- Deputy Commissioner of Taxation v Tideturn Pty Ltd

Judgment 1The Applicant, Mr Scott Pascoe as liquidator of RR Impex Pty Limited (in liq) ("Company") seeks order under s 480(d) of the Corporations Act 2001 (Cth) that he be released as liquidator of the Company and that the Australian Securities and Investments Commission ("ASIC") deregister the Company. Mr Pascoe also seeks orders that he pay ASIC's costs of dealing with the Interlocutory Process and that his costs of the application be paid out of the Company's assets. 2Section 480(d) of the Corporations Act relevantly provides that, where a liquidator has realised all of the company's property or so much of that property as can, in his or her opinion, be realised without needlessly protracting the winding up, and has distributed any final dividend to the creditors and adjusted the rights of the contributories among themselves and made any final return to the contributories, he or she may apply to the Court for an order that he or she be released and that ASIC deregister the company The effect of an order for release of a liquidator under s 480 is stated in s 481(3)-(4) of the Corporations Act as follows: "(3) An order the Court releasing the liquidator discharges him or her from all liability in respect of any act done or default made by him or her in the administration of the affairs of the company or otherwise in relation to his or her conduct as liquidator, but any such order may be revoked on proof that it was obtained by fraud or by suppression or concealment of any material fact. (4) Where the liquidator has not previously resigned or been removed, his or her release operates as a removal from office." 3The effect of such an order has been described as to "wipe the slate clean", subject to the limited exceptions set out in s 481(3): Singer v Trustee of the Property of Munro [1981] 3 All ER 215 at 219 (dealing with the corresponding English provisions in respect of a trustee in bankruptcy); Re Wayland as Liquidator of ABC Containerline NV (in liq) [2005] NSWSC 1; (2005) 52 ACSR 750 at [27]. The notification provisions in respect of such an application allow such an application to be the forum at which any claim that the liquidator has been deficient in performing his or her role should be advanced: Deputy Commissioner of Taxation v Tideturn Pty Ltd [2001] NSWSC 217; (2001) 37 ACSR 152; Re ABC Containerline above at [28]. It appears to be implicit in the structure of the sections and those notification requirements that, if the Court is satisfied that the relevant notifications have been given, no creditors have objected to the release of the liquidator or raised any concern as to the performance of his or her duties and the other evidence contemplated by the appropriate rules is placed before the Court, then the Court would ordinarily make an order releasing the liquidator, unless any reason emerges why it should not do so: Re Adellos Pty Limited (in liq) [2013] NSWSC 747 at [2]-[3]. Mr Pascoe also seeks an order for deregistration of the Company, consistent with authority that such an order should normally be sought together with any order for the liquidator's release: Re Austral Family Homes Pty Ltd (in liq) (1992) 28 NSWLR 247; (1992) 8 ACSR 322; (1992) 10 ACLC 1125. 4Mr Pascoe relies on his affidavits sworn 25 July 2013 and 20 September 2013, an affidavit of his solicitor, Ms Dorman, dated 6 August 2013. By way of background, Mr Pascoe was appointed as liquidator of the Company on 18 March 2011 by order of this Court. The sole director, secretary and contributory of the Company was Mr Mitesh Bharatbhai Thakkal. The evidence is that Mr Pascoe has been unable to locate Mr Thakkal. On 7 February 2012, Mr Pascoe received an amount from the Department of Climate Change and Energy Efficiency representing a solar rebate due to the Company pursuant to a home insulation program. The relevant funds were deposited by Mr Pascoe into the Company's liquidation account and are the only asset realised by Mr Pascoe in the Company's liquidation. On 4 May 2012, Mr Pascoe declared a priority payment to GIO in respect of its costs as petitioning creditor. Mr Pascoe subsequently issued notices of intention to declare a priority and unsecured dividend on 16 August 2012 to the Australian Taxation Office and GIO General Limited, invited proofs of debt to be submitted by 2 August 2012 and caused a notice to declare a first and final dividend to be advertised in the Sydney Morning Herald. 5On 27 September 2012, Mr Pascoe declared and paid dividends in respect of GIO's and Optus' claim in respect of the liquidation. Following the deduction of the first and final dividend, and Mr Pascoe's expenses and remuneration at 2 January 2013, there remains a surplus of $37,493.49 in the Company's liquidation. On 2 September 2013, Brereton J made orders that Mr Pascoe be granted leave to dispense with the requirements to make a call or adjust the rights of contributories of the Company and make out a provisional list of contributories of the Company under regs 5.6.58-5.6.60 and 5.6.62 of the Corporations Regulations 2001 (Cth). 6Mr Pascoe's evidence is that, in his view, all known assets of the Company have been realised and he does not consider it necessary to report further on the affairs of the Company or its officers. He gives evidence that he does not anticipate that there is any likelihood of any claim being made against him as a result of any act or omission committed by him during the Company's administration. He gives evidence acknowledging, and explaining, a delay in bringing this application. He also gives evidence that he has written to the Australian Tax Office regarding the application and has been informed that it is not a creditor of the Company. Mr Pascoe's evidence contemplates that surplus funds will be paid to ASIC, where he has been unable to locate Mr Thakkal, the Company's sole contributory. Mr Pascoe's further affidavit dated 20 September 2013 indicates that he has sent the amount of $15,669 to the Australian Securities and Investments Commission, being the undistributed surplus under s 544 of the Corporations Act, and he advised that the last known owner of the funds was Mr Thakkal as the Company's sole share shareholder. 7Mr Pascoe, appropriately, gives evidence addressing the matters referred to in r 7.5(3) of the Supreme Court (Corporations) Rules, indicating his view that all known assets of the Company have been realised. He has not made any calls on contributories during the course of the winding up; dealing with dividends paid in the course of the winding up; noting that no committee of inspection was formed and no resolution had been passed approving his release; indicating that he is not aware of ASIC having appointed an auditor to report on any account or statement of the position in the winding up under s 539(2) of the Corporations Act or that the Court has made any order that a report on the liquidator's accounts be prepared; that he does not consider it necessary to report further on the affairs of the Company or its officers. Mr Pascoe gives evidence, as required by r 7.5(3)(h) of the Corporations Rules, that he has submitted a report to ASIC under s 533 of the Corporations Act but has been advised that ASIC does not propose to commence an investigation. 8By a further affidavit of Mr Pascoe sworn 21 October 2013, he addressed the remuneration paid or payable to him and how such remuneration was determined as required by r 7.5(k) of the Corporations Rules. He refers to a purported approval of the method of calculation of his remuneration and of approval of his remuneration at specified rates and to a specified maximum at a creditors meeting on 28 June 2012, attended by one of the company's creditors, GIO. However, he noted that in the course of preparing that affidavit he became aware that Optus had not been given notice of or attended that meeting and that the quorum requirement for that meeting was not satisfied. It appears that the amount of the liquidator's remuneration is substantially less than the maximum purportedly approved at that meeting. It seems to me that matter is properly treated as a procedural irregularity that has not caused substantial injustice, in the relevant circumstances, and does not invalidate the meeting or the relevant approval by reason of s 1322(2) of the Corporations Act: see the cases cited in Austin & Black's Annotations to the Corporations Act [9.1322]. Mr Pascoe also sets out the anticipated expenses to finalise the liquidation of the Company, namely legal fees and his remuneration and expenses associated with this application, as required by r 7.5(3)(l) of the Corporations Rules. 9Mr Pascoe also makes the statement required by r 7.5(4) of the Corporations Rules that, to the best of his belief, there has been no act done or default made by him in the administration of the Company's affairs or otherwise in relation to his conduct as liquidator which is likely to give rise to any liability to the Company or any creditor or contributory, and that he is not aware of any claim made by any person of such an act or default. 10Mr Pascoe also relies on affidavits of service of Ms Erica Brandalise dated 8 and 29 August 2013 and 11 September 2013 and an affidavit of attempted service of Ms Hiscox dated 19 August 2013. Ms Brandalise gives evidence, in her affidavit dated 8 August 2013, of service of the application and affidavits initially relied on in it on Mr Thakkal at his last known address, ASIC and the Australian Taxation Office. By her affidavit dated 29 August 2013, Ms Brandalise gives evidence of service of the application on the petitioning creditor, the Workers' Compensation Nominal Insurer, by posting it to GIO Workers' Compensation (NSW) Pty Limited, and on Optus Billing Services Pty Limited. By her affidavit dated 11 September 2013, she gives evidence of having notified GIO, ASIC, Optus and the Australian Taxation Office of the orders to be sought on this further application. Mr Pascoe's solicitors have also advised the relevant creditors of the effect of an order releasing a liquidator under s 481(3) of the Corporations Act. Ms Hiscox's affidavit dated 19 August 2013 gives evidence of further attempts to serve Mr Thakkal with the application and supporting evidence at his last known address, on several occasions, which have been unsuccessful. 11As I noted above, Mr Pascoe also seeks an order that ASIC deregister the Company under s 480(d) of the Corporations Act. ASIC will be required to deregister the Company under s 601AC of the Corporations Act on the making of that order. That approach avoids the difficulty noted by Barrett J in Re Wayland as liquidator of ABC Container Line NV (in liq) [2005] NSWSC 13; (2005) 52 ACSR 750 that, if an application for release was made other than in conjunction with a parallel application by a liquidator for an order that ASIC deregister the Company at the same time, the original winding up order would remain in place without a liquidator then being in place for the Company. 12Mr Pascoe properly draws attention to the fact that rule 7.5(6) of the Corporations Rules requires that, unless the Court otherwise orders, the liquidator must serve copies of the Interlocutory Process accompanied by specified documents on each creditor who has proved a debt in the course of the winding up and each contributory. Mr Pascoe asked the Court to dispense with the requirement to serve updated accounts on creditors, where they have been paid in full, as set out in his affidavit sworn 25 July 2013, paragraphs 27-28. I consider that I should make such an order. 13By letter dated 19 August 2013, ASIC advised that, on the basis that no costs order was sought against it, it did not propose to appear at the hearing of this application and would abide by the orders made by the Court and it confirmed that position by its letter dated 9 September 2013. 14In these circumstances, I am satisfied by the evidence to which I have referred above that this is a proper case for the release of the liquidator and an order that ASIC deregister the Company. Accordingly, I make the following orders: