AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v PETER IVAN MACKS (NO 4)
[2020] SASC 209
Judgment of The Honourable Justice Doyle
29 October 2020
CORPORATIONS - WINDING UP - LIQUIDATORS - SUPERVISION OF LIQUIDATORS
CORPORATIONS - MANAGEMENT AND ADMINISTRATION - DUTIES AND LIABILITIES OF OFFICERS OF CORPORATION - FIDUCIARY AND RELATED STATUTORY DUTIES - OF CARE, SKILL AND DILIGENCE
CORPORATIONS - MANAGEMENT AND ADMINISTRATION - DUTIES AND LIABILITIES OF OFFICERS OF CORPORATION - OFFICERS OF INSOLVENT CORPORATIONS - GENERALLY
The defendant, Mr Macks, is a registered liquidator and an official Liquidator pursuant to the provisions of the Corporations Act 2001 (Cth) (the Act). At all relevant times, Mr Macks practised as a principal of the firm Prentice Parbery Barilla (PPB). By its second originating process filed on 12 March 2019, the plaintiff, ASIC, sought an inquiry under s 536(1) of the Act into two aspects of Mr Macks’ conduct as the liquidator of Bernsteen Pty Ltd (Bernsteen) and Newmore Pty Ltd (together, the Companies), which had been the subject of findings of both the Supreme Court of South Australia and the Full Court of the Supreme Court. On 21 February 2019, it was ordered that this inquiry take place.
The first aspect of the inquiry concerns the findings made by the trial judge in the Supreme Court proceedings, in relation to the creation of two memoranda (the Memoranda) provided by Mr Macks to ASIC on 26 February 2010, in response to a notice to produce issued by ASIC to Mr Macks on 27 January 2010 regarding an investigation into his conduct as the liquidator of the Companies. It is alleged by ASIC that, on or about 25 February 2010, Mr Macks fabricated the Memoranda with the intention of passing them off to ASIC as either original documents created on the dates they bore, or true photocopies of the originals, and forged on them the initials of other persons working at PPB. ASIC alleges that Mr Macks did so dishonestly, and for the purpose of deceiving ASIC in the course of its investigation into Mr Macks’ conduct.
The second aspect of the inquiry concerns the finding of the Full Court that Mr Macks, as the liquidator of Bernsteen, contravened s 180(1) of the Act by reason that from 28 April 2006 he failed to exercise the degree of care and diligence required of him as an officer of Bernsteen in applying its funds: in pursuing and, as the case may be, defending proceedings collectively known as the “Bernsteen proceedings”; and pursuant to an indemnity in favour of Ms Heidi George, by which Mr Macks indemnified Ms George against her liability for the costs of steps and proceedings collectively known as the “George proceedings”. ASIC alleges that, from, at the latest, 28 April 2006 onwards Mr Macks continued the Bernsteen proceedings and continued to indemnify Ms George in respect of the costs of the George proceedings in circumstances where no reasonable person in his position would have…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
ASIC v Macks (No 4) [2020] SASC 209
Case
[2020] SASC 209
Decision Date
CaseChat Overview and Summary
In the case of Australian Securities and Investments Commission v Macks (No 4), the Australian Securities and Investments Commission (ASIC) initiated proceedings against Mr. Macks, who was serving as a liquidator of several companies. ASIC sought orders to remove Mr. Macks from his position as liquidator and to cancel his registration as a liquidator, or alternatively, to prohibit him from holding such office for a period deemed appropriate by the Court. The dispute centred around the conduct of Mr. Macks in his role as liquidator, with allegations that he had not faithfully performed his duties or had failed to observe certain statutory requirements.
The primary legal issue before the Court was whether Mr. Macks had breached his fiduciary and statutory duties as a liquidator. This involved an examination of his conduct in the context of the winding up of the companies and whether his actions warranted disciplinary action. The Court was tasked with determining whether Mr. Macks's conduct was deficient and, if so, what appropriate remedial measures should be taken.
The Court conducted an inquiry into Mr. Macks's conduct, evaluating the allegations against him and considering the evidence presented. The inquiry was divided into three stages, consistent with the established framework for such proceedings. After reviewing all relevant circumstances, the Court found that Mr. Macks had indeed failed to meet the standards expected of a liquidator. The Court concluded that his conduct warranted the imposition of disciplinary measures, including his removal from office and the cancellation of his registration as a liquidator.
The Court ordered that Mr. Macks be removed from his position as liquidator of the companies in question and that his registration as a liquidator be cancelled. This decision reflects the Court's commitment to ensuring that liquidators adhere to their duties and to maintaining the integrity of the corporate insolvency process.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
In both the second originating process and the Claim, ASIC seeks relief in the form of orders removing Mr Macks as liquidator of the companies identified in the schedule to the second originating process, and cancelling his registration as a liquidator (or in the alternative, prohibiting him from holding the office of liquidator or controller for such period as the Court considers appropriate).The nature of an inquiry under s 536(1) of the Corporations Act Section 536(1) of the Act provides for the Court (or ASIC) to inquire into the conduct of a liquidator in connection with the performance of his or her duties, and for the Court to then take such action as it thinks fit.[4] It is in the following terms:[4] Section 536 was repealed by the Insolvency Law Reform Act 2016 (Cth), but remains applicable for the purposes of the present proceedings by reason of the transitional provisions under that legislation. (1) Where:(a) it appears to the Court or to ASIC that a liquidator has not faithfully performed or is not faithfully performing his or her duties or has not observed or is not observing:(i)a requirement of the Court; or(ii)a requirement of this Act, of the regulations or of the rules: or(b) a complaint is made to the Court or to ASIC by any person with respect to the conduct of a liquidator in connection with the performance of his or her duties;the Court or ASIC, as the case may be, may inquire into the matter and, where the Court or ASIC so inquires, the Court may take such action as it thinks fit. As I explained in my earlier reasons in this matter,[5] the Court’s jurisdiction under s 536(1) is an aspect of its supervisory and disciplinary jurisdiction over liquidators. Authority suggests that proceedings under s 536(1) will normally involve three stages: [6]The first stage involves the Court deciding, upon an application being made, whether an inquiry into a liquidator’s conduct is warranted. If found to be warranted, an inquiry is ordered to take place. The task of the Court at the second stage is to make a judgment about the liquidator’s conduct, viewed in light of the whole of the circumstances relevant to the particular winding up and liquidator. If the Court decides that the liquidator’s conduct was in some way deficient, it then embarks upon the third stage and decides whether or not to make an order in respect of that conduct.[5] Australian Securities and Investments Commission v Macks (No 2) (2019) 133 SASR 251 at [48]-[51]; see also Australian Securities and Investments Commission v Wily (2019) 137 ACSR 1 at [27]-[29].[6] Australian Securities and Investments Commission v Macks (No 2) (2019) 133 SASR 251 at [52]; see also Australian Securities and Investments Commission v Wily (2019) 137 ACSR 1 at [34]. Having earlier made an order that there be an inquiry, I have now held that inquiry, being the second of the three stages referred to in the passage above. The parties are agreed that I should set out my findings in respect of that second stage before embarking upon the third stage. I have acceded to this approach.