Liquidators' remuneration must be based on contractual agreements and not mere applications for directions under statutory sections without evidence.

Table of Content
1. liquidators' advisement on remuneration inviting court application. (Para 1 , 2 , 3)
2. existing sections do not govern remuneration suitability. (Para 4 , 5 , 6)
3. jurisdictional appropriateness of statutory sections for fixing remuneration. (Para 10)

[1] The appellants, who are the contributories of Semantan Estate (the said estate) in voluntary members' liquidation appeal against the judgment of the learned High Court judge who had, on the application of the respondents (joint liquidators of the said estate), given inter alia directions for fees entitlement of the liquidators.

Preliminaries

[2] The application was made pursuant to ss 237(3) and 274 of the Companies Act 1965 ( CA 1965).

[3] The said sections may not be wide enough to cover every form of directions to the liquidation itself, and whether contractual disputes in respect of remuneration should be dealt with under the said sections is arguable. However, it must not be forgotten that the issues of fees are related to contractual bargains. The contractual bargains by any profession in relation to fees must be forthcoming before the appointment process and/or by agreement and in its absence by any statutory guidelines on the scope and parameters of professional fees, failing which it may have to be sorted out by writ action. A professional person should not be seen to make an attempt to obtain fees on a reward basis as it happens in maritime salvage contract. If the fees arrangement is to be on 'reward basis' that must have been put forward by the professional person at the earliest opportunity, failing which it will impinge on integrity issues. If fees have not been agreed in contractual bargains, the Court should lean towards minimum fees as opposed to a reasonable fees or reward basis when the professional person himself has failed to set it out at the material time of appointment. Professional persons should not make an attempt to become beneficiaries of the estate. Again, such an attempt will impinge on integrity issues. The quantum of recovery should be of little concern if the work costs will be the same whether the estate is worth a million or RM100 million. The Court should not, unwittingly, lend its hand to enrich a professional person to be made a beneficiary of the estate. In fact, if the clients do not agree to the professional fees or to the terms, the professional person should discharge himself and sue for their fees for work done and it is for the Court to assess the amount, if any, after hearing the expert's evidence on professional fees. [See TR Hamzah & Yeang Sdn Bhd v. City Centre Sdn Bhd, ; SP Veloo & Co v. Affin Bank Berhad, [2017] 5 AMR 537 ].

[4] Liquidators are no different. A liquidator should not attempt to get the protection of the Court for unagreed fees in his favour when there are objections. Such unjust applications will raise questions of conflict of interest, especially when the apex Court has appeared to rule that directions given by the winding up Court, are not be appealable. Issues as to fees do not fall within the parameters of directions where it relates to an order to benefit the liquidator. The liquidator should discharge himself and sue for fees. The application of the liquidator's fees places him in a conflict situation and courts should take cognizance of it. What should be fair and reasonable fees cannot be determined by the Court without expert opinion from members of the profession itself. The Court by its own motion, fixing fees other than what is statutorily provided for, will amount to misdirection.

[5] It must be noted that a liquidator is an officer of Court. [See r 63 of the Companies (Winding-Up) Rules 1972]. In consequence, his application seeking direction from the Court is not appealable though it may not deprive other affected parties from appealing. There can be difference in judicial opinion on this issue. However, it has to be settled by judicial decision by passage of time. [See Ooi Woon C

Click Here to Read the rest of this document