In the recent case of Grace v Grace (No 5)  NSWSC 601, certain creditors sought to inspect entries of the provisional liquidator’s meetings “with anyone connected with the administration of the affairs of [the company]”, including but not limited to the directors, their representatives and various financiers.
The provisional liquidator refused the creditor’s request stating that “the types of meetings” that the creditors sought to inspect do not fall in the scope of section 531, the wording of the request was very wide and is “arguably oppressive and a fishing expedition”. The creditors disagreed, and responded that they are entitled to inspection pursuant to section 531.
Section 531 of the Corporations Act 2001 (Cth)
Section 531 of the Corporations Act 2001 (Cth) provides that:
a liquidator or provisional liquidator must keep proper books;
all entries and minutes of meeting and such other matters as described, must be recorded in those proper books; and
The provisional liquidator wrote to the creditors advising that the “handwritten notes” of the meetings do not fall within the scope of section 531 and regulation 5.6.01. The judgment did not reveal the provisional liquidator’s basis on this assertion. The provisional liquidator then made an application to the court pursuant to section 531 to restrict access.
The court disagreed with the liquidator. It held that the handwritten notes were of meetings which formed part of the provisional liquidator’s administration. These minutes are therefore necessary to give a complete and correct account of the administration.
Lavan Legal comment
Liquidators and provisional liquidators making an application under section 531 must be mindful that the scope of the provision, and the supporting regulations, are very wide. From a review of the case authorities, it appears that the court is unlikely to grant any restriction on inspection unless it will be detrimental to the company, or will put the creditors in a worse position in attempting to recover their debts.