This matter concerned an application by the liquidators of Bexalaw Pty Ltd for declarations and directions concerning the distribution of money held by them. Of interest is a submission that was made to have the Universal Distributing principle – which gives priority to a liquidator’s costs and expenses incurred in realising a fund – extend beyond a claim by a liquidator for remuneration, to others – in this case a former architect – who, by their work for which remuneration is claimed, contributed to a fund available to a liquidator. His Honour refused to extend the principle in this way.
9 February 2018
This matter concerned an application by the liquidators of Bexalaw Pty Ltd for declarations and directions concerning the distribution of money held by them. . A dispute arose in relation to a claim by the second respondent, Mr Hughes, and the priority of his claim. . Mr Hughes was an architect (now retired) who did work for the liquidators in preparing a claim against another company. . Mr Hughes claimed $382,700 for that work and submitted that the claim should take priority to all other claims. .
One issue which arose concerned the entitlement of Mr Hughes to charge for the work. As Davis J explained, the “profession of architects is governed by the [Architects Act 2002], which establishes the Board of Architects, and empowers it to regulate the profession through a system of registration of persons who may legally practice as architects”. . Mr Hughes had been registered under the Architects Act as a “practising architect” up to 30 June 2011. . However, from 1 July 2011 to 30 June 2016, he was registered as a “non-practising architect”; and from 1 July 2016, he was not registered under the Architects Act. .
Section 140 of the Architects Act 2002 relevantly provides that a person “who is not an architect” and, “in performing, or undertaking to perform, architectural services for someone”, either (i) claims, or holds himself or herself out, to be an architect, or (ii) allows himself or herself to be held out as an architect, is “not entitled to any monetary or other consideration for the performance or carrying out of architectural services”. The term “architect” is defined as “a person registered as an architect” under the Architects Act 2002. . Further, there are two types of registration under the act: as a “practising architect” and as a “non-practising architect”. .
Davis J observed that, reading the section literally, the prohibition applied to persons not registered as a practising or non-practising architect. . It would not then apply to a registered non-practising architect. . However, considering the section in the context of the Act as a whole, and with regard to the purpose of the Act, his Honour reached the conclusion that the prohibition in s 140 applied “to all persons except registered ‘practising architects’”. . His Honour explained that to construe s 140 so that it would contemplate non-practising architects charging fees for the provision of architectural services would be “completely contrary to the distinction drawn consistently in the Architects Act between the two types of registration of architects”. . Accordingly, s 140 could not be read literally. .
As a result, his Honour found that the Architects Act 2002 prohibited Mr Hughes from claiming for the work done from the time he ceased to be registered as a practising architect on 30 June 2011. . His Honour also considered that s 140 “excludes claims for remuneration made on a restitutionary basis for work done upon request”. . Mr Hughes’ claim therefore was limited to work done up until 30 June 2011 while he was registered as a practising architect. .
A further issue concerned the priority of Mr Hughes’ claim. Counsel for Mr Hughes had submitted that the Universal Distributing principle, which gives priority to a liquidator’s costs and expenses incurred in realising a fund, could be applied to Mr Hughes’ claim by analogy. . This submission was put on the basis that Mr Hughes had performed professional work which had in fact led to money coming into the liquidation. .
Davis J noted that no authority had been provided for this proposition and that it would extend the Universal Distributing principle “beyond the way it had been applied over the last 85 years since the case was decided”. . His Honour rejected the submission, stating that nothing supported the proposition that “a party with no contractual right to remuneration acquires some right merely because the work for which remuneration is claimed in fact resulted in, or contributed to, a fund available to a liquidator”. .
In the result, Mr Hughes was entitled only to $17,302.08. . As a cost of the winding up, it was to be paid after the costs and expenses of the liquidators. .