FEDERAL COURT OF AUSTRALIA

Hayes, in the matter of Henry Walker Eltin Group Limited (in liquidation) (No 3) [2014] FCA 722

IN THE MATTER OF HENRY WALKER ELTIN GROUP LIMITED (IN LIQUIDATION)

THE COURT ORDERS THAT:

1.    Pursuant to r 1.8 of the Federal Court (Corporations) Rules 2000 (Cth) (the Rules), and in lieu of r 9.4(3) thereof, at least 21 days before filing any interlocutory process seeking an order for remuneration under s 473(3) of the Corporations Act 2001 (Cth) with respect to the winding up of the fourth, seventh, eighth or ninth plaintiffs, the first and second plaintiffs must serve a notice substantially in accordance with Form 16 of the Rules of their intention to apply for that order, and a copy of any affidavit on which they intend to rely on the following persons:

(a) each of the 10 largest shareholders of the fourth plaintiff, as recorded in annexure A to the affidavit if Hamish Gidley-Baird sworn 27 August 2013, by ordinary mail to the address of those shareholders as stated in the fourth plaintiff’s share register, and

(b) each director of the fourth plaintiff.

2.    Pursuant to r 1.8 of the Rules, r 9.4(4), (5), (6) and (7) apply mutatis mutandis with respect to the notice referred to in Order 1 hereof, such that the reference therein to “any creditor or contributory” is to be taken as a reference to any person in respect of whom service has been made in accordance with the said order.

3.    Liberty to the plaintiffs to apply in relation to any further matter or issue arising in the winding up of the fourth, seventh, eighth or ninth plaintiffs, including with respect to, inter alia:

(a) distribution of surplus of the ninth plaintiff, and

(b) remuneration of the first and second plaintiffs as liquidators of those companies.

4.     An order that the plaintiffs’ cost be paid from the assets of the fourth plaintiff.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF HENRY WALKER ELTIN GROUP LIMITED (IN LIQUIDATION)

REASONS FOR JUDGMENT

1    The first and second plaintiffs, as liquidators of the fourth, seventh, eighth and ninth plaintiffs, seek directions in relation to two matters. The first matter concerns a proposed ex gratia payment to the fifth plaintiff. The second matter concerns the notice to be given by the first and second plaintiffs in relation to the determination of their remuneration as liquidators.

2    The background to the winding up of the fourth, seventh, eighth and ninth plaintiffs is summarised in Hayes, in the matter of Henry Walker Eltin Group Limited (Subject to Deed of Company Arrangement) [2013] FCA 973 (the principal judgment). Prior to making the winding up orders, I made orders providing for the termination of two deeds of company arrangement referred to as the Mining Pool Deed and the Non-Core Deed. The first, second and third plaintiffs were the administrators of the deeds. On 5 February 2014, I gave directions pursuant to r 1.8 of the Federal Court (Corporations) Rules 2000 (Cth) (the Rules) in relation to the giving of notice by the first, second and third plaintiffs concerning the determination of their remuneration as administrators (the administrators’ remuneration directions): Hayes, in the matter of Henry Walker Eltin Group Limited (Subject to Deed of Company Arrangement) (No 2) [2014] FCA 30. My earlier reasons in relation to the principal judgment and the administrators’ remuneration directions should be read with these reasons in order to understand the context in which the present directions are sought.

Directions concerning proposed ex gratia payment

3    The direction sought by the first and second plaintiffs is that, as liquidators of the fourth plaintiff (HWE), they are justified in making an ex gratia payment to the fifth respondent, Mr Gidley-Baird, in the sum of $30,000 from the surplus to be distributed to the shareholders of HWE, at a time and in a manner convenient to them. The direction is sought under s 479(3) of the Corporations Act 2001 (Cth) (the Act), which provides that a liquidator may apply to the Court for directions in relation to any particular matter arising under the winding up.

4    The history of the provisions on which s 479(3) is based is set out in Re G B Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 677-680. In that case, McLelland J (at 679), when referring to the Corporations Law, said:

The historical antecedents of s 479(3), the terms of that subsection and the provisions of s 479 as a whole combine to lead to the conclusion that the only proper subject of a liquidator’s application for directions is the manner in which the liquidator should act in carrying out his functions as such, and that the only binding effect of, or arising from, a direction given in pursuance of such an application (other than rendering the liquidator liable to appropriate sanctions if a direction in mandatory or prohibitory form is disobeyed) is that the liquidator, if he has made full and fair disclosure to the court of the material facts, will be protected from liability for any alleged breach of duty as liquidator to a creditor or contributory or to the company in respect of anything done by him in accordance with the direction.

5    In Sanderson v Classic Car Insurances Pty Ltd (1985) 10 ACLR 115, Young J considered the operation of s 379(3) of the Companies (NSW) Code (the Code), a predecessor provision to s 479(3). His Honour (at 116-117) made the following general observations regarding the limitations of the Court’s involvement in liquidators’ commercial decisions:

Although s 379(3) of the Companies Code is expressed in wide terms, it seems to me clear that it does not permit the liquidator or a provisional liquidator to come to the court whenever he feels some unease about a situation and wishes to obtain some sort of insurance against the possibility of error, as well as assurance that he is on the right track. A liquidator is an officer of the court, and the modern liquidator today performs many of the functions which in former ages, were dealt with by a judge, master or registrar, at least in the first instance. In addition, the persons eligible to be registered as liquidators and to be appointed liquidators only are so eligible because they possess not only the appropriate qualifications in accountancy, but also are experienced in the world of commerce. The Companies Code and the orders of the court these days usually commit the entire conduct of the liquidation to the liquidator, and empower him to do what in his commercial judgment he thinks best in the interests of the creditors as a whole, leaving persons aggrrieved to their remedy by appeal to the court, and also leaving the liquidator free where he can foresee a challenge to his powers, or where there is some extremely difficult problem, to apply to the court whose officer he is for directions. In another connection namely when dealing with the court's powers of review of a liquidator's decision at the instance of a creditor, the present Chief Justice, when Chief Judge in Equity, said in both Duffy v Super Centre Development Corp Ltd [1967] 1 NSWR 382 at 383 and Re Mineral Securities Australia Ltd (in liq) [1973] 2 NSWLR 207 at 231–2, that the court will only embark in itself considering the commercial view of the liquidator if there is some serious problem in which it is alleged that there is some want of good faith, or some erroneous approach in law or in principle.

6    Later, his Honour (at 117) observed (emphasis added):

Essentially, then, though there is wide jurisdiction given to the court under s 379(3) of the Code, it is usually only proper to exercise that power where the matter involves guidance to the liquidator on matters of law or principle or to protect him against accusations of acting unreasonably. The court does not usually consider it proper to intervene and make the liquidator's commercial decision for him. Indeed, the court is always reluctant to credit itself with any degree of competence in this field at all. Indeed the present Chief Justice said in Re Mineral Securities, supra, at p 232, “When the court is required to pronounce upon the commercial prudence of a transaction, it enters upon a slippery and uncertain field. Apart from the lawyers’ disclaimer of expert qualifications in matters of business prudence, the very process of litigation and the necessary limitations upon the scope of admissible evidence restrict the available material to far less than is necessary for the making of a commercial decision.” Again, in a different context, Lindley LJ said in Re English Scottish & Australian Chartered Bank [1893] 3 Ch 385 at 409, that creditors acting on sufficient information with sufficient time to consider what they are about are much better judges of what is to their commercial advantage than a court can be. This passage has been cited many times since, concluding by Bowen CJ in Eq in the Codisco case at 27909.

7    At this point, it is desirable to summarise the reasons advanced by the first and second plaintiffs for the decision to make the ex gratia payment and for seeking the direction.

8    The fifth plaintiff, Mr Gidley-Baird, is a director of HWE. He was appointed on 22 November 2001 and is one of two remaining directors of the company. He holds 125,952 shares in the issued capital of the company. There are 218,317,156 shares on issue, held by 11,062 shareholders. Mr Gidley-Baird’s shareholding thus represents, approximately, 0.058% of the shares on issue.

9    In an affidavit made on 23 June 2014, the first plaintiff, Mr Hayes, stated that Mr Gidley-Baird has provided outstanding assistance to the first and second plaintiffs as liquidators and, prior to that, to the first, second and third plaintiffs as administrators and deed administrators, in relation to the liquidation and prior administration of HWE and its relevant subsidiary companies.

10    In that connection, Mr Hayes deposed:

… It is the longevity of Mr Gidley-Baird’s assistance and commitment that is both impressive and compelling. Mr Gidley-Baird has been a director since 2001, but tellingly, he has remained a director following the administration of HWE (and its subsidiaries) and in all the circumstances has been the focal point for the Liquidators and previously the Administrators. Moreover, in the lengthy and complex circumstances of HWE, in external administration since 2005 and resulting in a substantial surplus for shareholders, Mr Gidley-Baird’s assistance has been both extraordinary and most necessary.

11    Whilst acknowledging that Mr Gidley-Baird has obligations as a director of HWE, and that he is also a shareholder in HWE (albeit, I observe, one with a very small holding relative to the number of shares on issue), Mr Hayes deposed:

… Mr Gidley-Baird’s assistance has far exceeded what would ordinarily be expected of a director of an insolvent company. His efforts in locating, liaising and communicating with shareholders in particular has been of invaluable assistance to the Deed Administrators and now the Liquidators. Those tasks … were of such a nature that had they not been performed by Mr Gidley-Baird, the Deed Administrators certainly would have had to expend considerable funds in attending to them, which would also have incurred additional remuneration, which, in the event, has been saved, an impost that shareholders of HWE would otherwise have borne.

12    Mr Hayes has identified in a schedule exhibited to his affidavit, the tasks undertaken by Mr Gidley-Baird which, Mr Hayes said, were “reflective of his extraordinary efforts”. Mr Hayes estimated that Mr Gidley-Baird:

… would have spent many hundreds of hours in total, attending to matters of assistance to me and HWE, over and above that ordinarily expected of, let alone received from, a director of a company in external administration. Mr Gidley-Baird’s assistance and commitment remains impressive, and I have no hesitation in suggesting that Mr Gidley-Baird will be of further utility to the Liquidators in finalising matters referable to HWE, and ultimately distributing the balance of the surplus to HWE shareholders. Whilst the Liquidators have no obligation to make any payment to Mr Gidley-Baird other than required by law in the course of winding up HWE, I believe that Mr Gidley-Baird deserves … an ex-gratia gift.

13     Mr Hayes referred, in particular, to not only Mr Gidley-Baird’s efforts in locating and communicating with shareholders (in circumstances where otherwise absent or uncontactable shareholders may have seen funds remitted to ASIC), but also to his assistance in obtaining the relief granted in the principal judgment, including by consenting to be a plaintiff and in providing affidavit evidence.

14    As to the amount of the proposed payment, Mr Hayes said that the amount has not been determined arbitrarily, but by reference to the level of assistance provided by Mr Gidley-Baird, as broadly summarised in the schedule exhibited to the affidavit. However, beyond the general description in the schedule of the work undertaken by Mr Gidley-Baird, the basis on which the amount has been calculated (such as by reference to hours, rates and so on) is not stated or otherwise revealed.

15    Mr Hayes also gave evidence as to the relativity of the amount of the proposed payment in relation to the distributions, actual and intended, to shareholders in the winding up of HWE. On 28 March 2014, a distribution of ten cents per share was made to shareholders. A further distribution of approximately six cents per share ($13,099,029) is in contemplation. A prior deduction of $30,000, on account of the proposed payment to Mr Gidley-Baird, would represent approximately 0.0023 cents per share in respect of the further distribution. When regard is had to the funds held at the time of the first and second plaintiffs’ appointment as liquidators ($38 million), the sum of $30,000 represents 0.000137 cents per share. Mr Hayes deposed that, in his view, the sum of $30,000 is both nominal and immaterial to the surplus distribution to shareholders.

16    In his affidavit, Mr Hayes also sought to illustrate the relatively nominal amount of the proposed payment by reference to the amount of interest earned on the surplus funds over the eight year period of the administration and subsequent winding up of HWE and its relevant subsidiaries.

17    Mr Hayes concluded:

The Liquidators are of the view that the earnest and extraordinary efforts of Mr Gidley-Baird in assisting the Administrators and now Liquidators of HWE, and its subsidiaries, and in facilitating the substantial result for shareholders, namely as sizable surplus to distribute, is deserving of a gift, albeit nominal in my view, and not withstanding that neither HWE nor the Liquidators have any duty or obligation to make such a payment …

18    Although the first and second plaintiffs sought to demonstrate that the amount of payment and the reasons for payment were not unreasonable, there is an anterior question whether it is appropriate for the Court to give directions in circumstances such as those under consideration. The first and second plaintiffs have placed emphasis on Young J’s observation in Sanderson that it would be an appropriate exercise of discretion to give a direction to protect a liquidator against accusations of acting unreasonably. However, as another passage in his Honour’s reasons makes clear, that proposition was illustrated by a case where there are two or more competing purchasers for a company’s property and the liquidator can see that it may be alleged that he or she has acted mala fide or in an absurd or unreasonable or illegal way: Re Bayswood Pty Ltd (1981) 6 ACLR 107 at 113. In the usual run of case, a direction approving a business or commercial decision of a liquidator is not given where no issue arises in relation to a legal matter or the propriety or reasonableness of the decision itself. An issue in relation to the propriety or reasonableness of the decision itself usually involves or manifests itself by some positive indication that the decision will be the subject of criticism by a particular creditor or creditors (or other relevant interest or interests): see also in that connection, Re Addstone Pty Ltd (in liq) (1997) 25 ACSR 357 at 362-363.

19    Relevant authorities on the question of when it is appropriate to give a direction under s 479(3) of the Act were reviewed by Goldberg J in Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409 at [46]-[64]. Ansett was a case in which the administrators of the Ansett group of companies applied to the Court for a direction under s 447D of the Act (an analogue of s 479(3)) that they were justified in continuing to operate a business (referred to as the Ansett main airline business) for a period of time (until 28 February 2002) pending the completion of the sale of that business under a sale agreement which originally provided for completion on 31 January 2002. The authorities considered by his Honour include: Deputy Commissioner of Taxation v Best & Less (Wollongong) Pty Ltd (1992) 7 ACSR 245; Re Mineral Securities Australia Pty Ltd (In liq) [1973] 2 NSWLR 207; Re Codisco Pty Ltd [1974] CLC ¶40-126; Re Statewide Investments Ltd (In liq) (1981) 6 ACLR 265; Sanderson; Shiraz Nominees (In liq) v Collinson (1985) 10 ACLR 7; Re Lemon Tree Passage & Districts RSL and Citizens Club Co-Operative Ltd (1987) 11 ACLR 796; Re Spedley Securities Ltd (In liq) (1992) 9 ACSR 83; Addstone; Re Tietyens Investments Pty Ltd (1999) 31 ACSR 1; and Re Ansett Australia Ltd and Mentha (2001) 39 ACSR 355. After undertaking that review, Goldberg J concluded (at [65]-[66]):

65    This review of the authorities satisfies me that the prevailing principle adopted by the courts, when asked by liquidators and administrators to give directions, is to refrain from doing so where the direction sought relates to the making and implementation of a business or commercial decision, either committed specifically to the liquidator or administrator or well within his or her discretion, in circumstances where there is no particular legal issue raised for consideration or attack on the propriety or reasonableness of the decision in respect of which the directions are sought. There must be something more than the making of a business or commercial decision before a court will give directions in relation to, or approving of, the decision. It may be a legal issue of substance or procedure, it may be an issue of power, propriety or reasonableness, but some issue of this nature is required to be raised. It is insufficient to attract an order giving directions that the liquidator or administrator has a feeling of apprehension or unease about the business decision made and wants reassurance. There must be some issue which arises in relation to the decision. A court should not give its imprimatur to a business decision simply to alleviate a liquidator's or administrator's unease. There must be an issue calling for the exercise of legal judgment.

66    The administrators may be correct in their submission that there is no rule of law and no fixed principle that a consideration of commercial issues is precluded, as the jurisdiction of the Court to give directions under provisions such as ss 447D and 479(3) of the Act is discretionary. The exercise of that discretion will vary depending upon the nature and novelty of the matters and issues which are brought before the Court. From time to time, the Court is necessarily drawn into a consideration of commercial issues where there is a matter giving rise not only to the need to make a business or commercial decision, but also to issues of propriety, power, reasonableness of conduct, contested issues of legal principle or procedure or challenges to the decision made by the liquidator or administrator. Such a situation arose, for example, in Re Codisco Pty Ltd; Sanderson and Re Addstone Pty Ltd (In liq). Nevertheless, there is the well-established principle to which I have referred, namely that a court will not give directions approving of a commercial or business decision made by a liquidator or administrator where the decision is within the power of the liquidator or administrator, and there is no challenge to it or other issue arising in relation to it such as propriety or reasonableness, or calling for the exercise of legal judgment.

20    In Ansett, the administrators submitted that their decision involved a consideration of issues which were not just “commercial”. They detailed their reasons for deciding that the Ansett group of companies should continue to operate the business for the further period of time and submitted that they were not seeking the Court’s confirmation of a decision that was “just a commercial decision in the sense of being a ‘quasi-mathematical’ exercise” but, rather, “confirmation that they have not, and are not, proceeding in an inappropriate manner”.

21    His Honour (at [68]) rejected that submission, saying:

... This submission identifies the manner, in part, in which the administrators have reached their commercial decision and the factors and issues to which they have had regard. But it does not expose any controversial issue of power, conduct, propriety, reasonableness or legal principle in respect of which the direction is sought.

22    The administrators also submitted that their application was based on a legitimate apprehension of a subsequent accusation that they had acted unreasonably. His Honour also rejected that submission, saying (at [71]-[72]):

71    ... The administrators may have an apprehension of the possibility of a subsequent accusation that they have acted unreasonably, but that apprehension is not based on any existing circumstance. Rather, it arises out of the complexity of the administration and the commercial decision they have taken to sell the mainline airline business to Tesna in circumstances where the sale is taking longer to complete than was initially anticipated.

72    Unlike the circumstances in Re Addstone Pty Ltd (In liq), no-one has threatened to take proceedings against the administrators if they extend the time for the completion of the sale to Tesna and continue to operate the mainline airline business in the meantime, albeit at a significant on-going loss. No-one has suggested that the administrators are not acting within power in continuing to operate the mainline airline business at a loss or that they have not acted with propriety.

23    His Honour declined to give the direction that was sought. In the absence of a live controversy or challenge to the propriety or reasonableness of the decision, to give the direction would have involved the Court in doing no more than simply approving the administrators’ commercial judgment and decision. This, his Honour concluded, was not an appropriate exercise of the Court’s discretion in the circumstances.

24    The first and second plaintiffs referred to Re Genoa Resources and Investment Limited (in liq) [2005] NSWSC 1145, which concerned the granting of leave under s 435 of the Code to two members of a committee of inspection (comprising three creditor representatives and three shareholder representatives) to accept a gift from a liquidator in the form of payments totalling $36,000 from funds that would otherwise have been available for distribution to the unsecured creditors of the company. The two donees were shareholder representatives on the committee.

25    Section 435 of the Code relevantly provided:

(1)    A member of the committee of inspection shall not, while acting as such a member, except as provided by this Code or with the leave of the Court –

(a)    make an arrangement for receiving, or accept, from the company or any other person, in connection with the winding up, a gift, remuneration or pecuniary or other consideration or benefit;

(b)    directly or indirectly derive any profit or advantage from a transaction, sale or purchase for or on account of the company or any gift, profit or advantage from a creditor …

26    In that case, the evidence was that the winding up of the company had been unusually complicated and had involved considerable litigation. The liquidator sought leave under s 435 of the Code on the basis that the two shareholder representatives had rendered exceptional service as committee members and had performed their duties with distinction over a period of approximately 10 years. The liquidator’s application was supported by various resolutions of the committee itself (with the two relevant shareholder representatives abstaining). The first resolution was that the liquidator be authorised to pay a maximum of $10,000 to each of the two shareholder representatives, and obtain any Court approval which might be needed as a pre-requisite in that regard. The application as filed sought leave to give the two shareholder representatives a gift of $12,000 each, or for such other amount as the Court thought fit. A further resolution, passed some years later, supported the liquidator’s application authorising the making of the gifts. Subsequently, at another committee meeting, one creditor representative supported the making of a gift of $18,000 to each of the two shareholder representatives, while another supported only the making of a gift in the amount of $10,000 which had been approved some 11 years before.

27    In granting leave, Campbell J (at [17]) said:

I am comfortably satisfied that this is an appropriate occasion to exercise the jurisdiction under s 435. I have also come to the view that I should accept the liquidator's estimate of the worth of the services of the two members. Liquidators are in a position where they have an almost uniquely good insight into the worth of various kinds of services which are provided in business. The Court is accustomed to placing great weight on liquidators views about such matters. The creditor who supports a payment of only $10,000 each is aware of today's proceedings, but has not appeared. The effect of making the payments totalling $36,000 on the distributions to unsecured creditors is that those creditors will receive 0.04 cents in the dollar less than they would have received if there had been no such distribution. That indicates, in my view, that the effect on the creditors of paying the $36,000 will not be great. The effect on the creditors of paying them $18,000 each rather than the $10,000 each which was approved in 1994 is even smaller.

28    In the present case, the first and second plaintiffs submit that, while there is no committee of inspection, and all creditors have been paid in full, and while s 435 of the Code (and its current equivalent, s 551 of the Act) has no direct application, Campbell J’s decision in Genoa provides some guidance as to whether the direction sought under s 479(3) should be given.

29    After some reflection, I have come to the view that, although the facts of the present case and the facts in Genoa bear some broad similarities – in that each involves a decision by a liquidator to make a discretionary payment in recognition of exceptional services provided to the liquidator – there are differences in both fact and context between the two that lead me to conclude that, ultimately, the decision in Genoa is of little persuasive value so far as concerns the exercise of the discretion in the present case.

30    What seems to me to be of compelling significance is that, in the present case, a direction is sought when no issue has arisen in relation to a legal matter or in relation to the propriety or reasonableness of the first and second plaintiffs’ decision. The highest that the first and second plaintiffs could fairly put the matter in evidence and in submissions was that, although in their view the amount contemplated as a gift is nominal and immaterial, they remained conscious of their duty to shareholders.

31    That duty is one of obvious importance. But it does not follow that, by reason of that duty alone, or by reason of the first and second plaintiffs’ consciousness of that duty, the Court should give the direction that is sought. The liquidators’ concern that, in hindsight, someone might be critical of their decision, as suggested in oral argument, does not materially advance the matter.

32    In my view, the decision of the first and second plaintiffs to make the payment to Mr Gidley-Baird is essentially a commercial decision of their own choosing. As s 479(4) of the Act emphasises, the first and second plaintiffs as liquidators, must use their own discretion in the management of the affairs and property of HWE and the distribution of its property. There is no circumstance attending that decision that would, in my view, warrant the giving of the direction sought. To adopt Goldberg J’s words in Ansett, no controversial issue of power, conduct, propriety, reasonableness or legal principles in respect of which the direction is sought, is exposed. I therefore decline to give the direction, as a matter of discretion. My decision should not be taken as reflecting in any way on the reasonableness or otherwise of the first and second plaintiffs’ decision.

Directions for notice to be given regarding determination of liquidators’ remuneration

33    The directions concerning notice to be given in relation to the determination of the first and second plaintiffs’ remuneration as liquidators is sought under r 1.8 of the Rules. The circumstances requiring such directions are closely similar to those which led to the making of the administrators’ remuneration directions.

34    Section 473(3) of the Act provides that the liquidator of a company is entitled to receive remuneration as is determined by agreement between the liquidator and a committee of inspection (if any); or, if there is no committee of inspection or the liquidator and the committee of inspection fail to agree, by resolution of the creditors; or, if no such resolution is passed, by the Court.

35    The prospect of the first and second plaintiffs’ remuneration being fixed by agreement with a committee of inspection or by resolution of HWE’s creditors (or, in the case of its subsidiaries, their creditors) does not exist. There are no committees of inspection and HWE and its subsidiaries have no creditors.

36    Rule 9.4 of the Rules applies to an application by a liquidator for an order determining the liquidator’s remuneration. Rule 9.4(3) provides:

At least 21 days before filing the interlocutory process seeking the order, the liquidator must serve a notice in accordance with Form 16 of the liquidator’s intention to apply for the order, and a copy of any affidavit on which the liquidator intends to rely, on the following persons:

(a)    each creditor who was present, in person or by proxy, at any meeting of creditors at which the remuneration of the liquidator was considered;

(b)    each member of any committee of inspection;

(c)    if there is no committee of inspection, and no meeting of creditors has been convened and held – each of the 5 largest (measured by amount of debt) creditors of the company;

(d)    each member of the company whose shareholding represents at least 10% of the issued capital of the company.

37     The first and second plaintiffs submit that, given its terms, r 9.4(3) of the Rules does not adequately provide for the practice and procedure to be followed in relation to the necessary determination of their remuneration by the Court.

38    Rule 1.8(a) provides:

    The Court may give directions in relation to the practice and procedure to be followed in a proceeding if it is satisfied, in the circumstances of the proceeding, that:

(a)    the provisions of the Corporations Act, the ASIC Act, or the rules of this Court do not adequately provide for the practice and procedure to be followed in the proceeding or …

39    The first and second plaintiffs seek directions which mirror the administrators’ remuneration directions. In my view, for the reasons given with respect to the making of the administrators’ remuneration directions (see [11]-[13] of the relevant reasons), such directions should be made.

40    There is, however, an additional matter to note. The administrators’ remuneration directions provided for the giving of notice to HWE’s 10 largest shareholders, representing 23.23% of HWE’s issued capital. Insofar as the first and second plaintiffs seek to make application for remuneration as liquidators of the seventh, eighth and ninth plaintiffs, the only relevant shareholder will be HWE itself. The first and second plaintiffs propose that, even in relation to remuneration in respect of the winding up of the seventh, eighth and ninth plaintiffs, notice should be given to HWE’s 10 largest shareholders. I agree that that is the appropriate course.

Disposition

41    I will not make any direction in relation to the proposed ex gratia payment to Mr Gidley-Baird. I will make directions substantially as sought by the first and second plaintiffs in respect of the giving of notice in relation to the determination of their remuneration as liquidators of HWE and of the seventh, eighth and ninth plaintiffs.

Associate:

Dated:    7 July 2014