JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: KITAY -v- FRIGGER [No 2] [2024] WASC 113
CORAM: HILL J
HEARD: 30 NOVEMBER 2022
DELIVERED : 10 APRIL 2024
PUBLISHED : 10 APRIL 2024
FILE NO/S: COR 131 of 2021
BETWEEN: MERVYN JONATHAN KITAY
First Plaintiff
COMPUTER ACCOUNTING AND TAX PTY LTD (IN LIQUIDATION)
Second Plaintiff
AND
ANGELA CECELIA THERESA FRIGGER
First Defendant
HARTMUT HUBERT JOSEF FRIGGER
Second Defendant
Catchwords:
Corporations - Winding up - Retainers and costs agreements entered into between liquidator and solicitors - Whether agreements require approval of court under s 477(2B) of the Corporations Act 2001 (Cth) - Whether liquidator entitled to take steps in proceedings on behalf of company in liquidation - Whether agreement between a liquidator and solicitors confers authority on solicitors to act on behalf of company in liquidation - Whether any approval required for agreements should be given retrospectively
Practice and procedure - Profession and trades - Legal practitioners - Difference between retainer and costs agreement with legal practitioners - Whether liquidator and/or company retained solicitors to act in various proceedings - Requirements for costs agreement with liquidator
Limitation period - Whether any relief sought by plaintiffs subject to a limitation period - When actions seeking declaratory relief accrue - Whether any claims are statute barred - Relevance of delay in seeking relief
Legislation:
Corporations Act 2001 (Cth) s 477, s 556, s 1322(4)
Insolvency Practice Schedule (Corporations) (sch 2 to the Corporations Act 2001 (Cth)) s 90-15
Judiciary Act 1903 (Cth) s 79, s 80
Legal Profession Act 2008 (WA) s 252, s 260, s 263, s 281, s 283
Legal Profession Uniform Law (WA) s 170
Limitation Act 2005 (WA) s 13, s 27
Rules of the Supreme Court 1971 (WA) O 1 r 4A, r 4B
Supreme Court (Corporations) Rules 2004 (WA) r 2.2(3)
Supreme Court Act 1935 (WA) s 25(6)
Result:
Declarations made
Approval under s 477(2B) (to the extent required) given nunc pro tunc
Category: B
Representation:
Counsel:
| First Plaintiff | : | Mr B W Ashdown |
| Second Plaintiff | : | Mr B W Ashdown |
| First Defendant | : | In person |
| Second Defendant | : | In person |
Solicitors:
| First Plaintiff | : | Herbert Smith Freehills |
| Second Plaintiff | : | Herbert Smith Freehills |
| First Defendant | : | In person |
| Second Defendant | : | In person |
Cases referred to in decision:
Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564
Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406
Australian Securities and Investments Commission v Marco (No 6) [2020] FCA 1781
Beach Petroleum NL v Abbott Tout Russell Kennedy (1999) 48 NSWLR 1
Cameron v Cole (1944) 68 CLR 571
Chen v Kornucopia Pty Ltd (No 1); Madgwicks v Efektiv Pty Ltd [2019] VSC 756; (2019) 59 VR 305
Computer Accounting & Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133
Deputy Commissioner of Taxation v ACN 154 520 199 Pty Ltd (in liq) [No 2] [2017] FCA 755
Continue reading Kitay v Frigger [No 2]
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- AGLC
- Kitay v Frigger [No 2] [2024] WASC 113
- Case
- [2024] WASC 113
- Decision Date
CaseChat Overview and Summary
The legal issues that the court had to address included the interpretation of section 477(2B) of the Corporations Act, the distinction between agreements that require court approval and those that do not, and the implications of these agreements on the liquidator’s authority and the solicitors' role. The court had to assess whether the liquidator was acting as an agent for or representative of the company or in his own capacity when entering into the agreements. Furthermore, the court needed to consider whether the company was a party to the agreements, the substance of the agreements, and the benefit derived from the services provided.
The court held that approval under section 477(2B) of the Act is necessary for agreements entered into by the liquidator as an agent for or representative of the company, as well as those in the company’s name. However, agreements entered into by the liquidator in their own name do not require such approval. The court examined each agreement to determine whether it fell under the required approval, considering whether the company was a party to the agreement and who benefited from the services provided. In this case, the First HSF Costs Agreement was entered into by Mr. Kitay personally and did not require approval, as it pertained to legal services provided to him in his capacity as liquidator and did not involve the company as a party or beneficiary. Similarly, the retention of solicitors to provide advice to the liquidator did not require court approval.
The court found that Mr. Kitay did not require leave of the court to enter into the First HSF Costs Agreement or to retain HSF for advice regarding the liquidation. The court concluded that seeking legal advice concerning the discharge of responsibilities as liquidator is a common practice and does not fall within the scope of section 477(2B) of the Act.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
In my view, the approach that has been taken in these decisions is consistent with the purpose and context of s 477(2B) of the Act. As has been held by the courts previously, the purpose of this section is not limited to a consideration of who has direct financial liability for any contractual obligations. It also concerns whether the contract assists with the winding up or proper realisation of the company's assets. This approach is also consistent with the broader context of the Act, which draws a distinction between actions which can be taken by a liquidator or external administrator in their own right (such as applications for examinations under s 596A and s 596B of the Act, or in respect of voidable transactions under s 588FF of the Act), and those which must be brought in the name of the company (such as claims for breaches of directors' duties,[99] or an application under s 601AG of the Act[100]).[99] The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 10] [2009] WASC 107.[100] Kitay as liquidator of ACN 009 009 072 Pty Ltd v Chaucer Syndicates Ltd (CRN 184915) as managing agents for Chaucer Syndicate 1084 [2021] WASC 450. On this basis, I consider that approval under s 477(2B) of the Act is required for agreements entered into by the liquidator as agent for or representative of the company, as well as agreements in the name of the company. However, approval is not required for entry into agreements by the liquidator in their own name. In determining whether the agreement has been entered into by the liquidator as agent for or representative of the company or in their own name, it is necessary to consider the substance of the agreement, whether the company is a party to the agreement or appears to have the status of a party under the agreement, and who receives the benefit of the services provided under the agreement. Given this conclusion as to the proper construction of s 477(2B) of the Act, I turn then to consider each of the relevant costs agreements and retainers. The defendants accept that the First HSF Costs Agreement was entered into between HSF and Mr Kitay personally and did not require approval under s 477(2B) of the Act.[101] In my view, this concession correctly reflects the position in relation to this agreement. [101] Defendants' submissions filed 22 November 2022 [37] - [38]. The First HSF Costs Agreement concerns the provision of legal services to Mr Kitay in relation to the provisional liquidation of CAT. CAT is not a party to the agreement, nor is it mentioned as being the recipient or beneficiary of any of the advice to be provided. The scope of the agreement set out in the letter are all matters which concerned Mr Kitay as liquidator of CAT. On this basis, I find that Mr Kitay did not require leave of the court under s 477(2B) of the Act to enter into the First HSF Costs Agreement. Consistent with this conclusion, I find that Mr Kitay did not require leave under s 477(2B) of the Act to retain HSF to provide him with advice in relation to the conduct of the liquidation. As was noted by Colvin J in considering the Second HSF Costs Agreement, it is common for liquidators to seek legal advice as to the discharge of their responsibilities as liquidator.[102] The retention of solicitors to provide advice to a liquidator does not, in my view, fall within the terms of s 477(2B) of the Act.[102] Kitay (in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (in liq) v Frigger [No 2] [178].