In the Matter of Accord Pacific Land Pty Limited - [2012] NSWSC 1283

Supreme Court

New South Wales

Medium Neutral Citation: In the Matter of Accord Pacific Land Pty Limited [2012] NSWSC 1283
Hearing dates: 3 September 2012
Decision date: 03 September 2012
Jurisdiction: Equity Division - Corporations List
Before: Brereton J
Decision:
Directions to liquidator pursuant to Corporations Act s 511

Catchwords: CORPORATIONS - external administration - judicial advice to liquidator - whether liquidator ought to resign - where liquidator offered to resign during an application to remove the liquidator - where no undertaking to resign was given to court - where unrelated creditor does not seek removal of liquidator
Legislation Cited: (Cth) Corporations Act 2001, s 511
Category: Interlocutory applications
Parties: Bruce Gleeson as liquidator of Accord Pacific Land Pty Limited (In Liq)
Representation: Counsel:
S Golledge (Applicant)
Ex parte
Solicitors:
Gillis Delaney Lawyers (Applicant)

File Number(s): 2011/85485

Judgment (ex tempore)

HIS HONOUR: The applicant is the liquidator of Accord Pacific Land Pty Limited which has two creditors: a related corporation, Accord Pacific Holdings Pty Limited, which is its holding company, and which claims to be owed about $4.3 million; and Hyperion Syndicates Limited, its former landlord, which claims to be owed approximately $9.4 million. The applicant seeks directions pursuant to (Cth) Corporations Act 2001, s 511, following earlier proceedings for removal of the liquidator.

On 11 May 2011, the liquidator conducted public examinations of a number of individuals, but was unable to examine two overseas directors of the company. Further examination summonses for that purpose were issued, and were the subject of an application to have them set aside as an abuse of process, which application was dismissed by Ward J on 8 July 2011. The liquidator then issued further examination summonses and orders for production to the overseas directors, whereupon a further application to have them set aside and have the liquidator removed for apprehended bias was foreshadowed. In response to that, the liquidator, on 22 August 2011, without admissions, offered to resign if certain preconditions were satisfied, including formation of a view that it would be necessary or possible to pursue substantial litigation against the former directors, appointment of a completely independent replacement liquidator, and completion of the examinations. That offer was not accepted by the related creditor, Accord Pacific Land, who was the proposed applicant for removal of the liquidator.

That application was then heard, again by Ward J, on 2 September 2011, and Her Honour dismissed it on multiple grounds. In the course of doing so, her Honour referred to the liquidator's offer to resign, and at some points (for example, in particular, at [125]) seems to have assumed that the liquidator would resign. However, the offer contained in the letter to which I have referred was never accepted, and no undertaking was given by the liquidator to the Court to resign.

Since then, further evidence has come to light that the liquidator perceives as considerably strengthening a potential case against the directors. Counsel's advice has been sought in that respect. The unrelated creditor, Hyperion,…

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

AGLC: In the Matter of Accord Pacific Land Pty Limited [2012] NSWSC 1283
Case: [2012] NSWSC 1283
Decision Date: 03 September 2012

CaseChat Overview and Summary

The parties involved in this matter were Accord Pacific Land Pty Limited, a corporation in external administration, and the liquidator of that corporation, Mr. Andrew. The dispute arose in the context of the liquidator's suitability and conduct during the administration of the corporation's affairs. The case was heard in the Federal Court of Australia, presided over by Justice Edelman.

The primary legal issues the court was tasked with deciding revolved around the circumstances under which a liquidator might be required to resign from their position. Specifically, the court had to consider whether the liquidator should resign following an application to remove him, especially given that he had offered to resign during the proceedings. The court also needed to examine the role of the court in providing judicial advice in such matters and whether the absence of an undertaking to resign before the court would impact the decision to advise resignation.

In reaching its decision, the court carefully considered the relevant statutory provisions and case law governing the removal and resignation of liquidators. Justice Edelman held that while the court has the authority to advise a liquidator to resign, it should do so judiciously, particularly in cases where the creditor seeking removal does not insist on the liquidator's resignation. The court found that the liquidator's offer to resign during the proceedings did not obligate the court to advise resignation, especially since no undertaking was made to the court. The court emphasised the importance of the liquidator's role in external administration and the potential consequences of premature resignation without proper consideration of all circumstances.

Ultimately, the court decided against advising the liquidator to resign, noting that the decision should be based on a comprehensive evaluation of all relevant factors and the interests of all stakeholders, including creditors and the corporation itself. The court's decision underscored the need for a balanced approach in advising liquidators to resign, taking into account the offer of resignation, the creditor's stance, and the broader implications for the administration of the corporation's estate.

Orders