57 VR 652WESTPOINT CORPORATION PTY LTD (in liq) v YEO Supreme Court of VictoriaSloss J 9 April 2018, 16 November 2018[2018] VSC 705Companies — Winding up — Liquidators — Control of liquidators — Court’s statutory jurisdiction to inquire into conduct of liquidators — Application by creditor for inquiry into conduct of liquidators — Corporations Act 2001 (Cth) s 541(1)(b).Companies — External administration — Liquidators — Liquidator’s remuneration — Where liquidator’s remuneration was approved by creditors — Whether court should undertake a review — Corporations Act 2001 (Cth) s 504(1).
Westpoint Finance Pty Ltd (WPF) was part of the Westpoint group of companies (Westpoint Group). The operations of the Westpoint Group included property development and financing. WPF was the entity responsible for the marketing and sale of properties as investments to potential purchasers. It also offered mortgage broking services. The plaintiff, Westpoint Corporation Pty Ltd (WPC), was the major unsecured creditor of WPF (in liquidation), having lodged a proof of debt which was admitted in the amount of $28,663,909. WPC was the main operating company of the Westpoint Group. At all relevant times throughout the liquidation of WPF, there were receivers and managers appointed to WPC (the receivers).
The proceeding concerned the conduct of the liquidators of WPF (Liquidators) and the remuneration claimed by them. The gist of WPC’s complaint was that the Liquidators had failed to properly perform their duties, incurring legal costs of approximately $600,000 and accruing remuneration in excess of $455,000 in pursuit of sales commission of $562,432 (later amended to $739,205) allegedly payable to WPF (real estate commissions). Separate proceedings were commenced and conducted in Victoria, Western Australia and Queensland for the recovery of real estate commissions in circumstances where WPF did not hold a requisite estate agent’s licence and there were statutory provisions in each state prohibiting the recovery or retention of reward in respect of services performed by an unlicensed agent. WPC contended that by the Liquidators pursuing three such claims, the amount available for distribution to creditors of WPF was diminished by approximately $1 million.
WPC also complained about other conduct of the Liquidators, including their conduct in rejecting a proof of debt and in unsuccessfully contesting an appeal in respect of that rejection.
In addition, WPC contended that the information that the Liquidators provided to creditors during the course of the liquidation was insufficient.
With respect to the Liquidators’ remuneration, WPC contended that the remuneration approved and paid to the Liquidators, totaling $1.4 million (plus GST), was disproportionate to the sums recovered by the Liquidators in the winding up.
WPC sought orders that the Court conduct an inquiry into the conduct of the Liquidators pursuant to s 536(1)(b) of the Corporations Act 2001 (Cth)(Corporations Act), and a review of the Liquidators’ previously approved remuneration, pursuant to subsection 504(1) of the Corporations Act.
Section 536(1)(b) of the Corporations Act relevantly provided that, where…
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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AGLC
Westpoint Corp v Yeo [2018] VSC 705
Case
[2018] VSC 705
Decision Date
CaseChat Overview and Summary
Westpoint Corporation Pty Ltd, a major unsecured creditor of Westpoint Finance Pty Ltd, applied to the Supreme Court for an inquiry into the conduct of the liquidators of Westpoint Finance and a review of the liquidators' remuneration. The Court was asked to review the liquidators' conduct in pursuing claims for commission in respect of the sale of real estate, and the liquidators' remuneration for work performed in the winding up of Westpoint Finance. The Court found that the liquidators' conduct in pursuing the Queensland litigation was sufficient grounds for an inquiry, but that other aspects of the liquidators' conduct were not. The Court found that the plaintiff had demonstrated a sufficient basis for the Court to review the quantum of the remuneration paid to the liquidators for work performed in respect of the three legal proceedings for recovery of real estate commissions. The Court dismissed the plaintiff's applications for relief in all other respects.