In the matter of DSR Industries Pty Ltd

[2020] NSWSC 940

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of DSR Industries Pty Ltd [2020] NSWSC 940
Hearing dates:	23 April 2020
Decision date:	23 April 2020
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Applicants appointed as additional liquidators jointly.
Catchwords:	CORPORATIONS — Winding up — Liquidators — Appointment — Where current liquidator’s registration expired and cannot be contacted — Whether s 90-15 of the Insolvency Practice Schedule (Corporations) permits Court to appoint another as liquidator or additional liquidator
Legislation Cited:	- Corporations Act 2001 (Cth), Sch 2, ss 90-15, 90-20
Cases Cited:	- FLY365 Pty Limited (in liq) [2020] FCA 419
Category:	Principal judgment
Parties:	Neil Robert Cussen (First Plaintiff) David Ian Mansfield (Second Plaintiff) DSR Industries Pty Ltd (First Defendant) Arts Illuminated Pty Ltd (Second Defendant) Composite Industries Pty Ltd (Third Defendant) Allmine Group Ltd (Fourth Defendant) Ferroporto Pty Ltd (Fifth Defendant) Avalon Nominees Holdings Pty Ltd (Sixth Defendant) NB2 Pty Ltd (Seventh Defendant) FP SPV No 1 Pty Ltd (Eighth Defendant) KWF Distributors Pty Ltd (Ninth Defendant) Michael Charles Hird (Tenth Defendant)
Representation:	Counsel: C Perry (Solicitor – Plaintiffs) Solicitors: Pure Legal (Plaintiffs)
File Number(s):	2020/121706

Judgment – EX TEMPORE (REVISED 5 MAY 2020)

1. An Originating Process has been filed by Mr Neil Cussen and Mr David Mansfield, who are partners in the firm of Deloitte Financial Advisory Pty Limited (“DFA”), in circumstances of considerable urgency. The application is supported by an affidavit of Mr Cussen sworn 23 April 2020, and my attention has been drawn to the relevant issues by helpful submissions of Ms Perry, who appears for Mr Cussen and Mr Mansfield in the application.

2. It appears that a third person, who is a principal of DFA who reports to Mr Cussen, has been a liquidator of several companies. That person was a registered liquidator until midnight on 21 April 2020 when he appears to have ceased to be a registered liquidator by reason of a failure to apply to the Australian Securities and Investments Commission (“ASIC”) for renewal of his registration as a liquidator by midnight on that date. The circumstances in which this occurred are presently uncertain, because attempts to contact him have been unsuccessful. It is possible that an application could be made to the Court to extend the time for him to seek to renew his registration and it is possible, although I express no concluded view, that such an order could be made nunc pro tunc.

3. Mr Cussen and Mr Mansfield have fairly recognised that the position that that person cannot presently act as liquidator of those companies, because his registration has lapsed and there are provisions which would prohibit that course, and there is no liquidator of the companies, is entirely unsatisfactory. They have drawn ASIC’s attention to this application, and ASIC has indicated that it does not seek to be heard in the application.

4. Mr Cussen and Mr Mansfield initially sought to address this question, given its urgency, by seeking orders which would clarify the position in respect of the third person's office, and appoint them as liquidators to the companies on a vacancy arising by these matters. I do not propose to proceed in that way, although I recognise it is a sensible way for them to approach the application, only because I can approach the matter in a different way which will allow further time for investigation of the position of the third person, and an opportunity for him to be heard as to extending the time to renew his application if he seeks to be heard.

5. Section 90-15 of the Insolvency Practice Schedule (Corporations) provides that the Court may make such order as it thinks fit in relation to the external administration of a company. Section 90-20 identifies the persons who may bring an application for such an order, including a person with a financial interest in the external administration of a company. I am satisfied that Mr Cussen and Mr Mansfield fall in that category, in respect of all of the companies, since their interest in the relevant firm means that they plainly have a financial interest in the performance of its roles in respect of liquidations conducted by persons associated with that firm. In particular, plainly, they might be exposed to the risk of financial loss, as might the firm, if a liquidation were conducted inappropriately or, here, companies were left without an appointed liquidator for a significant period. That, of course, is the result that this application is brought to seek to avert.

6. I am satisfied that it would here be appropriate to make an order appointing Mr Cussen and Mr Mansfield as joint liquidators, or alternatively a joint liquidator, in respect of each of the companies. Such an order would be an order in relation to the external administration of the companies for the purposes of s 90-15 and it would promote those external administrations. The form of that order will allow them to act as liquidators of the companies if that third person has ceased to be registered as a liquidator and his registration is not renewed. If his registration is renewed, following any order made by the Court extending the date for that to occur, then they will be additional liquidators to the companies.

7. The Court's power to make an order under this section, where the appointment of additional liquidators was urgently needed, has been recognised by the Federal Court of Australia in Natkunarajah (Liquidator) in the matter of FLY365 Pty Limited (in Liq) [2020] FCA 419, where Gleeson J referred to authorities as to the width of the Court's power under s 90-15 of the Act and the purposes for which it would be exercised, and applied that power in the circumstances of that case to appoint an additional liquidator where there was utility in taking that course. The same approach should properly be adopted in this case.

8. For these reasons, I will make orders in the form of orders that will be initialled by me and placed in the file which will, relevantly, provide for the appointments of Mr Cussen and Mr Mansfield as liquidators or additional liquidators of the companies jointly, and preserve the rights of creditors, including and also the right of the third person to whom I have referred, to seek to vary these orders.

**********

Decision last updated: 31 July 2020