This proceeding
14 This proceeding was commenced by originating application filed on 23 September 2021 by the plaintiff, seeking orders to the effect that the liquidators be replaced by other liquidators of his choosing.
15 The plaintiff also swore a lengthy affidavit in support of the relief sought in the originating application which was also filed on 23 September 2021. With annexures, that affidavit exceeds 1,100 pages in length.
16 On 22 October 2021, the matter came on for hearing for a case management hearing before a Judicial Registrar. The transcript of that hearing is in evidence.
17 In particular, at that hearing, counsel who appeared for the plaintiff told the Judicial Registrar,
What I'm chasing is a hearing this year, and why I'm chasing that is because it's well-established that in cases for the removal of a liquidator, it becomes more difficult for the applicant to succeed the longer a liquidator is in office.
18 For that reason, the plaintiff's counsel resisted an order that points of claim be filed. However, it was indicated by the Registrar that the points of claim did not need to be a full statement of claim and that it just needed to be a document which was concise and which identified the exact facts upon which the plaintiff relies and the reasons that he says that he is entitled to the relief, being the fairly drastic step of replacing the liquidators with different liquidators.
19 During the course of that hearing, the plaintiff submitted that the hearing would be between one to two days, but the Registrar indicated that he thought that it could potentially take three days.
20 The plaintiff was ordered to file and serve a points of claim by 4.00 pm on 29 October 2021.
21 By consent and pursuant to r 2.13(1)(a) of the Federal Court (Corporations) Rules 2000 (Cth), RCH was granted leave to be heard in the proceeding. No limitations were imposed on that leave at that time.
22 The plaintiff filed his points of claim on 29 October 2021 and was thereby provided with an opportunity to present his case as to why the liquidators should be removed.
23 The points of claim raised various factual matters covering the periods in and prior to the liquidator's initial appointment as administrators. Collected together in paragraphs 68 to 73 of the original points of claim, these matters are alleged to give rise to a view that a reasonable fair-minded observer might reasonably apprehend that the liquidators "might not, as liquidators of the Company, discharge their duties with independence and impartiality". This conclusion appears to be founded principally upon the existence of historical relationships between the liquidators and RCH and its solicitors, Arnold Bloch Leibler (ABL).
24 In particular, it is alleged that these relationships may disincline the liquidators from properly investigating the sale of assets by the receivers and reaching a conclusion that they breached s 420A of the Act when selling the Company's property under the Contract.
25 The case management hearing set down for 8 November 2021 was vacated and an order was made on 1 November 2021 requiring the liquidators and RCH to file and serve any affidavits on which they wished to rely by 4.00 pm on 11 November 2021.
26 The dates for filing of affidavit material, including by RCH, was amended by consent order dated 4 November 2021.
27 By this conduct, the plaintiff accepted that RCH was entitled to file affidavit material in relation to his claim without limitation.
28 A points of defence was filed by the liquidators on 16 November 2021 and affidavit material was also filed by the liquidators. On 16 December 2021, further time was granted to RCH to file and serve its affidavits and the matter was listed for a case management hearing before me on 25 January 2022. RCH filed affidavits in December 2021.
29 On 26 November 2021, the parties were advised by the Court that the proceedings had been listed for final hearing on 21, 22 and 23 February 2022. This was to accommodate the expedition sought by the plaintiff.
30 Special arrangements had been made to have the trial listed on 21 February 2022 for three days, which were dates suitable to the parties. Such arrangements included obtaining consent from the Chief Justice to list a trial during February 2022, which is the month of Full Court sittings.
31 The listing of the trial in February 2022 therefore had immediate impact on other litigants in this Court. However, because of the submissions made by the plaintiff's counsel at the hearing in October 2021, the Court accepted that there was urgency.
32 The impact on other litigants by the trial being listed as a special fixture was raised today by senior counsel for the liquidators but was not addressed by the plaintiff's senior counsel. It is an important consideration, which tells against the grant of leave in relation to the proposed amendments.
33 On 15 December 2021, a three page Notice to Produce was filed by the plaintiff, seeking production from the liquidators of 15 categories of documents to be produced on 23 December 2021. The categories were very broad, and they appear in some respects to relate to issues which went beyond that which was contained in the original points of claim.
34 There is no evidence as to why this Notice to Produce was not served earlier. There is no evidence as to why the documents referred to in this Notice to Produce were not sought earlier or obtained earlier and indeed, it is only an assumption that some of the documents which were produced in response were not already in the possession of the plaintiff or could not have been obtained by him by other means. That is important because the premise of the application to amend is that documents, including the Contract, were only obtained as a consequence of this Notice to Produce and therefore it is submitted that the amendments could not have been made at an earlier time.
35 One of the documents that fell within the scope of the Notice to Produce was, as I have said, the Contract. Given the matters stated by the receivers in the correspondence of 5 May 2021 to which I have referred, inquiry was made by the liquidators of the receivers as to whether they objected to the Contract and several other related documents being produced in compliance with the Notice to Produce.
36 On 22 December 2021, Mr Preston, one of the receivers, emailed one of the liquidators and confirmed that the receivers objected to the liquidators producing the documents on the basis of their confidentiality.
37 The Notice to Produce came before Judicial Registrar Schmidt on 23 December 2021. On that day, the liquidators' solicitors emailed the plaintiff's solicitors, providing a link to approximately 230 documents which were produced in response to the Notice to Produce. The plaintiff's solicitors were also advised that:
During our review of documents falling within the [Notice to Produce], we identified 4 documents which had been provided to the Liquidators by the Receivers subject to a strict claim of confidentiality. We engaged with the Receivers whether they continued to maintain a claim of confidentiality over those 4 documents. Last night, the Receivers advised that they did maintain the claim of confidentiality. Given this, we will bring this matter to the Court's attention at today's hearing, with a request that the Registrar determine the appropriate way to proceed given the time of year and the small number of documents at issue (noting there are a number of attachments to two of the documents). For completeness, the documents in question comprise two emails and a covering letter to the sale agreement and the sale agreement itself.
38 At the hearing on 23 December 2021, the Judicial Registrar was advised on behalf of the liquidators of the production under the Notice to Produce, that the receivers had been written to in relation to the production, that the receivers had confirmed that they disputed production by reason of confidentiality and that they needed to engage with the plaintiff's solicitors in relation to the matter. It was also indicated that the receivers would be notified of the next listing of the matter on 25 January 2022 and that the matter in relation to the documents might be resolved between the receivers and the solicitors for the plaintiff by the next occasion.
39 On 24 January 2022, a letter was received by the plaintiff's solicitors setting out the receivers' position in relation to the production. That letter confirmed that the Contract contained continuing "obligations of confidence" and that the obligations bound the liquidators. A confidentiality regime was proposed to enable production to be effected in a confidential manner.
40 The case management hearing on 25 January 2022 proceeded before me. At that hearing, the receivers appeared through counsel. On this occasion, orders were made for the production by the liquidators of further documents under the Notice to Produce with certain documents, including the Contract, being excluded from the order.
41 Also at that case management hearing, the plaintiff sought a direction that he be permitted to adduce evidence relating to an allegation in paragraph 66 of the points of claim concerning the change in coal price. This was opposed on the basis that directions had been made about the delivery of affidavit material and all parties had by that date filed and served their affidavit material for the hearing of the trial.
42 During argument about the proposed direction as to whether the plaintiff should be permitted to adduce evidence relating to paragraph 66 of the points of claim, it became apparent that the plaintiff wished to advance certain contentions at the trial which had not been pleaded. I refer in particular to pages 6 to 10 of the transcript of that hearing, which is in evidence on this application.
43 Another matter which was raised by counsel for the plaintiff was the prospect that the trial could exceed three days. An inquiry was made of me as to whether, if that occurred, I would be able to accommodate that and I indicated that I had hearings on Thursday and Friday of that week as well as the following week and there would be difficulties if the trial went longer than three days.
44 The next case management hearing was set down for 7 February 2022. That is, two weeks before the trial was due to commence.
45 At 7.30 am on 7 February 2022, approximately two hours before the case management hearing, an email was received by my chambers, attaching an unfiled interlocutory application, submissions and extensive affidavit material, being the material relied upon to seek a hearing that day of an application to amend the points of claim.
46 Proposed directions were also provided, and I understood from Mr May of counsel, who appeared for RCH, that he had only seen those directions just prior to the hearing. Mr May advised that he was not in a position to make submissions about the application to amend the points of claim or the other directions which were being sought, which directions sought to limit the basis on which RCH would be permitted to participate in the trial. I note that those directions are no longer pressed by the plaintiff today on the basis that those directions will be considered at the trial itself.
47 Mr Hynes of counsel appeared for the liquidators on 7 February 2022 and he indicated that he had not had the opportunity to get instructions on the amendment application. That is not surprising. The liquidators had only been served with the material, which was quite voluminous, on the previous Friday, being after 5.00 pm Sydney time on 4 February 2022.
48 The consequence of these matters was that the hearing of the application could not proceed and, taking into account the availability of counsel and the availability of the Court, the application was set down for hearing today.
49 I invited the plaintiff to file his further affidavit material in relation to the new allegations in the proposed amended points of claim by 9 February 2022, as had been proposed in his draft order, on the basis that he would need to do so if the trial dates of 21 to 23 February were to be maintained. On 9 February 2022, the plaintiff filed three affidavits, including an affidavit of Mr Joel Shaw, which is 1,280 pages in length (including annexures).
50 Because the plaintiff seeks to rely on such extensive additional material to support his proposed new grounds for seeking the removal of the liquidators, it is an obvious inference to draw, and I draw it, that permitting the plaintiff to amend the points of claim in the manner sought and to rely on this further affidavit material will have the result that the trial will need to be adjourned.
51 Further, the unchallenged evidence of the solicitors for the liquidators and RCH is to the same effect.
52 In particular, the liquidators' evidence is that they cannot meet the new allegations in the time available prior to the scheduled trial commencing on 21 February, further work is required to be done to deal with all of the proposed new claims (which primarily concerns the preparation of pleadings and affidavit evidence), and 12 to 15 business days is estimated to complete such work. I accept that evidence.
53 In addition to the trial being adjourned, the trial will also be lengthened for at least one day, if not longer.
54 Taking into account other matters which are due to be heard before the Court in the coming weeks, including appeals, an adjournment of the trial would mean that it is uncertain as to when this matter could come on again for trial.
55 These matters are further reasons against allowing the amendments proposed by the plaintiff to his points of claim.
56 Leaving aside that there was already dislocation in the allocation of the Court's resources by accommodating the plaintiff's request for an urgent trial, which impacts other litigants, a deferral of the hearing date will cause prejudice to the liquidators and, more widely, creditors of the Company.
57 The liquidators are understandably concerned to resolve these proceedings as soon as possible in order that the external administration, investigations and recovery actions may proceed without interruption for the benefit of creditors.
58 The potential impact on creditors of the Company and the liquidators' concerns around having these proceedings resolved as soon as possible was not the subject of any submissions by the plaintiff. It is another strong factor against allowing the amendments to the points of claim.