Case: Re Luxtrend Pty Ltd (in liq) [1997] 2 Qd R 86
Outcome: followed
The history of the requirement that certain compromises by liquidators be approved by the Court, by the committee of inspection or by a resolution of the creditors was referred to by Moynihan J in Re Luxtrend Pty Ltd (in liq) [1997] 2 Qd R 86 ( Luxtrend ) at 87. The position under the 1961-62 cooperative r&eacute;gime and under the 1981 cooperative "Code" scheme, as well as under the Corporations Law in its original form in 1991, made the liquidator's power of compromise generally subject to a requirement of the approval of creditors or of the court, subject to an exception in the case of a debt of not more than a certain monetary limit: see ss 236(1)(d) and 236(2)(i) of the Companies Act 1961 (NSW) (in which the monetary figure was &#8356;300), ss 377(1)(d) and 377(2)(j) of the Companies Code (in which the monetary limit was $20,000), and ss 477(1)(d) and 477(2)(j) of the Corporations Law in their original form (where, again, the monetary limit was $20,000, and compromises of debts to the company being calls and liabilities for calls also required approval regardless of the amount). That is to say, the position was structurally the converse of the present one. 22 It was s 73 of the Corporate Law Reform Act 1992 (Cth) (No 210, 1992) that amended s 477 of the Corporations Law by omitting the general requirement of approval. An exposure draft of the Bill for that Act and an Explanatory Paper were released early in 1992. The Explanatory Paper stated (at [931]) that the proposed amendments implemented a recommendation of the Harmer Report (Australian Law Reform Commission Report 45: General Insolvency Inquiry (1988)). The Harmer Report had recommended (at [608] [610]) that the powers of a liquidator generally be exercisable without the need for approval of creditors or the court, subject to exceptions in the cases of the power to compromise debts above a prescribed amount, and the power to enter into long term commitments. The expansion of the liquidator's powers to act without approval was recommended on the basis of the competence and qualifications of persons who act in the capacity of liquidator. 23 The Harmer Report's recommendations were reflected in the omission of the general requirement of approval from subs (1) and the insertion of a requirement of approval in new subss (2A) (debts to the company of more than any prescribed amount exceeding $20,000, and if none was prescribed, $20,000), and (2B) (agreements that may end or be performed beyond three months after they are entered into). 24 The meaning of the word "debt" can be affected by its context. There is a line of authority to the effect that the expression "a debt to the company" in s 477(2A) bears its familiar meaning of a sum of money that is either immediately payable, or that, by reason of an existing obligation, will become payable in the future ( debitum in praesenti , solvendum in futuro ): Luxtrend [1997] 2 Qd R 86 ; Re Tietyens Investments Pty Ltd (in liq) (Receiver and Manager appointed) (1999) 31 ACSR 1 ( Tietyens ) at [92] [94]; and see Austin R P and Ramsay I M, Ford's Principles of Corporations Law (13 th ed, LexisNexis Butterworths, 2007) at [28-260] p1412. Accordingly, claims by liquidators to recover amounts paid away by the company under voidable transactions have been held to lie outside the predecessor provision of s 477(2A), namely, s 477(2A) of the Corporations Law : Luxtrend [1997] 2 Qd R 86 ; Nambucca Investments Pty Ltd v Snoco Ltd [1999] NSWSC 211 at [2] . In Tietyens 31 ACSR 1 a claim of equitable damages based on accessorial liability for breaches of trust, the primary cause of action being a claim based on Barnes v Addy (1874) 9 Ch App 244, was similarly held not to be a claim of a debt to the company.