Westnet concerned an application under section 511 of the Corporations Act 2001 by a liquidator in a members' voluntary winding-up, involving 10 related companies.

In underlying facts described by the Court as "very odd", the court was asked to determine two questions:

  1. how the liquidator should dispense with a large amount of money unclaimed by unsecured creditors; and
  2. whether the court should approve additional remuneration sought by the liquidator.

For the purpose of this TGIF, we have focused on the second question considered by the Court.


The liquidator sought approval from the Court for additional remuneration of over $800,000. However, the liquidator acknowledged that he had previously agreed with the shareholders to have his remuneration fixed at $330,000, and that only four of the 10 companies had sufficient funds to meet these additional costs. The Court identified four problems in addressing this issue:

  1. What is the Court's power in a members' voluntary winding up to increase the liquidator's remuneration?
  2. What is the significance of the fact that the remuneration was approved when the liquidator was appointed, presumably with his consent?
  3. Is the amount sought by the liquidator reasonable?
  4. Should the Court approve one company being directed to pay the whole of the remuneration.

In respect of the first problem, the Court noted the decision of Justice Barrett in Re: Walker [2005] NSWSC 557 (relating to the winding up on One.Tel Ltd.), and reiterated that the Court has a broad power under section 511 to determine any question arising in the winding up of a company, including remuneration.

In respect of the second problem, the Court noted that it had specific power under section 504 of the Corporations Act to review a liquidator's remuneration, taking into account relevant factors. This was despite the fact that the liquidator had already contracted with the shareholders to accept a lesser sum in remuneration.

The Court then considered whether the additional amount claimed by the liquidator was reasonable, acknowledging that further unexpected tasks, such as the issue of unclaimed funds, had arisen in the course of the liquidation. Somewhat candidly, Young AJA noted that he had lost his "feel for the market" in approving liquidator's remunerations, as he had ceased sitting regularly in the Equity Division since 2009. Accordingly, his Honour considered whether it was necessary to ask for an experienced insolvency practitioner to provide an expert report certifying whether the proposed remuneration was or was not reasonable. However, given that commissioning this expert report would be a costly exercise, his Honour ultimately found that the most practical solution was to request the Registrar to provide a report as to her opinion of the reasonableness of the claimed amount to determine whether it was "within the ballpark" of what is reasonable, according to the practice that was used when fixing remuneration of liquidators. Subject to the Registrar's report, his Honour thought that it was appropriate for him to certify that the remuneration sought was reasonable.

As to the final question, the Court noted that the legislature had not caught up with the inherent problems in the liquidations of groups of companies. Consequently, it was necessary for courts to make orders under section 511 which are "just and beneficial" to the voluntary winding up. In this instance, the work performed by the liquidator for the 10 companies overlapped, and the only people who would be affected by an increase in the liquidator's remuneration did not raise any objection to it. Therefore, the Court found that the only sensible and pragmatic solution to save costs and to benefit the members generally was to order that the adjusted remuneration of the liquidator be paid out of the assets of only one company, bearing the costs of the group.


Westnet confirms that section 511 of the Corporations Act is a useful mechanism for liquidators to approach the court to determine any question arising in the winding up of a company, especially in novel or odd circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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