Do liquidators have to obtain approval of the court, committee
of inspection or the creditors to enter into costs agreements with
their lawyers?
Yes – according to the NSW Supreme Court judgement
handed down in Hutchison v Hillcrest Litigation Services
Limited on 23 August 2010 (Hillcrest
Proceedings).
Background to the Hillcrest Proceedings
Austin Australia Pty Limited (in liquidation)
(Austin) had engaged lawyers to act in arbitration
proceedings against the Auburn Council (Auburn
Proceedings).
After Austin was placed into administration, Austin's
administrators entered into a costs agreement with Austin's
existing lawyers in the Auburn Proceedings.
Following the administrators' appointment as
liquidators, Austin's existing lawyers continued to act in
the Auburn Proceedings. The liquidators then entered into a
litigation funding agreement with Hillcrest and later entered into
a second costs agreement with Austin's lawyers.
