In the matter of Columbia Private Holdings Pty Ltd and other companies

[2017] NSWSC 1859

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Columbia Private Holdings Pty Ltd and other companies [2017] NSWSC 1859
Hearing dates:	03 October 2017
Date of orders:	03 October 2017
Decision date:	03 October 2017
Jurisdiction:	Equity - Corporations List
Before:	Brereton J
Decision:	Manfred Holzman be removed as liquidator; Justin Holzman be appointed in his place.
Catchwords:	CORPORATIONS – external administration – winding up – liquidator – removal and replacement – where current liquidator is significantly incapacitated and terminally ill – whether (CTH) Corporations Act 2001, Insolvency Practice Schedule (Corporations), s 90-15, constitutes replacement power to that conferred by former ss 502 and 503.
Legislation Cited:	(CTH) Corporations Act 2001, s 473, s 499, s 502, s 503; Insolvency Practice Schedule (Corporations), s 90-5, s 90-10, 90-15, s 90-20, s 90-35 (CTH) Insolvency Law Reform Act 2016
Cases Cited:	City & Suburban Pty Ltd v Michael John Morris Smith (1998) 28 ACSR 328 Emerton Pty Ltd v Referral Marketing Services Pty Ltd [2009] NSWSC 738 McGrath, Re [2005] NSWSC 506; (2005) 54 ACSR 55 Vouris, Re [2004] NSWSC 384; (2004) 49 ACSR 543 Wily, Re [2003] NSWSC 1260; (2003) 49 ACSR 94
Category:	Principal judgment
Parties:	Manfred Holzman (plaintiff)
Representation:	Counsel: M Faraday (sol) (plaintiff)   Solicitors: Henry William Lawyers (plaintiff)
File Number(s):	2017/298091

Judgment – EX TEMPORE

1. Prior to the commencement, with effect from 1 September 2017, of the Insolvency Practice Schedule (Corporations) introduced by the (CTH) Insolvency Law Reform Act 2016, it had become commonplace for applications to be made on behalf of liquidators who had become - or feared becoming - incapacitated from acting, to be replaced via a single application to the Court, thus avoiding the necessity to make an application in each winding up to which the liquidator had been appointed (and, in the case of voluntary windings up, to convene meetings of the creditors or members, as the case may be, to effect the replacement). In order to engage this jurisdiction, resort was had variously to former (CTH) Corporations Act, s 473 (in the case of a winding up by the Court), s 499 (in the case of a creditors’ voluntary winding up), and s 502 or s 503 (in the case of a voluntary winding up generally). This jurisdiction was the subject of discussion in a number of cases, including City & Suburban Pty Ltd v Michael John Morris Smith,[1] Re Wily, [2] Re Vouris, [3] Re McGrath, [4] and Emerton Pty Ltd v Referral Marketing Services Pty Ltd. [5]

   1. (1998) 28 ACSR 328.

   2. [2003] NSWSC 1260; (2003) 49 ACSR 94.

   3. [2004] NSWSC 384; (2004) 49 ACSR 543.

   4. [2005] NSWSC 506; (2005) 54 ACSR 55.

   5. [2009] NSWSC 738.

2. The commencement of the Insolvency Law Reform Act has a significant impact on this practice, because it amends or repeals all of the sections to which I have referred. It preserves in an amended form in s 473 provision for the Court to fill a vacancy in the office of a liquidator appointed by the Court in the case of a compulsory winding up, and it retains the facility in s 473 for a liquidator to resign. In connection with a creditors’ voluntary winding up, it retains a facility for the Court to fill a vacancy occasioned by a liquidator resigning. However, s 502 and s 503, which provided the requisite power in connection with a voluntary winding up generally – and which, in the case of s 503, was typically resorted to in the case of a voluntary winding up, because it enabled the Court to remove the incumbent liquidator and thereupon appoint the replacement – have been repealed.

3. The only explicit replacement power in the Insolvency Practice Schedule (IPS) is to be found in IPS s 90-35, which provides that creditors may remove an external administrator and appoint another; but even that is subject to limitations in respect of notice of the meeting, and a right of the removed administrator to approach the Court. However, IPS s 90-15 provides a plenary power, by which "the Court may make such orders as it thinks fit in relation to the external administration of a company". Such orders can be made on application under IPS s 90-20, which provides that those who may apply for such an order include "an officer of the company", which encompasses a liquidator of the company. The types of orders that can be made are described in IPS sub-s 90-15(3) as including, without limitation, an order that a person ceases to be the external administrator of the company, and an order that another registered liquidator be appointed as the external administrator of the company.

4. Although s 90-15 appears in Division 90 "Review of the external administration of a company", Subdivision B "Court powers to inquire and make orders", it is not confined to orders that can be made consequent upon an inquiry under s 90-5 or s 90-10. That that must be so follows from the circumstance that standing to apply or an inquiry under s 90-10 is conferred on the persons referred to in s 90-10(2), which list is not identical, though it is similar, to that which appears in s 90-20(1).

5. There is nothing – in the Explanatory Memorandum, the second reading Speech, or the legislation itself – to suggest that the Insolvency Law Reform Act2016 and the enactment of the Insolvency Practice Schedule was intended to deprive the Court of any beneficial power that it had enjoyed under the preceding legislation. Rather, it seems that where those powers have not been directly replicated, the view has been taken that the general supervisory power contained in s 90-15 was ample to cover the situation. In the present context, that is fortified by the reference in sub-s (3) to the particular types of orders which I have mentioned.

6. I am satisfied therefore that what previously has been done under s 473, s 499 and s 503 can now be done under IPS s 90-15. Because the new section does not differentiate between the different types of winding up, that has the desirable consequence – which was part of the rationale for the Insolvency Practice Schedule – of unifying, simplifying and consolidating the applicable law, so far as practicable, across the various types of administration.

7. The plaintiff Manfred Holzman is presently a registered liquidator, and the liquidator in the creditors' voluntary windings-up of ten corporations. He is 73 years of age, in poor and deteriorating health, and, sadly, now significantly incapacitated and terminally ill. His son, Justin Holzman, is also a registered liquidator, having become registered in 2011. He has worked in his father's practice since December 2001, and more recently since he has been registered has taken some of his own appointments as well as assisting his father, including with the ten creditors' voluntary windings-up with which the present application is concerned. The plaintiff proposes that he be removed and – given his son's familiarity with the liquidations in question – replaced by his son in those administrations. That is plainly a sensible and desirable course.

8. Often it has been considered appropriate in this context, in the case of a creditors' voluntary winding-up, to require notice of the replacement of the liquidator to be given to the creditors, and to reserve leave to them to apply. That seems to me an appropriate course here, lest any creditor wish to advance a different position.

9. Justin Holzman has indicated in his affidavit that if appointed he will immediately take steps to notify creditors and ASIC of his appointment.

10. The Court orders that:

1. Upon the undertaking of the plaintiff’s solicitor Mr Faraday to pay the appropriate filing fees, Manfred Holzman have leave to file an originating process in the Registry in the form of the draft initialled by me, dated this day, and placed with the papers.

2. The originating process be returnable instanter.

3. Pursuant to Insolvency Practice Schedule (Corporations), s 90-15:

1. Manfred Holzman be removed at his own request as liquidator of each of the entities listed in the Schedule; and

2. Justin Holzman of Manfred Holzman & Associates be appointed liquidator of the said entities in his place.

4. Leave be reserved to any creditor of any of the said entities to apply to vary or set aside these orders within 14 days after service of notice of these orders on it.

5. Justin Holzman within 72 hours provide notice of these orders to all creditors of the said entities and lodge notice of appointment with the Australian Securities & Investments Commission.

6. Notice of these orders to any creditor for whom the liquidator has an email address may be given by email transmission of a PDF of a sealed copy thereof.

7. These orders are to be entered forthwith.

Schedule:

1. Columbia Private Holdings Pty Limited (ACN 130 662 690);

2. Penr Pty Limited (ACN 133 401 297);

3. Studio Lane Pty Limited (ACN 133 401 288);

4. Focus (Illawarra) Limited (ACN 123 028 231);

5. ACN 052 894 505 Pty Limited (formerly Ice Design Pty Limited);

6. John While Springs Pty Limited (ACN 000 009 674);

7. On Fovo Pty Limited (ACN 052 124 035);

8. Remo Bricklaying Pty Limited (ACN 104 997 177);

9. Remo (NSW) Pty Limited (ACN 104 997 177);

10. Retail Marketing Systems Pty Limited (ACN 055 737 098);

11. Rogue Bin Finances Pty Limited; and

12. Solo Trip Pty Limited (ACN 100 873 167).

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Endnotes