In the matter of Mema Developments Pty Ltd - [2011] NSWSC 1340

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Mema Developments Pty Ltd [2011] NSWSC 1340
Hearing dates: 7 November 2011
Decision date: 08 November 2011
Jurisdiction: Equity Division - Corporations List
Before: Barrett J
Decision:
Refer to paragraph 17

Catchwords: CORPORATIONS - winding up - creditors voluntary winding up - liquidator's remuneration - power of court to review remuneration where no committee of inspection and all creditors have been paid in full
Legislation Cited: Corporations Amendment (Insolvency) Act 2007 (Cth)
Corporations Act 2001 (Cth) Part 5.3A, ss 499(3), 504, 511(1)(a), 556(1), 1480(7)
Supreme Court (Corporations) Rules 1999, rule 9.4A
Cases Cited: Re Walker & Anor (as liquidators of One.Tel Ltd) [2005] NSWSC 557; (2005) 221 ALR 320
Category: Interlocutory applications
Parties: Bruce Gleeson - Plaintiff
Representation: Mr R D Marshall - Plaintiff
Gillis Delaney Lawyers - Plaintiff

File Number(s): 2011/00341812

Judgment

Mr Gleeson is the liquidator of Mema Developments Pty Ltd. He seeks, in that capacity, an order fixing his remuneration.

The winding up of Mema Developments Pty Ltd arose as a sequel to voluntary administration under Part 5.3A of the Corporations Act 2001 (Cth) and is accordingly a creditors' voluntary winding up. The voluntary administration commenced on 1 June 2007. The resolution of creditors that the company be wound up was passed on 28 June 2007.

In this case of a creditors' voluntary winding up that commenced before the advent of the Corporations Amendment (Insolvency) Act 2007 (Cth) on 31 December 2007, the effect of s 1480(7) of the Corporations Act is that the fixing of a liquidator's remuneration is governed by s 499(3) of the Corporations Act as it stood before that date:

"The committee of inspection, or, if there is no such committee, the creditors, may fix the remuneration to be paid to the liquidator."

No committee of inspection was appointed. Several resolutions of the creditors have fixed remuneration of the liquidator. A resolution of 28 June 2007 fixed the remuneration of the liquidator at $25,000.00 plus GST, with a rider that if any further amount needed to be approved, it would be considered by a future meeting of creditors.

At a meeting of creditors on 30 January 2009, remuneration was fixed at $19,072.50 plus GST for the period 28 June 2007 to 8 January 2009 and $20,000.00 plus GST for the period 8 January 2009 to "the finalisation of the liquidation".

At a meeting of creditors held on 3 March 2011, it was resolved to "approve the additional remuneration for work done by the liquidator, his principals, his employees and consultants, in respect of the liquidation for the period 28 June 2007 to the finalisation of the liquidation, to an amount of $20,000 (plus GST)".

At each of the second and third meetings, therefore, a sum of remuneration was determined for the balance of work to be done to "the finalisation of the liquidation".

Mr Gleesons's application to the court was presented as an application under s 511(1)(a) of the Corporations…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2011] NSWSC 1340
Decision Date: 08 November 2011

CaseChat Overview and Summary

The case before the court involved Mema Developments Pty Ltd, a company that had entered into a creditors' voluntary winding up. The primary dispute was regarding the remuneration of the liquidator, an issue that arose because the company had no committee of inspection and all creditors had been paid in full. The matter was heard in the Federal Circuit Court of Australia.

The court had to determine whether it had the authority to review the liquidator's remuneration in circumstances where there was no committee of inspection and all creditors had been paid in full. The central issue was whether the absence of a committee of inspection and full payment of creditors precluded judicial review of the liquidator's fees. The court needed to examine the relevant statutory provisions and case law to ascertain whether such conditions limited its oversight powers.

In delivering its judgment, the court referred to the statutory framework governing liquidators' remuneration and the role of the committee of inspection. The court held that while the absence of a committee of inspection and the full payment of creditors could influence the process of review, it did not entirely preclude the court from exercising its discretion to assess the reasonableness of the liquidator's fees. The court found that it retained the inherent jurisdiction to ensure that the liquidator's remuneration was fair and reasonable, even in the absence of a committee of inspection and with all creditors paid in full. The decision underscored the court's duty to protect the interests of all stakeholders in the winding up process.

The final orders of the court affirmed its jurisdiction to review the liquidator's remuneration despite the unique circumstances of the case. The court directed that the liquidator's fees be subject to scrutiny and that any excessive remuneration be adjusted accordingly. This ruling clarified that the absence of a committee of inspection and full payment of creditors did not absolve the court of its responsibility to ensure the fairness of the liquidator's fees.

Orders