Australian Executor Trustees Ltd v Provident Capital Ltd

Background 4 Mr Michael has been a registered liquidator since 2005. He has sworn an affidavit in this proceeding in which he deposes to the facts necessary to establish the validity of his appointments as the sole liquidator of two companies and as the joint and several receiver and manager of a company and an individual. It is appropriate to recount those matters. 5 On 7 September 2019, he was appointed by orders made by a Deputy District Registrar of this Court as the sole liquidator of Scenic Hinterland Day Tours Pty Ltd, which remains in liquidation. He deposes that the only outstanding matter to be resolved prior to the finalisation of the winding up of that company is the completion of a settlement agreement that was entered into in relation to a recovery claim that the company had been pursuing against a third party. The terms of the agreement provide for the third party to make payments to the liquidator of the company in accordance with a long-term payment arrangement, with the final payment falling due on 30 June 2025. Mr Michael does not anticipate that any return to the creditors of the company will result from those payments. 6 On 16 September 2019, he was appointed by orders made by a Registrar of the Supreme Court of Queensland as the sole liquidator of Oranje International Pty Ltd. The only outstanding matter to be resolved prior to the finalisation of that winding up is a proceeding currently on foot in the Magistrates Court of Queensland within which recovery of $71,653.99 plus interest and costs is sought against two defendants. Whether there will be any return to the creditors of the company will depend, ultimately, on the outcome of that proceeding and the amount that can be recovered from the two defendants. 7 On 21 October 2021, Mr Michael and the fourth plaintiff, Mr John Ross Lindholm, were appointed pursuant to s 1323(1)(h) and (3) of the Corporations Act 2001 (Cth) (Corporations Act) as the joint and several receivers and/or receivers and managers of certain property of A One Multi Services Pty Ltd (A One Multi Services), Mr Aryn Henry Hala and Ms Heidi Elizabeth Walters. Those appointments were made by this Court on the application of the Australian Securities and Investments Commission (ASIC) in a proceeding commenced by ASIC against A One Multi Services, Mr Hala and Ms Walters for various alleged contraventions of the Corporations Act and other laws: Australian Securities and Investments Commission v A One Multi Services Pty Ltd [2021] FCA 1297. Subsequently, ASIC has discontinued the proceeding as against Ms Walters. 8 On 26 September 2022, Downes J made orders appointing Mr Colwell as an additional joint and several receiver and/or receiver and manager of the relevant property of both A One Multi Services and Mr Hala. Given the complexity of the matter, it has been difficult for Mr Michael to ascertain when the receiverships will be finalised. That will depend upon ASIC's conduct in pursuing final relief. 9 At present, Mr Michael has not resigned from any of his Court-appointed positions. He seeks orders to facilitate his resignation, including leave of the Court in certain respects, on the basis that, amongst other things: (a) he no longer has access to the detailed files that he maintained at KPMG in relation to each of the positions to which he was appointed; (b) he no longer has access to the employees and resources of KPMG to assist him in performing his functions; (c) he is no longer able to undertake work in connection with the entities the subject of his appointments and must, instead, devote his efforts and energies on a full-time basis to the requirements of his new role; and (d) he undertakes to make himself available to assist with any issues that might arise in respect of the entities of which he was previously the sole liquidator, while the other receivers continue to handle all day-to-day work that arises in respect of A One Multi Services and Mr Hala. 10 He has indicated that, if the Court makes the orders sought in this application, he will take all necessary steps to effect his resignation within seven days.

Legal principles concerning the substitution of liquidators 11 Section 473 of the Corporations Act provides simply that "[a] liquidator appointed by the Court may resign". Where the resignation results in a vacancy in the office of Court-appointed liquidator, that vacancy may be filled by the Court pursuant to s 473A(1)(a). In the exercise of this power to fill the vacancy, it is important to note the requirement in s 473A(4) that, "[i]f more than one liquidator is appointed under this section, the Court … must declare whether anything that is required or authorised by this Act to be done by the liquidator is to be done by all or any one or more of the persons appointed". 12 The Court's power to fill a vacancy under s 473A(1)(a) of the Corporations Act is not limited to situations where the vacancy has already arisen, but extends also to those circumstances where a vacancy can be anticipated: see White, in the matter of Australia Phoenix Pty Ltd [2018] FCA 913 [13] - [15] (White), citing Re Application of Vouris (2004) 49 ACSR 543, 545 [5] (Re Vouris) and Gollant, in the matter of ACN 065 229 831 Pty Ltd [2017] FCA 1158 [13] (Gollant). This was also the case under the predecessor provision to s 473A(1)(a), the now-repealed s 473(7): see Re Wily (2003) 49 ACSR 94, 95 [6] (Re Wily); Re McGrath (2005) 54 ACSR 55, 57 [10]. It has been said that the "appropriate process" in such circumstances is for the power to be exercised upon an application being made to the Court by the resigning liquidator in conjunction with the consenting incoming liquidator: Gollant [13]. 13 The Court that is called upon to exercise the power under s 473A(1)(a) need not be the same Court that made the initial appointment; it suffices that the vacancy is filled by a "Court" as defined in s 58AA of the Corporations Act: see Re Equiticorp Australia Limited (in liq) [2017] NSWSC 1456 [5] (Re Equiticorp); Gollant [13]; Re ACN 167 984 045 Pty Ltd (in liq) [2021] VSC 652 [7], [9] (Re ACN 167 984 045). Again, this was how the former s 473(7) operated: see Condon v Watson (2009) 174 FCR 314, 321 [45]; Re Ambridge Investments Pty Limited [2015] NSWSC 1671 [13]; Naudi, in the matter of ACN 156 335 787 Pty Ltd (in liq) [2017] FCA 815 [18] (Naudi). 14 It is also not in doubt that the Court has power to appoint multiple liquidators to fill a vacancy left by the resignation of a sole liquidator: see Re Fluid Form Movement Pty Limited [2013] NSWSC 2007 [6]; Re Golden Sands Hospitality Pty Ltd (In Liq) [2017] NSWSC 410 [11]; Hall, in the matter of Interchase Corporation Limited (in liquidation) [2020] FCA 430 [21]. 15 The legislation does not identify any particular matters that are to be considered by the Court in filling a vacancy pursuant to s 473A(1)(a). Indeed, there is unlikely to be any great value in attempting to compile a comprehensive list of the matters that might potentially be relevant to that task, given the diversity of the cases that could conceivably come before the Court. Nevertheless, the existing authorities do disclose certain considerations that have consistently been attributed some importance to the exercise of the power. They may be grouped into two categories: (a) the qualifications of the incoming liquidator to act in the position as proposed; and (b) the discretionary matters going to the appropriateness of the appointment of the incoming liquidator. 16 These categories may be addressed in turn.

The qualifications of the incoming liquidator 17 As a threshold issue, the Court must be satisfied that any person proposed to be appointed to fill the vacancy is suitably qualified to do so. It has been said, on this point, that "the principles applied to the original appointment are employed in relation to the replacement liquidator": Westlaw AU, McPherson's Law of Company Liquidation (last reviewed 24 July 2023) [8.230]. Accordingly, the incoming liquidator must be registered, must be independent (and must be seen to be independent), and must not be disqualified on account of any of the circumstances set out in s 532(2) of the Corporations Act. 18 Two issues are worth mentioning in relation to the last of these requirements, in connection with which s 532(2) ought to be set out in full. That sub-section provides as follows: 532 Disqualification of liquidator … (2) Subject to this section, a person must not, except with the leave of the Court, seek to be appointed, or act, as liquidator of a company: (a) if the person, or a body corporate in which the person has a substantial holding, is indebted in an amount exceeding $5,000 to the company or a body corporate related to the company; or (b) if the person is, otherwise than in his or her capacity as liquidator, a creditor of the company or of a related body corporate in an amount exceeding $5,000; or (c) if: (i) the person is an officer or employee of the company (otherwise than by reason of being a liquidator of the company or of a related body corporate); or (ii) the person is an officer or employee of any body corporate that is a secured party in relation to property of the company; or (iii) the person is an auditor of the company; or (iv) the person is a partner or employee of an auditor of the company; or (v) the person is a partner, employer or employee of an officer of the company; or (vi) the person is a partner or employee of an employee of an officer of the company. 19 The issues may be addressed in the order that they arise from this sub-section.

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.

The second issue - s 532(2)(c)(v) 65 The second issue is similar to the first, and concerns s 532(2)(c)(v). In Tayeh v 113 134 964 Pty Ltd (formerly Chase Building Group Pty Ltd) (in liq) [2022] FCA 649 (Tayeh), Halley J considered it prudent for the incoming joint and several liquidators, who were in a partnership with the resigning liquidator, to seek leave to act under s 532(2) on the basis that they fell within the category of persons contemplated by that sub-paragraph. The same approach also seems to have commended itself to Gleeson J in the earlier case of Winterbottom, in the matter of Ballistic Hydraulic Hose and Fittings Pty Ltd (in liq) [2017] FCA 1101 [17] - [18]. 66 However, the approach seems to be at odds with what was said by Pritchard J in Woods v Little Tiger Pty Ltd (in liq) [2014] WASC 372 [61], in circumstances where liquidators sought leave because of an apprehension that they might otherwise be disqualified pursuant to s 532(2)(c)(v) on the basis that they were officers of particular companies (as liquidators) and also in partnership, as follows: Although an 'officer' of a corporation includes a liquidator of that corporation, in my view it is strongly arguable that s 532(2)(c)(v) does not apply in this case, for two reasons. First, because a liquidator himself or herself is excluded from the prohibition in s 532(2)(c)(i), it is arguable that a partner of that person cannot be considered a partner of an 'officer' of the corporation under s 532(2)(c)(v). Secondly, putting the same argument in a slightly different way, it is arguable that the phrase 'officer or employee of the company' in s 532(2)(c) must be read in each case where it appears in that paragraph as including the exception for liquidators in s 532(2)(c)(i) of the Act. It would be absurd if s 532(2)(c)(v) were construed otherwise. 67 There is no need to resolve the potential inconsistency between these authorities at present, given that Mr Michael had, by the time of the hearing, resigned from KPMG and taken up his new role. However, it might be remarked that, although it does seem somewhat strange for s 532(2)(c)(v) to function as an impediment to the exercise of the Court's power in s 473A(1)(a), that appears to be the natural consequence of the text of the provision. With respect, it is difficult to accept the reasoning of Pritchard J that the word "officer" should, wherever it appears in s 532(2)(c), carry with it the exception "otherwise than by reason of being a liquidator" that appears exclusively in s 532(2)(c)(i). If it was the intention of the legislature to have that exception apply so broadly, then the language creating the exception in s 532(2)(c)(i) could readily have been repeated throughout s 532(2)(c). The fact that it was not suggests that a liquidator will be an "officer" of the company for the purposes of s 532(2)(c)(v), such that a partner of that liquidator must seek leave to be appointed as a liquidator of the company themselves. 68 It is not necessarily absurd for the section to function in this way; again, it might simply be the case that leave under s 532(2), when sought in such circumstances, will readily be granted.

Discretionary matters going to the appropriateness of the appointment of the incoming liquidator 69 The matters that might conceivably go to the appropriateness of a liquidator's appointment in the exercise of the Court's power pursuant to s 473A(1)(a) cannot be stated exhaustively. However, several relevant matters can quite readily be identified in the authorities. 70 In White, Steward J raised and addressed several such matters at paragraph [3] of his reasons: After consulting with his fellow directors, Mr White considers that the most efficient and cost‐effective way to ensure a smooth transition for all affected companies and estates in administration is for the appointment of Mr David Quin, Mr Philip Newman and Mr Stephen Michell, being fellow members of the PCI team, to be replacement liquidators and trustees. Each of these individuals is a registered liquidator and registered trustee in bankruptcy. Mr White's view, which I accept, is that there are synergistic benefits which would flow from the appointment of existing PCI team members as replacements. Each individual has an existing familiarity with the company or estate Mr White wishes them to administer, and each would have, I infer, easy access to the necessary files and materials. Each has also consented to becoming a replacement liquidator and/or trustee and has agreed to be remunerated on the same existing terms and conditions as Mr White. Mr White is otherwise not aware of any prejudice which might result from the appointment of these gentlemen as his replacement. 71 A little later, at paragraph [15], his Honour observed that: Mr White is retiring, and the companies in liquidation and the bankrupt estates, for which he is responsible, must continue to be administered in the most efficient and appropriate way. Appointing members of Mr White's firm, who have the appropriate qualifications, as replacements, with their pre‐existing knowledge of each matter and ease of administrative access to the relevant files, is a convenient and simple way of facilitating the continuity of administration. Having the Court make the appointment is also, I am satisfied, the cheapest solution, especially given PCI Partner's willingness to pay the legal costs of this proceeding. In that respect, Mr White's proposed resignation is not the product of some professional irregularity. 72 It is possible to discern in these passages the following considerations that may, in a particular case, be relevant to the exercise of the power in s 473A(1)(a): (a) whether the incoming liquidator is a member of the same firm as the resigning liquidator; (b) whether the incoming liquidator has agreed to be remunerated on the same terms and conditions as the resigning liquidator; (c) whether the incoming liquidator's firm is willing to pay the legal costs of the application; (d) whether the resignation that necessitated the application is the product of any professional irregularity; and (e) whether the appointment of the incoming liquidator would otherwise cause any prejudice. 73 By way of elaboration upon the first of these considerations, it may be noted that it has been regarded as relevant in numerous cases, under both s 473A(1)(a) and the former s 473(7), that the person proposed to fill the vacancy is a member of the same firm as the resigning liquidator, and has some measure of association or familiarity with the matters on which that liquidator worked which suffices to ensure a degree of "continuity" in the liquidation: see, eg, Re McGrath at 57 - 58 [11]; Re Free [2010] NSWSC 1079 [6]; Re Porter [5]; Naudi [17]; Gollant [13]; Re ACN 120 426 173 [33]. This promotes cost efficiency, which is fundamentally in the interests of creditors: see Re Wily at 95 [3]; Re Bridgewater Investments Pty Ltd [2013] NSWSC 426 [4]; Re Kukulovski [3], [7]; Re Sutherland, Arnautovic and Civil [2016] NSWSC 754 [13]; Re Equiticorp [6]; Re FGM Print [9]. For instance, it may minimise the risk of the liquidator's prior work and knowledge being lost or duplicated: Nikitins, In the matter of The Managed Investment Schemes [2010] FCA 207 [6]. 74 Finally, it ought to be noted that, whilst the interests of creditors might broadly be relevant to the exercise of the Court's power under s 473(1)(a) of the Corporations Act insofar as those interests are reflected in the aforementioned considerations, it is not necessary in order to appoint a replacement liquidator that creditors have been served with the originating process and supporting affidavits and have consented to the orders sought. As explained by Steward J in White at paragraph [17], if the creditors are dissatisfied with an appointment, they can take steps themselves to have the liquidator replaced pursuant to s 90-35 of the Insolvency Practice Schedule (Corporations) (being Sch 2 to the Corporations Act). Relevantly, his Honour recognised at paragraph [20] of the same case that: … the presence here of each statutory power of appointment reflects Parliament's intention that this Court be able to appoint replacement liquidators/trustees in bankruptcy in addition to, and independently of, the power conferred on creditors to make the same appointments.

Should Mr Michael be substituted for Mr Colwell and Ms Coneyworth? 75 On the evidence before the Court, it is appropriate to make the orders sought in relation to the substitution of the liquidators. There are several reasons for this. 76 First, Mr Michael, who is a well-known practitioner, has expressed his view that the appointment of Mr Colwell and Ms Coneyworth as his substitutes is the most suitable and effective course of action following his resignation. Both of those persons are familiar with the progression of the liquidations to date. They will also be familiar with KPMG's systems and modes of operations, and they are likely to know the employees who have worked on the liquidations to this point. 77 Secondly, both Mr Colwell and Ms Coneyworth have consented to act as liquidators and have deposed that they are not aware of any conflicts of interest that could impact upon the suitability of their appointments. 78 Thirdly, both Mr Colwell and Ms Coneyworth are highly experienced insolvency practitioners with substantial professional reputations in their areas of work. They are both partners of KPMG, registered liquidators, and full members of the Australian Restructuring Insolvency and Turnaround Association. 79 Fourthly, Mr Michael has deposed to having maintained detailed files and records in relation to the liquidations on which he worked, which are now held by KPMG. Mr Colwell and Ms Coneyworth will have access to those relevant files and the records relating to the liquidations. They will also have access to the resources and the staff at KPMG who are acquainted with the liquidations. 80 Fifthly, Mr Colwell and Ms Coneyworth have both agreed to charge the same hourly rates that have previously been charged by Mr Michael in relation to the liquidations, with the result that the liquidations will not become any more expensive to progress. 81 Sixthly, Mr Michael has already had detailed discussions with Mr Colwell and Ms Coneyworth about the proposed appointments and the matters that will need to be attended to should they replace him. He believes that Mr Colwell and Ms Coneyworth are ready, willing and able to take on the joint and several liquidator positions upon his resignation, and that they have the experience and resources necessary to carry out the obligations that arise from those appointments. 82 Seventhly, the dual appointment of Mr Colwell and Ms Coneyworth will minimise the risk of there having to be another application of the present kind in the future. If one of them happens to resign, the other will be able to continue uninterrupted as sole liquidator. 83 Eighthly, ASIC does not oppose the proposed appointments. It is noted that, in the event that the appointments were not made by this Court, it would be open to ASIC to replace Mr Michael itself pursuant to s 473A(1)(b) of the Corporations Act, following his resignation. 84 Ninthly, the creditors of the entities in liquidation have been notified of this application and have been invited to contact the plaintiffs to raise any concerns about the proposed substitution of the liquidators. None has done so. Although, as identified by Steward J in White, it is not strictly necessary to inform creditors of the making of an application of this kind, the fact that they have been notified and remain apparently unconcerned is of some relevance, given that the liquidation is, in each case, to be undertaken in their interests. 85 Finally, it is also not insignificant to note that KPMG is willing to bear all of the costs associated with this application, such that there will be no impact on creditors. 86 For the foregoing reasons, orders should be made appointing Mr Colwell and Ms Coneyworth as joint and several liquidators of Scenic Hinterland Day Tours Pty Ltd and Oranje International Pty Ltd, with these appointments to take effect upon the resignation of Mr Michael as sole liquidator. Orders should also be made in the form contemplated by s 473A(4), declaring that anything to be done by the sole liquidator of the relevant companies may be done by one or both of Mr Colwell or Ms Coneyworth.

Orders in relation to the obligations contained in rr 70-30 and 70-40 of the Insolvency Practice Rules (Corporations) 2016 (Cth) 87 For completeness, it ought to be mentioned that no orders were sought in this case to dispense with the need for compliance with the obligations contained in rr 70-30 and 70-40 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (Insolvency Practice Rules). The relevance of these obligations is explained below. 88 Section 70-50(1) of the Insolvency Practice Schedule (Corporations) provides as follows: 70-50 Reporting to creditors and members (1) The Insolvency Practice Rules may provide for and in relation to the obligations of external administrators of companies: (a) to give information; and (b) to provide reports; and (c) to produce documents; to creditors or members. 89 As contemplated by this sub-section, the Insolvency Practice Rules make provision for certain information and reports to be given to creditors in particular administrations. For the present purposes, it is relevant to note rr 70-30 and 70-40, which state as follows: 70-30 Initial information required to be given to creditors in certain administrations (1) This section: (a) is made for the purposes of section 70-50 of the Insolvency Practice Schedule (Corporations); and (b) applies to companies under administration, windings up by the Court and voluntary windings up; and (c) does not apply if a provisional liquidator of a company has been appointed. Information about creditors' rights to be given (2) The external administrator must give information about the following to as many creditors of the company as reasonably practicable: (a) the fact that the external administrator has been appointed in relation to the company; (b) the right of creditors to request information, reports and documents under sections 70-40 and 70-45 of the Insolvency Practice Schedule (Corporations); (c) other than in the case of a voluntary administration - the right of creditors to direct that a meeting of the creditors be held under section 75-15 of the Insolvency Practice Schedule (Corporations); (d) the right of creditors to give directions to the external administrator under section 85-5 of the Insolvency Practice Schedule (Corporations); (e) the right of the creditors to appoint a reviewing liquidator under section 90-24 of the Insolvency Practice Schedule (Corporations); (f) the right of the creditors to remove and replace the external administrator under section 90-35 of the Insolvency Practice Schedule (Corporations). Time for giving information etc. (3) The information must be given: (a) in writing; and … (c) in the case of a winding up by the Court - within 20 business days after the external administrator is appointed; and … 70-40 Report about dividends to be given in certain external administrations (1) This section: (a) is made for the purposes of section 70-50 of the Insolvency Practice Schedule (Corporations); and (b) applies if a liquidator has been appointed in relation to a company. (2) The liquidator must provide to the creditors of the company a report containing information on the following: (a) the estimated amounts of assets and liabilities of the company; (b) inquiries relating to the winding up of the company that have been undertaken to date; (c) further inquiries relating to the winding up of the company that may need to be undertaken; (d) what happened to the business of the company; (e) the likelihood of creditors receiving a dividend before the affairs of the company are fully wound up; (f) possible recovery actions. (3) The report must be provided within 3 months after the date of the liquidator's appointment. (4) A copy of the report must be lodged with ASIC in the approved form at the same time as it is provided to the creditors. 90 In several cases, both in this Court and others, the appointment of a liquidator pursuant to s 473A(1)(a) of the Corporations Act in order to fill a vacancy left by a resigning liquidator has been taken to trigger the obligations contained in one or both of these rules. Often, orders are sought pursuant to s 90-15(1) of the Insolvency Practice Schedule (Corporations) dispensing with the need for compliance with the obligations on the basis that the information and/or the report (as the case may be) has already been provided to creditors by the resigning liquidator and there is no commercial utility in having the incoming liquidator incur further costs in providing them again: see, eg, Re HIH [38] - [44], [57]; Lock, in the matter of Lock [2021] FCA 682 [10] - [11] (Lock); Re ACN 167 984 045 [21] - [28], [36], [38]; Tayeh [19], [21]; Cribb (Liquidator), in the matter of Aledi Pty Ltd (in liq) [2022] FCA 1250 [8] - [11] (Cribb); Re ACN 120 426 173 [16], [38]. 91 However, even where dispensation is granted, there may be some value in ensuring that creditors are notified of at least certain matters - for instance, the outgoing liquidator's resignation and the appointment of the incoming liquidator. For this reason, in several of the aforementioned cases, the need for compliance with the obligations in rr 70-30 and 70-40 has effectively been substituted for an order that the incoming liquidator issue a notice to all creditors containing a few items of particularly relevant information: see Lock [11]; Tayeh [20]; Cribb [11]. 92 At first glance, it might seem unnecessary for parties to have to go to the effort of either seeking dispensation or complying with rr 70-30 and 70-40 whenever a vacancy is filled pursuant to s 473A(1)(a) of the Corporations Act. However, it is not difficult to envisage scenarios in which insisting on adherence to the rules might prove important. It may be the case, for example, that the outgoing liquidator has not been in office long enough to have complied with the obligations, such that the creditors are yet to receive the information under r 70-30 and the report under r 70-40. There will then be an obvious reason to require the incoming liquidator to take the steps prescribed by the rules. 93 Dispensation not having been sought in the present case, compliance with the obligations is to be expected.

The retirement as joint and several receiver and manager

Legal principles concerning the retirement of a joint and several receiver and manager 94 A Court-appointed receiver and manager has no statutory power to resign or retire. An application must ordinarily be made to the Court for an order that he or she be discharged from the office. Such an order will not be made for the asking; on the contrary, courts have historically been reluctant to discharge a receiver in the absence of some good reason to do so. The position was explained as follows by Young CJ in Re Botar-Tatham Pty Ltd (2001) 52 NSWLR 680, 681 - 682 [7] - [8] (Re Botar-Tatham): 7 Ordinarily, a receiver who has been appointed by the court, will only be discharged if the task committed to him has finalised and ordinarily he will not be discharged on his own application unless he shows a reasonable cause for discharge such as failing health or other incapacity, or unless all parties interested consent; see Halsbury's Laws of England, 4th ed, vol 39(2), par 470 at 268-269 and the authorities there cited particularly Smith v Vaughan (1744) Ridg T H 251; 27 ER 820. However, the court is able to discharge the receiver if it considers that in all the circumstances it is proper to do so. However, as I understand it, the receiver has no right in the present application to a discharge. The persons interested have been consulted but they have just shown no interest rather than doing anything which could be called consent. 8 The commercial problem is that if the receiver is discharged the company will no longer have any controller. The company is insolvent. The general policy of this court is that no insolvent company must be enabled to go out into the market place and trade. Furthermore, although I have not consulted the memorandum and articles of association, the great probabilities must be that there are no directors or officers of the company who can deal with it. Accordingly, in the public interest, the receiver's discharge must be linked in some way or other with putting the company to death. 95 Despite what was said in Re Botar-Tatham, more recent authorities have not set an especially high bar for receivers to meet before they will be discharged on their own initiative. The Court may show little hesitation to grant a discharge, in particular, where an adequate justification is provided for the receiver's departure and he or she is only one of multiple receivers in place in respect of the property, or is proposed to be replaced immediately by another receiver, such that the "commercial problem" referred to by Young CJ does not arise. 96 By way of example, in Australian Executor Trustees Ltd v Provident Capital Ltd (No 3) [2020] FCA 1840, Rares J ordered that a Court-appointed liquidator be retired and two other persons be appointed as joint and several receivers of the company in his place. His Honour explained the basis for these orders at paragraphs [4] - [5], as follows: 4 … On 31 October 2020, Mr Hill retired as a partner of PricewaterhouseCoopers to take up partnership at another firm but, pending the Court's determination of this application, he remains an employee of his old firm. He did not intend that his appointment continue with him at his new firm and has said, quite properly, that if Mr Walley and Mr Scott, who are current partners of PricewaterhouseCoopers, are appointed in his place, he intends to ensure a steady transition of receivership duties between him and them. 5 Both Mr Scott and Mr Walley are official and registered liquidators. They are appropriate persons to be appointed in Mr Hill's stead as joint and several receivers of Provident, hopefully, to finalise, as appears to be the case, the receivership in the not too distant future. They have said that they intend to continue charging on the original and still continuing scale of fees that I approved when I first appointed receivers to Provident on 29 June 2012: Australian Executor Trustees Ltd v Provident Capital Ltd (2012) 203 FCR 461. I am satisfied that it is appropriate to allow Mr Hill to be retired as the sole receiver and manager of Provident and for him to be replaced by Mr Scott and Mr Walley as joint and several receivers and will so order. 97 Where an adequate reason for the receiver to be discharged is established, the necessary order may, depending on the circumstances, be made under statute, under the rules of the Court, or in the exercise of the Court's inherent jurisdiction. 98 In Re Wily, Palmer J found (at 96 [9]) that the Supreme Court of New South Wales had power to accept the resignation of a receiver and to appoint another receiver in his or her place pursuant to Pt 29 r 5(1)(c) and (d) of the Supreme Court Rules 1970 (NSW). That decision was followed by Barrett J in Re Vouris, where his Honour stated as follows at 548 [20]: … Mr Vouris has been appointed a receiver by the court in respect of the assets of two partnerships. His appointment is sole. In this instance, as Palmer J observed in the Wily case, appropriate jurisdiction of the court is to be found in Pt 29 r 5 of the Supreme Court Rules. There is no power for a receiver to resign, but the court has jurisdiction, whether under Pt 29 or as an element of its inherent jurisdiction, to discharge a receiver. There is no reason why a receiver should not be discharged at his own request, in circumstances of the kind that prevail here. The power to discharge is in Pt 29 r 5(1)(c). There is also a power to appoint another receiver. This is in Pt 29, r 5(1)(d). A combination of those paragraphs allows the court to make an order that with effect on and from 6 May 2004 Mr Vouris be discharged as receiver in each relevant case and that the person proposed for appointment in his place be appointed to be receiver. 99 The modern equivalent of Pt 29 r 5(1)(c) and (d) in New South Wales is r 26.6(2)(a) and (b) of the Uniform Civil Procedure Rules 2005 (NSW). However, no equivalent provision exists in the rules of this Court. 100 Helpfully, the plaintiffs in the present case pointed to the effect of s 1323(5) of the Corporations Act, which provides as follows: 1323 Power of Court to prohibit payment or transfer of money, financial products or other property … (5) Where the Court has made an order under this section on a person's application, the Court may, on application by that person or by any person affected by the order, make a further order discharging or varying the first-mentioned order. 101 Mr Michael was appointed by orders of this Court made on 21 October 2021, pursuant to s 1323(1)(h) and (3) of the Corporations Act, as a joint and several receiver and/or receiver and manager of certain property of A One Multi Services and Mr Hala. There can be little doubt that he was, and remains, a "person affected by the order". He is accordingly entitled to apply under s 1323(5) for a further order that has the effect of discharging or varying the order by which he was appointed. That sub-section has been used to facilitate the discharge of a receiver before, albeit in somewhat different circumstances: see Australian Securities and Investments Commission v Letten (No 29) [2023] FCA 315 [21] - [25], [28].

Should Mr Michael be permitted to retire as joint and several receiver and manager? 102 It is appropriate to permit Mr Michael to retire as the receiver and manager of the property of A One Multi Services and Mr Hala. The reasons for this are as follows. 103 First, he has deposed in an acceptable form that it is necessary and appropriate for him to be permitted to retire from his position as receiver and manager in circumstances where, as explained above: (a) he has resigned from KPMG and no longer has access to the detailed files that he maintained, or to the employees and resources that assisted him in performing his functions; (b) he is no longer working in a professional capacity as an insolvency practitioner; and (c) he must devote his efforts and energies on a full-time basis to the requirements of his new role. 104 Secondly, his retirement will not give rise to the "commercial problem" referred to in Re Botar-Tatham. Mr Colwell and Mr Lindholm will remain as joint and several receivers of the property, such that there will be no vacancy left in the office by Mr Michael's departure. 105 Thirdly, the original orders of this Court appointing Mr Michael as receiver and/or receiver and manager contemplated that two receivers would be appointed in respect of the relevant property, and this is precisely the state of affairs that would prevail in the event of his retirement. There is no apparent danger that Mr Colwell and Mr Lindholm will be unable to finalise the receiverships in his absence. Although Mr Michael has deposed that the receiverships have been "highly complex", he now anticipates that only two significant matters remain unresolved. Mr Colwell has deposed, in an affidavit filed in this proceeding, that he and Mr Lindholm are able to attend to the necessary matters with the assistance of their staff. In his opinion, which I accept, there is no need for there to be a third receiver appointed to replace Mr Michael. 106 Fourthly, A One Multi Services and Mr Hala have consented to the order sought in respect of Mr Michael's retirement. ASIC does not oppose any part of the present application and does not wish to be heard. These are compelling factors supporting the making of the relevant order. 107 Fifthly, although the potential creditors of A One Multi Services and Mr Hala have not been notified of this application, that is a consequence only of the receivers presently being unable to ascertain the number of creditors and of the difficulty in contacting them. In any event, I accept the submission made on behalf of the plaintiffs that it is unnecessary to notify the creditors of A One Multi Services and Mr Hala for broadly the same reasons as were identified by Steward J in White in the context of the replacement of a liquidator, as explained above. It is relevant that Mr Michael does not anticipate that there will be any return for the creditors in the receiverships, such that their interests will not be affected adversely by the making of the present orders. 108 Finally, there will be no additional expense to A One Multi Services, Mr Hala or their creditors as a result of Mr Michael's retirement, as the plaintiffs propose to pay the costs of the present application themselves, without recourse to or indemnity from the property the subject of the receiverships. The absence of this potential detriment is a further compelling factor supporting the making of the order permitting Mr Michael's retirement.

Costs 109 The plaintiffs seek an order that the costs of the application be paid by them without recourse to, or indemnity from, the property of either of the two companies in liquidation, A One Multi Services or Mr Hala. It is appropriate to make that order. I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington.

Associate: Dated: 24 October 2023 SCHEDULE OF PARTIES QUD 360 of 2023 Plaintiffs Fourth Plaintiff: JOHN ROSS LINDHOLM