GLEESON JA: Before the Court on 10 April 2017 was an urgent application by the plaintiff Mr Stephen Parbery pursuant to section 473(1) of the Corporations Act 2001 (Cth) that he be removed as liquidator of the defendant Golden Sands Hospitality Pty Limited (in liquidation) and that Mr Mark Robinson and Mr David Webb be appointed liquidators of the defendant in his place.
In addition, the originating process filed 30 March 2017 sought approval nunc pro tunc pursuant to s 477(2B) of the Corporations Act 2001 (Cth) for the liquidator, Mr Parbery, to enter into a deed of indemnity and funding with Mr Jianxong He dated 7 February 2017 and, contingent upon the appointment of Mr Robinson and Mr Webb as liquidators, approval pursuant to s 477(2B) for Mr Robinson and Mr Webb to enter into a proposed deed of indemnity and funding with Mr He in similar terms. These reasons only deal with the removal of the existing liquidator and the appointment of new liquidators.
The relevant background is as follows. The company was wound up, it seems, by consent, by order made by Barrett AJA on 13 March 2017. Mr Parbery was appointed liquidator of the company. He was selected by the Court and not by the parties. The primary asset of the company is a Chinese restaurant business conducted from leased premises located at Forest Road, Hurstville. The company is the holder of a liquor licence known as an "on-premises licence". It is that liquor licence which causes the difficulty with Mr Parbery remaining liquidator of the company.
Mr Parbery is a member of the Independent Liquor and Gaming Authority of New South Wales (the Authority). As a member of the Authority, Mr Parbery cannot have any business or financial association with a gaming or liquor licence. That requirement arises under s 16(1)(e) of the Gaming and Liquor Administration Act 2007 (NSW) since, as a member of the Authority, Mr Parbery answers the description of a "key official" as defined in s 3 of that Act. Other provisions in s 16 also prohibit Mr Parbery's involvement as a liquidator of an entity holding a liquor licence: ss 16(1)(a) and (1)(f). As the company is the holder of a liquor licence, Mr Parbery seeks to be removed as liquidator.
The matter of resignation or removal of the liquidator is now dealt with in ss 473, 473A and 600K of the Corporations Act. Prior to the Insolvency Law Reform Act 2016 (Cth), s 473 provided that a liquidator appointed by the Court may resign, or on cause shown, be removed by the Court. Since 1 March 2017, the resignation of a liquidator is dealt with in ss 473 and 473A. The removal of a liquidator is dealt with in the Insolvency Practice Schedule (Corporations) introduced by s 600K of the Corporations Act.
Section 473 now provides that a liquidator appointed by the court may resign. Section 473A(1) provides that a vacancy in the office of a liquidator appointed by the Court may be filled by the Court or by ASIC. Section 473A(4) provides that if more than one liquidator is appointed under this section, the Court or ASIC (as the case may be) must declare whether anything that is required or authorised by the Corporations Act to be done by the liquidator is to be done by any one or more of the persons appointed.
The new provisions about vacancies of court appointed liquidators in s 473A(1) apply whether or not the vacancy in the office of liquidator occurred before on or after the commencement day Insolvency Law Reform Act 2016, which relevantly is 1 March 2017: s 1584, Corporations Act.
Section 90-15(1) of the Insolvency Practice Schedule (Corporations) provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. The external administration of a company is defined in s 5-15 to include a company of which a liquidator has been appointed. Section 90-15(3) provides that, without limiting sub-section (1), the orders a Court may make include any one or more of the following:
(a) …
(b) an order that a person cease to be the external administrator of the company;
(c) an order that another registered liquidator be appointed as the external administrator of the company.
The relief sought in par 1 of the originating process incorrectly assumed the continuing operation of s 473 prior to its amendment by the Insolvency Law Reform Act 2016. Further, no relief was sought under s 90-15 of the Insolvency Practice Schedule (Corporations). Having regard to the amendment of s 473 and the introduction of the s 473A, effective from 1 March 2017, the appropriate course is that Mr Parbery resign as liquidator and that the court fill the vacancy by exercising the power conferred by s 473A(1).
Mr Robinson and Mr Webb, who are each registered liquidators, have given their consent to act as joint liquidators of the defendant. Mr Webb gave an affidavit in support of the present application in which he outlined his detailed involvement in the administration of the company since Mr Parbery was appointed liquidator on 13 February 2017. There would clearly be efficiencies and costs savings if Mr Webb was appointed liquidator.
Mr Robinson is a partner of Mr Webb in the firm PPB Advisory. Mr Webb deposed that there would be an advantage in appointing two liquidators, having regard to the nature of the work required to be undertaken in the administration and that this would make the administration more efficient, particularly if either liquidator was able to sign documents or make decisions as required. I am satisfied that it is appropriate to appoint those two persons as joint liquidators of the defendant.
At the conclusion of the hearing on 10 April 2017, I indicated that upon receipt of an affidavit annexing a copy of Mr Parbery's resignation as liquidator of the defendant, I would make orders in chambers under s 473A(1) appointing Mr Robinson and Mr Webb as liquidators of the defendant company and under s 473A(4) declaring that anything authorised by the Corporations Act to be done by the liquidator is to be done by any one or more of Mr Robinson and Mr Webb. I made an order that the balance of the originating process be stood over for further hearing at 10am on 13 April 2017. I also ordered that costs of this application be costs in the winding-up of the defendant.
Orders
On 11 April 2017, an affidavit was filed by Mr Parbery's solicitors annexing a copy of his resignation as liquidator of the defendant on that date. Accordingly, as indicated at the hearing I made the following orders in chambers on that date:
1. Pursuant to s 473A(1) of the Corporations Act 2001 (Cth), that the vacancy arising from the resignation of the plaintiff be filled by appointing Mark Robinson and David Webb of PPB Advisory as joint liquidators of the Defendant.
2. Pursuant to s 473A(4) of the Corporations Act 2001 (Cth), declare that anything required or authorised by the Corporations Act 2001 (Cth) to be done by the liquidator of the Company may be done by one or more of the joint liquidators.
[3]
Addendum
On 20 April 2017 I raised with the legal representatives for the liquidators an apparent slip in the above orders as to the source of power under the Corporations Act for the appointment of new liquidators in place of Mr Parbery. That slip arose as I had overlooked and was not referred during the hearing to Sch 2 of the Corporations and Other Legislation Amendment (Insolvency Law Reform) Regulation 2016 (Cth) (the 2016 Regulation). In broad terms, the effect of the 2016 Regulation is to defer to 1 September 2017 the operation of many of the amendments to the Corporations Act introduced by the Insolvency Law Reform Act 2016 (Cth).
As to order 1, contrary to [5]-[6] of my reasons above, the commencement date of the relevant amendments to the Corporations Act, ss 473 and 473A, introduced by the Insolvency Law Reform Act 2016 (Cth), is not 1 March 2017. The effect of Corporations Regulations 2001 (Cth), reg 10.25.02(3)(h), which was introduced by Sch 2 of the 2016 Regulation 2016 is that the amendment to s 473 of the Corporations Act and the introduction of s 473A apply in relation to external administrations on and after 1 September 2017. Accordingly, the source of power in the present case to appoint new liquidators in place of Mr Parbery is s 473(1) of the Corporations Act.
As to order 2, Item 40 of Sch 13 to the Corporations Regulations 2001, introduced by the 2016 Regulations amends s 1627(3) of the Corporations Act such that, relevantly, s 473A(4) applies on and after 1 September 2017. The source of power for order 2 is s 473(8) of the Corporations Act, which relevantly is in the same terms as s 473A(4).
The liquidators have indicated their agreement with the exercise of the Court's power under the slip rule to vary the orders made on 11 April 2017: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 36.17. Accordingly, I make the following further order:
(3) Pursuant to the slip rule in UCPR r 36.17, vary the orders made on 11 April 2017 as follows:
1. In order 1, delete the reference to "s 473A(1)" and insert "s 473(1)".
2. In order 2, delete the reference to "s 473A(4)" and insert "s 473(8)".
[4]
(3) Pursuant to the slip rule in UCPR r 36.17, vary the orders made on 11 April 2017 as follows:
(a) In order 1, delete the reference to "s 473A(1)" and insert "s 473(1)".
(b) In order 2, delete the reference to "s 473A(4)" and insert "s 473(8)".
[5]
See Addendum to revised judgment - [14]-[17] for reasons.
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Decision last updated: 21 April 2017
Legislation Cited (6)
Corporations and Other Legislation Amendment (Insolvency Law Reform) Regulation 2016(Cth)