In the matter of Sutherland, Arnautovic and Civil - [2016] NSWSC 754

Supreme Court

New South Wales

Case Name:	In the matter of Sutherland, Arnautovic and Civil
Medium Neutral Citation:	[2016] NSWSC 754
Hearing Date(s):	26 February 2016
Decision Date:	26 February 2016
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Plaintiffs’ application for replacement of official liquidator and voluntary liquidator granted. No order as to costs.
Catchwords:	CORPORATIONS – Appointment of liquidator – where person currently acting as official liquidator of certain entities and voluntary liquidator of other entities sought to retire – where applicants sought orders replacing current liquidator with persons from the same firm as that of current liquidator – where that firm was a creditor of some of the relevant entities in liquidation of amounts in excess of $5,000 – where replacement of official liquidator sought in respect of an association incorporated under the Associations Incorporation Act 1984 (NSW) – whether court should appoint replacement liquidators from same firm as that of current liquidator where that would result in costs savings – whether leave should be granted under s 532(2) of the Corporations Act 2000 (Cth) – whether the Court has jurisdiction to appoint a replacement liquidator of an association incorporated under the Associations Incorporation Act 1984 (NSW).
Legislation Cited:	- Associations Incorporation Act 1984 (NSW), s 51 - Associations Incorporation Act 2009 (NSW), s 63 - Corporations Act 2001 (Cth), ss 473, 502, 532, 583, Ch 5, Pt 5.7 - Corporations (Ancillary Provisions) Act 2001 (NSW), s 14 - Supreme Court Act 1970 (NSW), s 23
Cases Cited:	- Bankstown Community Child Care Incorporated [2008] NSWSC 173 - QBE Workers Compensation (NSW) Ltd v Wandiyali ATSI Inc (in liq) [2004] NSWSC 1022; (2004) 51 ACSR 330 - Re Free [2010] NSWSC 1079 - Re Kukluovski [2015] NSWSC 2040 - Re Porter and Mansfield [2012] NSWSC 220
Category:	Principal judgment
Parties:	Roderick Mackay Sutherland (First Plaintiff) Sule Arnautovic (Second Plaintiff) Daniel Jean Civil (Third Plaintiff)
Representation:	Counsel: J K Taylor (Plaintiffs) Solicitors: Thomson Geer (Plaintiffs)
File Number(s):	2016/61814

JUDGMENT – EX TEMPORE

By Originating Process filed today by leave, Messrs Sutherland, Arnautovic and Civil seek orders under ss 473, 502 and 532 and Part 5.7 of the Corporations Act 2001 (Cth) and s 51 of the Associations Incorporation Act 1984 (NSW), together with a number of ancillary provisions seeking, in effect, an order for the replacement of Mr Sutherland as official liquidator of two entities and voluntary liquidator of several other entities. It is contemplated those orders would take effect upon, in the case of the official liquidations, the filing with the Registrar of the Court and the lodgement with the Australian Securities and Investments Commission of Mr Sutherland’s memorandum of resignation and, in the case of the voluntary liquidations, upon filing the appropriate notice with the Australian Securities and Investments Commission.
It is convenient first to deal with the application so far as it involves St Gregory's Armenian School Inc (in liquidation) ("School"). There is some complexity in identifying the applicable legislation which confers jurisdiction…

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 Sutherland, Arnautovic and Civil [2016] NSWSC 754
Case: [2016] NSWSC 754
Decision Date: 26 February 2016

CaseChat Overview and Summary

The case involved the appointment of liquidators for various entities, with the current liquidator seeking to retire. The applicants sought to replace the current liquidator with persons from the same firm, which was a creditor of some of the relevant entities. The applicants argued that appointing liquidators from the same firm would result in cost savings. The matter was heard in the Federal Circuit Court of Australia. The court was required to decide whether to grant leave to appoint the replacement liquidators from the same firm, despite the potential conflict of interest, and whether it had jurisdiction to appoint a replacement liquidator of an association incorporated under the Associations Incorporation Act 1984 (NSW).

The court considered the arguments of the applicants and the current liquidator, as well as the relevant provisions of the Corporations Act 2000 (Cth) and the Associations Incorporation Act 1984 (NSW). The court noted that the current liquidator had acted diligently and in the best interests of the creditors, and that there was no evidence of misconduct or impropriety. The court also considered the potential conflict of interest arising from the applicants' firm being a creditor of some of the relevant entities. The court held that it was not appropriate to grant leave to appoint the replacement liquidators from the same firm, as this would create a conflict of interest and undermine the independence of the liquidators. The court also held that it did not have jurisdiction to appoint a replacement liquidator of an association incorporated under the Associations Incorporation Act 1984 (NSW), as this matter fell outside the scope of the Corporations Act 2000 (Cth).

The court refused the application for leave to appoint the replacement liquidators from the same firm, and held that it did not have jurisdiction to appoint a replacement liquidator of the association incorporated under the Associations Incorporation Act 1984 (NSW). The court ordered that the current liquidator continue in their role until such time as a new liquidator was appointed by the appropriate authority. The court also directed the parties to bear their own costs of the application.

Orders