Gadsden v MacKinnon (Liquidator), in the matter of Allibi Pty Ltd (in liq)

The case of Gadsden v MacKinnon (Liquidator), in the matter of Allibi Pty Ltd (in liq) involves an application by directors and a creditor to replace the existing liquidators of a company in liquidation. The plaintiffs sought the removal of the liquidators on the basis that their conduct was an abuse of process, specifically, their demand for $69 million in damages for alleged breaches of the Corporations Act by the directors was made without proper foundation. The court was required to determine whether the liquidators' actions amounted to an abuse of process and whether their role as officers of the court justified their removal. The central legal issue was whether the demand for damages by the liquidators was unreasonable and inconsistent with their duties, thereby warranting their replacement.

The court considered the nature and extent of the liquidators' demands, the lack of proper foundation for these demands, and the liquidators' persistence with these claims despite being aware of their untenability. The court held that the liquidators' conduct in making and persisting with the demand was an abuse of process, inconsistent with their role as officers of the court. This conclusion was based on the lack of evidence supporting the claims and the liquidators' failure to correct the record despite being made aware of the errors. The court found that the abuse of process founded an order for the removal of the existing liquidators and the appointment of new ones.

Pursuant to sections 90-10, 90-15, and 90-20 of the Insolvency Practice Schedule (Corporations), the court ordered that Mr Hamish MacKinnon and Mr Nicholas Giasoumi cease to be the external administrators of Allibi Pty Ltd (in liquidation). In their place, Mr Craig Crosbie and Mr Robert Ditrich, both registered liquidators, were appointed as liquidators of Allibi. The parties were also directed to file and exchange written submissions regarding costs within seven days, as per Rule 39.32 of the Federal Court Rules 2011.