New South Wales Supreme Court CITATION : Onefone Australia Pty Ltd v One.Tel Ltd [2009] NSWSC 822 HEARING DATE(S) : 17/08/09 JUDGMENT DATE : 17 August 2009 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 17 August 2009 DECISION : Application to court adjourned. CATCHWORDS : CORPORATIONS - winding up - creditors' voluntary winding up - remuneration of liquidator - request by liquidator that committee of inspection fix remuneration - committee seeks information or explanation in two areas - not clear that this given as to both - court cannot find that statutory machinery for fixing remuneration has broken down - liquidator's application to court adjourned LEGISLATION CITED : Corporations Act 2001 (Cth), ss 499(3), 511 CATEGORY : Principal judgment CASES CITED : Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290 Re Walker & Anor (as liquidators of One.Tel Ltd [2005] NSWSC 557; (2005) 54 ACSR 11 Onefone Australia Pty Limited - First Plaintiff DCA Resources Australia Pty Limited - Second Plaintiff Pacific Finance Group Pty Limited - Third Plaintiff PARTIES : Concept Systems (Australia) Pty Limited - Fourth Plaintiff One.Tel Limited (in liquidation) - First Defendant Steven Sherman - Second Defendant Peter Walker - Third Defendant Paul Gerard Weston - Applicant FILE NUMBER(S) : SC 5291/03 COUNSEL : Mr R D Glasson - Applicant SOLICITORS : NOT Lawyers - Applicant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J MONDAY 17 AUGUST 2009 5291/03 ONEFONE AUSTRALIA PTY LIMITED & 3 ORS v ONE.TEL LIMITED (IN LIQUIDATION) & 2 ORS JUDGMENT 1 The special purpose liquidator of One.Tel Limited makes application under s 511 of the Corporations Act 2001 (Cth) in relation to a question which he considers to have arisen in the winding up of that company. 2 The question concerns the quantum of the special purpose liquidator's remuneration for the period 1 May to 30 June 2009. 3 Under s 499(3) of the Corporations Act, the function of fixing remuneration in this creditors' voluntary winding up is vested in the committee of inspection (the version of s 499(3) relevant for present purposes is that existing immediately before 31 December 2007: see Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290 at [32]). The court has no power to fix remuneration, but it has been held in earlier cases (see, for example, Re Walker & Anor (as liquidators of One.Tel Ltd [2005] NSWSC 557; (2005) 54 ACSR 11) that, if the machinery created by s 499(3) breaks down and proves unworkable, then a question within the meaning of s 511 arises and the court may answer that question. 4 It is the contention of the special purpose liquidator that the s 499(3) machinery has broken down and proved unworkable in respect of remuneration for the period to which I have referred. 5 The evidence is that the special purpose liquidator's claim for remuneration for the period in question in the sum of $61,502.98 was submitted to a meeting of the committee of inspection on 31 July 2009. The special purpose liquidator's affidavit identifies two matters of concern then raised by the committee. With respect to one of the matters, the special purpose liquidator outlines in his affidavit the response or explanation that he gave to the meeting. In respect of the other, however, it does not seem that his affidavit discloses any response or explanation that he gave. 6 In the result, the motion for fixing of remuneration was not carried when one member of the committee voted against and the other three members abstained from voting. 7 I am not satisfied that, in these circumstances, the statutory machinery can be seen to have broken down and proved unworkable in the way that is necessary for resort to s 511 to be appropriate. On the evidence, there was some discussion at a meeting, two issues of concern were raised, some oral explanation was given about one of them but, as I have said, it is not clear that any explanation was given about the other. That is not a sufficient foundation for the special purpose liquidator to approach the court under s 511. 8 There must be interaction and debate. If the committee of inspection requests further information or explanation, the special purpose liquidator ordinarily ought to provide that. 9 If the committee of inspection needs time to consider the explanation, that time should be granted. 10 There cannot be, as it were, automatic resort to s 511 just because something is put up and not passed at a single meeting. That is insufficient. This is particularly so when the fact that three out of the four members of the committee abstained from voting may well be taken to indicate that they did not consider themselves to be in a position to make a properly informed decision. 11 It is also important to note that the committee has a statutory function to perform and therefore a duty to act. If it finds itself unable to do so despite its best efforts, it must say why. 12 I intend to stand over the special purpose liquidator's application for a period so that the dialogue I consider to be necessary and appropriate may take place. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.