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City & Suburban Pty Ltd v Smith

City & Suburban Pty Ltd v Smith

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Case Copied 9 July 1998 35 min read

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FEDERAL COURT OF AUSTRALIA

CORPORATIONS LAW - liquidation - application by creditors to remove liquidator - prima facie evidence of breach of duty by liquidator - Whether sufficient cause to remove liquidator - tests of when Court may be satisfied of sufficient cause – whether liquidator should be afforded opportunity to resign - liquidator’s application for remuneration - reduction of remuneration in respect of liquidator’s failure to investigate properly certain matters.

Corporations Law ss 503, 548

Re Adam Eyton Ltd; Ex parte Charlesworth (1887) 36 Ch D 299 applied
Re The Mutual Live Stock Financial and Agency Company Limited (1886) 12 VLR 777 cited
Re George A. Bond and Company Ltd (1932) 32 SR NSW 301 applied
Re Giant Resources Limited [1991] 1 Qd R 107 cited
Network Exchange Pty Ltd v MIG International Communications Pty Ltd (1994) 13 ACSR 544 cited
Re Biposo Pty Ltd (1995) 17 ACSR 730 considered
Dallinger v Halcha Holdings Pty Ltd (1995) 134 ALR 178 cited
Re National Safety Council of Australia, Victorian Division [1990] VR 29 applied
Adsett v Berlouis (1992) 37 FCR 201 cited
Tracker Software v Smith (1997) 24 ACSR 644 cited

Law of Company Liquidation (B H McPherson, 3rd ed by J O’Donovan, 1987)

CITY & SUBURBAN PTY LTD & OTHERS V MICHAEL JOHN MORRIS SMITH LIQUIDATOR OF CONPAC (AUST) PTY LIMITED (IN LIQUIDATION) & ANOTHER

NG 3027 1998
NG 3065 of 1998

MERKEL J
9 JULY 1998
CANBERRA (HEARD IN SYDNEY)

IN THE FEDERAL COURT OF AUSTRALIA

SYDNEY DISTRICT REGISTRY

NG 3027 OF 1998
NG 3065 OF 1998

BETWEEN:

CITY & SUBURBAN PTY LTD AND OTHERS
APPLICANTS

AND:

MICHAEL JOHN MORRIS SMITH LIQUIDATOR OF CONPAC (AUST) PTY LIMITED (IN LIQUIDATION) AND ANOTHER
RESPONDENTS

AND IN THE MATTER OF:

CONPAC (AUST) PTY LIMITED (IN LIQUIDATION)
ACN 003 483 234 AND THE CORPORATIONS LAW

JUDGE:

MERKEL J

DATE OF ORDER:

9 JULY 1998

WHERE MADE:

CANBERRA (HEARD IN SYDNEY)

THE COURT ORDERS THAT:

Michael John Morris Smith be removed as liquidator of Conpac (Aust) Pty Limited (in liquidation).

Richard Campbell Brien be appointed as liquidator of Conpac (Aust) Pty Limited (in liquidation).

A declaration be made that Michael John Morris Smith is entitled to remuneration of $92,651.36 for acting as liquidator of Conpac (Aust) Pty Limited (in liquidation) for the period from 22 August 1997 to 30 November 1997.

The liquidator may file submissions as to costs on or before Thursday, 16 July 1998.

The applicants may file submissions as to costs on or before Thursday, 23 July 1998.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

SYDNEY DISTRICT REGISTRY

NG 3027 OF 1998
NG 3065 OF 1998

BETWEEN:

CITY & SUBURBAN PTY LTD AND OTHERS
APPLICANTS

AND:

MICHAEL JOHN MORRIS SMITH, LIQUIDATOR OF CONPAC (AUST) PTY LIMITED (IN LIQUIDATION) AND ANOTHER
RESPONDENTS

AND IN THE MATTER OF:

CONPAC (AUST) PTY LIMITED (IN LIQUIDATION)
ACN 003 483 234 AND THE CORPORATIONS LAW

JUDGE:

MERKEL J

DATE:

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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Details

Case: [1998] FCA 822
Decision Date: 9 JULY 1998

CaseChat Overview and Summary

In City & Suburban Pty Ltd v Smith, the dispute involved the removal of Michael John Morris Smith from his position as liquidator of Conpac (Aust) Pty Limited, which was in liquidation, and his replacement with Richard Campbell Brien. The case was heard in the Supreme Court of New South Wales.

The central legal issue before the court was whether there were valid grounds for the removal of Smith as liquidator, considering that he had been appointed by the creditors of the company and whether the proposed replacement, Brien, was suitable to assume the role. Additionally, the court had to determine whether Smith was entitled to remuneration for his services rendered during the period he acted as liquidator.

The court found that there were valid grounds to remove Smith due to concerns regarding his competence and the manner in which he was conducting the liquidation. The evidence presented indicated that Smith had failed to act in a manner that was in the best interest of the creditors and had not been fulfilling his duties as liquidator adequately. Consequently, the court ruled in favour of appointing Brien as the new liquidator. The court also determined that Smith was entitled to remuneration for the period during which he acted as liquidator, as he had performed certain duties and expended effort in that role. The court set the remuneration amount at $92,651.36. Furthermore, the court provided instructions for the filing of submissions regarding costs by both parties.

The court's final orders included the removal of Smith as liquidator and the appointment of Brien in his place, along with the declaration of Smith's entitlement to remuneration. The court also specified the deadlines for both parties to file their submissions on costs.

Orders

Orders of the court

Michael John Morris Smith be removed as liquidator of Conpac (Aust) Pty Limited (in liquidation).

Richard Campbell Brien be appointed as liquidator of Conpac (Aust) Pty Limited (in liquidation).

A declaration be made that Michael John Morris Smith is entitled to remuneration of $92,651.36 for acting as liquidator of Conpac (Aust) Pty Limited (in liquidation) for the period from 22 August 1997 to 30 November 1997.

The liquidator may file submissions as to costs on or before Thursday, 16 July 1998.

The applicants may file submissions as to costs on or before Thursday, 23 July 1998.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
SYDNEY DISTRICT REGISTRY	NG 3027 OF 1998 NG 3065 OF 1998

BETWEEN:	CITY & SUBURBAN PTY LTD AND OTHERS APPLICANTS
AND:	MICHAEL JOHN MORRIS SMITH LIQUIDATOR OF CONPAC (AUST) PTY LIMITED (IN LIQUIDATION) AND ANOTHER RESPONDENTS
AND IN THE MATTER OF:	CONPAC (AUST) PTY LIMITED (IN LIQUIDATION) ACN 003 483 234 AND THE CORPORATIONS LAW
JUDGE:	MERKEL J
DATE OF ORDER:	9 JULY 1998
WHERE MADE:	CANBERRA (HEARD IN SYDNEY)