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Judgment 1Mr John Sheahan and Mr Ian Lock ("Liquidators") as liquidators of PM Sulcs Pty Limited (in liq) ("Company") seek approval under ss 477(2A)-(2B), 479(3) and 511(1) of the Corporations Act 2001 (Cth) for entry into a deed of release dated 14 February 2012 ("Deed") between the Company, Daustp Pty Ltd (in liq) ("Daustp") and the Company's former solicitor, Mr Dominic Oliveri ("Mr Oliveri"). A liquidator was appointed to Daustp in May 2004 in a members' voluntary winding up. The Liquidators were appointed to the Company in February 2010, following their appointment as administrators in December 2009. 2The Deed was executed on a conditional basis, subject to the Company obtaining the approval of a resolution of its creditors or the Court to the terms of the Deed. The Deed relates to the settlement of proceedings brought by the Company against Daustp ("Daihatsu Proceedings") and certain disputes between the Company and Mr Oliveri. I should first set out the somewhat complex background to those disputes. 3The Company brought the Daihatsu proceedings in April 1992 and, from mid 1998, Mr Oliveri acted for the Company in those proceedings. The Company was successful in obtaining an order for damages and interest against Daustp in 2001, which was paid; an order for costs was made in the Company's favour; and the Company was given leave to seek additional damages if it was assessed as liable for tax on the amount awarded. 4A dispute arose in late 2001 between the Company, its sole director, Mr Hooper and Mr Oliveri in respect of the costs of the Daihatsu Proceedings. The Company paid costs of $220,045 to Mr Oliveri in respect of the Daihatsu Proceedings and Mr Oliveri claimed costs of a substantially larger amount in respect of those proceedings. 5In 2004 the Company brought proceedings ("Costs Proceedings") against Mr Oliveri seeking to recover costs previously paid to him in respect of the Daihatsu Proceedings and Mr Oliveri brought a cross-claim. The outcome of the Costs Proceedings was that the Company was found liable to pay Mr Oliveri's costs in respect of the Daihatsu Proceedings on a quantum meruit basis. The Company was subsequently ordered to pay Mr Oliveri's costs of the Costs Proceedings on an indemnity basis. 6A costs assessor has determined that the costs properly payable by the Company to Mr Oliveri in respect of the Costs Proceedings are $639,808 and that determination has been affirmed by a review panel which did not award interest on those costs to Mr Oliveri. Mr Oliveri has sought leave to appeal from the determination that he should not be paid interest on that amount ("Interest Appeal"). 7The Company claimed costs in respect of the Daihatsu Proceedings against Daustp in April 2011 in the amount of $1,167,896. Daustp objected to costs of $582,115 and that claim for costs has not yet been assessed. It appears that the Company also faces a likely liability for tax, including interest and penalties, in respect of the judgment given in the Daihatsu Proceedings. Mr Lock, one of the Liquidators, has estimated the likely assessment as in the order of $694,000. 8In November 2011, the Liquidators were advised that the current assets of Daustp were about $1.78 million and were being reduced over time by continuing expenses in its liquidation. The Company and Daustp reached a settlement of the remaining issues in the proceedings against Daustp, in principle, in November 2011 and, in entering that settlement, the Liquidators had regard to the fact that Daustp's available assets were less than the amount of costs and tax which are, or would be, claimed against it. 9Mr Oliveri has also brought proceedings against the Company claiming an equitable charge or lien over the monies payable by Daustp to the Company by way of costs in respect of the Daihatsu Proceedings ("Lien Proceedings"). The Company has also made a claim for costs against Mr Oliveri in respect of a security for costs application brought by him ("Security Costs Order"). 10The Liquidators have formed the view that it is in the Company's commercial interests to reach a settlement with Daustp and Mr Oliveri which provides, inter alia: (a) for payment of the large part of Daustp's assets to the Company, although the amount paid will be significantly less than the Company's claims against Daustp in respect of costs and Daustp's potential tax liability; (b) the Liquidators will retain the amount of approximately $334,000 in their trust account pending determination of the Interest Appeal, which will be paid to Mr Oliveri if the appeal is successful and will otherwise be applied to the costs of the winding up; (c) Mr Oliveri will be left to prove as an unsecured creditor in respect of his claim for costs in the Costs Proceedings; and (d) the Lien Proceedings and the Security Costs Order will be settled on the basis that Mr Oliveri will be paid an amount towards his costs. 11A resolution for approval of the Deed was put to creditors but not approved at a meeting convened on 27 February 2012 and adjourned to 8 and 23 March 2012. Mr Hooper (who is a director, shareholder and creditor of the Company) and Mrs Hooper (who is also a creditor of the company) voted against the resolution for reasons identified in correspondence and at the meeting. The solicitors acting for Mr and Mrs Hooper have, in correspondence with the Liquidators, identified various bases on which Mr and Mrs Hooper contend that the Liquidators' entry into the Deed will be prejudicial to them and have put the Liquidators on notice that they will hold the Liquidators "liable for any loss and damage which may be suffered by them as a consequence of the prejudicial operation of the Deed". 12Although Mr and Mrs Hooper were notified of this application, they have not sought to be heard in it. The Liquidator's decision in respect of the Deed 13I am satisfied that there is no reason to doubt that the Liquidators entered into the Deed in good faith and that their decision to do so was commercially prudent, having regard to the following matters: The proposed settlement between the Company and Daustp will result in the Company receiving a payment equivalent to substantially all of Daustp's assets, although that will be substantially less than the sum of the costs claimed by the Company in respect of the Daihatsu Proceedings and its tax liability, including penalties and interest, as estimated by the Liquidators. There would be a real question as to whether such interest or penalties could be recovered from Daustp in their entirety, or possibly at all, given the significant delay between the delivery of judgment and the steps which have now been taken to address tax in respect of the judgment. The Liquidators could properly have regard, in determining to reach the settlement with Daustp, to the fact that its assets and its ability to meet any judgment will be dissipated over time by the continuing costs of its liquidation. The Deed provides for Daustp to pay Mr Oliveri the amount of $454,960.50 in respect of the costs of the Daihatsu Proceedings and his costs of the Lien Proceedings. The amount of $419,763 is referable to the costs of the Daihatsu Proceedings and reflects the outcome of the Costs Proceedings which held that Mr Oliveri was entitled to his costs on a quantum meruit basis and the subsequent assessment of those costs. Mr Oliveri has asserted a lien over the monies paid by Daustp in respect of those costs, and it appears his claim to such a lien is well founded: Firth v Centrelink [2002] NSWSC 564; (2002) 55 NSWLR 451 at [33]-[43]. Further costs incurred by the Company in respect of these matters are likely to be wasted, where there is no basis to expect that the Company will avoid liability for costs which have already been established by proceedings in this Court and a costs assessment and review in accordance with the Legal Profession Act 2004 (NSW). The balance of approximately $35,000 payable to Mr Oliveri relates to costs of the Lien Proceedings. Although the evidence led before me did not specifically address the quantum of those costs, I can properly infer that that matter has been addressed by the Liquidators in reaching their assessment as to whether the entry into the Deed is in the Company's interests. The Deed provides for an amount to be set aside pending the outcome of the Interest Appeal, to be paid to Mr Oliveri if that appeal is successful and otherwise applied to the costs of the winding up, subject to a qualification to which I refer below. That provision assumes that Mr Oliveri's claim to interest is treated as secured by his lien and that assumption is consistent with authority: Re Drax; Savile v Drax [1903] 1 Ch 781 at 796; Firth v Centrelink above at [118]-[119]; Simpson v Rowe [2011] VSC 149 at [25]. It became apparent, in the course of the Liquidators' submissions before me, that there was a cross-referencing error in clause 4.3(d) of the Deed and that clause could also have been read as suggesting an entitlement of the Liquidators to apply funds paid by Daustp to the payment of costs incurred in the Company's winding up, if the Interest Appeal failed, even if other claims had a higher statutory priority under s 556 of the Corporations Act. The Liquidators have addressed that issue by undertaking to the Court that all proceeds of the settlement referred to in that clause, and all proceeds received under the Deed generally, will be received and administered by them in accordance with the statutory order of priority under s 556 of the Act. On the basis of that undertaking, I do not see that clause as a reason not to give the direction sought. The Deed does not afford priority to Mr Oliveri in respect of his claim for costs in relation to the Costs Proceedings. This approach properly reflects the fact that those costs are not secured by an equitable lien. 14Mr Hooper (who, as I noted above, is the sole director of, and a creditor of and shareholder in, the Company) and Mrs Hooper (who, as I have noted above, is a creditor) have opposed the Deed in correspondence and at the creditors' meeting on the basis that, inter alia, it may provide a "windfall" to Mr Oliveri if the Office of the Legal Services Commissioner ("OLSC") upholds a complaint that Mr Hooper has made (in the Company's name, with the Liquidators' consent) against Mr Oliveri and determines that the Company is not required to pay Mr Oliveri's costs. I do not have the advantage of any submissions made by Mr and Mrs Hooper in support of this position, since they have not sought to be heard in respect of the direction sought by the Liquidators. However, I cannot see any basis on which the OLSC could determine that the Company is not required to pay Mr Oliveri's costs, where such a determination would be inconsistent with a decision of this Court which is binding upon the Company and Mr Oliveri and with the result of a costs assessment undertaken in accordance with the statutory regime for such assessments established under the Legal Profession Act. I accept the Liquidators' submission that, even if the OLSC were to treat the application as a claim for compensation under s 570 of the Legal Profession Act, such compensation would not be available to the Company where the relevant conduct occurred more than six years before the date of the complaint. 15Mr Hooper also contends that the preferable course for the Liquidators would be to pursue a further claim for costs against Daustp but this contention faces the difficulties that, first, the Liquidators would be required to incur further costs in doing so and, second, the commercial benefit of their doing so is not apparent where there is no suggestion that Daustp has significant assets available to meet any judgment against it beyond the amount of those assets which will already be made available to the Company under the Deed. The Court's jurisdiction 16Section 477(2A) of the Corporations Act prevents a liquidator compromising a debt of greater than the prescribed amount without, relevantly, the approval of the Court or a resolution of creditors. (The Company has no committee of inspection). Section 477(2B) of the Corporations Act deals with approval of an agreement which may end, or where obligations of the parties may be discharged by performance, more than three months after the agreement was entered into. 17Section 479(3) of the Corporations Act allows a liquidator to apply to the Court for directions in relation to a matter arising under a winding up. The function of a liquidator's application for directions under this section is to give the liquidator advice as to the proper course of action for him or her to take in the liquidation: Sanderson v Classic Car Insurances Pty Ltd (1985) 10 ACLR 115 at 117; (1986) 4 ACLC 114; Re Ansett Australia Ltd (admins apptd) and Korda [2002] FCA 90; (2002) 115 FCR 409; 40 ACSR 433 at [46]. The Court will typically not give directions where a matter relates to the making and implementation of a business or commercial decision, where no particular legal issue is raised and there is no attack on the propriety or reasonableness of the decision, but may do so where a legal issue or attack on the propriety of the decision is raised: Sanderson v Classic Car Insurances Pty Ltd above at 117; GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 686-7; 5 ACSR 673; 9 ACLC 1291; Re Ansett Australia Ltd above at [65]. For example, the Court gave a direction to a liquidator that he would be acting appropriately in discontinuing appeals in Re Addstone Pty Ltd (in liq) (1997) 25 ACSR 357, where Mansfield J observed at 363 that: "While the court may be reluctant to give directions where purely commercial considerations are relevant to the liquidator's decision, even in relation to the conduct of litigation, there will be circumstances where it is or may be appropriate to do so. One of those circumstances may be where the liquidator's proposed decision is the subject of criticism by a particular creditor or creditors as being unreasonable or mala fides." A liquidator is protected against a claim for breach of duty if he or she acts in accordance with a direction given by the court under s 479(3) and he or she made full disclosure to the court in the relevant application. 18Section 511 of the Corporations Act in turn allows a liquidator in a voluntary winding up to apply to the Court to determine any question arising in that winding up and exercise any power the Court could exercise if the Company was being wound up by the Court, if it is "just and beneficial" to do so. In Re Bauhaus Pyrmont Pty Ltd (in liq) [2007] NSWSC 936; (2007) 64 ACSR 646, Bergin J (as her Honour then was) reviewed the authorities and gave such a direction under s 511 of the Corporations Act, where her Honour was satisfied that the making of that direction was just and beneficial in advancing the liquidation. Similarly, in Handberg (in his capacity as liquidator of S & D International Pty Ltd (in liq)) v MIG Property Services Pty Ltd [2010] VSC 336; (2010) 79 ACSR 373, which concerned an application for directions under s 511 of the Corporations Act in respect of complex litigation, Warren CJ noted that the Court would act with restraint in approving a compromise of liquidation, but nonetheless observed that the liquidator in that case was: "... not seeking commercial advice from the court. He has already made what he regards as the appropriate and reasonable commercial decision. It is contained in the settlement deed. Having made that decision, he now asks the court to protect him from the potentially unreasonable behaviour of other parties involved in these proceedings. He is seeking the protection which the court is able to provide him in light of the difficult and litigious circumstances in which he finds himself, and the risk that they pose to his continuing ability to effectively and equitably wind up the second plaintiff." 19I am satisfied that this is a proper case in which to make a direction under s 511 of the Corporations Act, having regard to findings which I have made above as to the Liquidator's decision to enter into the Deed; the complex history of the litigation between the Company and Daustp on the one hand and Mr Oliveri on the other; the fact that the entry into the Deed involves an assessment of several legal issues and the claims asserted by Mr Hooper also raise legal issues; and the fact that the giving of the relevant direction would, in my view, be just and beneficial to advance the winding up by placing the Liquidators in a position where they have, subject to the adequacy of the information put before the Court, protection in respect of the entry into the Deed. 20In these circumstances, I consider that I should give the direction which is sought. I direct the Liquidators to submit, within seven days, a form of order to give effect to this judgment.