Nairn v Westpoint Management Ltd (in liq)
[2009] WASC 180
•25 JUNE 2009
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NAIRN -v- WESTPOINT MANAGEMENT LTD (in liq) [2009] WASC 180
CORAM: MASTER SANDERSON
HEARD: ON THE PAPERS
DELIVERED : 25 JUNE 2009
FILE NO/S: COR 15 of 2006
BETWEEN: GREGORY JOHN NAIRN
Plaintiff
AND
WESTPOINT MANAGEMENT LTD (RECEIVERS & MANAGERS APPOINTED) (in liq) (ACN 074 148 431)
Defendant
Catchwords:
Corporations Act - Application to appoint additional liquidator for special purpose when risk of conflict of interest - Turns on own facts
Legislation:
Nil
Result:
Additional special purposes liquidator appointed
Category: B
Representation:
Counsel:
Plaintiff: No appearance
Defendant: No appearance
Solicitors:
Plaintiff: Hardy Bowen
Defendant: Clayton Utz
Case(s) referred to in judgment(s):
Advanced Housing Pty Ltd (in liq) v Newcastle Classic Development Pty Ltd (1994) 14 ACSR 230
Honest Remark Pty Ltd v Allstate Explorations NL (2006) 58 ACSR 2
Re McGrath [2006] NSWSC 385
Re Obie Pty Ltd (in liq) (No 4) (1984) 8 ACLR 967
Re Spedley Securities Ltd (in liq) (1991) 4 ACSR 555
MASTER SANDERSON: On 11 June 2009 the plaintiff filed an interlocutory process seeking the appointment of an additional special purpose liquidator. After reviewing the application and the additional supporting material on 12 June 2009 I made the following orders:
1.Simon Guy Theobald an official liquidator, be appointed as an additional, special purpose liquidator of Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) pursuant to sub‑section 472(1) of the Corporations Act 2001 (Cth), for the purposes specified in order 2.
2.As an additional, special purpose liquidator of Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation), Simon Guy Theobald may, pursuant to sub‑section 473(8) of the Act:
2.1receive and review the books and records of Westpoint Management insofar as they relate to any claim by:
(a)Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) as responsible entity of the Paragon Commercial Syndicate; and
(b)Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) as trustee of the Westpoint Income Fund,
that may arise against KPMG;
2.2investigate, consider and obtain legal and any other professional advice required in relation to any claim that may arise by:
(a)Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) as responsible entity of the Paragon Commercial Syndicate; and
(b)Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) as trustee of the Westpoint Income Fund,
against KPMG;
2.3convene a meeting of the investors and/or creditors of:
(a)Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) as responsible entity of the Paragon Commercial Syndicate (Paragon); and
(b)Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) as trustees of the Westpoint Income Fund (WIF),
to consider any claim that may be available to them or Paragon or WIF against KPMG;
2.4as advised and/or approved, commence, join with, or delegate to the ASIC any proceedings against KPMG;
2.5attend the global mediation on 15 June 2009;
2.6to the extent permitted by law, compromise or make any agreement on behalf of:
(a)Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) as responsible entity of the Paragon Commercial Syndicate; and
(b)Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) as trustee of the Westpoint Income Fund,
in relation to any claim against KPMG.
3.The applicant Simon Andrew Read as liquidator of Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) or Simon Guy Theobald as additional, special purpose liquidator have leave to apply to extend or modify the purposes for which Simon Guy Theobald be appointed as an additional, special purposes liquidator of Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) and the powers to facilitate those purposes.
4.The costs of this application be paid equally from the assets of:
(a)Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) as responsible entity of the Paragon Commercial Syndicate; and
(b)Westpoint Management Ltd ACN 074 148 431 (Receivers and Managers Appointed) (In Liquidation) as trustee of the Westpoint Income Fund.
5.Matter otherwise be adjourned to 9.30 am on Tuesday 30 June 2009 for mention.
These are the reasons for making those orders.
The application was supported by an affidavit of Simon Andrew Read sworn 11 June 2009. Mr Read is the liquidator of Westpoint Management Ltd (Receives & Managers Appointed) (in liquidation) (Westpoint Management). On 11 June 2006 he together with Andrew John Birch was appointed joint and several liquidator of Westpoint Management. The application was also supported by an affidavit of Darren Jay Garber affirmed 6 May 2009. Mr Garber is a solicitor employed by Mallesons Stephens Jaques (Mallesons) who act as legal advisors to Mr Read. In particular Mallesons act for Mr Read as liquidator of Westpoint Management in its capacity as Responsible Entity of Paragon Commercial Syndicate (PCS) a managed investment scheme. The summary of facts which follows is taken from these two affidavits.
On 13 October 2008 the Australian Securities & Investment Commission (ASIC) commenced proceedings pursuant to s 50 of the Australian Securities & Investment Commission Act 2001 (Cth) in the Supreme Court of Victoria against KPMG on behalf of eight companies (Westpoint companies) which are part of the Westpoint Group as is Westpoint Management.
The proceedings against KPMG were commenced on the basis of alleged negligence in carrying out the audit of the financial reports of the Westpoint companies in the years that KPMG was auditor of the Westpoint companies - that is, between 1 July 2001 and 30 June 2004.
ASIC and Mr Read have discussed the option of joining PCS and WIF as plaintiffs to the proceedings brought by ASIC. Mr Read is a partner of McGrathNicol. Several of Mr Read's partners of McGrathNicol were partners of KPMG at the time the negligence alleged by ASIC occurred. Mr Read proposed that the difficulty be overcome by appointing Mr Theobald as an additional or special purpose liquidator.
There is no doubt that an additional or special purpose liquidator can be appointed under s 472(1) of the Corporations Act 2001 (Cth). Such an order was made by Barrett J in Re McGrath [2006] NSWSC 385. His Honour referred to the judgment of Thomas J in Re Obie Pty Ltd (in liq) (No 4) (1984) 8 ACLR 967 as the authoritative statement of the relevant principle. Thomas J said:
It was submitted for the Lewises that the court has no power to give a limited function to a particular liquidator; that an additional liquidator can only be appointed on a winding up, resignation, removal or occurrence of a vacancy; and that in any event the transference of this issue to an independent liquidator ought to be postponed until the removal proceedings are completed.
It has long been held that the court has jurisdiction to give the conduct of any particular matter arising in the course of the liquidation to one of several liquidators: Re Midland Land and Investment Corporation [1887] WN 58. In my own experience courts have made such orders when there is a matter to be dealt with in a liquidation which it would be embarrassing for the liquidators to handle. In such circumstances an additional liquidator is appointed to handle that matter, and the great expense and loss of efficiency involved in resignation and replacement in a partially completed administration is avoided (971).
His Honour then referred to a number of cases in which additional liquidators have been appointed. These cases included: Re Spedley Securities Ltd (in liq) (1991) 4 ACSR 555; and Advanced Housing Pty Ltd (in liq) v Newcastle Classic Development Pty Ltd (1994) 14 ACSR 230. Barrett J then went on (at [11]):
As is shown by these and other cases … the efficient conduct of a complex winding up can often be assisted by such an appointment, particularly where situations of conflict arise. One possibility, of course, is that the existing liquidators, upon encountering such a situation of conflict, should vacate the field. But that would be highly counterproductive in a case such as the present where application and experience over a period of more than five years has put the existing liquidators in a position of special knowledge that would be very expensive indeed to replicate in the mind of some new liquidator, assuming that replication were possible at all. The much preferable course is that there be an additional liquidator who can take charge of and administer the separate aspect of the winding up giving rise to the conflict difficulties.
An additional liquidator is generally appointed for a special purpose. In Honest Remark Pty Ltd v Allstate Explorations NL (2006) 58 ACSR 234, Brereton J said:
A special purpose liquidator is appointed to co‑exist with the existing liquidators, to fulfil a specific purpose which would otherwise form part of the responsibilities of the original liquidator, but which is carved out from those usual responsibilities because of difficulties in the original liquidator performing it [61].
In his affidavit Mr Read says that Mr Theobald is a registered liquidator who was formerly an employee but now a partner of the accounting firm PPB. Mr Theobald has never been an employee of McGrathNicol. So far as Mr Read is concerned Mr Theobald has had no professional involvement with any partner of KPMG who maybe liable if PCS and WIF join in the ASIC action. In other words there is no possibility of any conflict of interest arising if Mr Theobald handles this aspect of the liquidation.
There was an urgency about this matter. On 28 January 2009 ASIC obtained a court order for a global mediation of all actions initiated by ASIC on behalf of the Westpoint related companies. This mediation was to be held on 15 June 2009. KPMG has been ordered to attend that mediation. The orders were necessary to allow Mr Theobald to attend the mediation to protect the interests of the Westpoint Management and other entities.
It was for these reasons I made the orders set out earlier in these reasons. In the minute of proposed orders the final order was not included. However, this application was made ex parte without an appearance and without any creditor or any other party who may be interested having the opportunity to be heard. It was clearly in the interests of the creditors that Mr Theobald be appointed so that Westpoint Management would be represented at the mediation. Order 3 anticipates that there may need to be some adjustment to the terms of Mr Theobald's appointment. Rather than leave the matter at large it seemed to me appropriate that the matter be reviewed sometime after the mediation with a view to ensuring that all parties who should be notified of Mr Theobald's appointment are notified and anyone who objects is given the opportunity to be heard. Further, it may be necessary to review Mr Theobald's powers in light of what transpired at the mediation.
0
4
1