Harris (Trustee for the Nedyah Investment Trust) v Evans, in the matter of Canford Property Group Pty Ltd

Harris (Trustee for the Nedyah Investment Trust) v Evans, in the matter of Canford Property Group Pty Ltd [2018] FCA 1762 involved an application by Mr Harris to appoint a provisional liquidator of Canford Property Group Pty Ltd. Mr Harris sought to protect the company’s assets pending the determination of an application to wind up the company under either s 233 or s 461(1)(k) of the Corporations Act 2001 (Cth). The primary issues for the court were whether there was a reasonable prospect that the winding up order would be made, and whether the assets of the company were in jeopardy. Additionally, the court considered whether measures less intrusive than the appointment of a provisional liquidator could be sufficient to secure the ends sought by the application.

The court noted that Mr Harris had identified questionable transactions exceeding $2.6 million from the company’s accounts, which Mr Evans had not adequately explained. The court also considered the sudden removal of Mr Harris as a director and the breakdown of trust between the directors. While Mr Evans argued that the appointment of a provisional liquidator would destroy the company's business and reputation, the court found that the significant concerns raised by Mr Harris justified the appointment of a provisional liquidator to protect the company’s assets. The court was also satisfied with Mr Harris’ undertaking as to damages.

The court concluded that there was a reasonable prospect that the winding up order would be made, and that the assets of the company were in jeopardy. The court found that the appointment of a provisional liquidator was necessary to preserve the status quo and secure the ends sought by the application. Consequently, the court appointed Anne-Marie Jane Barley of AMB Insolvency Services Pty Ltd as the provisional liquidator of Canford Property Group Pty Ltd. The costs of the application were reserved.

The court’s decision emphasised the importance of transparency and accountability in corporate governance, especially in tightly held companies. The court’s appointment of a provisional liquidator aimed to protect the company’s assets and ensure that any potential mismanagement or misappropriation could be investigated thoroughly.