Deloughery v Weston

Judgment - EX TEMPORE 1This is an application by Mr Mitchell Ball as liquidator ("Liquidator") of Mustang Marine Australia Services Pty Ltd ("Company") for approval of his entry into a deed of funding and indemnity with Abacus Funds Management Limited ("Abacus") ("Funding Agreement") and for approval, or retrospective approval, of his entry into retainer agreements with Paul Bard Lawyers for them to act or continue acting as solicitors for the Liquidator in connection with proposed proceedings. 2The application is brought under s 477(2B) of the Corporations Act 2001 (Cth) which provides that, except with the court's approval, or the approval of the committee of inspection or a resolution of creditors, a liquidator must not enter into an agreement on a company's behalf if the term of that agreement may end, or obligations of a party to the agreement may be discharged by performance, more than three months after entry into the agreement. 3In granting approval for the entry of such an agreement, the court is not concerned with matters of commercial judgment but is concerned to be satisfied that if the entry into the agreement is a proper exercise of power and not ill advised or improper on the part of the liquidator: Empire (Aust) Nominees Pty Ltd v Vince (2000) 35 ACSR 167; Re McGrath & Anor (in their capacity as liquidators of HIH Insurance Ltd [2010] NSWSC 404; (2010) 266 ACR 642; 78 ACSR 405. Several previous decisions consider the question whether a litigation funding agreement should be approved under this section including Re HIH Insurance Group Ltd [2001] NSWSC 308; (2001) 19 ACLC 1102 and Leigh; Re AP & PJ King Pty Ltd (in liq) [2002] NSWSC 578; [2006] NSWSC 315. In the latter case, Austin J referred to his earlier decision in Re ACN 076 673 875 Ltd (2002) 42 ACSR 296 and summarised the relevant factors as including: