BSA Executives Pty Ltd (In Liquidation) and Ors
[2016] VSC 576
•26 September 2016 (ex tempore)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2016 03920
IN THE MATTER of BSA Executives Pty Ltd (In Liquidation) ACN 099 703 867; Quality Clean Pty Ltd (In Liquidation) ACN 081 218 091; Olympian Pty Ltd (In Liquidation) ACN 082 325 362; A3 Consulting Pty Ltd (In Liquidation) ACN 149 765 668
| PAUL CHARLES STEWART | Plaintiff |
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JUDGE: | GARDINER AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 September 2016 |
DATE OF JUDGMENT: | 26 September 2016 (ex tempore) |
CASE MAY BE CITED AS: | BSA Executives Pty Ltd (In Liquidation) and Ors |
MEDIUM NEUTRAL CITATION: | [2016] VSC 576 |
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CORPORATIONS – External administration – Liquidator resigns his appointment as sole liquidator of several companies – Appointment of replacement liquidator from the same firm – Corporations Act 2001 (Cth), s 473(1), 473(7) – Re Free [2010] NSWSC 1079, Re Ambridge Investments Pty Ltd [2015] NSWSC 1671 cited.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N B Curran | Thomson Geer |
HIS HONOUR:
On 26 September 2016, I made orders pursuant to s 473(7) of the Corporations Act 2001 (Cth) (‘the Act’) appointing Andrew William Beck (‘Mr Beck’) as liquidator of the several companies identified in paragraph 2. I indicated on that occasion I would provide brief reasons which I now do.
The plaintiff, Mr Stewart, is an official liquidator and the Court-appointed liquidator of the following companies (‘the companies’):
(a) BSA Executives Pty Ltd (In Liquidation) ACN 099 703 867;
(b) Quality Clean Pty Ltd (In Liquidation) ACN 081 218 091;
(c) Olympian Pty Ltd (In Liquidation) ACN 082 325 362;
(d) A3 Consulting Pty Ltd (In Liquidation) ACN 149 765 668
Mr Stewart makes application pursuant to s 473(7) of the Act for orders that, subsequent to his retirement as liquidator of the companies, Mr Beck be appointed as official liquidator of the companies. Mr Stewart’s ability to resign as liquidator is provided by s 473(1) of the Act which provides:
A liquidator appointed by the Court may resign or, on cause shown, be removed by the Court.
Section 473(7) provides that a vacancy in the office of a liquidator appointed by the Court must be filled by the Court.
The need for the application arises as Mr Stewart is the subject of a creditor’s petition issued in the Federal Circuit Court by Bendigo and Adelaide Bank Limited. The Bank obtained a judgment against him on 26 February 2016 arising from Mr Stewart’s dealings with Great Southern Finance Limited from about 2005. The petition is scheduled to be heard on 27 September 2016 and Mr Stewart expects that on that occasion a sequestration order will be made against him. Because of this, he intends to resign as the liquidator of the companies and seeks an order that Mr Beck, his co-director at Beck and Stewart Advisory Pty Ltd, be appointed as liquidator of the companies.
Mr Beck has agreed to his proposed appointment as liquidator of the companies and has filed consents of liquidator and declarations of relevant relationships on 23 September 2016.
The winding up order in respect of BSA Executives Pty Ltd was made by the Supreme Court of Victoria on 30 June 2016. Quality Clean Pty Ltd was ordered to be wound up by the Federal Court of Australia on 13 November 2015. Olympian Pty Ltd was ordered to be wound up by the Federal Court on 3 May 2016 and A3 Consulting Pty Ltd was ordered to be wound up by the Federal Court on 14 June 2016. Mr Stewart is the sole liquidator of each of the companies.
Section 206B(3) of the Act provides that a person is disqualified from managing corporations if a person is an undischarged bankrupt under the law of Australia, its external territories or another country. Section 206A(1) provides:
(1)A person who is disqualified from managing corporations under this Part commits an offence if:
(a)they make, or participate in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or
(b)they exercise the capacity to affect significantly the corporation’s financial standing; …
Mr Stewart cannot continue to act as liquidator of the companies and wishes to resign. In order to effect his resignation, Mr Stewart, as a liquidator appointed by the Court, must file with the Registry and lodge with ASIC, memoranda pursuant to Order 7.1(1) of the Supreme Court (Corporations) Rules 2013 (‘the Rules’). Rule 7.2(1)(a) provides that if for any reason there is no liquidator acting in a winding up, the Court may, in the case of a winding up by the Court, appoint another official liquidator whose written consent in accordance with Form 8 of the Rules has been filed. Rule 7.2(2)(b) provides that the Court may make the appointment in the case of a winding up by the Court on its own initiative. I cannot perceive how that could occur unless it was actuated by an application by the resigning liquidator, as has occurred here. The vacancy does not arise until the relevant memoranda under the Rules has been filed with the Court and lodged with ASIC.[1] It is only when those two events have occurred that there is the vacancy referred to in s 473(7).[2]
[1]Rule 7.1(2) of the Rules.
[2]See Free& Ors [2010] NSWSC 1079 (‘Free’)at [10].
Three of the liquidations are as a result of orders made by the Federal Court. In Re Ambridge Investments Pty Limited[3] Bergin CJ in Equity, in dealing with an application under s 473(7) of the Act, collected the authorities dealing with the issue as to whether the court making the original winding up order in each case should be the relevant court dealing with the replacement of the resigning liquidator. Her Honour stated:
13.On one reading of s 471B of the Act, it might have been thought that the use of the expression “the Court” where it secondly appears meant the same court that had made the orders for winding up of the company. A similar reading might be applied to s 473(7) of the Act. This is particularly so where the expression used in both sections is “the Court” rather than “a Court”. However I agree with the approach adopted in the above mentioned authorities and conclude that the expression “Court” where it secondly appears in s 473(7) may be read as any of the courts defined in s 58AA of the Act.
14.In the present case this court is not being asked to countermand the order of the Federal Court or the order of the Victorian Supreme Court. Rather this court is asked to make a consequential order in respect of the winding up of those companies by reason of a step taken by the liquidator. The resignations take effect when the liquidator files his memoranda of resignation with the Registrar of the Court pursuant to the Corporations Rules and lodges them with ASIC. It is these steps that create the vacancies. The vacancy must be filled by the court.
15.I am satisfied having regard to the approach adopted in the authorities referred to above that this court does have the power to make the orders sought by the plaintiffs in these proceedings. I am also satisfied that there is a clear benefit in appointing Mr White to ensure continuity within the one firm in respect of each of the liquidators: Condon v Watson at 317; Free at [6].
[3][2015] NSWSC 1671.
Accordingly, despite the fact that three of the companies were ordered to be wound up by orders of the Federal Court, this Court has jurisdiction to make the orders appointing Mr Beck to those companies.
In his affidavit in support of the application, Mr Stewart indicates that he wishes to resign as liquidator with effect from the time of the appointment of the new liquidator in order to avoid any interregnum or adverse effects on any of the companies’ administrations. Mr Stewart states that in March 2016, he and Mr Beck, who is an official liquidator, established Beck and Stewart Advisory Pty Ltd. Prior to the establishment of that company, they were employed at RSM, a firm of accountants. Since the establishment of Beck and Stewart Advisory Pty Ltd, Mr Beck and Mr Stewart have shared the workload of their respective insolvency administrations and together have conducted weekly reviews of their respective insolvency administrations. Mr Beck is therefore familiar with each of the administrations of the companies.
Mr Stewart states that given Mr Beck’s past involvement with each of the liquidations, Mr Beck is the most appropriate person to appoint to replace him. Mr Stewart states that Mr Beck will be able to seamlessly step into the role of liquidator thereby minimising the costs and disruption to each administration.
In my view, it is appropriate to make the orders sought. It is in the interests of creditors and those other persons affected by Mr Stewart’s resignations that a liquidator from the same firm as the resigning liquidator be appointed to ensure continuity.[4]
[4]See Free at [6].
In accordance with the form of orders made in Free ,[5] I will make an order pursuant to s 473(7) of the Act, that the vacancies which will arise upon the resignation of Mr Stewart as the Court appointed liquidator of the companies following his filing with the Registry and lodgement with ASIC of a memorandum of resignation in accordance with Rule 7.1 of the Rules, be filled by Mr Beck.
[5]At [29].
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