relevant fund, but held that the contest between them and the liquidators was to be resolved by the application of s 556 of the Act. His Honour referred at [30], without disapproval, to the liquidators’ submission that:

“(a) in the winding up of a company, the order of priority of payments of debts of and claims against the company is that specified in s 556 [of the Corporations Act];

(b) section 561 [of the Corporations Act]:

imposes a duty on a controller of floating charge assets to pay priority debts out of floating charge assets if the relevant conditions are satisfied. It … follows that the controller is required to withhold funds from the secured creditor sufficient to pay priority creditors if it appears that the company’s property is likely to be insufficient. In these respects, s 561 mandates an incursion into the proprietary rights of the secured creditor;

(c) and accordingly:

the costs and expenses of the winding up of the company are payable out of the assets of the company not comprised in the debenture security before any payment is made by the liquidator in respect of what may be called preferential debts. But if the general assets after discharge of the costs and expenses of the winding up are insufficient for the payment of those preferential debts, then to the extent to which they are insufficient the amount must be made up by the debenture-holder whose security creates a floating charge upon the property of the company out of the property comprised in or subject to that charge, or in other words, whether a creditor be an unsecured creditor or a debenture-holder whose only security is that of a floating charge, he is equally to be postponed in respect of any claim of his against the assets of the company until those preferential debts have been paid, but the free general assets must be exhausted before recourse is had to the assets charged.” [citations omitted]

27. Mr Katekar also relies on Kirman v RWE Robinson & Sons Pty Ltd (in liq) [2019] FCA 372 (“Kirman”) at [75], where Banks-Smith J observed that:

“[A] priority creditor’s right to payment from the company’s circulating assets under s 561 only operates against a secured party in relation to security interests of a specified kind, being a “circulating security interests created by the company”.”

28. It seems to me that that observation is directed both to the parties and the nature of the security interests with which s 561 is concerned and that it is correct, so far as s 561 requires that payment of the preferred claims be made “in priority over the claims of a secured party in relation to a circulating security interest created by the company”.

29. Mr Katekar submits that once Westpac was paid out from the proceeds recovered from the Company’s non-circulating assets, s 561 had no work to do, and no contest arose between the preferred creditors and Westpac. He submits that the only contest was between the preferred creditors and the liquidator for his fees and remuneration; and, in that situation, as in Saker, the priority question is governed by s 556 of the Act. Mr Katekar also submits that:

“Putting it another way: in the present case, it is the application of the section 556 “waterfall” that produces a shortfall in the funds available to meet the preferred creditor claims. Section 561 does not require the liquidators to make up any such shortfall. Section 561 only requires the debenture-holder claiming priority to company funds under a circulating security interest to make up such a shortfall, and as otherwise in the circumstances described in that section. Those circumstances do not arise in this case.”

30. Mr Katekar also submits that s 561 mandates an incursion into the proprietary rights of the secured creditor over the circulating assets (Cook at [78]) in order to postpone the claims of a secured creditor to the preferred creditors when there is a contest between those parties over the circulating assets. He submits that no such contest arises here and s 561 does not apply. He submits that, here, the contest is between the claims of a liquidator for his fees and remuneration (referred to in s 556(1)(a) and (de) of the Act) and the preferred creditor claims (referred to in s 556(e), (f) and (g) of the Act). He submits that s 556 rather than s 561 determines that contests in this case. Mr Katekar submits that s 561 is not engaged where the secured creditor lays no claim to the company’s circulating assets, because there are then no “claims of a secured party in relation to a circulating security interest” and there is no “priority” to be granted. Mr Katekar submits that this construction of s 561 accords to its text, context and purpose because it is consistent with the literal meaning of the section and

“operates conformably with its purpose. The policy behind s 561 is not accomplished when there is no contest between the preferred creditors and the secured creditor over the circulating assets. The policy does not apply to a contest between the preferred creditors and the liquidator for his remuneration and costs. That particular contest is resolved under s556: the liquidator’s remuneration and costs take priority.”

31. Mr Katekar also submits that, here, once the secured creditor was paid out from the non-circulating assets, the charge was satisfied. He submits that the Company’s circulating assets were then available to it in accordance with s 142 of the Personal Property Securities Act 2009 (Cth) (“PPSA”), free of that security, to be dealt with under s 556, and no payment was required to be made under s 561 to the preferred creditors, out of the “property comprised in or subject to the circulating security interest” in “priority” to the secured creditor. The Commonwealth disputes that proposition and I address its contentions below.

32. The Commonwealth responds that:

“It is agreed that, by reason of an insufficiency, s 561 required payment of priority creditors out of circulating assets in priority to the claim of the secured party. Section 561 is not a mere priority regime that may be disregarded if, in the circumstances, there is no need to make payment to the secured creditor from circulating assets. … To the extent that it is suggested that Kirman decided otherwise, that is disputed.”

33. I do not accept this submission. It seems to me that s 561 is a priority regime (although I would not adopt the term “mere” in that regard) in respect of access to circulating assets, as between a creditor with security over circulating assets and preferred creditors, which applies where the necessary insufficiency of assets exists. To the extent that the Commonwealth disputes the correctness of Kirman, I should follow the approach taken by another judge at first instance in dealing with national corporations legislation unless I consider that that decision is plainly wrong: Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; [1993] HCA 15; Duckworth (as trustee for the Ocean Farm Trust) v Water Corporation (2012) 261 FLR 185; [2012] WASC 30 at [31]. I do not consider the approach taken in Kirman is plainly wrong; to the contrary, as I noted above, it seems to me to be correct.

34. The Commonwealth also contends that s 561 of the Act is not limited to the position “when there is a contest between those parties over the circulating assets”; that “[c]ompliance with s 561 does not require that there be a contest between the secured creditor and the preferred creditors over the circulating assets” and Cook does not stand as authority for such a proposition; and, alternatively, there is such a ‘contest’ whenever a secured creditor has the legal right (subject to statute) to have recourse to circulating assets to recover the secured debt. It submits that:

“Westpac had the right to have recourse to circulating assets to recover the debt owed to Westpac. Westpac therefore had a ‘claim in relation to a circulating security interest’ within the meaning of s 561 ... The existence of that claim, together with an insufficiency of the Company’s free assets, engaged s 561. The fact that, in the circumstances, Westpac did not need to enforce its claim over circulating assets did not have the consequence of disengaging s 561.”

35. This proposition discloses a central premise of the Commonwealth’s position, which treats the existence of a “claim” to circulating assets as determined by a legal right to access the assets, without regard to any qualification to it arising from the debtor’s right of redemption and the corresponding right under s 142 of the PPSA, or the economic reality of the creditor requiring or taking access to circulating assets to the exclusion of preferred creditors. Mr Moore did not identify any authority which required me to take that approach and I am not persuaded that I should do so. I identify several difficulties with this approach in dealing with the Commonwealth’s submissions below.

36. It seems to me that there was here no application of circulating assets to meet any claim of Westpac as a secured creditor in a manner inconsistent with s 561 of the Act. Although the Company’s assets were the subject of an AllPAAP security interest, the amount of the debt secured was at all times substantially less than the Company’s non-circulating assets and the entire amount of its non-circulating assets was available to preferential creditors, subject to remuneration and expenses which might be incurred by the liquidator and paid in the priority afforded to them by s 561 of the Act. It seems to me that the Commonwealth’s response to Mr Tonks’ submissions neglects the reality that Westpac did not have a claim under its security, at any relevant time, for any amount exceeding the debt that was properly recoverable by it. The “fund” available to the Company at all times included the amount that would inevitably be available to it on discharge of that debt. That proposition does not require the realisation of that surplus in fact, although Mr Katekar points out that that surplus was in fact realised when, after Westpac’s debt was paid out from the non-circulating assets, the circulating assets (and the surplus from the non-circulating assets) was returned to the Company, and then amounted to $692,574 excluding the liquidator’s remuneration and expenses.

The Commonwealth’s alternative positions

37. First, the Commonwealth’s primary position is that s 561 requires the claims listed in s 561(a)-(c) to be paid out of any property comprised in or subject to a circulating security interest, where a secured creditor is owed a debt supported by a circulating security interest created by the company and the uncharged property of the company available for payment of creditors other than secured creditors is insufficient to pay priority creditors. In his submissions in chief, Mr Moore contends that:

“In the present case, the company’s free assets – that is, its uncharged assets – were nil. All of the company’s assets were secured. Accordingly, once it became clear that there would be no recoveries from (eg) any voidable transactions, it also became clear that the ‘the property of a company available for payment of creditors other than secured creditors [was] insufficient to meet payment’ of the s 561 priority creditors.

Even if account is taken of the proceeds of secured property that remain after payment of the secured creditor, it is still the case that ‘the property of a company available for payment of creditors other than secured creditors is insufficient to meet payment’ of the s 561 priority creditors. That is because, if s 561 is ignored, the waterfall in s 556 operates. If that waterfall applied here, the liquidator’s remuneration and costs will exhaust all but $121,960.56. That is not sufficient to pay the debts owed in respect of employees, which total $480,293.65.”

38. Mr Katekar responds that this contention seeks to rewrite s 561 of the Act, which does not state that it applies where “there is a secured creditor who is owed a debt supported by a circulating security interest created by the company”, and that, when the opening words of s 561 apply, the section requires payment of the preferred creditors’ claims “in priority over the claims of a secured party in relation to a circulating security interest”. Mr Katekar submits that that envisages a secured party having “claims in relation to a circulating security interest” for repayment of its debt, in which event payment of the preferred creditors’ claims “must be made in priority over” those claims.

39. Mr Katekar also submits that the Commonwealth’s primary position:

“appears to be that where (as here) a secured party (Westpac) has an AllPAAP security, then once the winding up commences, the secured party ipso facto has “claims … in relation to a circulating security interest”. On that basis, [the Commonwealth] appears to argue that in this scenario, s 561 operates to require the preferred creditors’ claims to be paid out of the circulating assets, even if it ultimately transpires that the secured creditor makes no claim against those assets.”

40. Mr Katekar also submits that:

“The language of s561 militates against this construction. The opening words speak of the sufficiency of the property of the company, which can only be ascertained once the assessment has been made. The section then requires the preferred creditor claims to be made in priority to claims of a secured party in relation to the circulating assets. Whether or not the secured party makes any claim in relation to those assets must also be a matter for assessment once sufficient is known. Further, there can be no “priority” over a secured creditor if that secured creditor has already been paid in full from the non-circulating assets. In that event, the circulating assets will have become “property of the company available for payment of creditors other than secured creditors” under the equity of redemption.

The purpose of the provision also militates against this construction. As addressed above, the employees’ claims are to be paid ahead of a secured creditor who has taken security over circulating assets, which have been enhanced by the efforts of those employees. The provision should only be read as operating to that effect when it actually has that effect.”

41. The Commonwealth’s first contention has the effect that s 561 of the Act applies throughout the winding up, and overrides s 556 of the Act, if a secured creditor has a circulating security interest at the commencement of a winding up and it later transpires that the property of the company available for payment of creditors other than the secured creditor is insufficient to pay the claims of preferred creditors specified in s 561, irrespective of the amount of the debt that was secured and even if it was not paid out from circulating assets. Mr Moore moderated that position slightly in oral submissions to accept that this would not be the case where a circulating security existed but did not secure any debt at the commencement of the winding up.

42. I do not accept this contention, which has no regard to the amount of the debt that is owed to the secured creditor, or whether it can be and is paid out from non-circulating assets, or to the company’s right of redemption under s 142 of the PPSA when the debt is paid out. Mr Moore fairly accepted that he could point to no authority that provided any support for this construction of the section. This construction would lead to remarkable and arbitrary results where, as Mr Moore fairly accepted, a secured creditor’s claim under a floating security would not be deferred if no loan existed at the commencement of the winding up, but would be deferred (in the event of a shortfall for preferred creditors) to the maximum amount of the circulating security (say, $1 million), if a loan of $1 or $100 or $1000 had been left in place secured by the circulating security at the commencement of the winding up. To the contrary, it seems to me that, if a secured creditor had a circulating interest at the commencement of the winding up, which did not, in substance, secure any debt, whether because no debt then existed or because non-circulating assets of the debtor would be sufficient to discharge it, and the right of redemption under s 142 of the PPSA would arise, and circulating assets are not in fact applied to repay the secured debtor at the expense of preferred creditors’ claims, the requirement for payment of preferred creditors in priority to the secured creditor under s 561 of the Act is not engaged. This contention is essential to the Commonwealth’s primary position, and it follows that, where I do not accept this contention, I cannot accept that primary position.

43. Second, the Commonwealth contends that whether that position is established is to be determined as at the date the winding up commenced, although it accepts that it will generally be necessary for a liquidator to wait until sufficient information is known to undertake an assessment of the insufficiency of assets available to pay the preferred creditors. Mr Tonks responds that the section does not require that a determination of this kind be made on the commencement of the winding up, and then not change even though the facts may later change which would cause s 561 to operate differently. Mr Tonks contends that whether s 561 is complied with is to be determined at the time of purported compliance. It is not necessary to determine the correctness of this contention in this form. It is at least common ground between the parties that this question is to be addressed when sufficient information is available, and it appears that was here the case before the Westpac Security Interest was paid out from non-circulating assets.

44. Third, the Commonwealth contends, and it is now common ground, that account must be taken of the liquidator’s remuneration and expenses in assessing whether the property of the company available for payment of creditors other than secured creditors is insufficient to meet the claims of the preferred creditors. The Commonwealth contends that this includes remuneration for work performed, even if that remuneration is not yet approved, and estimated future remuneration to the end of the liquidation. It is not necessary to determine the correctness of that proposition in order to determine this application.

45. Fourth, the Commonwealth contends that the word “claims” in the phrase “the claims of a secured party in relation to a circulating security interest” connotes a right held by the secured party to have recourse to the property subject to the circulating security in order to recover the secured creditor’s debt. Mr Tonks accepts that proposition and says that whether or not the secured creditor makes any such claim against the circulating assets is to be assessed at the time of purported compliance with s 561, which he contends is the date of this hearing. Mr Moore also submits that that word is not used in s 561 as a verb and does not connote the concept of the secured creditor “laying claim to” the company’s circulating assets, in the sense of the secured creditor taking some active step to assert or enforce a right arising under its circulating security interest. Mr Tonks responds that he does not contend that “claims” applies only to a secured creditor enforcing a right, and that s 561 can (as it does here) apply in a liquidation, where the liquidator distributes the company’s funds in accordance with designated priorities in the absence of any enforcement. He submits that the word “claims” envisages the necessity for a secured creditor’s debt to be repaid from circulating assets over which it has security. While I accept the Commonwealth’s submission that that term is not used as a verb in that section, it does not seem to me that the word “claim” extends to a claim that will never be made by a secured creditor to a circulating security interest, for example, because the secured creditor’s debt will is discharged from other assets and the security extinguished in accordance with s 142 of the PPSA.

46. Fifth, the Commonwealth contends that the concept of property being “available” for payment of creditors other than secured creditors within the meaning of s 561 distinguishes between property which is available for general creditors (the company’s uncharged “free” assets) and property which is subject to a security interest granted by the company to a secured creditor. Mr Moore relies on Buchler v Talbot [2004] 2 AC 298 (“Buchler”) at [30], [62] and Cook at [72] in this respect. On that basis, the Commonwealth submits that any surplus of secured assets that “may become available” (I should add, apparently even if it inevitably would become available) after the satisfaction of the secured creditor’s debt is not available within the meaning of s 561. Mr Tonks partly accepts this proposition but submits that the liquidator’s remuneration and expenses are not included in the “property available for general creditors” and that the latter proposition regarding any surplus of secured assets put by the Commonwealth is inconsistent with Cook and Buchler. He submits that, once Westpac discharged its security, the Company had a right of redemption and the remaining funds became free assets of the Company.

47. This contention is also an essential step in the Commonwealth’s position and I also do not accept it. I have addressed the observations in Cook in dealing with Mr Katekar’s submissions above but should now address the House of Lord’s decision in Buchler. The House of Lords there considered the operation of s 175(2) of the Insolvency Act 1986 (UK), which provided that priority debts rank equally among themselves after the expenses of the winding up, consistently with the priority regime in s 556 of the Act, and s 175(2)(b) which provided that preferred creditors must be paid before a secured creditor’s claims out of circulating assets, consistent with s 40 of the Insolvency Act 1986 (UK), which applied to a receivership, and ss 433 and s 561 of the Act. The question in that case was whether liquidation costs should be paid out of floating charge assets in priority to a secured creditor’s claim, after the preferred creditors had already been paid out by a receiver. The House of Lords did not accept the liquidator’s claim to recover remuneration in priority to the secured creditor’s claim. Lord Hoffmann observed at [26]-[31] that:

“The reasoning of the Court of Appeal in this case goes as follows. The expenses of winding-up are payable out of an insolvent company's funds in priority to the claims of unsecured creditors, whether preferential or otherwise. The claims of preferential creditors, so far as unpaid out the company's funds, are payable out of the debenture-holder's funds. It therefore follows that the expenses of winding up are payable out of the debenture-holder's funds.

I find this hard to follow. If A has priority over B in respect of payment out of the proceeds of Blackacre and B has priority over C in respect of payment out of the proceeds of Whiteacre, why does it follow that A has any right to payment out of Whiteacre? ...

The winding up of a company is a form of collective execution by all its creditors against all its available assets. The resolution or order for winding up divests the company of the beneficial interest in its assets. They become a fund which the company thereafter holds in trust to discharge its liabilities... It is a special kind of trust because neither the creditors nor anyone else have a proprietary beneficial interest in the fund. The creditors have only a right to have the assets administered by the liquidator in accordance with the provisions of the Insolvency Act 1986. But the trust applies only to the company's property. It does not affect the proprietary interests of others.

When a floating charge crystallises, it becomes a fixed charge attaching to all the assets of the company which fall within its terms. Thereafter the assets subject to the floating charge form a separate fund in which the debenture holder has a proprietary interest. For the purposes of paying off the secured debt, it is his fund. The company has only an equity of redemption; the right to retransfer of the assets when the debt secured by the floating charge has been paid off. It is this equity of redemption which forms part of the fund held on trust for the company's creditors which arises upon a winding up.

Putting aside any fixed charges, the position is therefore that if a company is in both administrative receivership and liquidation, its former assets are comprised in two quite separate funds. Those which were subject to the floating charge ("the debenture-holder's fund") belong beneficially to the debenture-holder. The company has only an equity of redemption. Those which were not subject to the floating charge ("the company's fund") are held in trust for unsecured creditors. In the usual case in which the whole of the company's assets and undertaking are subject to the floating charge, the company's fund will consist only of the equity of redemption in the debenture-holder's fund.

In principle, each fund bears its own costs. The expenses of the administrative receivership are borne by the debenture-holder's fund. The expenses of winding up are borne by the company's fund. The debenture-holder has no interest in the winding up and the unsecured creditors have no interest in the administrative receivership. So there is no reason why either group should contribute to the expenses of the other. Occasionally (for example, if no receiver has been appointed) a liquidator will realise an asset forming part of the debenture-holder's fund. As the debenture-holder is entitled to the proceeds, it is right that he should pay the cost of realisation ... But the debenture-holder has no liability for the general costs of the winding up.” [citations omitted]

48. His Lordship then went on to recognise (at [32]) the general rule that unsecured creditors are entitled to share pari passu in the company's fund, qualified by the introduction (by the Companies Act 1883 (UK)) of the concept of preferential debts, to be paid out of the company's fund in priority to other unsecured creditors. His Lordship’s approach does not, in my view, support the Commonwealth’s fifth contention, since his Lordship recognised that the Company’s fund would include the equity of redemption in the debenture-holder’s fund. By contrast, the Commonwealth seeks to disregard the surplus of assets that becomes available to the Company by exercising the corresponding right under s 142 of the PPSA.

49. Mr Katekar then submits that that:

“The argument pursued by [the Commonwealth] in this case is the converse of that which was rejected in Buchler v Talbot. It is to the effect that since s 561 requires the preferred creditors to be paid ahead of the liquidator’s fees when the secured creditor lays claim to the circulating assets (ie in the Buchler v Talbot scenario), the preferred creditors should also be paid out ahead of the liquidator whenever there is a circulating security interest over all of the assets of the Company at the time the liquidator was appointed – even if it ultimately transpires that the secured creditor lays no claim to those assets for repayment of its debt.”

50. He submits that the Commonwealth’s submission should be rejected, for the same reason that Lord Hoffmann rejected the Court of Appeal’s approach in Buchler. I accept that this submission should be rejected, but on the somewhat simpler basis that there was here, as a matter of fact, no contest between the claims of a secured creditor and the claims of preferred creditors over the Company’s circulating assets and no application of circulating assets to meet a claim of the secured creditor in a manner inconsistent with s 561 of the Act.

51. Sixth, the Commonwealth contends that the assessment whether the property of the company available for payment of creditors other than secured creditors at the commencement of the winding up is insufficient to meet the claims of the preferred creditors is to be made when there is sufficient information known of the relevant circumstances. Mr Tonks contests the submission that this must occur “at the commencement of the winding up”, on the basis that “sufficient information” will generally only be known well after the commencement of the winding up, as it was in this case. This proposition partly overlaps with the Commonwealth’s second contention and I do not consider that it is necessary to determine it in order to determine this application.

52. Seventh, the Commonwealth contends that, as at the commencement of the winding up (18 March 2019), there was here no property available for payment of the Company’s creditors other than secured creditors, because all of the Company’s property was subject to a security interest granted by the Company to Westpac and there was no other property which was available for general creditors, such as recoveries from voidable transactions. Mr Tonks agrees with the factual proposition, but disagrees that it informs how s 561 is to be applied in the current circumstances. That contention is also essential to the Commonwealth’s claim, and I do not accept it for the reasons that I have noted above.

53. Eighth, the Commonwealth submits that, once enlivened, s 561 continued to operate despite Westpac’s secured debt being satisfied out of the realisations from non-circulating assets. It submits that there is no reason why s 561 should operate differently to s 433, where the two sections are complementary. In submissions in chief, Mr Moore submits that “there is nothing in the text of s 561 to indicate that” it “ceases to operate once the secured creditor is paid out from non-circulating assets”. Mr Moore also submits that s 433 of the Act creates an obligation on a receiver of circulating assets to pay preferred creditors in priority to any claim for principal and interest by the secured creditor. That submission does not assist the Commonwealth, where s 433 of the Act does not apply here, and it does not advance the question whether circulating assets were not here applied in that manner, where Westpac’s debt at all times could be and was discharged without any payment to it from circulating assets, and the Westpac Security Interest was redeemed under s 142 of the PPSA. Mr Moore also drew attention to English and Australian case law dealing with, inter alia, s 94 of the Companies Act 1948 (UK), the predecessor to s 40 of the Insolvency Act 1986 (UK), which broadly corresponds to s 433 of the Act, including Re GL Saunders Ltd [1986] 1 WLR 215, 218A, 219; Re Pearl Maintenance Services Ltd [1995] BCC 657, 663-4; CIL Realisations Ltd (In Liquidation) [2001] BCC 3000; Buchler at [14], [55], [58], [88] and Cook at [72]. Mr Tonks contests this proposition; points out that the Court is being asked to interpret how s 561 applies to the current circumstances, not how s 433 might apply if it had any application, and submits that the Court should not adopt a different interpretation to the express meaning of s 561 to achieve a hypothesised consistency with s 433. He also addresses the Australian case concerning s 433 of the Act and the English case law as to broadly corresponding English sections. With all respect for Mr Moore’s review of this case law, and Mr Katekar’s response to it, it does not seem to me to advance the question that I have to decide in the particular facts and on the proper construction of s 561 of the Act. This submission does not assist the Commonwealth, where the question is not whether s 561 had continued application, but whether circulating assets of the Company were applied inconsistently with its requirements.

54. Ninth, the Commonwealth submits that, once it became clear that there would be no recoveries by the liquidator not caught by the charge (which it contends was clearly by 18 June 2019), s 561 required the liquidator to pay the preferred creditors from the assets that were subject to the circulating security interest. Mr Tonks responds that s 561 only required the liquidator to do so if there was a contest between the preferred creditors and Westpac for payment out of the circulating assets and that there is no such contest here. He again points out that Westpac has released its charge and makes no claim in relation to the circulating assets and has never made such a claim. It seems to me that this ninth of the Commonwealth’s contentions is consequential on its previous contentions, and I do not accept it where I have not accepted essential steps in those previous contentions for the reasons noted above.

55. The Commonwealth then advances a first alternative position, which repeats its first through fourth contentions noted above. The Commonwealth then modifies its fifth contention noted above and instead contends that property available for payment of creditors other than secured creditors within the meaning of s 561 includes: (a) the Company’s uncharged free assets; and (b) property which is subject to a security interest granted by the Company to a secured creditor to the extent that that property is not needed to pay the secured creditor’s debt. The Commonwealth then repeats the sixth through eighth contentions noted above. Mr Tonks responds that this contention is inconsistent with the language of s 561 and particularly contests proposition (b) above. I have not accepted the first, fourth or eighth of the Commonwealth’s contentions, which are expressly incorporated in this first alternative position, so I also do not accept this alternate position. In any event, this alternate position does not seem to me to have the result for which the Commonwealth contends. It seems to me that the assets subject to the circulating security are to be determined by reference to the assets necessary to discharge that security and no contest between preferred creditors and Westpac arises here. The Commonwealth then quantifies the suggested application of s 561 on this basis, and undertaking that assessment as at March 2021, and Mr Tonks contests the relevance of that quantification. It is not necessary to address that quantification where I do not accept that its basis is established.

50. Mr Moore also addressed a further “alternative” position that the elements of s 561 should be applied at different times, so that whether a circulating security exists should be determined at the commencement of then winding up, but the amount of any insufficiency in assets available to meet the claims if unsecured creditors should be determined at a later point. Mr Tonks contests the relevance of this approach. It is not clear to me that this is an “alternative” submission, as distinct from being implicit in the Commonwealth’s primary submission. In any event, this alternative submission would not make any difference to the outcome of this case. Here, there was never a point at which circulating assets would need to be or were applied to satisfy Westpac’s claim, and they were at all times “free”, as a matter of substance, to meet the claims of preferred creditors, although their amount was reduced over time by Mr Tonks’ remuneration and costs. I also see nothing in the terms of the section or the case law that would support that “alternative” approach.

A question that does not arise

57. Mr Moore identifies a further question in submissions, namely, when s 561 applies, what remuneration and costs is a liquidator able to deduct from the proceeds of circulating assets before paying the preferred creditors? Mr Moore submits that the liquidator is only entitled to costs and remuneration associated with activities that fall within the principle in ReUniversal Distributing Co Ltd (1933) 48 CLR 171; [1993] HCA 2. Mr Tonks agrees with that position, but contends this question does not arise, because s 561 does not apply in this case. It is not necessary to address this question, both because it does not arise and because the Court would not, as a matter of discretion, give a direction to a liquidator where no controversy exists as to this question.

Orders

58. For the reasons I have set out above in dealing with the parties’ submissions, I will make the direction sought by Mr Tonks. I direct the parties to submit agreed short minutes of order to give effect to this judgment, including as to costs, within 7 days and, in the event of disagreement, their respective draft minutes of order and submissions not exceeding 5 pages in Arial font 12 and one and a half spacing as to the differences between them.

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I certify that this and the preceding 26 pages

are a true copy of the reasons for judgment herein

of his Honour Justice Black

Associate

Date: 13 April 2023

Decision last updated: 13 April 2023