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Judgment - ex tempore

1. By Originating Process filed 6 July 2015 Mr Kenneth Rennie and Mr Philip Campbell-Wilson, seek orders in respect of the proposed retirement of Mr Kenneth Rennie as liquidator and scheme administrator in respect of several companies and in respect of the proposed appointment of Mr Campbell-Wilson in his place. The applications are supported by comprehensive affidavits of Mr Rennie and Mr Campbell-Wilson. The applications have, properly, been served upon the Australian Securities and Investments Commission which has indicated that it does not seek to intervene in the proceedings or seek leave to appear and is content to leave the matter for the determination of the Court. I have also been assisted by comprehensive submissions of Mr Insall, who appears for the Plaintiffs, and I will refer to those submissions in setting out, briefly, the history of the matter.
2. Mr Rennie is now seventy-six years of age, and indicates that he has had serious health problems over the last several years but has continued working, as a consultant to the firm of Ernst and Young, with a view to bringing the conclusion of the liquidation and schemes of the Equiticorp Finance Holdings Limited ("Equiticorp") to conclusion. In the event, his health problems are now such that he considers he can no longer take that approach. He expects that the liquidations and administrations will be concluded within the next one or two years, and indicates the matters which are likely to be required to complete that course.
3. It should be noted that the liquidations and administrations have continued over a long period, Mr Rennie having been appointed approximately twenty-five years ago, and then in circumstances that he had replaced earlier liquidators and administrators. However, it should also be noted that a very substantial amount has been realised and distributed to creditors over that period, in what has undoubtedly been a very complex liquidation and administration, of numerous companies within a large corporate group.
4. Mr Campbell-Wilson, the Second Plaintiff, is a registered liquidator and official liquidator, who has worked with Mr Rennie on Equiticorp matters, and it is proposed that he be appointed in place of Mr Rennie. The affidavits in evidence refer to the history of the liquidations and administrations, which I note but do not set out. However, one significant step, for present purposes is that, on 4 February 2003, the Court made orders appointing Mr Rennie as liquidator and scheme administrator of Equiticorp in place of the then liquidator and scheme administrator, Mr Oldfield. Although a judgment indicating the reasons for that step is not available, a similar order is now sought, in a somewhat broader form, to appoint Mr Campbell-Wilson in place of Mr Rennie as scheme administrator of the relevant companies.
5. The relevant companies were all wound up pursuant to the provisions of the Companies Code. Mr Insall rightly addressed the question whether the question of any replacement of a liquidator of the companies is to be determined by the provisions of the Companies Code, to the extent that their operation is affected by s 601 of the Corporations Law which took effect on 1 July 1991 and then by s 1408 of the Corporations Act 2001 (Cth) when it took effect, or by s 473 of the Corporations Act as it now stands. Mr Insall draws attention to a possible construction of s 601 of the Corporations Law, the transitional provision that continued the operation of the Companies Code in respect of a winding-up, as applying to the appointment of a replacement liquidator in these circumstances, but also points out to a contrary view taken in Re Equiticorp Australia Limited (in liq) [2011] NSWSC 1368. Mr Insall relies alternatively on s 373 of the Companies Code, to the extent that its operation has been continued by the transitional provisions, or upon s 473 of the Corporations Act as it now stands. I do not consider it necessary to determine the question of the source of the Court's power, because it is plain that the Court has such power under either s 373 of the Companies Code or s 473 of the Corporations Act, and the scope of that power and the principles to be applied do not depend on the provision that applies.
6. The matters that apply to the resignation of a liquidator, and his or her replacement, are in turn well established. They have been considered in several decisions, to which Mr Insall refers in submissions, including Re Free [2010] NSWSC 1079 and Re Thomas [2013] NSWSC 2016 at [6] where I in turn referred to the decision in Re Wily [203] NSWSC 1260; (2003) 49 ACSR 94 and Re McGrath [2005] NSWSC 506; (2005) 54 ACSR 55. Section 473 of the Corporations Act provides that a vacancy in the office of a liquidator appointed by the Court must be filled by the Court. Rule 7.1 of the Supreme Court (Corporations) Rules 1999 (NSW) in turn provides that a liquidator appointed by the Court who wishes to resign must file with the Registrar and lodge with ASIC a memorandum of his or her resignation which takes effect on filing and lodging of that memorandum.
7. In order to resign, Mr Rennie will need to adopt that course. However, the Court has power to replace a Court-appointed liquidator, who is about to resign, prior to his or her resignation taking effect and that power is recognised in the cases to which I referred above. The form of order sought by Mr Rennie provides for the appointment of Mr Campbell-Wilson as liquidator, following his filing with the Registrar and lodgement with ASIC of a memorandum of resignation on a date to be fixed, and that order is broadly consistent with that which has been made in previous cases.
8. I am satisfied that this a proper case to make orders facilitating the resignation of Mr Rennie given the matters referred to in his evidence, and that Mr Campbell-Wilson is an appropriate replacement, so far as the evidence that the work has been undertaken in Ernst and Young's Sydney office over a considerable period and that Mr Campbell-Wilson is familiar with the documents and systems in place for the schemes and liquidations of the companies, and that several members under his supervision have been working on the matter. The process of appointment of a person who is familiar with the matter, particularly in a complex matter, will undoubtedly reduce the costs which would otherwise be incurred in a transition to a new liquidator.
9. I am also satisfied that, for more abundant caution, an order should be made under s 532(2) of the Corporations Act granting leave to Mr Campbell-Wilson to be appointed, so far as his firm may have claims for costs and disbursements exceeding $5000 against particular companies.
10. The other issue which arises in this application is whether the Court has power to, and should, replace Mr Rennie with Mr Campbell-Wilson as scheme administrator of the relevant schemes. Relevant matters in this regard include, first, the terms of the relevant schemes which, in the case of Equiticorp provide for a named person to be scheme administrator, who has been replaced by Mr Rennie by order of the Court as noted above. The terms of the schemes contemplated that, if a scheme administrator resigns, the creditors may, at a meeting duly convened in accordance with cl 16, remove the scheme administrator and by ordinary resolution appoint a person or persons to be scheme administrator of this scheme. As I have noted above, it appears that approach was not adopted when the Court previously replaced the former scheme administrator, Mr Oldfield, with Mr Rennie, as scheme administrator, although the judgment giving reasons for that decision is not available.
11. Mr Insall has, in helpful submissions, identified a number of matters which may provide the Court with jurisdiction to make the relevant appointments. The first is the possibility that such an order could be made under the slip rule, in respect of the orders that created the scheme. It does not seem to me that jurisdiction is presently available, since the fact that Mr Rennie seeks to retire, after many years in office and for good reason, is not a slip or error in the orders making the scheme but is something that is established by the schemes, which provides a means to replace him.
12. A second possibility, arising from the decision in Re Sutherland [2004] NSWSC 798; (2004) 50 ACSR 297 at [10] to which Mr Insall refers, is that the Court may have inherent jurisdiction to deal with the matter, so far as the position of a scheme administrator is analogous to that of a trustee. In Re Sutherland, Campbell J considered that he had power to allow remuneration to an insolvency practitioner who administers trust funds, arising from the Court's inherent jurisdiction in respect of such funds. The Court also has an inherent jurisdiction to deal with a resignation or retirement of a trustee, and may permit a trustee to retire for good reason, in the circumstances set out in, for example, Jacobs' Laws of Trusts in Australia [1581]ff. It seems to me that jurisdiction may well have allowed the order that was previously made by the Court for the replacement of the former scheme administrators with Mr Rennie and it seems to me that it is sufficient to allow the Court to make an order for the replacement of Mr Rennie with Mr Campbell-Wilson, notwithstanding that the terms of the scheme would also allow that replacement to be affected by the meetings of creditors, albeit after an hiatus in which no scheme administrator was in office.
13. Mr Rennie and Mr Campbell-Wilson originally sought an order that provided for the appointment of Mr Campbell-Wilson as scheme administrator, from the time of Mr Rennie's resignation up to the point of scheme meetings under cl 4.2 of each of the schemes. Mr Insall extended that order, in the course of submissions, to seek an order for the replacement of Mr Rennie by Mr Campbell-Wilson to have permanent effect, consistent with the order that had previously been made by the Court. It seems to me that there would have been good reason for the Court at least to have made the first form of order that was sought, so far as it would avoid the hiatus which would otherwise exist in respect of the position of scheme administrator. On balance I am satisfied that there is also good reason to make the wider order that is now sought, where the Court has jurisdiction to do so and has already once before made such an order in respect of the replacement of the scheme administrator. It seems to me that there would be a significant complexity and costs in calling a meeting of creditors, in respect of schemes that have now continued for many years, where it might be expected that creditors' attention is now elsewhere, and significant practical difficulties would arise if such meetings could not attract the quorum necessary for the relevant resolutions to be passed.
14. It seems to me that it is in the interests of creditors, and the effective administration of the schemes, which have now been in place for such a long period, that the replacement of Mr Rennie be implemented at the lowest possible cost and in a manner that does not create uncertainty. I am satisfied that I may make an order in the form that the Court previously did in the exercise of an inherent jurisdiction analogous to that which the Court has in respect of trustees, so as to replace Mr Rennie with Mr Campbell-Wilson as scheme administrator, on a permanent basis rather than on an interim basis. It seems to me that the Court's jurisdiction is not affected by whether that appointment is made on an interim or a final basis, because the Court either has jurisdiction to make such an appointment or it does not, irrespective of the period for which that order is made. In the present case, it seems to me that the Court has that jurisdiction, and discretionary factors, being those to which I have referred, support that replacement on a final basis.
15. Next, orders are sought that the costs "of and incidental to the originating process be borne as to half each" in respect of two of the primary companies, which continue to have funds. It seems to me that the orders are properly sought in respect of the liquidations and should properly be borne by those companies which have funds to meet them, on a pro rata basis, and those orders should properly be made.
16. Accordingly, I will make orders in accordance with the short minutes of order initialled by me and placed in the file. I have amended order 1 by inserting, after the words "be fixed", the words "within twenty-eight days". In order 2, I have inserted the word "second" in the first line between the words "the plaintiff" because I understand the intention to be that Mr Campbell-Wilson will be appointed by this Court. I have in order 2 deleted the words "and continuing" through to the end of the order and I make an additional order 4 as follows "Grant leave, pursuant to s 532(2) of the Corporations Act, for the appointment of the Second Plaintiff, as liquidator of the companies specified in schedule 1."