Onefone Australia Pty Ltd v One.Tel Ltd [2009] NSWSC 540

Reported Decision : 72 ACSR 301

New South Wales Supreme Court

CITATION : Onefone Australia Pty Ltd v One.Tel Ltd [2009] NSWSC 540

HEARING DATE(S) : 19/03/09

JUDGMENT DATE : 12 June 2009

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : Barrett J

DECISION : Short minutes to be brought in.

CATCHWORDS : CORPORATIONS - winding up - special purpose liquidator - assessment and funding of special purpose liquidator's expenses

CATEGORY : Principal judgment

CASES CITED : Onefone Australia Pty Ltd v One.Tel Ltd [2006] NSWSC 1447 Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290

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

FILE NUMBER(S) : SC 5291/03

COUNSEL : Mr S M Golledge - Special Purpose Liquidator

SOLICITORS : NOT Lawyers - Special Purpose Liquidator

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

BARRETT J

FRIDAY 12 JUNE 2009

5291/03 ONEFONE AUSTRALIA PTY LIMITED & 3 ORS v ONE.TEL LIMITED & 2 ORS JUDGMENT 1 The applicant is the special purpose liquidator of One.Tel Ltd. The circumstances of his appointment and aspects of his administration are referred to in a number of previous judgments, most recently Onefone Australia Pty Ltd v One.Tel Ltd [2008] NSWSC 1335; (2008) 69 ACSR 290. I need not repeat here the brief chronology recited in the last-mentioned judgment (which I shall call "the December 2008 judgment"). 2 I am dealing now with another application by the special purpose liquidator that arises from what can only be described as the unsatisfactory circumstances that the general liquidators of One.Tel cannot properly exercise any oversight of expenditures by the special purpose liquidator (see paragraph [14] of the December 2008 judgment), that the special purpose liquidator has no insight into the financial resources available in the winding up and no capacity to engage in any kind of prioritising of expenditures (see paragraph [11] of the December 2008 judgment), that the committee of inspection in the One.Tel winding up has no power to control or monitor expenditure by the special purpose liquidator (see paragraph [54] of the December 2008 judgment) and that no statutory process of screening or evaluation exists in relation to a liquidator's recoupment of expenses (paragraph [52] of the December 2008 judgment). 3 At an earlier stage of the special purpose liquidator's administration, the committee of inspection undertook on an informal basis the function of monitoring expenditures by the special purpose liquidator. The basis on which it did so was described by White J in a judgment of 20 December 2006 (Onefone Australia Pty Ltd v One.Tel Ltd [2006] NSWSC 1447) at [10]: "As a matter of practice, the special purpose liquidator has been providing the members of the Committee of Inspection with at least summaries of the legal expenses incurred, and has provided the members of the Committee with a budget of future expenditure on legal costs. The Committee has de facto assumed a greater role in overseeing such expenditures than would normally be the case." 4 The default nature of the committee's role was then referred to by his Honour at [11] and [12]: "It is not appropriate that the special purpose liquidator be required to make repeated applications to the Court for approval of his funding. Such applications themselves carry costs. Nor is the Court in a position to make an informed assessment as to the appropriateness of the expenses.