The New South Wales Supreme Court provides directions under Section 511 of the Corporations Act for increasing a Liquidator’s previously approved remuneration. A recent Case of Westnet WA Infrastructure Holdings Limited(2015) deals with an unusual situation where a Liquidator in a Members’ Voluntary Liquidation involving ten related companies applies for directions under Section 511 of the Corporations Act.
In this case, due to the very unusual situation, the Court was asked to decide on two issues:-
- How the Liquidator should deal with a significant amount of unclaimed monies by unsecured Creditors; and
- Whether the court should approve additional remuneration sought by the Liquidator due to the complexity of the liquidations.
In the first issue, the Court agreed with advice from Counsel that the appropriate course of action was the Liquidator to pay the Funds to ASIC pursuant to Section 544 (1) of the Corporations Act.
In considering the second issue of the approval of Liquidator’s additional remuneration, the Court identified the following four problems:-
- In a Members Voluntary Winding Up, did the Court have powers to increase the Liquidator’s remuneration? ;
- What is the significance of the fact that the remuneration was approved when the Liquidator was appointed, likely with his consent? ;
- Is the request for the additional Liquidator’s remuneration reasonable?; and
- Should the Court approve one company to pay the whole of the Liquidator’s remuneration?
In dealing with the first problem, the Court noted the One Tel Limited decision, which confirmed that the Court had broad powers pursuant to Section 511 to determine any question arising in the winding up of a company including remuneration;
In respect of the second problem, the Court noted that it had specific power under Section 504 of the Corporations Act to review the Liquidator’s remuneration even though the Liquidator had previously agreed with the shareholders on a fixed amount;
In considering the third problem, the Court, with the assistance of the Registrar’s report, certified that the Liquidator’s sought remuneration was reasonable;
In addressing the final problem, it was noted that the Liquidator’s work for the ten companies overlapped and since the shareholders did not object, the Court established that the saving of costs benefited the shareholders generally, and subsequently an order that the additional Liquidator’s remuneration be paid out of only one company’s assets, bearing the costs of all companies in the group.
Overall, this case concludes that Section 511 of the Corporations Act is a useful mechanism for Liquidators to approach the Court to determine any question arising in a winding up of a company in unusual circumstances.