In The Matter of Mendarma Pty Ltd (in liquidation) (No. 2)

Mendarma Pty Ltd, a company in liquidation, was the subject of an application to set aside examination summonses, with the liquidators of the company acting as respondents. The central issue in the case was the extent of the liquidators' liability to pay costs to successful applicants for the setting aside of the summonses. Specifically, the court had to determine whether the liquidators' liability to pay such costs would be limited to the assets of the company that were available to satisfy their right of indemnity, or whether an order could be made for the payment of costs directly from the company's assets, despite the company not being a party to the proceedings.

The court examined the relevant statutory provisions, including sections 474 and 476 of the Corporations Act 2001, which provide for the liquidators' right of indemnity and the circumstances in which they may be held liable for costs. The court also considered the common law principles applicable to the situation, particularly the rule that a liquidator is not personally liable for costs incurred in proceedings unless they have acted in bad faith or outside the scope of their powers. The court found that, in the absence of any specific statutory provision or common law authority, an order for payment of costs directly from the company's assets could not be made against the liquidators, as this would effectively impose personal liability on them for costs that they were not statutorily bound to pay.

In conclusion, the court held that the liquidators' liability to pay costs to successful applicants was limited to the assets of the company that were available to satisfy their right of indemnity, and that no order could be made for the payment of costs directly from the company's assets where the company was not a party to the proceedings. This decision provides important guidance to liquidators and other interested parties in relation to the scope of liquidators' liability for costs in winding-up proceedings.