Dean-Willcocks, in the matter of Militto’s Transport Pty Limited (in liq) [2006] FCA 1792

REASONS FOR JUDGMENT 1 This is an application under s 473 of the Corporations Act 2001 (Cth) for orders to deal with an impending vacancy in the office of liquidator of a company, Militto's Transport Pty Limited (in liquidation), occasioned by the resignation of the first plaintiff which is to take effect on 20 December next, and for the replacement of him by the second plaintiff. That course of action is rendered necessary, or at least desirable, by reason of orders which have the effect of suspending the entitlement of the first plaintiff to act as liquidator. I need not deal with all of the circumstances. There are only two aspects of the matter which I should mention. 2 The first is the fact that the order is sought to be made prospectively, that is, a replacement in anticipation of a pending resignation. Counsel has referred me to several authorities which provide clear authority for reading the relevant section in that way, namely, Re Application of Vouris and Anor (2004) 49 ACSR 543; [2004] NSWSC 384; Re Wily and Anor (2003) 49 ACSR 94; [2003] NSWSC 1260 and Re McGrath and Anor (as liqs of HIH Insurance Ltd) (in liq) (2005) 54 ACSR 55; [2005] NSWSC 506. I am satisfied that there is power to make the order sought and there being power, it is clearly convenient to do so, subject to the other aspect. 3 The second aspect of the matter is that the second plaintiff, who is proposed to be the substituted liquidator in this case, whilst a registered liquidator and an official liquidator, is a principal of the same firm of accountants as the first plaintiff and he was employed by that firm for a number of years before becoming a principal. It is contemplated that the first plaintiff will remain as a principal and, indeed, as the chairman of the firm of accountants and will continue to occupy his present premises. He will therefore be easily accessible to the second plaintiff and his staff to answer queries they may have in relation to the liquidation to ensure a smooth transition of the work. 4 It is said that there are currently no funds available for payment of liquidator's disbursements and remuneration from the assets of the company. If a new, what might be described as external, liquidator were to be appointed, there would not be sufficient funds to cover payment of that liquidator's remuneration and disbursements, particularly given the need for that liquidator to become familiar with the details of the liquidation. Plainly enough, the proposed transfer is convenient and may achieve a result which would be difficult to achieve if there were sought to be a replacement of the first plaintiff by a liquidator with no association with him. 5 On the other hand, it is clear enough that the relationship between the two plaintiffs is such that this could not be regarded as being an arm's length replacement in any real sense. Indeed, it is entirely possible that the same people will be working on the matter as were working on it previously. It is difficult to believe that the first plaintiff will not influence decisions. Indeed, his ability to be available is one of the points put in favour of the application. As against that, the second plaintiff has his own professional responsibilities which are binding upon him and he is subject to all of the discipline which is potentially applicable in the circumstances. 6 My concern in a nutshell is that the suspension of a liquidator may not achieve very much if the firm of which he is a member continues in practice, to do the work. My concern, however, is alleviated very considerably because counsel is able to point out that in the matters of both Vouris and Wily, to which I have referred, experienced corporations judges in the Supreme Court, Palmer J and Barrett J, have each permitted the replacement of one liquidator by another in very similar circumstances. Whilst there is no real discussion in those decisions of the point that troubles me, I am certain that it would not have escaped the attention of either of those judges. The fact that they made the respective appointments in question is an indication that in situations like this, because of the practical consequences, the judges have been prepared to rely upon the professional responsibility of the replacement liquidator. I am, therefore, in sound company in so doing. 7 I have amended order 1 by adding 'effective 20 December 2006' after the word 'arise'. I make order 1 as amended. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.