Supreme Court New South Wales Medium Neutral Citation: In the matter of Alphena Pty Limited (in liquidation) [2012] NSWSC 536 Hearing dates: 26 March 2012 Decision date: 26 March 2012 Jurisdiction: Equity Division - Corporations List Before: Hammerschlag J Decision: Pursuant to s 477(2B) of the Corporations Act 2001 (Cth), the entry into by the first plaintiff as liquidator of the second plaintiff an agreement in the form which is part of exhibit B to the affidavit of Charly Tannous sworn 23 March 2012 is approved Catchwords: CORPORATIONS - where liquidator retains solicitors for proceedings and retainer agreement includes provision which might offend provisions of the Legal Profession Act 2004 (NSW) as being a conditional costs agreement in relation to a claim for damages providing for the payment of an uplift fee on a successful outcome - liquidator seeks approval to enter into a further agreement - approval granted Legislation Cited: Corporations Act 2001 (Cth) Legal Profession Act 2004 (NSW) Category: Principal judgment Parties: Ozem Azzam Kassem as Liquidator of Alphena Pty Ltd (In Liquidation) ACN 067 092 308 - First Plaintiff Alphena Pty ltd (In Liquidation) ACN 067 092 308 - Second Plaintiff Representation: Counsel: S. Golledge - Plaintiffs Solicitors: Sage Solicitors - Plaintiffs File Number(s): 2012/81350 ex tempore judgment 1HIS HONOUR: Section 477(2B) of the Corporations Act 2001 (Cth) provides that: Except with the approval of the court or of the committee of inspection or of a resolution of the creditors, a liquidator of a company must not enter into an agreement on the company's behalf if the term of the agreement may end or obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance more than three months after the agreement is entered into, even if the term may end or the obligations may be discharged, within those three months. 2The liquidator of Alphena Pty Ltd (in liquidation) ACN 067 092 308 ("the company") and the company itself are party to proceedings in which they are claiming indemnity from PS Securities Pty Ltd on the basis that debts incurred by the company were incurred as its trustee. Those proceedings (the main proceedings) are set down for two days to commence on 29 March 2012. 3By written agreement entered into on 16 May 2011, the liquidator retained solicitors to prosecute the main proceedings. Clause 2.4 of the retainer agreement makes provision for the payment of an "uplift fee" calculated on the basis of any verdict which the company may achieve. 4The Statement of Claim primarily seeks declarations as to the right of the company as trustee to indemnity out of the trust funds, but as further alternative relief, it also seeks equitable damages or compensation. 5Section 323(1) of the Legal Profession Act 2004 (NSW) provides that: A costs agreement may provide that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate. 6Section 324(1) of the Legal Profession Act 2004 (NSW) provides that: A law practice must not enter into a conditional costs agreement in relation to a claim for damages that provides for the payment of an uplift fee on the successful outcome of the claim to which the fee relates. 7Section 327(1) of the Legal Profession Act 2004 (NSW) provides that: A costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void. 8Having received advice, the liquidator considers that it is possible that the retainer agreement is a conditional costs agreement in relation to a claim for damages. If this were the case (which it is not presently necessary to decide) the retainer agreement would be void. 9The liquidator's initial position was to seek the Court's approval for the entry into of that agreement. However, during the hearing he sought, rather, approval for the entry into of a new agreement not containing any uplift provision. 10Undoubtedly the approval which is sought is justly and appropriately to be given. It could not reasonably be expected of the liquidator to motivate the main proceedings without the certainty that the court has approved an appropriate retainer agreement. Approval is required because the retainer agreement may be discharged by performance more than three months after its date of entry. 11Without expressing any definitive view on the matter it may still be open for the liquidator, at some later point in time, to seek approval of the earlier retainer agreement. 12I make the following orders. 13Pursuant to s 477(2B) of the Corporations Act 2001 (Cth), I approve the entry into by the first plaintiff as liquidator of the second plaintiff an agreement in the form which is part of exhibit B to the affidavit of Charly Tannous sworn 23 March 2012. 14Subject to any further order of the Court, the first plaintiff's costs of this application will be costs in the winding-up of the second plaintiff. ********** 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. Decision last updated: 22 May 2012