Condon v Watson [2009] FCA 11 | Case summary

Condon v Watson [2009] FCA 11 | Case summary | Zoe

7 During Mr Watson's time at Condon Associates, he and Mr Condon were appointed, relevantly as: · trustees in bankruptcy of each of 33 estates in bankruptcy; · liquidators of each of nine companies the subject of court orders for winding up; · liquidators of each of eight companies the subject of creditors' voluntary windings up; · voluntary administrators of one company (Hiafargo Pty Ltd); and · administrators under a deed of company arrangement in respect of each of 11 companies. 8 One aspect of the parties' separation was that Mr Watson agreed to resign all of his insolvency appointments, both bankruptcy and corporate, in favour of Mr Condon. While it was plain that this was what both parties wished to achieve, there were procedural complexities. The nature and circumstances of the appointments are diverse and different statutory regimes apply. 9 Mr Watson appeared by a solicitor on the record, Mr Graeme Vietch of Brock Partners. The Court indicated that it would be assisted if the solicitor for Mr Watson took an active role. Mr Vietch's response, as conveyed to the Court by the solicitor for Mr Condon, was that he was not able to do so. It is not clear what this meant. Perhaps it meant that Mr Vietch had not been put in funds by Mr Watson to take an active role having regard to the fact that it was Mr Condon, not Mr Watson, who had a commercial interest in the outcome of the proceeding. Perhaps it meant that Mr Watson had not left Mr Condon on amicable terms, and, beyond signing notices of resignation, Mr Watson was not willing to assist Mr Condon. 10 Be this as it may, it was disappointing that Mr Watson, as an officer of the Court for bankruptcy and liquidation purposes, should, through his solicitor, Mr Vietch, not have discharged his responsibility to assist the Court. In some cases it may be enough that a solicitor on the record provides documents while leaving the conduct of a proceeding to the solicitor for the other party, but this was not one of those cases. 11 To the extent necessary, I treated the present application as being made by Mr Watson as well as by Mr Condon, even though Mr Watson was named as a respondent and only expressed himself as resigning the relevant offices. 12 It is important to understand that according to the evidence, it was Mr Condon and Mr Watson who sought the appointment of themselves as co-trustees, co-liquidators, co-administrators and co-deed administrators in relation to the appointments referred to at [6]-[7] above. In no case did anyone else, such as creditors or a Court, insist on the appointment of two persons. I am satisfied that one rather than both of them might just as easily have been appointed, and that it was immaterial that two had in fact been appointed. 13 Affidavit evidence showed that Mr Condon and Mr Watson sought the appointment of them both in order to cover the position when one or other of them might be absent from the office on leave or for any other reason. I infer that they performed their functions and exercised the powers associated with the various offices as if their appointments had been joint and several. 14 Affidavit evidence also showed that the staff at Condon Associates who were handling the various bankruptcies, corporate insolvencies, voluntary administrations and administrations under deeds of company arrangement during Mr Watson's time with Condon Associates, had continued to do so following his departure under the supervision of Mr Condon alone. In view of Mr Watson's departure and Mr Condon's possession of all relevant files, it was difficult to see any practicable alternative to Mr Condon's filling the various offices alone. 15 I was satisfied on the evidence to which I have referred that it would be wasteful and inconvenient for the various groups of creditors to be consulted. The cost of ascertaining their wishes would be borne out of the assets constituting the various estates in bankruptcy or the assets of the various companies the subject of external administration, as the case may be. 16 There was evidence that the Insolvency and Trustee Service Australia (ITSA) and ASIC had been notified of the application and had indicated that they did not wish to be heard in opposition to it. 17 In view of all the circumstances referred to above, I was of the opinion that it was in the interests of creditors that the Court should, if possible, facilitate Mr Condon's continuing to occupy each of the offices in question alone.

[1]

In relation to each of the 33 bankrupt estates listed in Schedule 1 to the Orders (of which the parties are trustees) 18 Mr Watson signed a written resignation as trustee in relation to each bankruptcy. 19 Section 180 of the Bankruptcy Act provides: The Court may, subject to such terms and conditions as it thinks just, accept the resignation of a registered trustee from the office of trustee of an estate. I will return to this section below, but first it is necessary to refer to the circumstances and nature of the appointments of Messrs Condon and Watson as trustees of the estates. 20 Mr Condon and Mr Watson became trustees of each of the 33 estates when the debtor became a bankrupt, either upon the making of a sequestration order or upon the Official Receiver's acceptance of a debtor's petition: see ss 43(2), 55(4A) and 156A(3)(a) of the Bankruptcy Act. In each case, Messrs Condon and Watson had filed with the Official Receiver a consent to act as trustee of the estate of the debtor under s 156A(1) of the Bankruptcy Act. 21 Section 156A(1)(a), (2) and (3)(a) of the Bankruptcy Act provides, relevantly: (1) A registered trustee may, by instrument signed by him or her and filed with the Official Receiver, consent to act: (a) as the trustee of the estate of the debtor specified in the instrument in the event that the debtor becomes a bankrupt; or (b) ... (2) An instrument under subsection (1) shall be in accordance with the approved form. (3) Where: (a) at the time when a debtor becomes a bankrupt, a registered trustee has, under subsection (1), consented to act as the trustee of the estate of the debtor and the consent has not been revoked, the registered trustee becomes, at that time, by force of this subsection, the trustee of the estate of the bankrupt; and (b) ...… The approved form is Form 12 to the Bankruptcy Regulations 1966 (Cth) (Bankruptcy Regulations) (Form 12). 22 It will be noted that a registered trustee who has consented becomes trustee of a bankrupt estate by the operation of the Bankruptcy Act. There is a question whether it is open to two or more registered trustees to sign a form of consent to act, and so to be trustees of an estate. In the present case, there was no contradictor to argue that Mr Condon and Mr Watson were not both validly in office in respect of each estate. 23 Section 156A contains no provision comparable to s 158 of the Bankruptcy Act which expressly empowers the creditors, if they think fit, to appoint two or more registered trustees jointly, or jointly and severally, to the office of trustee. The omission of any comparable provision in s 156A may suggest an intention that only a single registered trustee may sign a consent and become trustee pursuant to that section, notwithstanding the presumption that the singular includes the plural: see Acts Interpretation Act 1901 (Cth) s 23. 24 However, Form 12 (referred to at [21] above) assumes that two or more registered trustees may be trustees in bankruptcy pursuant to s 156A(3). It expressly allows for two or more registered trustees to complete and sign the form. 25 There were in evidence certificates of appointment issued by the Official Receiver pursuant to s 156A(6) of the Bankruptcy Act in relation to the 33 bankruptcies. The certificates are stated to have been extracted from the National Personal Insolvency Index (NPII). Pursuant to reg 13.07 of the Bankruptcy Regulations 1966 (Cth) the certificates are therefore proof, in the absence of evidence to the contrary, of the information on the NPII that is stated in each of the certificates. I proceed on the basis that Messrs Condon and Watson are trustees of each of the 33 estates. 26 The question remains as to whether the appointments of Messrs Condon and Watson were joint or joint and several. 27 Form 12 does not invite the registered trustees signing the form to indicate a choice between a joint office and joint and several offices. There is a question whether it is open to multiple registered trustees, such as Messrs Condon and Watson, to include in Form 12 some such words as "jointly" or "jointly and severally", and so to secure for themselves appointment as joint and several trustees. The certificates were silent on the present question. 28 Section s 5(4) of the Bankruptcy Act does not assist on the question whether Messrs Condon and Watson are joint or joint and several trustees because it assumes that persons are already known to be "joint trustees" or "joint and several trustees". 29 The general rule of law is that two or more trustees in bankruptcy "have only a joint and not a separate authority", although the exigencies of the circumstances of a particular bankruptcy may make it proper for one to leave certain tasks to the other without being liable for the other's default: see Ex parte Griffin; Re Dixon (1826) 2 GL&J 114 at 116, cited in Re Gudgeon; Ex parte Pegler (1969) 13 FLR 350 at 352. 30 Mr Condon and Mr Watson were not "appointed". Rather they activated the statutory mechanism by which they secured for themselves the office of trustees in bankruptcy. There was no appointerwho have chosen to have two trustees. 31 I infer that the intention of Mr Condon and Mr Watson was that they be joint and several trustees: as noted earlier, they put both of themselves forward so that either one could act as the circumstances might require. However, I do not think that that undisclosed intention signifies that their appointment was in fact as joint and several trustees. Rather, I think that they held office as joint trustees: see [29] above. 32 It is necessary in the light of this conclusion to return to s 180 of the Bankruptcy Act, set out at [19] above. 33 In my opinion, on the basis that multiple trustees are permissible, s 180 allows the Court to accept the resignation of one of them. The alternative and narrower construction is that the Court can accept the resignation, whether of one trustee or of multiple trustees, only if no registered trustee would be left in office. I cannot think of any sensible purpose that would have been intended to be served by this narrower construction. 34 The power of the Court to remove a trustee given by s 179 of the Bankruptcy Act is available only following an inquiry into the conduct of a trustee in relation to the bankruptcy and is inappropriate in the present circumstances. The present case is therefore not one in which the Court could accept Mr Watson's resignation, remove Mr Condon and reappoint Mr Condon. 35 Upon the Court's acceptance of Mr Watson's resignation, Mr Condon would remain a trustee of each estate. In these circumstances I do not think s 160 of the Bankruptcy Act would be activated. That section provides: If at any time there is no registered trustee who is the trustee of the estate of a bankrupt, the Official Trustee shall, by force of this section, be the trustee of the estate. 36 The resolution of the issue before the Court is to be found in the Court's power under s 180 to accept Mr Watson's resignation "subject to such terms and conditions as it thinks just" (see [19] above). In circumstances in which there are multiple trustees, the terms of s 180 are apt to entrust to the Court the function of ensuring the continuance of the office of trustee of a bankrupt estate. In the present case it would have been appropriate to make the Court's acceptance of Mr Watson's resignation subject to the condition that Mr Condon consent to continue as sole trustee. In fact, Mr Condon had so consented, thereby satisfying in advance the hypothetical contemplated condition. 37 Since the hypothetical contemplated condition had already been satisfied, I considered it appropriate to give a direction pursuant to s 134(4) of the Bankruptcy Act that from the time of the Court's acceptance of Mr Watson's resignation, Mr Condon would be sole trustee of each estate and would be entitled and obliged to act as such. Section 134(4) provides: The trustee may at any time apply to the Court for directions in respect of a matter arising in connection with the administration of the estate. 38 I also made an order pursuant to O 1 r 8 of the Federal Court Rules that compliance with the requirements of rule 8.02(1) and (2) of the Federal Court (Bankruptcy) Rule be dispensed with.

[2]

In relation to each of the two companies identified in Schedule 2 to the Orders (of which Mr Watson was sole court appointed liquidator) 39 Mr Watson was appointed as sole liquidator of Coastace Pty Ltd by the Supreme Court of New South Wales on 28 June 2006 (proceeding number 002262/2006), and as liquidator of Goodbat Pty Limited by the Family Court of Australia on 6 March 2008 (proceeding number SYF4776/2005). 40 Section 473(1) of the Corporations Act provides: A liquidator appointed by the Court may resign or, on cause shown, be removed by the Court. As will be seen below, Mr Watson exercised his right to resign. 41 In relation to the appointment by the Supreme Court of New South Wales (Coastace Pty Ltd), the Supreme Court (Corporations) Rules 1999 (SC Corporations Rules)apply. Like the Federal Court (Corporations) Rules 2000 (FC Corporations Rules), they are part of the harmonised scheme of Corporations Rules of the Federal Court and all State and Territory Supreme Courts. Those harmonised rules are not, however, rules of the Family Court of Australia. 42 Rule 7.1 of the SC Corporations Rules provides: 7.1(1) A liquidator appointed by the Court who wishes to resign office must file with the Registrar, and lodge with ASIC, a memorandum of resignation. 7.1(2) The resignation takes effect on the filing and lodging of the memorandum. 43 The evidence showed that Mr Watson filed with the Supreme Court of New South Wales and lodged with ASIC a memorandum of resignation in relation to Coastace Pty Ltd on 3 December 2008. His resignation as liquidator of that company therefore took effect on that date. 44 In relation to Goodbat Pty Ltd, a notice of resignation was lodged with ASIC on 3 December 2008. I infer that in this case also, the resignation took effect on that date. 45 Section 473(7) of the Corporations Act provides: A vacancy in the office of a liquidator appointed by the Court must be filled by the Court. I do not think that this provision means that the vacancy must be filled by the Court that made the original appointment of the liquidator. It is not as if the filling of the vacancy involves a variation of, or other form of interference with, the order made by the appointing Court. It is sufficient that the vacancy is filled by a "Court" as defined in s 58AA of the Corporations Act. Accordingly, this Court can fill both vacancies. 46 There was a total vacancy in the office of liquidator in the case of each of the two companies referred to, and it was appropriate that Mr Condon be appointed to fill that vacancy. In relation to each company, he had signed a form of consent to act as liquidator pursuant to s 532(9) of the Corporations Act and r 5.5(2) of the FC Corporations Rules. 47 I ordered that Mr Condon be appointed as liquidator of each of the two companies. That appointment took effect from the date of the making of the Orders, 18 December 2008 (each company was without a liquidator from 3 December 2008 to 18 December 2008).

[3]

In relation to each of the five companies the subject of creditors' voluntary windings up identified in Schedule 3 to the Orders (of which Mr Watson was sole liquidator) 48 At the time of the commencement of his employment with Condon Associates, Mr Watson was the sole liquidator of each of the five companies specified in Schedule 3 to the Orders, each of which was the subject of a creditors' voluntary winding up. 49 Section 499(5) of the Corporations Act assumes, in the case of a creditors' voluntary winding up, that a liquidator, other than one appointed by or by the direction of the Court, may resign his or her office. Mr Watson signed forms of resignation as liquidator in the case of each of the five companies listed in Schedule 3 to the Orders. The signed form of resignation was served on the relevant company, being delivered, in each case, to the office of the liquidator, namely, Condon Associates (see s 109X(1)(c) of the Corporations Act). In the case of all but one of the five companies, delivery took place on 27 November 2008. In the case of the remaining company, Furnetec Pty Ltd, delivery took place on 10 December 2008. 50 In relation to each of the five companies Mr Condon had signed a form of consent to act as liquidator pursuant to s 532(9) of the Corporations Act and r 5.5(2) of the FC Corporations Rules. 51 Section 499(5) of the Corporations Act, to which I referred above, provides that "the creditors" may fill the vacancy caused by the resignation. I referred at [15] above to the evidence of the inconvenience, cost and wastefulness of seeking an appointment by the creditors. 52 Section 502 of the Corporations Act provides in relation to a voluntary winding up: If from any cause there is no liquidator acting, the Court may appoint a liquidator. 53 In Re Application of Vouris (2004) 49 ACSR 543 (Vouris), Barrett J had occasion to consider the relationship between s 499(5) and s 502 (at [8]-[10]). His Honour treated the s 502 power as an "overarching" power and exercised it in order to avoid the expense and inconvenience associated with the convening of a meeting of creditors (at [10]). Unlike the position in relation to the present five companies, that was a case of the appointment of multiple liquidators by the creditors. Accordingly, in that case, the creditors at least had approved of the identity of the continuing liquidator. Although that was not so in the present case, it was my view that a case was made out for the Court's exercising the power under s 502 and I followed that course.

[4]

In relation to each of the nine companies the subject of court ordered windings up identified in Schedule 4 to the Orders (of which Mr Condon and Mr Watson were liquidators) 54 During Mr Watson's time at Condon Associates, he and Mr Condon were appointed as liquidators of each of the nine companies identified in Schedule 4 to the Orders. In the case of eight of the companies, the winding up order and the appointment were by the Supreme Court of New South Wales. In the case of the remaining company, Pyoja Pty Ltd, the winding up order and the appointment were made by the Supreme Court of Victoria. 55 As noted at [40] above, s 473(1) of the Corporations Act provides that a liquidator appointed by the Court may resign. I also refer to rule 7.1 of the harmonised corporations rules of court (set out at [42] above). The evidence shows that written resignations signed by Mr Watson were filed in the Supreme Court of New South Wales and the Supreme Court of Victoria on 3 December 2008, and that notices of the resignations were lodged with ASIC either on that day or earlier. The effective date of Mr Watson's resignations in all nine cases was therefore 3 December 2008. 56 Subsections (7) and (8) of s 473 are as follows: (7) A vacancy in the office of a liquidator appointed by the Court must be filled by the Court. (8) If more than one liquidator is appointed by the Court, the Court must declare whether anything that is required or authorised by the Act to be done by the liquidator is to be done by all or any one or more of the persons appointed. 57 In the case of two of the nine companies, Orchard Holdings (NSW) Pty Ltd and Pyoja Pty Ltd, the Court making the appointment referred to it as joint and several. In the other seven cases, however, there was no purported compliance with s 473(8). 58 Subsection (7) raises two questions. The first is whether there is a "vacancy in the office of a liquidator" where there is a vacancy in the office of one co-liquidator, or only where a sole liquidator or all co-liquidators have ceased to hold office so that no one remains in office. 59 The second question is whether the word "must" means only that if a vacancy is to be filled, it is the Court and no one else that must fill it, or that the Court must fill any vacancy when it occurs, no matter what the circumstances. 60 In Re McGrath (2005) 54 ACSR 55, Barrett J appears to have thought that even where, as in the present case and in the case before him, there is a continuing co-liquidator in office, there is a "vacancy in the office of a liquidator appointed by the Court" where a co-liquidator ceases to hold office, and therefore s 473(1) requires the Court to fill the vacancy (at [5]). His Honour appointed a second liquidator to replace one who had resigned. 61 The questions raised above must now be considered in the light of s 530 of the Corporations Act which was introduced by the Corporations Amendment (Insolvency) Act 2007 (Cth), s 3, Sch 1, Pt 3, Item 114. Section 530 provides: If 2 or more persons have been appointed as liquidators of a company: (a) a function or power of a liquidator of the company may be performed or exercised by any one of them, or by any 2 or more of them together, except so far as the order or resolution appointing them otherwise provides; and (b) a reference in this Act to a liquidator, or to the liquidator, of a company is, in the case of the first-mentioned company, a reference to whichever one or more of those liquidators the case requires. This provision has assimilated the position of multiple liquidators to that of multiple voluntary administrators and of multiple administrators of deeds of company arrangement under s 451A(2) and s 451B(2) of the Corporations Act respectively (set out at [84] and [93] below). 62 Clearly, s 530 produced the effect that following Mr Watson's resignation, as prior to it, Mr Condon was entitled alone to perform the functions and exercise the powers that were vested in "the liquidators". In the result, whatever be the correct meaning of the word "must" in s 473(7), there is only a vacancy in the office of a liquidator for the purposes of that subsection where a sole liquidator or all co-liquidators have ceased to hold office. 63 Accordingly, I gave a direction pursuant to s 479(3) of the Corporations Act that from the time of the resignations, Mr Condon had continued to be liquidator and had been, and continued to be, entitled and obliged to act as such.

[5]

In relation to each of the eight companies the subject of creditors' windings up identified in Schedule 5 to the Orders (of which Mr Condon and Mr Watson were liquidators) 64 During Mr Watson's time at Condon Associates he and Mr Condon were appointed as liquidators of the eight companies listed in Schedule 5 to the Orders, which are the subject of creditors' windings up. 65 In seven of the eight cases, the evidence showed that the resolutions appointing Messrs Condon and Watson appointed them as joint and several liquidators. In the eighth case, that of PLM Distributors Pty Ltd, the resolution simply referred to their appointment "as Liquidator to act for the purposes of winding up the company". 66 As noted at [49] above, s 499(5) of the Corporations Act assumes that a liquidator other than one appointed by the direction of the Court, may resign his or her office. In my opinion that provision applies to one of two or more liquidators as well as it does to a sole liquidator: see my observations at [33] above, which apply mutatis mutandis. 67 Mr Watson's written resignation of office was served on the relevant company and was received, in each case, by Mr Condon at the office of Condon Associates, being the office of the liquidator (see s 109X(1)(c) of the Corporations Act). 68 Uninstructed by authority, I would have assumed that where one of two liquidators ceases to hold office, the other succeeds to the office. Barrett J may have thought similarly: see Vouris at [12]. However, his Honour considered that there was a contrary indication in McPherson's Law of Company Liquidation (4th ed, LBC Information Services, 1999) of which Professor Andrew Keay is the author. Footnote 237 at p 297 of that notable work states that where one of two joint liquidators dies, the appropriate course is for the Court to appoint another liquidator to act jointly with the survivor, or, in the alternative, to remove the survivor and reappoint him or her as sole liquidator. The learned author cites in support a decision of Sir Samuel Griffith, then Chief Justice of the Supreme Court of Queensland, in Re Aplin, Brown & Co Ltd [1902] St R Qd 67 (Aplin). Barrett J considered that the relevant provisions of the then Companies Act of Queensland were sufficiently similar to those of the Corporations Act to give rise to the conclusion that any difficulties of the kind suggested in that case "also conceivably arise under the present provisions" (at [13]). 69 Barrett J took the course of removing the continuing liquidator (Vouris concerned, not the death of a liquidator but the suspension of the registration of a liquidator for three months by the Company Auditors and Liquidators Disciplinary Board) and reappointing him as sole liquidator in the exercise of the power in s 503 of the Corporations Act. 70 Sections 502 and 503 provide: 502 If from any cause there is no liquidator acting, the Court may appoint a liquidator. 503 The Court may, on cause shown, remove a liquidator and appoint another liquidator. Section 502 did not apply in Vouris because there was still a liquidator acting, and Barrett J considered that s 503 gave only a composite power to remove and appoint, not simply a power to appoint. His Honour noted the question whether the expression "another liquidator" means a liquidator other than the one removed, but concluded that it did not mean this. 71 It is necessary to go back to Aplin. Two persons, Aplin and Brown, were appointed as liquidators in a voluntary winding up, without any determination being made as to the exercise of their powers. They acted in the winding up jointly until Aplin died. For reasons that do not matter, the company in general meeting was not competent to act, and so there was no question of its filling of the vacancy pursuant to s 130 of the Companies Act 1863 (Qld). A representative on behalf of one of the contributories made an application by petition to the Supreme Court of Queensland for an order replacing Aplin or appointing Brown as sole liquidator. 72 Section 123(6) of the Companies Act 1863 provided that when several liquidators were appointed, their powers were exercisable by such one or more of them as might be determined at the time of their appointment "or in default of such determination by any number not less than two". In the circumstances, the effect of this provision was that although there was still a liquidator in place, he was incapable of continuing to exercise the powers of "the liquidators". 73 Until recently, the Corporations Act contained in s 506(4) an analogue of s 123(6) of the Queensland Act of 1863. Section 506(4) provided: When several liquidators are appointed, any power given by this Act may be exercised by such one or more of them as is determined at the time of their appointment, or in default of such determination, by any number not less than 2. [my emphasis] 74 I was minded to follow the course established by Aplin and Vouris of removing the continuing liquidator, Mr Condon, and appointing him as sole liquidator. However, the position must now be considered in the light of the recent amendments made by the Corporations Amendment (Insolvency) Act 2007 (referred to at [61] above). Consistently with the new s 530 (set out at [61] above), s 506(4) of the Corporations Act was repealed by that amending Act (see s 3, Sch1, Pt 3, Item 113.) 75 As I noted at [62] above, by the operation of s 530, it is clear that following a resignation of one co-liquidator, just as prior to such a resignation, the other liquidator can perform the functions and exercise the powers of "the liquidators" except so far as the resolution appointing them otherwise provides. Although s 530 does not do so in terms, its effect seems to be to make the appointments of multiple liquidators joint and several appointments. I do not regard the terms of the appointment of Messrs Condon and Watson in the case of PLM Distributors Pty Ltd (see [65] above) as providing otherwise. 76 Accordingly, I was of the view that from the time of Mr Watson's resignation, Mr Condon had continued to be liquidator. 77 Section 511 of the Corporations Act provides, relevantly, in relation to a voluntary winding up: (1) The liquidator, or any contributory or creditor, may apply to the Court: (a) to determine any question arising in the winding up of a company; or (b) to exercise all or any of the powers that the Court might exercise if the company were being wound up by the Court. (1A) ... (2) The Court, if satisfied that the determination of the question or the exercise of power will be just and beneficial may accede wholly or partially to any such application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks just. 78 One of the powers that the Court might exercise if the company were being wound up by the Court is a power to give directions pursuant to an application by the liquidator under s 479(3). However, I made a "determination" directly under s 511(1) that from the time of Mr Watson's resignation, Mr Condon had continued to be liquidator of each of the eight companies, and had been, and continued to be, entitled and obliged to act as such.

[6]

In relation to the company the subject of voluntary administration identified in Schedule 6 to the Orders (of which Mr Condon and Mr Watson were voluntary administrators) 79 On 4 September 2008, during Mr Watson's time at Condon Associates, Mr Watson and Mr Condon were appointed as voluntary administrators in respect of the company identified in Schedule 6, Hiafargo Pty Ltd. 80 Mr Watson's written resignation was served on Hiafargo Pty Ltd and was received by Mr Condon at the office of Condon Associates, being the administrators' office, on 27 November 2008 (see s109X(1)(d) of the Corporations Act). 81 Section 449C(1) of the Corporations Act provides: (1) Where the administrator of a company under administration: (a) dies; or (b) becomes prohibited from acting as administrator of the company; or (c) resigns by notice in writing given to his or her appointer and to the company; his or her appointer may appoint someone else as administrator of the company. [my emphasis] 82 Section 449C(1)(c) of the Corporations Act assumes that a voluntary administrator of a company may resign by notice in writing given to his or her appointer and to the company. In my opinion the assumption extends to one of two voluntary administrators. 83 Section 449C(2) gives the meaning of "appointer". Relevantly, if the administration began because of an appointment under s 436A, as was the case here, the appointer is the company. Mr Watson resigned as one of two voluntary administrators by notice in writing given to Hiafargo Pty Ltd on 27 November 2008. 84 Section 451A of the Corporations Act provides: (1) Where a provision of this Act provides for an administrator of a company to be appointed, 2 or more persons may be appointed as administrators of the company. (2) Where, because of subsection (1), there are 2 or more administrators of a company: (a) a function or power of an administrator of the company may be performed or exercised by any one of them, or by any 2 or more of them together, except so far as the instrument or resolution appointing them otherwise provides; and (b) a reference in this Act to an administrator, or to the administrator, of a company is, in the case of the first‑mentioned company, a reference to whichever one or more of those administrators the case requires. 85 In Re Wallace Smith; National Express Group Australia (Bayside Trains) Pty Ltd (recs and mgrs apptd) (admins apptd) (2003) 46 ACSR 674, Finkelstein J had to deal with an application for the appointment of a substitute administrator where one of two administrators had resigned. In the present case, however, that is not the relief sought. In passing, his Honour referred to s 449C(6) which provides: Where a company is under administration, but for some reason no administrator is acting, the Court may appoint a person as administrator on the application of ASIC or of an officer, member or creditor of the company. His Honour observed (at [5]): On one view, which may be the correct view, this condition cannot be satisfied when one of two or more joint administrators have ceased to act for, in that event, it cannot be said that "no administrator is acting". It will be recalled that Barrett J took a similar view in the context of joint liquidators in Vouris (see [69] above). 86 By reason of s 451A(2), Mr Condon remained entitled to exercise the powers of the voluntary administrators. Indeed, the evidence shows that the appointment of Mr Condon and Mr Watson was expressed to be an appointment of them as "joint and several administrators". 87 Section 447D of the Corporations Act provides: (1) The administrator of a company under administration, or of a deed of company arrangement, may apply to the Court for directions about a matter arising in connection with the performance or exercise of any of the administrator's functions and powers. (2) The administrator of a deed of company arrangement may apply to the Court for directions about a matter arising in connection with the operation of, or giving effect to, the deed. 88 For the above reasons, I gave a direction pursuant to s 447D(1) that since Mr Watson's resignation, Mr Condon had continued to be voluntary administrator of the company and had been, and continued to be, entitled and obliged to act as such.

[7]

In relation to each of the eleven companies the subject of a deed of company arrangement identified in Schedule 7 to the Orders (of which Mr Condon and Mr Watson were deed administrators) 89 During Mr Watson's time at Condon Associates, Mr Watson and Mr Condon were appointed as administrators under eleven deeds of company arrangement (DOCAs) in respect of eleven companies listed in Schedule 7 to the Orders. 90 Of the eleven DOCAs, nine were in a common form. They referred to the deed administrators as "joint". The same firm of solicitors prepared those nine DOCAs. 91 The other two DOCAs contained references to "joint and several". Each of those two was prepared by a different firm of solicitors - different from the firm that prepared the nine and different as between themselves. 92 I infer that Condon Associates instructed, or had some role in instructing, the firm that prepared the eight DOCAs that are in the same standard form. 93 Section 451B of the Corporations Act provides: (1) Where a provision of this Act provides for an administrator of a deed of company arrangement to be appointed, 2 or more persons may be appointed as administrators of the deed. (2) Where, because of subsection (1), there are 2 or more administrators of a deed of company arrangement: (a) a function or power of an administrator of the deed may be performed or exercised by any one of them, or by any 2 or more of them together, except so far as the deed, or the resolution or instrument appointing them, otherwise provides; and (b) a reference in this Act to an administrator, or to the administrator, of a deed of company arrangement is, in the case of the first‑mentioned deed, a reference to whichever one or more of those administrators the case requires. 94 I do not regard the use of the word "joint" in the standard form nine DOCAs referred to as providing otherwise than to the effect of s 451B(2)(a). 95 Section 449D of the Corporations Act provides: (1) Where the administrator of a deed of company arrangement: (a) dies; or (b) becomes prohibited from acting as administrator of the deed; or (c) resigns by notice in writing given to the company; the Court may appoint someone else as administrator of the deed. (2) Where a deed of company arrangement has not yet terminated, but for some reason no administrator of the deed is acting, the Court may appoint a person as administrator of the deed. (3) An appointment may be made on the application of ASIC or of an officer, member or creditor of the company. [my emphasis] 96 In my opinion s 449D(1) assumes that one of multiple administrators of a DOCA may resign by notice in writing given to the company. Mr Watson gave notice in writing of his resignation to each of the eleven companies on 9 December 2008 and his resignations took effect on that date. 97 It was my opinion that under s 451B(2), following the resignations of Mr Watson, Mr Condon was entitled and obliged to perform the functions and exercise the powers of "the administrators" of each of the eleven DOCAs just as he had been prior to Mr Watson's resignations, unless and until the Court should appoint a replacement for Mr Watson. I would not appoint a replacement for the reasons given at [15] above. 98 Accordingly, I gave a direction pursuant to s 447D of the Corporations Act that from the time of Mr Watson's resignation, Mr Condon had continued to be administrator of each of the eleven DOCAs and had been, and continued to be, entitled and obliged to act as such.

Condon v Watson

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Judgment (34 paragraphs)

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