Supreme Court New South Wales Medium Neutral Citation: In the matter of Rivercorp Pty Ltd (receivers and managers appointed) (in liquidation) [2012] NSWSC 1078 Hearing dates: 9 and 16 July 2012 Decision date: 16 July 2012 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Orders made pursuant to Corporations Act 2001 (Cth) s 477(2B) approving retrospective entry by the liquidator into costs agreements. Liquidator's costs of and incidental to application be costs in the liquidation. Catchwords: CORPORATIONS - Application for orders for retrospective approval of liquidator's entry into costs agreements and associated retainers with two firms of solicitors. Legislation Cited: - Corporations Act 2001 (Cth) ss 477(2B), 588FA, 1322, 1322(4) - Legal Profession Act 2004 (NSW) s 324 Cases Cited: - Empire (Aust) Nominees Pty Ltd v Vince [2000] VSC 324; (2000) 35 ACSR 167 - Hutchison v Hillcrest Litigation Services Ltd [2010] NSWSC 934 - Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498; (2010) 78 ACSR 163 - Re McGrath & Anor (in their capacity as liquidators of HIH Insurance Ltd) [2010] NSWSC 404; (2010) 78 ACSR 405 Category: Interlocutory applications Parties: Robert Boyce Moodie in his capacity as liquidator of Rivercorp Pty Limited (receivers and managers appointed) (in liquidation) (First Plaintiff) Rivercorp Pty Limited (receivers and managers appointed (in liquidation) Representation: Counsel: S. Golledge (9 July 2012) (Liquidator) S. Lipp (16 July 2012) (Liquidator) Solicitors: Polczynski Lawyers (Liquidator) File Number(s): 12/203030 Judgment - EX TEMPORE 1By application made under s 477(2B) of the Corporations Act 2001 (Cth), Mr Robert Boyce Moodie in his capacity as liquidator ("Liquidator") of Rivercorp Pty Ltd (receivers and managers appointed) (in liq) ("Rivercorp") and Rivercorp seeks orders approving retrospectively the Liquidator's entry into costs agreements and associated retainers with two firms of solicitors in relation to claims against third parties seeking recovery of payments made by Rivercorp under s 588FA of the Corporations Act. Alternatively, the Liquidator and Rivercorp seek a declaration under s 1322(4) of the Corporations Act that the costs agreements and associated retainers are not invalid by reason of the Liquidator's not having obtained prior approval to enter into such retainers under s 477(2B) of the Corporations Act. 2The application is supported by affidavits of the Liquidator dated 27 June 2012 and 11 July 2012. The Liquidator retained the first firm of solicitors to advise and conduct the relevant proceedings in May 2010. He retained the second firm in August 2011 in respect of several claims in which the first firm was unable to accept instructions by reason of conflicts. Both firms accepted instructions on the basis that payment was contingent on the recovery of funds. The Liquidator's evidence is that he was without funds in the liquidation and could not have retained those firms other than on that basis. His evidence is that he was not then aware of a requirement for approval of the costs agreements and retainers under s 477(2B) of the Corporations Act. 3The Liquidator gives evidence of having previously retained the two firms in similar work and of his confidence that they have the necessary skill and expertise. The evidence before me indicates that the Liquidator, with the assistance of those firms, has in fact achieved recoveries well in excess of the costs incurred to date. The Liquidator also gives evidence that he is familiar with the rates usually charged by its solicitors for this type of work and the retainer agreements in evidence show rates which are reasonable on their face. The Liquidator also gives evidence that he is satisfied that the amounts invoiced by the respective firms were reasonably charged. There is no reason to doubt his assessment of these matters. 4The application is brought under s 477(2B) of the Corporations Act which provides that, except with the Court's approval or the approval of a 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. The obligations of the liquidator and the solicitors under the retainer agreements may be discharged more than three months after entry into those agreements by reason of the time likely to be required to complete the remaining proceedings. 5In granting approval for the entry into such an agreement, the Court is not concerned with matters of commercial judgment but is concerned to be satisfied that 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] VSC 324; (2000) 35 ACSR 167; Re McGrath & Anor (in their capacity as liquidators of HIH Insurance Ltd) [2010] NSWSC 404; (2010) 78 ACSR 405. It is well established that the Court can give retrospective approval to such an agreement under s 477(2B) and I agree with, and would follow, the view expressed by White J in Hutchison v Hillcrest Litigation Services Ltd [2010] NSWSC 934 that a further order under s 1322 of the Corporations Act is not necessary where an order approving an agreement is made under s 477(2B) of the Corporations Act with retrospective effect. 6There is, on the facts which I have summarised above, no reason to think that the entry into the costs agreements and retainers with the respective firms of solicitors is not a proper exercise of the Liquidator's powers. The rates involved and other terms are not unusual and a provision in one of the costs agreements for an uplift of fees is authorised by s 324 of the Legal Profession Act 2004 (NSW). The Court's role, as I have noted above, is not to second guess the Liquidator's judgment as to the experience and qualification of the solicitors retained and there would be no reason to doubt that judgment on the evidence before me. There is nothing to suggest that the Liquidator's entry into these agreements is not a proper exercise of his powers or is ill-advised or is in any way inappropriate. 7Accordingly, I will make the orders sought under s 477(2B) of the Corporations Act approving the entry into the relevant agreements with retrospective effect and there is no need for further orders to be made under s 1322 of the Corporations Act. 8The liquidator also sought confidentiality orders in respect of documents which were tendered in the proceedings. I was satisfied that a confidentiality order should be made in respect of those documents, for the reasons put by counsel in submissions. The Court's power to make such an order in an appropriate case is well established: Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498; (2010) 78 ACSR at [5]. I made such an order during the hearing of the matter before me. 9The liquidator seeks an order that the costs of the application be costs in the liquidation. I am satisfied that this is a proper case for such an order. 10Accordingly, I make the following orders: 1. An order pursuant to s 477(2B) of the Corporations Act approving retrospectively the entry by the liquidator of the second plaintiff of: (a) The costs agreement with Polczynski Lawyers dated 7 May 2010, retaining Polczynski Lawyers to act or to continue to act as the solicitors for the First Plaintiff and the Second Plaintiff in relation to claims for recovery of payments made by the Second Plaintiff pursuant to s 588 FA of the Corporations Act; and (b) The costs agreement with Streeter Lawyers dated 15 June 2012, as clarified by the letter dated 11 July 2012 from Streeter Lawyers to the First Plaintiff, retaining Streeter Lawyers to act or continue to act as the solicitors for the First Plaintiff and the Second Plaintiff in relation to claims for recovery of payments made by the Second Plaintiff pursuant to s 588 FA of the Corporations Act. 2. The liquidator's costs of and incidental to this application be costs in the liquidation. ********** 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: 20 September 2012