Cuthbertson & Richards Sawmills Pty Ltd v Thomas

REASONS FOR JUDGMENT 1 The respondent is the liquidator of Glenwood Cottages Pty Ltd (the Company) a company incorporated under the Corporations Law of the Australian Capital Territory. 2 The appellant brought proceedings in the Supreme Court of the Australian Capital Territory seeking a declaration that a charge given to it by the Company was valid as against the respondent and not void under s588FJ of the Corporations Law. 3 The primary Judge dismissed the claim but this Court allowed an appeal. Orders made on 30 March 1999 (entered on 12 April 1999) included an order: "4. The respondent pay the appellant's costs of the appeal and at first instance." 4 A dispute has arisen as to whether the respondent is personally liable to pay these costs. The appellant by a notice of motion dated September 1999 seeks a declaration that the respondent is so liable. 5 At our request, both sides have filed written submissions. 6 We are satisfied that the Court has jurisdiction to deal with this question. No variation or alteration of the original order is sought. 7 In our view the respondent should not be personally liable for the costs. The only costs to which the appellant is entitled are those recoverable out of the Company's assets. Our reasons are as follows. 8 First, it is not suggested that there has been anything done by the respondent, either in the conduct of the litigation or otherwise, which might make it fair and reasonable for him to incur personal liability. 9 Secondly, the respondent liquidator defended proceedings brought by the appellant. He was not a plaintiff. The importance of this distinction was stressed by Oliver J in Re Wilson Lovatt & Sons Ltd [1977] 1 All ER 274 at 285: "I can quite see that there may be very powerful reasons of policy for a rule that a liquidator, when carrying out his functions and thus subjecting himself to the possibility of proceedings against him by parties who are discontented with the way in which he has carried out those functions, must be entitled to defend himself without being subjected to the risk of having costs awarded against him personally, because of course he cannot protect himself against claims being made. Unless there is some such rule it might be very difficult to get persons to take on the heavy responsibility of the liquidation of companies. It seems to me that it is quite a different matter where the liquidator himself takes it on himself to institute proceedings, whether they be proceedings in the winding-up of [sic] otherwise." 10 Authorities cited by the appellant all concerned cases where the liquidator was a plaintiff. 11 The appellant's notice of motion dated 1 September 1999 will be dismissed with costs. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Heerey, Carr and Tamberlin.