Crisp v ACN 069 859 585 Pty Ltd

AND: ACN 069 859 585 PTY LTD (FORMERLY KNOWN AS WATERMAN COLLECTIONS PTY LTD) and

REASONS FOR JUDGMENT 1 Mr Crisp is the former liquidator of Waterman Collections Pty Ltd now known as ACN 069 859 585 Pty Ltd (in liq). He was appointed liquidator by resolution of the company's creditors. The creditors also resolved that Mr Crisp's remuneration be "fixed on a time basis in accordance with the hourly rates set by RSM Bird Cameron from time to time subject to an overall limit of $16,448.10 (including GST and disbursements) beyond which the liquidator must seek further approval of creditors". Mr Crisp contends that his proper remuneration exceeds the limit imposed by the creditors' resolution. So he has made application to have his remuneration fixed by the court. 2 According to his amended application Mr Crisp applies for relief under ss 473(3), 504 and 511 of the Corporations Act 2001 (Cth). A major creditor, Insurance Australia Ltd (IAL), the second respondent, contends that Mr Crisp is not entitled to any further remuneration. In a statement of grounds where its several objections to Mr Crisp's application for remuneration are set out, IAL also contends that the court does not have "jurisdiction" to fix Mr Crisp's remuneration under any of the sections pursuant to which his application is brought. 3 The "jurisdictional" issue has several components. One of IAL's submissions is that, at least as regards ss 504 and 511(1), Mr Crisp does not have standing to bring the application under those sections. 4 Section 504 provides that: "Any member or creditor, or the liquidator, may at any time before the deregistration of the company apply to the Court to review the amount of the remuneration of the liquidator, and the decision of the court is final and conclusive". Section 511(1) provides that: "The liquidator, or any contributory or creditor, may apply to the Court: (a) to determine any question arising in the winding up of a company; or (b) to exercise all or any of the powers that the Court might exercise if the company were being would up by the Court". 5 The standing issue comes about because each section confers on three classes of person, a member (or contributory), a creditor and a liquidator, the ability to make the relevant application. And, so the argument goes, as Mr Crisp is no longer the liquidator he cannot bring an application under either section. 6 At a directions hearing held on 26 October 2010 I said I would resolve this construction question there and then. But Mr Crisp was not ready to proceed. Accordingly, I directed the parties and ASIC, which has intervened in the proceeding, to file written submissions on the standing question to enable me to resolve the dispute on the papers. 7 I should point out that at the directions hearing, Mr Lee, who with Ms Francois appeared for IAL, accepted (transcript at 14) that, at least for some work performed (ie work performed to satisfy his statutory obligations) Mr Crisp was entitled to be paid, although the amount involved has yet to be determined. 8 Written submissions were received from the parties. The submissions filed on behalf of IAL addressed Mr Crisp's standing solely by reference to him being the former liquidator of the company. In a comprehensive submission it was argued that the two sections, properly construed, do not enable a former liquidator to bring an application under them. 9 A submission prepared by Dr Bigos, who appeared on behalf of ASIC, took a different stand. While acknowledging that neither section expressly conferred standing on a former liquidator, reference was made to cases in which it had been held that a former provisional liquidator and a former administrator could apply to have their remuneration determined under sections that applied to liquidators and administrators respectively. The cases are Nationwide News Pty Ltd v Samalot Enterprises Pty Ltd (No 2) (1986) 5 NSWLR 227 and Re Currabubula Holdings Pty Ltd (in liq); Ex parte Lord (2004) 48 ACSR 734. ASIC's submission, in summary, was that it would not take much (ie it would not require a significant expansion in the language of the two sections) to reach the conclusion that a former liquidator has standing under them. 10 For reasons which will become apparent in just a moment, I need not resolve whether a former liquidator is a liquidator for the purposes of s 504 and s 511. Although I need not resolve the issue, my preliminary view is that a former liquidator cannot bring himself under either provision. When a company is in the process of being wound up the only persons interested in the winding up are the liquidator (whose job it is to carry out the winding up) and the creditors and contributories (who may benefit from the winding up if there are enough assets). Apart from one instance, a former liquidator is simply a stranger to the liquidation. The exception is where the former liquidator is also a creditor of the company. But, in that event, he/she falls under ss 511 and 504 as a creditor. 11 Following the filing of the submissions my associate sent a note to the parties which enquired whether Mr Crisp's application could not be founded on his status as creditor with the relevant issue being: What is the quantum of the debt which is owed to him? This enquiry elicited supplementary submissions from the parties. The supplementary submissions from IAL recorded that it was "cognisant of the separate position of creditors" under the sections but that it had filed its submissions on the basis that Mr Crisp only pressed his application on the ground that he was a former liquidator. In its primary submission IAL had made the point (in a footnote) that: "Although s 511(1) also provides that a 'creditor' may apply to the Court, the Applicant has not put his case forward on the basis that he is a creditor as distinct from a liquidator". 12 Quite frankly I am indifferent to the basis upon which a person claims standing to invoke the court's jurisdiction. My only interest is whether he/she does or does not have the requisite standing. Just to make the point quite clear, where a person moving the court is mistaken about the basis of his/her standing but, in law, he/she in fact has standing it would be extraordinary for the court not to entertain the application. 13 It being clear (if for no other reason than as a consequence of counsel's concession) that Mr Crisp is entitled to some additional remuneration, he has standing to bring his application under both ss 511 and 504. Even if it be the position that IAL disputes that Mr Crisp is a creditor, as he claims he is, it would be necessary to leave the determination of his standing to the trial as the jurisdictional facts and the merits are intertwined: see for example Barrett v US 853 F (2d) 124 (1988); US v North Carolina 180 F (3d) 574 (1999); Cupit v US 964 F Supp 1104 (1997). 14 The second question is whether a creditors' resolution which capped a liquidator's remuneration is subject to review under s 504 as it stood on 30 December 2007. The only difference between the section then and now is the addition of sub-paragraph (2), which provides that the court must have regard to whether the remuneration a liquidator seeks is reasonable, taking into account any or all of a number of listed matters. 15 The issue raised by the question is whether what Mr Crisp seeks is, in substance, a "review" of the creditors' resolution. In Re Walker (2005) 54 ACSR 11 Barrett J said (at [11]) that: "Section 504 works upon an implicit assumption that the machinery for the fixing of remuneration will always operate to produce a remuneration sum and that the only need for the court's involvement will be to review the sum so fixed". This rather suggests that Mr Crisp cannot bring himself under the section. 16 But that is of no real consequence here because his remuneration could be fixed under s 511. It is true that in Re Electronic Surplus Warehouse Pty Ltd [2010] NSWSC 827 Barrett J said (at [17]) that recourse to s 511 for the purpose of fixing a liquidator's remuneration is appropriate when "the statutory machinery for fixing the quantum of the remuneration of a liquidator … breaks down and proves unworkable". The statutory machinery to which Barrett J referred is that contained in s 499(3), which provides that a liquidator's remuneration may be fixed by the committee of inspection or by creditors. 17 That machinery is not available here because it is likely that s 499(3) only permits the fixing of a current liquidator's remuneration. IAL puts forward an alternative machinery, which is that Mr Crisp should apply to the present liquidator to have his remuneration assessed and, if dissatisfied with the result, he could bring an appeal to the court under s 1321. This is not specific machinery for the fixing of costs of the kind that Barrett J had in mind. 18 Moreover, I think the suggested process is a waste of both time and money. The dispute in this case is not between Mr Crisp and the present liquidator but, rather, between Mr Crisp and IAL. It is a dispute which, having regard to its nature, will inevitably come before the court to be resolved. It is unreasonable to involve the present liquidator in this dispute for that would just run up costs for no good purpose. 19 I will require IAL to pay Mr Crisp's costs on this aspect of the application. I will hear the parties on what further orders should be made to enable the remaining matters in dispute to be resolved. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.