Welcome to today’s Chamberlains Selection, where we will discuss with James d’Apice on the matter of Azmac Pty Limited (No 2) [2020] NSWSC 363. We will talk about how a company’s liquidator can be personally liable for costs as a result of unreasonable conduct.

Judgment was handed down confirming Co A was a secured creditor of Co B (in liq). [1] The next question was: who pays Co A’s legal costs? Co A sought to have Co B’s liquidator, in his personal capacity, pay. A liquidator will be personally liable for costs in “exceptional circumstances” due to unreasonable conduct. [8] The Court considered the facts to form a view about reasonableness. Early in the liquidation, the liquidator behaved as if Co A was a secured creditor including sending an email Co A described as an ‘undertaking’ to that effect. [21], [22] Later, the liquidator pivoted from this position (apart from admitting that a nominal sum was secured). [24]

Land, which was Co B’s chief asset, was sold. The proceeds were applied to, among other things, the liquidator’s remuneration. [25] The liquidator’s change from first accepting Co A was secured creditor and then bitterly [36] resisting that suggestion was self-interested. [46] It was also unreasonable and unnecessary, meaning the litigation was provoked by the liquidator, such that Co A’s legal costs ought to be personal visited on him. [46]