Taylor, in the matter of Kabita Earthworks Pty Ltd (in liquidation)
[2018] FCA 1542
•8 October 2018
FEDERAL COURT OF AUSTRALIA
Taylor, in the matter of Kabita Earthworks Pty Ltd (in liquidation) [2018] FCA 1542
File number: NSD 1379 of 2018 Judge: PERRAM J Date of judgment: 8 October 2018 Date of publication of reasons: 12 October 2018 Catchwords: BANKRUPTCY AND INSOLVENCY – uncontested application for replacement of liquidator and trustee of bankrupt estates Legislation: Bankruptcy Act 1966 (Cth) s 180, sch 2 s 90-15
Corporations Act 2001 (Cth) ss 473A, 499
Date of hearing: Determined on the papers Date of last submissions: 5 October 2018 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 7 Solicitor for the Plaintiffs: Mr A Kam of ERA Legal ORDERS
NSD 1379 of 2018 IN THE MATTER OF KABITA EARTHWORKS PTY LTD (IN LIQUIDATION)
JOSHUA TAYLOR
First Plaintiff
MICHAEL JONES
Second Plaintiff
JUDGE:
PERRAM J
DATE OF ORDER:
13 SEPTEMBER 2018
THE COURT ORDERS THAT:
1.Pursuant to section 473A(1) of the Corporations Act 2001 (Cth) (‘Corporations Act’), upon the resignation of Joshua Taylor thereof, Michael Gregory Jones be appointed liquidator of the company referred to in Schedule A of the Originating Process.
2.Pursuant to section 499(3) of the Corporations Act, upon the resignation of Joshua Taylor thereof, Michael Gregory Jones be appointed liquidator of each of the companies referred to in Schedule B of the Originating Process.
3.Pursuant to section 532(2) of the Corporations Act, Michael Gregory Jones has leave to be appointed liquidator of each of the companies referred to in Schedules A and B of the Originating Process.
4.Pursuant to section 60-10 of the Insolvency Practice Schedule (Corporations) that in respect of each of those companies referred to in Schedule B of the Originating Process, where the creditors of those companies have fixed the remuneration of Joshua Taylor, the remuneration of Michael Gregory Jones be fixed in accordance with the same terms and such resolution of creditors as has been made as at the date of this order, save that any reference to Joshua Taylor be deemed to be a reference to Michael Gregory Jones.
5.Pursuant to section 180 of the Bankruptcy Act 1966 (Cth) that this Court accepts the resignation of Joshua Taylor from the office of trustee of the bankrupt estates referred to in Schedules C and D of the Originating Process.
6.Pursuant to section 90-15 of the Insolvency Practice Schedule (Bankruptcy), upon the resignation of Joshua Taylor as trustee thereof, Michael Gregory Jones be appointed trustee of the bankrupt estates referred to in Schedule C of the Originating Process.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1379 of 2018 IN THE MATTER OF KABITA EARTHWORKS PTY LTD (IN LIQUIDATION)
JOSHUA TAYLOR
First Plaintiff
MICHAEL JONES
Second Plaintiff
JUDGE:
PERRAM J
DATE OF ORDER:
8 OCTBOER 2018
THE COURT ORDERS THAT:
1.Pursuant to section 90-15 of the Insolvency Practice Schedule (Bankruptcy) that in respect of each of those bankrupt estates referred to in Schedule C of the Originating Process, where the creditors of those bankrupt estates or the Inspector-General have fixed the remuneration of Joshua Taylor, the remuneration of Michael Gregory Jones be fixed in accordance with the same terms and such resolution of creditors or determination of the Inspector-General (as the case may be) as has been made as at the date of this order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
PERRAM J:
Mr Joshua Taylor was employed by the Firm Jones Partners & Insolvency Business Recovery which in the interests of brevity I will refer to as Jones Partners. That firm does insolvency work including the provision of personnel to act as trustees of bankrupt estates and as liquidators of companies being wound up. As part of his duties, Mr Taylor was appointed as the trustee of a number of bankrupt estates as the liquidator of a number of companies.
In April 2018 Mr Taylor resigned from Jones Partners to run his own insolvency firm, Taylor Insolvency. However, due to the personal nature of an appointment as a trustee in bankruptcy or as a liquidator, he remains in these offices notwithstanding his resignation.
On his departure, Mr Taylor agreed with Jones Partners that he should relinquish those various offices and, where necessary, be replaced by Mr Jones, the managing principal of Jones Partners.
This practical course is confronted with some difficulties. In relation to the one company of which Mr Taylor is liquidator which resulted from a court appointment, only the Court or the Australian Securities and Investments Commission (‘ASIC’) has the power to replace such a liquidator: Corporations Act 2001 (Cth) (‘Corporations Act’) s 473A. In the case of that company, Mr Taylor and Mr Jones must apply to the Court (or ASIC) for Mr Taylor to be replaced by Mr Jones. In relation to all of the other appointments, the relevant creditors may, at a formally requisitioned meeting, also approve Mr Jones as a replacement for Mr Taylor but the cost of circularising all of the creditors of these estates and companies and convening those meetings will run into many tens of thousands of dollars.
Fortunately, the Court also has the power to appoint Mr Jones to these positions on Mr Taylor’s retirement from office. In the case of the companies which are not being wound up in insolvency the power is in s 499(3) of the Corporations Act. In the case of the bankrupt estates, the Court is empowered to accept the resignation of a liquidator under s 180 of the Bankruptcy Act 1966 (Cth) and to appoint a new trustee under s 90-15 of the Insolvency Practice Schedule (Bankruptcy). In relation to the winding up in insolvency, as previously mentioned the power is in s 473A.
These powers should be exercised in Mr Taylor and Mr Jones’ favour who now so apply. One wrinkle also needs to be dealt with. This is the fact that Jones Partners, and hence Mr Jones, are creditors of each of the estates or companies in relation to outstanding remuneration for the work of Jones Partners. Subject to a contrary Court order, this would ordinarily disqualify Mr Jones from appointment. For obvious reasons, however, a dispensation should be granted in this case and Mr Jones permitted to be appointed notwithstanding his status as a creditor. In that regard, I note that the fees in question (and future fees) are reasonable and fix them as suggested in the short minutes of order. For completeness, I also note that Mr Jones is amply qualified for the appointments, that Jones Partners is paying for this application and that ASIC and AFSA have been notified of the application and neither opposes it.
I make orders in accordance with the Plaintiff’s proposed short minutes of order.
I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 12 October 2018
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