Re Moneysaver Free Coupons Pty Ltd (in liq)

The case of Re Moneysaver Free Coupons Pty Ltd (in liq) involved the liquidators of a company that had gone into liquidation. The liquidators faced a claim for insolvent trading under the Corporations Act 2001 (Cth) by an external creditor. The creditor subsequently withdrew its proof of debt, leading to the discontinuance of the insolvent trading proceeding. The liquidators were then faced with a claim for indemnity costs by the former creditor, who alleged the proceeding was commenced and continued without a sufficient prospect of success. The former creditor also sought to join related companies in the proceedings to obtain a costs order against the liquidators.

The primary legal issues before the court were whether the liquidators had commenced and continued the insolvent trading proceeding without regard to known facts, whether they had concluded that the proceeding had a sufficient prospect of success, and whether they were properly advised or should have known that the proceeding had no sufficient prospect of success. The court also considered whether the former creditor was entitled to join related companies to obtain a costs order against the liquidators and whether the court could make a costs order in favour of non-parties under the Civil Procedure Act 2010 (Vic).

The court held that the liquidators had commenced the insolvent trading proceeding without concluding that it had a sufficient prospect of success and without proper advice, thus breaching their duties as liquidators. The court found that the proceeding was not commenced with regard to known facts, and the liquidators continued the proceeding without regard to known facts. As a result, the liquidators were liable for indemnity costs to the former creditor. The court also held that the former creditor was entitled to join the related companies to seek a costs order against the liquidators, as they were proper parties to the proceeding. The court further found that it had the discretion to make a costs order in favour of non-parties in appropriate circumstances.

The court ordered the liquidators to pay the former creditor’s costs of the insolvent trading proceeding. The court also ordered the related companies to pay a portion of the costs, as they were found to be proper parties to the proceeding. The court exercised its discretion to make a costs order in favour of non-parties, recognising the importance of holding liquidators accountable for their actions in commencing and continuing proceedings without a sufficient prospect of success.