Re Finnigan concerned the costs of a successful application to be appointed as liquidators after the liquidators had overlooked a disqualification.
The liquidators were appointed by shareholder resolution. They accepted the appointment, apparently unaware that they were disqualified under s 280(1)(ca) of the Companies Act 1993. The liquidators sought to claim, as expenses in the liquidation, their solicitor/client costs of subsequently applying for the Court's leave to be appointed. A preferential creditor who had withdrawn its liquidation application following the shareholder resolution, and whose claim ranked after liquidation expenses, opposed the application for costs.
The High Court declined to allow the liquidators to recover the costs of rectifying their mistake. It noted that the ruling provided "a stern test" for liquidators accepting an appointment at the request of the company. That test is appropriate, particularly when the liquidators had a continuing business relationship with the company within two years of liquidation and when the company was at that time subject to a creditor's application for liquidation.
See Court decision here.