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Kennards Hire Pty Ltd v RMGA Pty Ltd [2010] NSWSC 1387

by Emma.Gleeson 8. February 2011 10:08



The applicant applied by interlocutory process for:

·         a review of the remuneration of Mr Clout as liquidator of the defendant determined by resolutions of creditors under s 473(6) of the Corporations Act 2001 (Cth) (the Act); and

·         an inquiry by the court into the conduct of Mr Clout as liquidator of the defendant, under s 536(1)(b) of the Act: [2]-[6].


An applicant for an inquiry under s 536 must show that such an inquiry is warranted by establishing that there is a sufficient basis for making such an order. A sufficient basis is in the nature of a well-based suspicion indicating a need for further investigation: [35]-[36]. However, even if such a basis is shown, the court has discretion whether or not to order an inquiry: [36].




The conduct of the liquidator in neither opposing nor consenting to an application to stay a winding up order under s 482 did not warrant an inquiry, on the basis that:

o        The power of the court under s 482 is discretionary, and the interests of creditors, the liquidator, contributories and the public will be considered by the court: [50].

o        The court will expect to have before it some account by the liquidator of the administration: [52]-[53].

o        Given that the liquidator had reservations about the completeness of the material provided to him and the company’s solvency, it would have been “irresponsible in the extreme” for the liquidator to have consented to a stay of the winding up order: [53].

o        The proper course was therefore to do as the liquidator did and put material before the court recording the liquidator’s reservations: [53].


Section 542 of the Act expressly recognises a distinction between books of the company and books of the liquidator pertaining to the administration of the company. Whether legal advice obtained by the liquidator was owned by the liquidator or the company did not warrant an inquiry under s 536: [60], [65].


Where a claim for review is made under s 473(6), the threshold question is whether the court should carry out a review, and this question is to be approached with s 473(10) in mind: [75]-[76].


The applicant took issue with the liquidator’s remuneration on the basis that the amounts claimed were excessive, involved duplication of work, and work which was unnecessary given the circumstances of this case.


Barratt J held that some of the items claimed did raise possible issues under s 473(1)(k)(i), in relation to time “properly taken” and “likely to be properly taken” and these potential queries formed a proper basis for the court to undertake a review of the remuneration under s 473(6).


Given that there was to be a review of remuneration under s 473(6) and no other basis for an inquiry under s 536 had been established, there was no order made for an inquiry.


Relevant paragraphs of Ford:

[27.129], [27.183], [27.184]


Ford's Principles of Corporations Law


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