MENTHA as Receiver and Manager of Westgem Investments Pty Ltd (in liq) v HUGHES as Liquidator of Westgem Investments Pty Ltd (in liq)

[2014] WASC 478

Supreme Court of Western Australia

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Catchwords

1. Corporations
2. › Winding up
3. › Liquidators
4. › Appointment of special purpose liquidator
5. › Whether conflict of interests justified appointment
6. › Whether pressing need for investigation established
7. › Whether appointment would cause undesirable interference with liquidation
8. › Corporations Act 2001 (Cth), s 588M
1. Practice and Procedure
2. › Costs
3. › Special costs order
4. › Whether costs allowable under costs determination inadequate
5. › Whether inadequacy arose from unusual difficulty, complexity or importance
6. › Legal Profession Act 2008 (WA), s 280(2)

Quick Take

A general tension between a liquidator's interest in preserving a co-plaintiff's credibility in damages proceedings and the potential need to investigate that co-plaintiff for voidable transactions or insolvent trading does not, without more, constitute a conflict of interest sufficient to justify the appointment of a special purpose liquidator. The appointment will not be justified where no specific claims requiring immediate investigation have been identified, where the proposed investigations are contingent on the outcome of pending proceedings, and where any proceedings commenced would inevitably be stayed. The court left open the possibility that the position may change as the limitation period approaches.