The first issue - s 532(2)(b)
20 In a number of cases, it has been considered necessary to grant an incoming liquidator leave under s 532(2) because they are a partner of the same firm as the resigning liquidator that they are replacing, and their firm is, by reason of the work conducted by the resigning liquidator, a creditor of the company in liquidation in an amount greater than $5,000 - thus enlivening the condition for disqualification in s 532(2)(b). In many of those cases, however, leave has been granted only "so far as it is necessary" or "out of an abundance of caution": see, eg, Re Porter and Mansfield [2012] NSWSC 220 [11] (Re Porter); Equiticorp Finance Holdings Limited (in liq) (scheme administrator appointed) [2015] NSWSC 1992 [9]; Re Kukulovski [2015] NSWSC 2040 [8] (Re Kukulovski); Gollant [14]; White [21]; Re ACN 120 426 173 Pty Ltd (formerly known as UBU Communications) [2022] VSC 640 [37] (Re ACN 120 426 173). In certain decisions, it has been queried whether leave is actually required, although the reasons for these apparent reservations have not been expressed: see, eg, Re FGM Print Pty Ltd [2018] NSWSC 1478 [9] (Re FGM Print); Re Arresso Consulting Pty Ltd [2019] NSWSC 997 [6].
21 Here, there was no evidence that KPMG was, at the relevant time, a creditor of either of the companies in liquidation in an amount exceeding $5,000. At the hearing of the application, I was prepared to proceed on the basis that the absence of evidence meant that KPMG was, in fact, not a creditor of the companies in the relevant amount. It was therefore strictly unnecessary to consider whether leave was required by reason of s 532(2)(b).
22 However, the absence of evidence from which it could be determined conclusively whether or not leave was required by reason of s 532(2)(b) had the potential to be a matter of some concern. For the reasons set out below, it seems that the better view is that leave under that provision is required in circumstances where the incoming liquidator is a partner of the same firm as the resigning liquidator, and their firm is, by reason of the work conducted by the resigning liquidator, a creditor of the company in an amount greater than $5,000. It follows that, in any case in which a person seeks appointment as a liquidator by exercise of the Court's power in s 473A(1)(a) in order to fill a vacancy left by a resigning liquidator, and that person is a partner in a partnership that has included the resigning liquidator (or employed the resigning liquidator), then material ought to be put before the Court to address the applicability of this disqualifying factor.
23 As certain of the aforementioned decisions have suggested, there is arguably some reason to doubt whether leave must in fact be sought in cases such as the present, where a liquidator is to be appointed merely to fill a vacancy left by the resignation of another liquidator of the same firm. The legislative intention underlying s 532(2) is to disqualify from the position of liquidator of a company any person who has a past or present association with the company that would give rise to a potentially conflicting allegiance or would undermine the appearance of their independence: see Re McGrath (2010) 266 ALR 642, 657 [50] (Re McGrath). See also Re Perseus Mining NL; Ex parte Smith & Judge (1976) 2 ACLR 105, 107 (Re Perseus Mining); Domino Hire Pty Ltd v Pioneer Park Pty Ltd (in liq) (2000) 18 ACLC 13, 19 [14]. There is little reason to see that concern as being engaged in circumstances where the incoming liquidator is a creditor of the company in precisely the same amount as (and, indeed, because of) the resigning liquidator. In substance, the incoming liquidator can be in no more a position of conflict and have no less an appearance of independence than the person who has already been acting in the role. Insisting that leave be obtained in such a scenario would seem somewhat pedantic.
24 The insistence on leave may also involve a degree of arbitrariness. It would depend, essentially, on the fact that the incoming liquidator is in a partnership to which the company being wound up has become indebted, such that the debt can be seen to exist as between the company and the incoming liquidator personally. If the incoming liquidator's firm was structured as a corporation rather than a partnership, or if the incoming liquidator was merely an employee and not a partner, then he or she could not personally be considered a creditor and the requirement of leave might therefore be avoided. It would seem strange for the applicability of s 532(2) in this context to be decided by so fine a distinction.
25 All that having been said, if there is no sensible construction of the text of s 532(2)(b) that makes unnecessary the grant of leave in circumstances where the liquidator proposed to be appointed is merely a substitute for a resigning liquidator from the same firm, to which the company in liquidation is indebted in an amount greater than $5,000, then the need for such leave to be sought must remain. This Court should not override the clear effect of the words chosen by the legislature, no matter how peculiar the consequences of their application to a particular scenario might prove to be. It may simply be the case that leave is to be sought as a matter of course in these cases but, once it is sought, it will readily be granted. In that way, the statutory requirement for leave can duly be observed, but cannot function as any real impediment to the Court's task of filling the vacancy left by the resigning liquidator.
26 Turning to the text of the statute, one might ask immediately what effect is to be given to the exception in s 532(2)(b) created by the words "otherwise than in his or her capacity as liquidator". Those words seem to provide the only apparent textual footing for an argument that an incoming liquidator who is a creditor of the company only by reason of their being a partner in a partnership that has included the resigning liquidator (or employed the resigning liquidator), does not require leave to seek to be appointed or to act. However, the exception does not appear to have received any detailed consideration, despite the fact that it has been present in Australian corporations legislation for some time: see Companies Act 1981 (Cth) s 417(2)(b). Even pinpointing the precise reason for which the exception was introduced is not a straightforward task. Prior to the passing of the Companies Act 1981 (Cth), similar provisions appeared without the exception in the Uniform Companies Acts 1961 - first in s 10 and later in s 277A. The Explanatory Memorandum to the Companies Bill 1981 (Cth) recognised at paragraph [965] that the proposed s 417 was "based on ICAC CAs [Companies Acts of the States which are parties to the Interstate Corporate Affairs Agreement] s. 277A apart from the following amendments", and listed a number of points thereafter. None of those points can readily be understood to explain the introduction of the exception.
27 It is nevertheless possible to identify a potential explanation once consideration is given to some of the judicial decisions leading up to the enactment of s 417.
28 The first relevant case, Re Splinta Holdings Pty Ltd (in liq); Ex parte Barnes (1976) 2 ACLR 103 (Re Splinta Holdings), is reported on a single page in the Australian Company Law Reports. The headnote provides that, in December 1975, "B" was appointed as liquidator of several companies in their voluntary winding up. At the time of the appointments, he was not an officer of any of those companies. In March 1976, by which time the liquidations were well advanced, s 277A(1A) of the Companies Act 1961 (Vic) came into operation. That provision was comparable to today's s 532(2), but did not contain the exception in what is now s 532(2)(b). The relevant part of the sub-section provided as follows:
(1A) Subject to this section, a registered liquidator shall not, except with the leave of the Court, consent to be appointed and shall not act as liquidator of a Company -
…
(b) if he is -
(i) an officer of the Company;
(ii) a partner, employer or employee of an officer of the Company; or
(iii) a partner or employee of an employee of an officer of the company.
29 B sought an order that, pursuant to s 277A(1A), he be at liberty to act as liquidator of the companies. The report simply provides that Menhennitt J "granted leave as sought".
30 Likewise, it is recounted in the headnote of the one-page report of Re Rochelle Flats Pty Ltd (in liq); Ex parte Walsh (1976) 2 ACLR 104 that "W" was, in December 1975, appointed as liquidator of a company in its voluntary winding up when, at the time of his appointment, he was a partner of "H", who was an officer of the company. By the time s 277A(1A) of the Companies Act 1961 (Vic) came into operation in March 1976, the winding up was well advanced. W sought an order that he be given leave to continue to act as liquidator. It is reported that Starke J "granted leave as sought".
31 In each of these decisions, a liquidator who had been appointed to a company, and who was already acting in that capacity, came to be in a position whereby he satisfied a condition for disqualification under s 277A(1A). The liquidators both accordingly sought, and were granted, leave to continue acting. No attention appears to have been devoted to the question of whether leave was actually required in such circumstances.
32 A different approach was adopted by Brinsden J in Re Perseus Mining. There, the applicants sought leave to consent to be appointed to act as liquidators of a company pursuant to s 277A of the Companies Act 1961-1975 (WA). Upon being asked by the Court why leave was required, it was submitted that the applicants could not consent to be appointed as liquidators and could not act as liquidators without leave because they would, by reason of the definition of "officer" appearing in s 5 of the statute, upon their appointment be officers of the company - thus disqualifying them from the role in accordance with s 277A(1A)(b)(i). The necessary implication of this submission was that, immediately upon a person taking up the role of liquidator, that person could (unless leave was granted) be disqualified from being appointed or acting as liquidator because, in their capacity as liquidator, they came to meet one of the disqualifying conditions in s 277A(1A).
33 His Honour rejected the submission. He found that leave of the Court was not required in the circumstances before him, explaining the position at 106 - 107 as follows:
It seems to me apparent immediately that leave of the court in these circumstances is not required because at the time the liquidators give their consent they clearly are not officers of the company because they only become officers of the company upon their appointment as liquidators. As to the application for leave for these applicants to act as liquidators this really amounts to the court giving leave to the applicants to act as liquidators because they are liquidators, that is officers of the company. I do not believe that this section really requires such a strained interpretation leading to such an absurd result.
…
[T]he legislative history and the present legislative intention is to exclude from acting as liquidator and hence consenting to so act, a person who has had a past or has a present association with the company. I do not believe the present section requires an interpretation to include a person who has an association with the company by reason only of his appointment as liquidator.
34 Despite this, his Honour proceeded to refer to the decision of Menhennitt J in Re Splinta Holdings and remark that "I do not know why his Honour decided to grant leave but for the sake of uniformity I am prepared in this case to make an order granting the leave".
35 In Re Antard Pty Ltd [1977] VR 200 (Re Antard), a person consented to act as liquidator in the voluntary winding up of several companies, in some instances before March 1976 and in other instances after that date. He sought orders concerning the validity of these appointments, on the basis that he had potentially been acting contrary to s 277A(1A)(b)(i), since its coming into operation in March 1976, as an officer of the companies in his capacity as liquidator.
36 Without citing any of the aforementioned decisions, Harris J found that the liquidator had not contravened that provision. His Honour stated as follows at 202 - 203:
In my opinion, it is clear enough that the object of the subsection is to prevent registered liquidators who have a connection with companies that are to be wound up from becoming liquidators of such companies. The subsection enumerates the particular connections which constitute such a disqualification. In my opinion, what the subsection strikes at is the disqualification of registered liquidators who are so disqualified at the time they are appointed to be liquidators.
…
[I]n my opinion, what s. 277A(1A) provides is that a registered liquidator shall not, except with the leave of the court, consent to be appointed and shall not act as liquidator of a company if, inter alia, he is, at the time he consents or at the time he is appointed, an officer of the company.
(Emphasis added).
37 The critical point in his Honour's reasons, as indicated by the emphasised words in this passage, was that s 277A(1A) would only require leave to be sought if, at the time of the liquidator's appointment, he or she was already disqualified for one of the reasons listed in that sub-section. It would not require leave to be sought if the disqualifying condition was only engaged after the liquidator consented to act, or acted, as liquidator of the company.
38 The decision of Harris J was expressly followed by Kaye J in Re Ausminco Ltd (in liq); Ex parte Simmons (1976) 2 ACLR 114 (Re Ausminco), albeit, it appears, on a different point in relation to the construction of s 277A(1A). Nevertheless, Kaye J seemed generally to adhere to the same approach, in finding that, although certain of the disqualifying conditions in that sub-section were arguably met in respect of the applicant-liquidator upon the coming into operation of s 277A(1A), the appointment and subsequent acting as liquidator had not been prohibited by that provision. No leave was required for the liquidator to continue to act.
39 A number of the decisions discussed above were referred to by Needham J in Lefimu Pty Ltd & Companies Act (Supreme Court of New South Wales, 11 May 1981) (Lefimu). Before his Honour was an application by a liquidator, Mr Ferrier, for leave to be appointed and to act as liquidator of a company. The evidence established that Mr Ferrier had no connection with the company, or any associated company, and that none of his partners had any such connection. His Honour held as follows, effectively adopting the approach taken in Re Antard, as explained above:
In my opinion there is no necessity in this case for Mr Ferrier to obtain the leave of the court. He would require that leave only if he came within the provisions of subs (1A) of the section. The only relevant category into which Mr Ferrier could possibly fit is that he was an officer of the company. Section 5 of the Act defines "officer" to include any liquidator of a company appointed on a voluntary winding-up.
It seems to me that the proper interpretation of s 277A is that it requires leave of the court either to consent to be appointed or to act as liquidator of the company if at the time of the application the person making the application came within any of the descriptions contained in subs (1A). That being so, Mr Ferrier is not at this stage of his application an officer of the company.
…
If the construction of s 277A were other than as I have indicated, every liquidator sought to be appointed in a voluntary winding up would need to apply to the court for consent to be appointed to that position. I do not think that the definition in s 5 produces that result for the reasons I have given.
40 Taking stock, it appears that, prior to the enactment of s 417 of the Companies Act 1981 (Cth), it was necessary for it to be established by a process of statutory construction in multiple cases that the predecessor provision, s 277A of the Uniform Companies Acts 1961, did not require a liquidator to seek leave or else be disqualified in circumstances where:
(a) as a result of; or
(b) at some time after,
their appointment and acting as liquidator, one or more of the conditions for disqualification in sub-s (1A) came to be enlivened.
41 It is important to distinguish between those two scenarios. The reasoning of Brinsden J in Re Perseus Mining focused on the former scenario, leading to a narrower conclusion that a person should not be disqualified in circumstances where they have become associated with the company merely because they have been appointed or have acted as liquidator. The reasoning in Re Antard, Re Ausminco and Lefimu appears to have been expressed somewhat more broadly, and in that way addressed the latter scenario - the principle most clearly to be drawn from those authorities being that the existence of a disqualifying condition is to be assessed only at the time of appointment and a person should not be required to seek leave or else be disqualified on account of an event occurring thereafter. However, Re Antard and Lefimu can arguably also be read, in light of their specific facts, to support the narrower approach adopted by Brinsden J.
42 Against this background, there is reason to believe that the exception in what is now s 532(2)(b) was enacted merely to clarify that this narrower approach did indeed reflect the intended operation of the provision. It is worth noting, in this connection, that the exception is not replicated throughout the sub-section. It otherwise appears only in s 532(2)(c)(i), albeit in slightly different terms. One might understand from this drafting choice that the legislature has been concerned to ensure that only certain categories of association between the liquidator and the company, arising because of the liquidator's appointment to or acting in the role, do not give rise to a requirement for leave to be granted in order to avoid disqualification. In this way, the legislature does not appear to have given a clear endorsement to the broader approach perceptible in Re Antard, Re Ausminco and Lefimu, to the effect that no post-appointment event can disqualify a liquidator.
43 It is worth addressing some subsequent decisions that have discussed the aforementioned authorities.
44 In Low v Performance Finance Ltd (Receiver and Manager Appointed) (2004) 28 WAR 512 (Low), the plaintiff was appointed as the receiver and manager of two companies, then the provisional liquidator of a third company and the liquidator of a fourth company. All of the companies were related bodies corporate. A series of legal issues arose in relation to the provisions of the Corporations Act dealing with the qualifications for appointment and to act as receiver and manager under s 418, and as provisional liquidator and liquidator under s 532. The most relevant issue for the present purposes was that concerning the construction of s 418(1), which provided as follows, in terms relatively similar to s 532:
A person is not qualified to be appointed, and must not act, as receiver of property of a corporation if the person:
…
(e) is an officer of a body corporate related to the corporation;
45 It was pointed out by counsel for the plaintiff that there were two possible constructions of this provision. One, which was labelled the "point in time disqualification" approach, treated the words "must not act" as descriptive of what a disqualified person could not do. In other words, the section operated upon the state of affairs at the time of appointment: if a person, at that time, met one of the disqualifying conditions in s 418(1), then they could not act as receiver. The other construction, which was labelled the "always operative disqualification" approach, treated the words "must not act" as a prohibition operating throughout the period of appointment. On the latter approach, but not the former, it would be possible for a person who was not otherwise disqualified under the section to be appointed as receiver, to then become an officer of the company (for instance, in the immediate case, by his or her appointment as provisional liquidator and liquidator), and thereafter to contravene the section, due to the effect of s 418(1)(e), when they acted as receiver.
46 In deciding to adopt the "point in time disqualification" approach, Simmonds J made particular reference to Re Antard. Though the provision the subject of that decision was different in certain respects, it was found that those differences in fact suggested that the construction preferred in Re Antard, which was effectively the "point in time disqualification" approach, should be applied equally to s 418. It is worth noting that s 418(1) did not contain an exception of the kind appearing in s 532(2)(b).
47 By contrast, Barrett J made remarks in the subsequent case of Re McGrath that might potentially be taken to prefer the "always operative disqualification approach" in respect of s 532(2). His Honour stated as follows at 656 [47]:
Under the present legislation, the court may grant leave so as to allow a person not yet appointed both to seek appointment and to act once appointed; and it may, as a separate matter, grant leave to act to a person who, being already in office, is, by subsequent events, brought within one of the categories that attract the prohibition on acting.
(Emphasis added).
48 The question before the Court on that occasion was whether leave could be given under s 532(2) to facilitate a proposed arrangement between several related companies, of which the same persons were liquidators, that would result in a mortgagor-mortgagee relationship forming between certain of the companies. Section 532(2)(c)(ii) established as a disqualifying condition the fact that "the person is an officer of any body corporate that is a mortgagee of property of the company". As is apparent from the passage extracted above, his Honour considered that leave was required in the circumstances before him. His ultimate conclusion on this point was expressed as follows at 660 [6(h)]:
[U]pon the proper construction of s 532(2)(c)(ii), the court's power to grant leave under that section extends not only to the seeking of appointment as liquidator but also to acting as liquidator (in the sense of ongoing exercise of the office), with the result that the circumstance that a funding company giving financial assistance to a claimant company (of which the same persons are liquidators) becomes a mortgagee of property of the claimant company under the funding agreements will not preclude continuation of the liquidators in office if leave under s 532(2)(c)(ii) is granted …
49 Section 532(2)(c)(ii) does not contain an exception of the kind appearing in s 532(2)(b), so this conclusion cannot necessarily be understood as speaking to the interpretation of that latter provision. It should be noted, however, that the emphasised portion of the statement extracted above might be slightly overbroad insofar as it does not account for the operation of the exceptions in s 532(2)(b) or s 532(2)(c)(i): on the understanding expressed above, the Court need not grant leave to act to a person who is brought within s 532(2)(b) or s 532(2)(c)(i) merely because they are the liquidator of the company.
50 The decision of Barrett J is otherwise notable for the fact that it appears to run against the trend in the authorities from Re Antard to Low to the effect that leave is not required when a disqualifying condition is satisfied only after the relevant person's appointment. His Honour appears to have explained the difference in result as being attributable to a change in the wording at the outset of s 532(2) from "a person shall not, without the leave of the court, consent to be appointed, and shall not act, as liquidator" to "a person must not, except with the leave of the court, seek to be appointed, or act, as liquidator".
51 In Re Octaviar Ltd (in liq) (2015) 110 ACSR 72, Brereton J left open the question of whether a post-appointment event might disqualify a liquidator by enlivening one of the conditions in s 532(2), citing both Re Antard and Re McGrath. However, his Honour returned to the point in Re Octaviar Ltd (in liq) [2016] NSWSC 16 (Re Octaviar). After raising more explicitly the apparent conflict between the decisions of Re Antard and Re McGrath, his Honour offered the following remarks at paragraph [33]:
[Barrett J in McGrath] appears to have considered that differences in wording between Corporations Act, s 532(2), and its predecessor considered in Re Antard had the consequence that leave was now required, even if the relevant relationship arose after the appointment. Although I respectfully doubt whether the difference in language reveals an intent to achieve that result, rather than mere modernisation of language, it is unnecessary to resolve that issue, as if leave were required, I am satisfied that it should be granted.
52 The disqualifying condition in issue before Brereton J was again s 532(2)(c)(ii), so there was no need to consider the effect of any exception. His Honour ultimately decided to grant leave under s 532(2) to the extent that it was required.
53 The doubt expressed by Brereton J as to the reasoning of Barrett J in McGrath was subsequently referred to by Rees J in Re HIH Insurances Ltd (in liq) [2020] NSWSC 803 (Re HIH) at paragraphs [50] - [51]. However, her Honour stated that she did not share these doubts, and proceeded to grant leave to a person to be appointed as liquidator of several companies in circumstances where that person would, upon assuming the role, also act as a scheme administrator and, therefore, be an officer of the companies. Given that s 532(2)(c)(i) was to be enlivened by the person's acting as scheme administrator and not strictly her acting as liquidator, it does not appear to have been necessary for her Honour to consider the effect of the exception appearing in that provision.
54 The present state of the law, as emerging from this survey of the authorities, can be summarised as follows:
(a) The exceptions in s 532(2)(b) and in s 532(2)(c)(i) appear to have been introduced against the background of some uncertainty in the case law as to whether leave of the Court was required under the predecessor provision, s 277A(1A) of the Uniform Companies Act 1961, when, because of, or otherwise after, a person's appointment as liquidator of a company, he or she came to meet one of the disqualifying conditions listed in that provision.
(b) The objective of the drafters of the exceptions, whilst somewhat difficult to discern, seems to have been to resolve this uncertainty. The exceptions give express operation, whether intentionally or otherwise, to the reasoning of Brinsden J in Re Perseus Mining to the effect that a person should not be disqualified by reason of the fact that he or she has become associated with a company purely in his or her capacity as liquidator of that company. So understood, the exceptions avoid the absurdity that would otherwise result from the Court being asked to grant leave to an applicant who has technically met certain statutory conditions for disqualification from the role of liquidator of the company only because they are the liquidator of the company. The existence of the exceptions is consistent with the broader statutory purpose underlying s 532(2), in that they remove the need for leave to be sought to avoid disqualification in two particular scenarios that do not, in actuality, involve any potentially conflicting allegiance between the company and the liquidator, or undermine the appearance of the liquidator's independence.
(c) The reasoning of Brinsden J in Re Perseus Mining is also supported to some extent by the decisions of Re Antard and Lefimu, albeit that those decisions can potentially be understood as advancing a broader proposition, to the effect that an event occurring after the liquidator's appointment should not be capable of disqualifying the liquidator pursuant to s 532(2) or necessitating that leave be granted under that sub-section in order to avoid such a result. This proposition has been described in an analogous statutory context in Low as the "point in time disqualification" approach.
(d) Since the introduction of s 532(2) in its current form, there has been some debate as to whether the "point in time disqualification" approach is still available on a proper construction of the opening language of the provision. Comments made in Re McGrath and Re HIH seem to suggest that it is not, while comments made in Re Octaviar suggest that it may be.
55 It is unnecessary, for the present purposes, to take any position in respect of the controversy referred to in the last of these points.
56 A workable understanding of the exception in s 532(2)(b) having been gathered in this way, it remains to ask whether the exception can operate in a scenario where:
(a) a liquidator who is a partner in a partnership is proposed to be appointed to replace a resigning liquidator;
(b) the resigning liquidator was a partner of, or was employed by, the same partnership during the period in which they occupied the office of liquidator; and
(c) by reason of the actions of the resigning liquidator, the company in liquidation has become indebted to the partnership in an amount exceeding the statutory threshold of $5,000.
57 It might be observed at this juncture that, having regard to the facts of Re Perseus Mining and the other authorities of its generation discussed above, the paradigm case to which the exception in s 532(2)(b) applies is that where a person has been appointed as liquidator, has acted in that capacity for some time, and by so acting has become a creditor of the company in an amount exceeding $5,000. The exception clarifies that the person, already having been appointed as liquidator, does not need to be granted leave merely to continue acting in the role. It does not seem that the exception has ever been contemplated to apply to the scenario presently under consideration.
58 However, arguments to the effect that the exception applies to certain other scenarios have been addressed in a small number of cases. It is instructive to consider those authorities.
59 In Government Insurance Office v Krey Investments Pty Ltd (Supreme Court of New South Wales, 29 October 1990) (Government Insurance Office), a person was appointed as liquidator of a company at a general meeting of its members. He claimed to be owed $6,500 by the company for work done prior to that appointment in advising the directors as to the solvency of the company and in convening the meeting. The company submitted that this work was intimately connected with the function of a liquidator, such that the exception (then in the former s 417(2)) applied and leave was not required. Justice Young rejected this submission, stating that the words "in his capacity as liquidator" (as they appeared in the former section) referred to "the time after which he was appointed liquidator by the members and not for work done before that". One might view this reasoning as, to some extent, confining the application of the exception to the paradigm case described above. From Young J's reasoning can also be drawn the proposition that it will not suffice, in order for the exception to be enlivened, that there merely exists some nexus between the relevant person's position as creditor of a company and that company's liquidation: that person must be a creditor in their role as liquidator, after their appointment, and not merely a creditor in some other role.
60 In Smith v Australian Securities and Investments Commission [2018] NSWSC 1695, Parker J found that leave under s 532(2) was required where the plaintiff was seeking reappointment as a liquidator of a company after having served in that same role previously, during which time he became a creditor of the company. His Honour stated at paragraph [17] that, in his view, the exception in s 532(2)(b) "applies only to a new appointment". The question of leave was also seen by Young J in Deputy Commissioner of Taxation v Barroleg Pty Ltd (1997) 25 ACSR 167 at 173 - 174, to arise in the case of a former liquidator, who was a creditor, pursuing reappointed to the role. With respect, the basis for these decisions was not made abundantly clear in their Honours' reasons. However, there is no basis to regard the decisions as incorrect. They again serve effectively to confine the application of the exception to the paradigm case described above by clarifying that, in order to rely on the exception, the relevant person must be a creditor in their present capacity as liquidator, not in their capacity as former liquidator.
61 If it is accepted that a former liquidator who is a creditor of the company must, on account of s 532(2)(b), be granted leave in order to be reappointed, then it would seem logical for the provision also to operate in such a way as to require a partner of a former (resigning) liquidator who is a creditor of the company to be granted leave in order to seek to be appointed or to act. The positions of the former liquidator and the partner of the former liquidator are, in substance, indistinguishable. Insisting on the need for the incoming liquidator to seek leave in that latter scenario is also consistent with a plain reading of the text of s 532(2)(b): it would otherwise stretch the statutory language to breaking point to treat the exception as applying on the basis that the incoming liquidator is a creditor in their "capacity as liquidator". More accurately, they are a creditor in their capacity as a partner in a partnership to which the company has become indebted by reason of the actions of the former liquidator - potentially, in the case of a large partnership like KPMG in the present case, alongside other partners who are not registered liquidators and who could have no possible role in the liquidation. In accordance with the reasoning of Young J in Government Insurance Office, it is not sufficient in order for the exception in s 532(2)(b) to operate that there is some arguable nexus between the incoming liquidator and the liquidation.
62 It follows that, where an incoming liquidator is a partner in a partnership to which the company has become indebted in an amount exceeding $5,000, leave must be granted under s 532(2) in order for them to seek to be appointed or to act. As explained previously, this is a somewhat peculiar and potentially quite arbitrary result. However, the text of the sub-section - including, in particular, that of the exception in s 532(2)(b) - affords no footing for the contrary conclusion. As noted previously, it may simply be the case that leave is to be sought in this scenario as a matter of course but, once it is sought, it will readily be granted.
63 All of this goes to the point made at the very outset of this analysis: that a person seeking an order that the Court exercise its power under s 473A(1)(a) to fill a vacancy left by the resignation of a liquidator, in circumstances where that person is a partner in a partnership that has included the resigning liquidator (or has employed the resigning liquidator), ought properly to put before the Court evidence indicating whether or not he or she is a creditor of the company in an amount exceeding $5,000. In such a scenario, there will be a prima facie reason to suspect that leave might be required under s 532(2) due to an extant creditor-debtor relationship between the partnership and the company. That possibility should be addressed proactively by evidence.
64 As noted above, the plaintiffs in the present matter did not seek leave pursuant to s 532(2) of the Corporations Act and the Court was not advised as to whether, on the facts of the case as they stood at the time of the hearing, such leave was required in order to make the primary orders that were sought. However, whilst revising the ex tempore reasons, the potential importance of the question of leave became clear. For reasons explained previously, in circumstances where the proposed incoming liquidators are from the resigning liquidator's firm and the potential for them to be disqualified from their intended office arises exclusively on that basis, there is little reason not to make an order granting leave to the extent that it is required. Necessarily, leave must be granted nunc pro tunc.