Australian Securities and Investments Commission v Wily & Hurst

In the case of Australian Securities and Investments Commission v Wily & Hurst, the Australian Securities and Investments Commission (ASIC) sought an inquiry into the conduct of liquidators following an investigation into the conduct of liquidations. The respondents, Wily and Hurst, were liquidators appointed to various companies. ASIC alleged misconduct by the liquidators, including potential conflicts of interest, failure to disclose conflicts, and not reporting possibilities of shadow directors and unlawful phoenixing.

The legal issues that arose in this case involved whether there was a sufficient case of misconduct to warrant an inquiry into the conduct of the liquidators, whether the liquidators should have declined appointment due to apparent conflicts of interest, whether they should have disclosed those conflicts, and whether they should have reported possibilities of shadow directors and unlawful phoenixing. The court also had to consider the discretionary considerations in making its decision, including the strength and nature of the allegations, delay, utility, availability of alternative remedies, the role of the "second appointee" in joint and several appointments, subsequent practice, and the financial circumstances.

The court found that the liquidators' conduct warranted an inquiry as ASIC had established a sufficient case of misconduct. The court held that the liquidators should have declined appointment or disclosed their conflicts of interest, and they should have reported the possibilities of shadow directors and unlawful phoenixing. The court considered the discretionary factors and found that the utility of an inquiry outweighed the delay and the availability of alternative remedies. The court also found that the subsequent practice and financial circumstances of the liquidators did not mitigate their misconduct.

The court ordered an inquiry into the conduct of the liquidators, and it was directed to be conducted by an independent body. The inquiry was to examine the conduct of the liquidators in relation to their appointments, including any conflicts of interest, disclosure of conflicts, and reporting of shadow directors and unlawful phoenixing. The court also ordered that the liquidators pay ASIC's costs of the application.