Australia: Is your committee of inspection validly appointed?

The need for separate meetings of creditors and contributories

In Re The Bell Group Ltd (in liquidation); Ex Parte Woodings [2015] WASC 88 (Bell) Pritchard J found that section 548 of the Corporations Act 2001 (Cth) required:

  1. a request from a creditor or contributory to be made to a liquidator to convene meetings to consider the appointment of a committee of inspection; and
  2. separate meetings of creditors and contributories to vote on the resolution.

Section 548 of the Corporations Act

Sections 548(1) and (2) of the Corporations Act read:

Convening of meetings by liquidator for appointment of committee of inspection--company not in pooled group

  1. The liquidator of a company must, if so requested by a creditor or contributory, convene separate meetings of the creditors and contributories for the purpose of determining:
    1. hether a committee of inspection should be appointed; and
    2. where a committee of inspection is to be appointed:
      1. the numbers of members to represent the creditors and the contributories, respectively; and
      2. the persons who are to be members of the committee representing creditors and contributories, respectively.
  1. If there is a difference between the determination of the meeting of creditors and the determination of the meeting of contributories, the Court may resolve the difference and make such order as it thinks proper.

As Pritchard J observed in Bell, the section is "somewhat awkwardly drafted in that it is not entirely clear what work is to be done by the words 'if so requested by a creditor or contributory'".

Section 548(1) has been the subject of two other decisions in the last few years. In Jindal Transworld Pty Ltd v Scottsdale Homes No 10 Pty Ltd (No 2) [2010] SASC 210 (Transworld) Lunn J held that "the proper interpretation of s 548(1) is that no COI is established under it until both the meetings of the creditors and the contributories have been held, and, if they differ, that the Court has made an order under sub-s(2)."

In Re Rivercity Motorway Pty Ltd; Ex parte Owen [2014] FCA 1008; (2014) 102 ACSR 185 (Rivercity) Greenway J disagreed with Transworld, saying "Section 548(1) casts a mandatory obligation upon the liquidator only in the circumstances upon which that obligation is preconditioned. In other words, the liquidator must convene separate meetings of the creditors and contributories if [and only if] requested by a creditor or a contributory to convene such meetings."

In Bell at [38]–[47] Pritchard J explained why he preferred the construction in Transworld ie that, before a committee of inspection could be validly established, there had to be both (1) a request to the liquidator and (2) separate meetings of creditors and contributories. Pritchard J said, "the words 'if so requested by a creditor or contributory' refer to a request to the liquidator to make arrangements so that the question of the establishment of a COI can be considered (at separate meetings of the creditors and contributories)." Both of those meetings must be held and any difference between them resolved by Court application under section 548(2). According to Pritchard J, it is not open to a liquidator to convene meetings of creditors and contributories without a request to do so by a creditor or contributory.

The failure to strictly observe the requirements of section 548 of the Corporations Act raises the spectre of the invalidity of any resolutions passed by the committee of inspection. Pritchard J observed in Bell that, "while s 548(1) requires that the request come from a creditor or contributory, it is far from clear that the legislative intention was that a failure to observe that requirement (as occurred in this case) would, of itself, invalidate the establishment of any COI established. Indeed, there are good reasons for doubting that that was the legislative intention ... it is difficult to envisage any logical explanation for a legislative purpose that would result in the invalidity of a COI established after a vote at separate meetings of the creditors and contributories simply because those meetings were not arranged at the request of one of the creditors or contributories." The absence of a creditor or contributory request was characterised by Pritchard J as a procedural irregularity which would allow the operation of section 1322(2) of the Corporations Act. Whilst that applies to a committee created without a request from a creditor or a contributory, the position is likely different where a committee of inspection is established without resolutions at separate meetings of creditors and contributories. In that case, it may be necessary to seek an order under section 1322(4) of the Corporations Act.

Ultimately, the liquidators in Bell succeeded in obtaining relief for an irregularity under section 1322(4) of the Corporations Act. Even so, it would be unwise to assume that such relief will be available in every instance.

Section 497(10) of the Corporations Act

Section 497 of the Corporations Act requires a liquidator in a creditors' voluntary winding up to convene a meeting of creditors within 11 days after being appointed. Section 497(10) provides that at such a meeting, "the creditors may determine the matters referred to in paragraphs 548(1)(a) and (b) and, where the creditors so determine those matters, a meeting of the creditors for the purposes of section 548 is taken to have been held and the determinations are taken to have been made under that section."

In Rivercity Greenway J found that section 497(10) effectively by-passed the requirement in section 548 that (1) there be a request from a creditor and contributory and (2) there be separate meetings of creditors and contributories before a committee of inspection could be validly appointed. However, in Bell Pritchard J found the opposite: "s 497(10) does not eliminate the need for a meeting of the contributories, which remains a requirement under s 548".

Liquidation following administration

There is no provision in the Corporations Act that provides for a committee of creditors in administration to automatically become a committee of inspection in liquidation.

Although section 446A(3) of the Corporations Act provides that "Section 497 is taken to have been complied with" when a company transitions from administration to liquidation, according to Bell that does not eliminate the need for a meeting of the contributories, which remains a requirement under section 548.

When transitioning from administration to liquidation, it is necessary to comply with section 548 of the Corporations Act before a committee of inspection can be established in the liquidation.

Considering the importance of the decisions that a committee of inspection can make under the Corporations Act it is important that the committee is validly constituted.

Clearly, the state of the law is unsatisfactory and is ripe for immediate reform.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.