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This case involved a dispute between a company's administrator and its subsequent liquidator over the priority of payment of their fees and expenses. This case clarifies the law on the equitable Citation: \li t and =tSgESJi4s of administrators and liquidators for their fees =>< and expenses, and the prioritising of their claims for payment of VSCA Victorian \ ' 30, t20051 their fees. per Court Appeal Winneke : of P,J Buchanan Gillard and JJA | ; The'Lifestyle group' companies operated unregistered an managed investment I/ scheme. July2000, Mr Lockwood Mr Fitzgerald appointed In and were (Lifestyte administratorscertain to group companies the Lifestyle in Date of Judgment: administration companies). thensought ASIC orders the appointment a liquidator, White, for of Mr 28 February 2005 to all companies the Lifestyle group, in including those under administration. Theadministrators opposed application. Justice the After Warren indicated the in lssues: Supreme Court Victoria shewasproposing make orders of that to the soughi by r Section 443F CA ASIC, parties the reached agreement. Under agreement, administrators the the r Whether administrators' wouldnotoppose application the administrators'fees the Lifestyle the and for fees havepriorityover administration companies beingpaidin order priority out in section of set 556 of liquidators' fees the CA.Suchfeeswouldbetreated costs the Lifestyle group, if all of those as of as companies oneentity. were
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On 7 August 2000, Justice Warren made following the order: proper The remuneration administrators s449E theCorporations of the under of Law and proper and the costs expenses administrators s443A theCorporations ofthe under of Law theadministratorstheplaintiff's proper in thisapplicationpaid and and costs be in thepriorities outin s556of theCorporationsascosts thewinding of set Law in up thecomoanies ... Before Lifestyle the administration companies' liquidation, administrators the had recovered approximately of companies. June2002, By $4300 in respect those the administrators not beenpaid,although Whitehadpaidhis ownfees. had Mr Further, Whitehadconducted liquidations the Lifestyle group Mr the of companres separately, because, said,he hadnot understood Honour's he her orders as amounting a 'pooling to order'. Theadministrators further fromthe ) sought orders court thattheirfees $186,795.75 paidimmediately in priority all ( of be and to priority otherunsecured creditors. White Mr sought orderunder an s1322(4) CA V that all actsdoneby himto datein the winding of the Lifestyle group up companies not invalid were because hadnot been they authorised approved or by a combined meeting creditors all group of of companies. payment the Justice Warren not makeorders the immediate did for of administrators' and made orders fees the sought the liquidator by under sI322(4). Theadministrators appealed sought have orders and to the madeunder sI322(4)

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made subject immediate payment theirfeesout of the fundscurrenily to of heldby the liquidator and,if insufficient, amounts be reimbursed him to the from to by group Lifestyle pooled companies' funds. Thecourtof Appeal upheld Justice warren's orders. courtnoted The that a court should slowto interfere discretionary be with orders the kindmadebyJustice of Warren, unless therewerestrong grounds doingso. for Thecourtsaidthatthe 'pooling order' tookeffectonlyafterthe administrations were terminated therefore, wouldbe inappropriate the liquidator pay and, it for to the administrators' out of the property companies whichthe fees of to administrators notappointed. were Further, courtfoundthatthe administrators' the entitlement, conferred s443FcA, to payment theirfeesandexpenses by of in priority unsecured to priority creditors listedin s556 wassubject the liquidator's to equitable over property the companies respect his fees. lien the of in of

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Thecourtdistinguished administrators' the statutory equitable and liensin respect of theirfees.Administrators-have a sld{taly lign on the company's property under I s443FCA,whichsecures tneit tigliffiity under s443D.Administrators atso have equitable that attaches fundsrealised themfromthe companies' an lien to by \\ property gives and thempriority a secured as creditor priority It over unsecured the li creditors referred in s556.Similarly, liquidator an equitable over to the has lien the fundshe realised fromthe company's property his feesand expenses for of realising property whichgives that and him priority priority overunsecured creditors \I and previous administrators. courtstated: The where liquidator the createsfundbyrealising assets companies have a the of which formerly under been administration,theliquidator has claim it is who first upon fund the forhisfees exoenses... and

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