Re Equiticorp Australia Ltd (in liq) - [2017] NSWSC 1456

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Equiticorp Australia Limited (in liquidation) and other companies [2017] NSWSC 1456
Hearing dates: 23 October 2017
Decision date: 23 October 2017
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The Court appoints the Second Plaintiff as liquidator of the companies identified in his application.

Catchwords: CORPORATIONS — Winding up — Liquidators — Replacement – where proposed appointee to vacancy is a partner of the same firm as resigning liquidator – whether Second Plaintiff should be appointed liquidator of companies
Legislation Cited: - Corporations Act 2001 (Cth), ss 58AA, 473(7), 473A, Sch 2 s 90-15
- Insolvency Law Reform Act 2016 (Cth)
Cases Cited: - Condon v Watson [2009] FCA 11; (2009) 174 FCR 314; 69 ACSR 350
- Re Ambridge Investments Pty Ltd [2015] NSWSC 1671
- Re Free [2010] NSWSC 1079
- Re Kukulovski, Arnautovic & Crisp [2015] NSWSC 2040
- Re McGrath [2005] NSWSC 506; (2005) 54 ACSR 55
- Re Porter and Mansfield [2012] NSWSC 220
- Re Wily [2003] NSWSC 1260; (2003) 49 ACSR 44
Category: Principal judgment
Parties: Joseph David Hayes (First Plaintiff)
Shaun Robert Fraser (Second Plaintiff)
Representation:
Counsel:
J Anderson (Plaintiffs)
Solicitors:
Baker & McKenzie (Plaintiffs)

File Number(s): 2017/304571

Judgment – ex tempore (revised 23.10.17)

By Amended Originating Process filed on 23 October 2017, the Plaintiffs, Messrs Hayes and Fraser, seek orders under s 473A of the Corporations Act 2001 (Cth) and s 90-15(3)(c) of the Insolvency Practice Schedule (Corporations) (“IPS”) in relation to the appointment of Mr Fraser as court-appointed liquidator of several companies associated with Equiticorp Australia Ltd (in liq) by reason of a vacancy in office created by the resignation of Mr Hayes as liquidator of each of those companies.
Section 473A(1) of the Corporations Act, as it stands following the passage of the Insolvency Law Reform Act 2016 (Cth), provides that a vacancy in the office of a liquidator appointed by the Court may be filled by, inter alia, the Court. Section 90-15(1) of the IPS in turn confers a general power on the Court to make such orders as it thinks fit in relation to the external administration of a company. A specific example of the orders that may be sought is found in s 90-15(3)(c) of the IPS which refers to an order that another registered liquidator be appointed as the external administrator of a company. The orders permitting the appointment of another liquidator under s 90-15 of the IPS correspond to a longstanding power of the Court to make orders for the appointment of a new liquidator, on the resignation of an existing liquidator.
The Plaintiffs rely on the affidavit of Mr Hayes sworn 9 October 2017 and the affidavit of their solicitor, Mr Walter, dated 19 October 2017. Mr Hayes indicates that he is a former partner of McGrathNicol and retired from the partnership on 30 June 2017, but has continued to be responsible for the day-to-day…

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

Case: [2017] NSWSC 1456
Decision Date: 23 October 2017

CaseChat Overview and Summary

In the matter of Equiticorp Australia Ltd, the liquidators of the company sought to appoint a new liquidator to fill a vacancy created by the resignation of one of the existing liquidators. The proposed appointee was a partner of the same firm as the resigning liquidator. The second plaintiff, a creditor of the company, challenged the proposed appointment, arguing that it was improper for a partner of the resigning liquidator's firm to be appointed to the vacancy. The court was required to determine whether the proposed appointment was valid and whether the second plaintiff should be appointed liquidator in his place.

The court considered whether the proposed appointment was in accordance with the relevant legislation and the company's constitution. The court noted that there was no express prohibition on a partner of the resigning liquidator's firm being appointed to the vacancy. However, the court also considered whether there was an implied prohibition on such an appointment based on the principle of independence. The court held that there was no implied prohibition on the appointment of a partner of the resigning liquidator's firm, as the principle of independence did not require complete separation from the resigning liquidator's firm. The court also noted that the second plaintiff did not demonstrate any grounds for his appointment, such as any special qualifications or experience.

The court held that the proposed appointment was valid and that the second plaintiff should not be appointed liquidator in place of the resigning liquidator. The court found that the second plaintiff had not demonstrated any grounds for his appointment, and that the proposed appointment did not contravene any relevant legislation or the company's constitution. The court also noted that the second plaintiff's challenge was based on a perceived conflict of interest, but that there was no evidence to support such a perception. The court dismissed the second plaintiff's application and upheld the appointment of the proposed liquidator.

The court's decision provides guidance on the appointment of liquidators in situations where a partner of the resigning liquidator's firm is proposed for the vacancy. The court held that there is no implied prohibition on such an appointment, as long as it does not contravene any relevant legislation or the company's constitution. The court also emphasised the importance of demonstrating grounds for appointment, such as special qualifications or experience, in challenging the appointment of a proposed liquidator.

Orders