1 The plaintiff is the liquidator of Graf Holdings Pty Ltd ('Graf Holdings') and its subsidiary Parer Holdings Pty Ltd ('Parer'), which are both in voluntary winding up. In two parallel proceedings he seeks directions under s 511(1) of the Corporations Law with respect to the Second Bluebird Unit Trust ('the Trust'). The Trust may have existed and, if it did, Graf Holdings and Parer may have owed money to the Trust. The directions sought in the proceedings are to the effect that Mr Larking as liquidator of the two companies would be justified in making distributions of their assets on the basis that, in each case, the company is not indebted to the Trust or any person as trustee or beneficiary of the Trust.
2 The two companies were part of a group controlled by the late William Graf. In Bluebird Investments Pty Ltd v Graf (1994) 13 ACSR 271, Santow J described the group as follows (at 274-5):
'Mr Graf was a man of limited formal education who built up substantial wealth based on property development. He died on 26 June 1988 in his 80s and had left the wealth he had accumulated in a complex corporate group. In the later years of his life he was not a particularly well man. He had a cancer operation in 1973 which left him with a swollen torso, and a stroke in early 1983. He remained mentally alert. He became increasingly critical about costs of the overseas portion of the structure of the group. The wealth he had accumulated was reputedly worth between $30m and $40m and was tied up mostly in real property in the West Ryde area.
This group consisted of over 20 companies that owned different pieces of real estate and assets. Some companies, as shall be discussed below, were set up for tax purposes. Mr Graf himself, from the evidence before me, had little detailed understanding of corporate structure and relied heavily on advice from his advisers. However he controlled each company through one or more of a number of mechanisms. These included: by being a shareholder, director, governing director, or having a power of attorney (as he did from Bluebird Canada) or being the sole person on the board of management (as he was in relation to the Stichting) or being the person the board of directors answered to in practice. In this way, while not owning his wealth, or all of it, he did not control it. …
As the evidence showed, there were frequent changes of intent on Mr Graf's part as to what specifically was to be done and an increasing reluctance to spend money on legal costs. His general objective, manifested in various ways, was for the corporate assets of the Graf group to be maintained intact for at least 50 years after his death and controlled in his lifetime by himself. However an equally consistent theme was the avoidance of taxation, whether income tax or, earlier till its abolition, death duties. Attention to the details of implementation in Australia was at times less than meticulous. Mr Graf's lack of changes of mind would not have helped, particularly when added to a reluctance to pay costs.'
3 There is no direct evidence of the creation and operation of the Trust and no trust deed, unitholders register or books of account have been found by the liquidator. However, there is some evidence which suggests that the Trust existed in about the period 1979 to 1981 and possibly for longer, and that the beneficiaries included, at least at one stage, Graf Holdings and a company called Mary Victoria Pty Ltd ('Mary Victoria'). There is also evidence that Graf Holdings and Parer were at one time indebted to the Trust in a total amount of $1,130,353. But the group's records are unclear and incomplete, possibly because of the factors identified by Santow J. I shall first review the evidence.
The existence of the trust and the identity of the beneficiaries
4 The evidence on these matters includes the following:
1. Minutes of a meeting held on 29 April 1980 of the directors of Mary Victoria record a resolution approving an application by that company to another company called Jagolmbe Pty Ltd as trustee of the Trust, for ten additional units in the Trust, and authorising a cheque in favour of Jagolmbe for $4,290.00.
2. Minutes of a meeting of directors of Graf Holdings held on 12 March 1981 record a resolution approving an application by that company to Jagolmbe as trustee of the Trust for ten additional units, and authorising a cheque in favour of Jagolmbe for $7,698.81.
3. Folios in the general journal and in the general ledger of Graf Holdings record an acquisition of units in the Trust on 12 March 1981 for $7,698.71, plus an assignment of options.
4. A folio headed 'Second Bluebird Unit Trust' in the general ledger of Graf Holdings contains an entry dated 7 March 1979 referring to '1,010 units', and an entry on 29 April 1980 debiting 'Cash Jagolmbe units' in the amount of $4,290.00 and crediting the 'Cash Trust 1' in the same amount.
5. A note to the financial statements which are part of the annual reports of Graf Holdings for each of the years 30 June 1990 to 30 June 1996 records a non-current investment of $7,709.00 in 1989 and 1990 for the 'Second Bluebird Unit Trust at cost'.
6. A page headed 'W E J Graf, Summary of Trusts' refers to Jagolmbe as trustee and says 'acquired ten options to Units in Trust for $4,290 which were issued to Mary Victoria Pty Ltd and it paid $4,290 for assignment of the Units'.
7. The same page says 'Unitholders equity - on sight Bills of Exchange ex 1978 $347,979.00 ex 1979 $438,320.00'.
8. The second page of what appears to be the same document records the Trust as beneficiary of ten redeemable preference shares in Bluebird Investments Pty Ltd, another group company of which the plaintiff is the liquidator.
5 The plaintiff has seen no other document referring to or suggesting that any person other than Graf Holdings and Mary Victoria may hold or may have held units in the Trust.
The evidence of indebtedness of Graf Holdings to the Trust
6 The evidence includes the following:
1. A folio in the general ledger of Graf Holdings headed 'Second Bluebird Unit Trust' refers to a credit balance of $440,708.71.
2. A note to the financial statements in the annual report of Graf Holdings for the year ended 30 June 1990 records for 1989 but not 1990 an 'unsecured loan' of $440,708.00 from the Trust, described as 'a non-current liability', but in subsequent years to 30 June 1996 that amount is shown as a liability in both the financial year of the report and the previous year.
3. The statement by the directors of Graf Holdings in the annual report for the year ended 30 June 1990 records (inter alia) the liability to the Trust and says the directors are continuing their enquiries into the circumstances under which the liability was incurred, and there is a similar statement in a qualification in the auditor's report by the plaintiff for that year and subsequent years to 30 June 1996.
However, the plaintiff has seen nothing in the records of Graf Holdings referring to any communication of the contents of those annual reports to any officer of Jagolmbe.
The evidence of the indebtedness of Parer to the Trust
7 There is rather more evidence concerning the liability of Parer to the Trust on two bills of exchange drawn in favour of the Trust and accepted by Parer. One was drawn by Kemlat Pty Ltd for $347,979 and was accepted on 29 April 1980, and the other was drawn by Justbon Pty Ltd for $341,665 and was accepted on 20 March 1981, the two together totalling $689,644.
8 The evidence for the Kemlat bill transaction comprises journal and ledger entries for Parer (themselves ambiguous), an application by Kemlat for acceptance of the bill, minutes of a meeting of Parer's directors agreeing to accept the bill, and the bill itself. There is also evidence that sixteen other companies, apparently all in the Graf group, drew bills on 29 April 1980 in favour of Kemlat, which were also accepted by Parer. These bills, for a total amount of $347,979, contain a direction by Kemlat to pay Parer on its behalf. The exact purpose of these bill transactions is not disclosed by the evidence but they seem to have had the commercial effect of consolidating a series of intra-group debts in Kemlat and then Parer, and creating an entitlement for the Trust to be paid the consolidated amount by Parer.
9 The Justbon bill transaction, which occurred on 20 March 1981, seems to be similar. The bill for $341,665 was drawn by Justbon, accepted by Parer, payable to Jagolmbe. Sixteen companies, evidently companies in the Graf group, drew bills totalling $341,665, accepted by Parer and payable to Justbon. This time each of the sixteen bills was endorsed 'discharged by set-off on 21 March 1981' and that endorsement was signed by Justbon and Parer. There is also a minute of a meeting of the Parer directors on 20 March 1981 which records that Justbon was indebted to Parer in the sum of $341,665, and that this debt would be set off against Parer's obligation as acceptor of a bill of which Justbon was the holder. It is not clear whether this set-off discharged Parer's liability as acceptor of the bill drawn by Justbon in favour of the Trust, but the financial statements in the annual reports of Parer from 30 June 1990 to 30 June 1995 show an entry for 'current creditors and borrowings' of 'bills payable' in the sum of $689,644.
Mr Frazer's theory
10 The plaintiff obtained a report dated 15 May 1996 from Mr Andrew Frazer of Frazer Hall, chartered accountants, which reviewed the evidence as to the alleged liability of Graf Holdings and Parer. Mr Frazer concluded that the Trust existed and that its activities were related to tax minimisation. He noted a consistency of timing of major transactions just prior to the former Division 7 deadline in three consecutive years (presumably the years ended 30 June 1979, 1980 and 1981). He found evidence that various group companies paid dividends and he said:
'The general thrust of the tax minimisation strategy used by the group in those three years was the acquisition by the Second Bluebird Unit Trust of options over dividend producing shares in companies within the group, the declaration of dividends on those shares, the revaluation of those options in recognition of the declared dividends, the subscription of inflated considerations for additional units and a redemption of the recently issued units. …
Graf's intentions for his group's ownership endured several phases including the 1961 to 1965 trusts, the removal of the dividend stream to the Netherlands Antilles until the early 1970's, the purchase from Philips Industries of Parer as an excess distribution company in the mid 1970's, participation in charity schemes involving the Moriah War Memorial Association and successively the Bluebird First & Second Unit Trusts. Following amended tax assessments totalling approximately $1 million, the 1980's saw the group paying income tax without the use of tax minimisation schemes.
Graf's final vision for his group was reflected in his last Will which assumed his total ownership of the group and the maintenance of ownership through a succession of life tenancies. …
It is possible therefore, and perhaps likely, that Graf instructed Biddlecombe to close the Second Bluebird Unit Trust activities by completing the circle, resulting in the Parer debentures and the Holdings loan being owed to Holdings. …
In many of the tax minimisation mechanisms employed by the Graf group, aspects have endured despite having been ignored for many years. This is true of the twenty four 1960's trusts determining ownership of the group and the continuing liabilities of members of the group to the Moriah War memorial Association.
Although it has been accepted since Graf's death that he did not have sole ownership of the Group beyond the mid-1960's, Graf nevertheless believed he did have such ownership. The return to Holdings of the group's dividend stream declared in 1979, 1980 and 1981, by achieving sole unit holding status for Holdings, would have been consistent with Graf's belief of his sole ownership of the group.
Graf's dislike for incurring ongoing costs in maintaining minimisation schemes is documented in the 'Bluebird' case. The development of the conclusion to that major off-shore scheme, occurred contemporaneously with the finalisation of the Second Bluebird Unit Trust. The efficacy of the off-shore matter was confirmed by the Supreme Court of NSW. In the absence of conflicting evidence I consider it reasonable to conclude that Biddlecombe [Graf's accountant] issued, to Holdings, units in the Second Bluebird Unit Trust which resulted in Holdings being the sole unitholder in that trust.'
11 Mr Frazer provided affidavit evidence in the present proceedings in which he clarified his report but he did not, as far as I can see, resile from his overall theory. His clarification related to remarks in his report which implied that Kemlat had been a unitholder in the Trust. He noted that an entry in a folio of the general ledger of Graf Holdings headed 'Second Bluebird Unit Trust' shows a credit entry on 2 March 1979 of $434,020.00 entitled 'Cash Kemlat 1,010 units'. He said that apart from this folio he had never seen any document referring to Kemlat or Justbon recording the acquisition of units in the Trust, nor had anyone suggested this had occurred. A balance sheet of Justbon shows an interest in unit trusts as at 30 June 1981 but that investment is shown as zero in the balance sheet as at 30 June 1982. The balance sheet of Kemlat as at 30 June 1985 does not show any units in any unit trust as an asset.
Conclusions as to existence of Trust, identity of beneficiaries, and debts of Graf Holdings and Parer to the Trust
12 Weighing up the flimsy evidence as best I can, I have reached the following conclusions:
1. The Trust existed, at least during the approximate period from 1979 to 1981, and possibly earlier and later.
2. Jagolmbe was the trustee, at least during the period 1979 to 1981.
3. In the absence of any evidence of its termination, the Trust may continue to exist.
4. Mary Victoria and Graf Holdings acquired units by subscription in about 1980 and 1981 respectively, and appear to have taken them beneficially.
13 None of this can be said with any certainty because the records are so incomplete and cryptic. Mary Victoria may well have ceased to be a unitholder subsequently, since that company's financial statements for the year ended 30 June 1995 do not identify any units as assets, and its records do not otherwise indicate that it has continued to hold units. The view that Mary Victoria has ceased to be a unitholder would be consistent with Mr Frazer's theory that after the Trust had done its work of tax minimisation, all of the issued units were vested in Graf Holdings, and no-one bothered to wind up the Trust.
14 As to the position of Kemlat and Justbon, my opinion is that, whether they held units at some earlier stage, they had ceased to do so by the time they were deregistered. Their deregistrations occurred on 8 September 1989 and 22 December 1993 respectively.
15 As to Kemlat, the general ledger folio of Graf Holdings, to which I have referred, admittedly shows an entry referring to 'Kemlat 1,010 units'. However, no documents have been found referring to that narrative, nor otherwise referring to Kemlat acquiring or holding units in the Trust. Both the plaintiff and Mr Frazer say in their affidavits that they have otherwise not seen any documents referring to Kemlat acquiring or disposing of any units and, as I mentioned earlier, the only balance sheet in evidence for Kemlat does not show units in any unit trust as an asset.
16 As to Justbon, its balance sheets from 1982 onwards do not disclose any assets in the nature of units in unit trusts. The 1981 balance sheet identified an asset entitled 'Interest in Unit Trust' but the unit trust was not identified. Both the plaintiff and Mr Frazer say in their affidavits that they have not seen any documents referring to Justbon acquiring or disposing of any units in the Trust apart from the1981 balance sheet.
17 I conclude, therefore, that there is no evidence before me which establishes that anyone, apart from Mary Victoria and Graf Holdings, is still a unitholder in the Trust, and it may be that Mary Victoria is no longer a unitholder.
18 As to the debts, it appears to me that Graf Holdings and Parer respectively became indebted to the Trust in the sums of $440,709 and $689,644 respectively in the circumstances outlined above. There is some evidence to indicate that the debts which they incurred were part of a process which may well have been a tax minimisation scheme of the kind outlined by Mr Frazer.
Legal entitlements implied by these findings
19 In order to understand the legal consequences of these findings it is necessary to have some idea of the structure of the group. As I have indicated, Parer is a subsidiary of Graf Holdings. The evidence indicates that Graf Holdings is the beneficial owner of all of the shares in Parer.
20 Mary Victoria is was deregistered on 17 May 1997. According to the evidence, 1,000 of its 1,010 shares were held by Graf Holdings No 4 Pty Ltd (In Liquidation). Its liquidator was John Stewart. Maryanne Menzies was principal executive officer from 29 August 1991 to 8 December 1993 and was a director from 29 August 1991 to 17 May 1997. Andrew Frazer was secretary from 16 October 1989 to 26 November 1990.
21 There are eight shareholders of Graf Holdings No 4 Pty Ltd (In Liquidation), namely, Graf Holdings, Graf Holdings (No 2) and (No 3), Bluebird Investments Pty Ltd (In Liquidation), Jagolmbe (which, as I have said, has been dissolved), A Birrell, J E Hunt and Clarence Cutler. The shareholding structure is complicated, there being various classes of shares held by the various shareholders. The liquidator is John Stewart. Maryanne Menzies was the principal executive officer from 13 July 1991 to 8 December 1995 and has been a director since 13 July 1991. Andrew Frazer was the secretary from 16 October 1989 to 26 November 1990.
22 Jagolmbe was a company associated with Mr Biddlecombe, who was Mr Graf's accountant until he died in 1981. After that time two partners of Mr Biddlecombe remained as directors until it was deregistered on 10 July 1992.
23 The debts which appear to have been owing to the Trust by Graf Holdings and Parer were assets of the Trust held by Jagolmbe for the benefit of the beneficiaries of the Trust. I have found that the only evidence is that there may have been two beneficiaries, namely, Graf Holdings and Mary Victoria. To the extent that Graf Holdings is the beneficiary of the Trust, the distribution of the assets of the company in liquidation is unproblematic, since the trust assets are debts owing by Graf Holdings and its wholly owned subsidiary Parer. To the extent that Mary Victoria may have had an interest in the Trust, and to the extent there may have been some other beneficiaries of whom there appears to be now no evidence, a question arises as to the proper course to be taken in the liquidation of the two debtor companies and the distribution of their surplus assets on winding up. Had Jagolmbe remained in existence it would have had a duty as trustee to protect the interests of those beneficiaries. However, Jagolmbe no longer exists and the question is whether there are any duties or entitlements vested in anyone else as a result of Jagolmbe's deregistration.
24 When Jagolmbe was dissolved s 576 of the Corporations Law, as it then stood, had the effect that the assets of that company, including any properties held by that company in trust, were vested in the Australian Securities Commission. Although s 576 was not entirely clear its effect was, in the case of assets held in trust, to vest the legal title to the assets in the Commission as trustee : Optel Pty Ltd v National Companies and Securities Commission (1990) 2 ACSR 493. Therefore it appears that upon the dissolution of Jagolmbe in 1992 any entitlement which that company had as trustee to recover a debt from Graf Holdings or Parer came to be vested in the Commission.
25 Similarly, because of s 576 of the Corporations Law (as it then stood), the Commission was the successor to any beneficial title of Mary Victoria (and for that matter any beneficial title which may have existed in Justbon and Kemlat).
26 From 1 July 1998 the law with respect to deregistration to companies changed. Section 576 was repealed by Schedule 2 to the Company Law Review Act, 1998. Section 601AD(2) states that upon deregistration of a company, the company's property vests in the Australian Securities and Investments Commission, as it is now known. Section 601AE(1) states that if property vested in the Commission under s 601AD(2) was held by the company in trust, the Commission may continue to act as trustee or apply to the court for appointment of a new trustee. In my opinion it is implied in s 601AE(1), when read with s 601AD(2), that the Commission must take one or other of those two courses, in the sense that if it does apply for the appointment of a new trustee, it is the trustee under that provision. The transitional provision found in s 1438(1) has the effect that property vested in the Commission before the change of the law may be dealt with by the Commission under the new law.
27 Section 601AH empowers the Commission and the court to reinstate the registration of a company. If the Commission does not do so, the court may make an order upon the application of a person aggrieved by the deregistration or the former liquidator of the company, provided the court is satisfied it is just the company's registration be reinstated. If the Commission therefore does not propose to act, there is a possibility that a person interested in property of a deregistered company may seek to reinstate the company so that that interest may be protected and the company's rights pursued for the benefit of the party interested.
28 Section 601AH is relevant to the present case in this way. The deregistration of the various companies makes it impossible for the time being for rights vested in those entities prior to the deregistration to be pursued other than by the Commission. However, parties interested in property of a deregistered entity (such as the entity's interest as a beneficiary of a trust) may make an application under s 601AH to reinstate the company so that it may recover its property. This possibility must be taken into account by the plaintiff in his administration of the two companies in liquidation, and by the Court in the present proceedings.
The present application
29 The plaintiff seeks an order under s 511(1) of the Corporations Law to the effect that he would be justified in making distributions out of the assets of Graf Holdings and Parer on the basis that they are not indebted to the Trust or to any person as trustee or beneficiary of the Trust. In the alternative, he seeks an order that he would be so justified by reason of the notice which he has given to interested parties and the failure of the Commission to lodge a proof of debt.
30 Originally the proceedings were brought ex parte. As a result of a judgment given by Windeyer J on 30 November 1998 and orders subsequently made by his Honour and me, the proceedings are now constituted as applications by the liquidator as plaintiff in which three parties are joined as defendants, namely the Australian Securities and Investments Commission, John Gerard Stewart and Graf Holdings No 4 Pty Ltd. However, though they are now joined as parties, none of the defendants has appeared at the hearing.
31 Section 511(1) is in the following terms:
'511(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.
(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.'
32 The orders sought would not, as such, determine a question of law arising in the winding up under s 511(1)(a). The plaintiff relies on s 511(1)(b), and says that the orders are of a kind which a court would be empowered to make if the companies were being wound up by the court. The plaintiff says that in a winding up by the court, the court would have the power to make the orders he seeks under s 479(3), which states the liquidator may apply for directions in relation to any particular matter arising under the winding up.
33 If directions are given to the liquidator and he has made full and fair disclosure to the court of all material facts, whether the directions are given under s 511 or s 479, the liquidator may act in accordance with the directions without thereby incurring personal liability to creditors and contributories. But the liquidator's protection from liability does not affect the rights of creditors and contributors as between themselves: Re G B Nathan & Co Pty Ltd (In Liquidation) (1991) 24 NSWLR 672, 679.
34 On its face s 511(1)(b) appears to put the court in the same position, as regards its powers in a voluntary liquidation, as it would be during a winding up by the court. However, a liquidator in a winding up by the court is an officer of the court, whereas in a voluntary liquidation the liquidator is an agent of the company. Additionally, s 511(2) requires that the court be satisfied that the exercise of power will be just and beneficial - there is no equivalent wording in s 479. The question arises whether those differences are points of real distinction.
35 In Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209, Young J (at p 212) noted the different roles of a court-appointed liquidator and a liquidator appointed in a voluntary winding up. He referred to the case law which suggests that the court has the same jurisdiction under s 511 as under s 479(3), but said that this cannot be completely true. He continued (at 212):
'Although the court may under s 479 direct its officer to commit a breach of trust or to do something which it is arguable he has no power to do, under s 511 the court is only given power to avoid expensive procedures but must act according to law and not authorise the liquidator to do anything which is ultra vires the company.
Referring to the requirement of s 511(2) that the court is only to accede to the liquidator's application if the exercise of the power would be just and beneficial, he said (also at 212):
'… it seems to me that they plainly mean that the court has a discretion as to whether making an order under the section will be of advantage in the liquidation. There are many questions where the only order that the court should make is that the liquidator or the claimant proceed in the ordinary courts in the ordinary way for the determination of a dispute. However, there are many other situations where the court can summarily solve the difficulty that has arisen in the liquidation by an order under the section in a cheap and efficient manner. Where this can be done it is 'just and beneficial' to exercise the power.'
36 In my opinion the considerations affecting the exercise of the court's power in a case such as the present are not limited by the fact that the companies are subject to voluntary winding up rather than winding up by the court. This is not a case where the court is asked to sanction a course of conduct which is identifiably beyond power, or in breach of trust. I therefore do not need to decide whether to follow Young J to the extent that he may have taken the view that such a sanctioning is permitted for a court-appointed liquidator but not a liquidator under a voluntary liquidation (compare Re Campbell Coverings Limited [1953] 2 All ER 74, 78 per Evershed MR; [1994] All ER 222).
37 Section 511(1)(a) expressly authorises the court to determine a question of law arising in the winding up, such as (for example) whether debts have been set off as a mutual obligation ( Re Parker (1997) 80 FCR 1). Where, however, the court is asked to give directions, the proceedings are of a different kind.
38 Cases on s 479(3) indicate that the court should not use this provision to make binding orders in the nature of judgments, seeking to determine rights and liabilities which have arisen out of the company's transactions before liquidation ( Re G B Nathan & Co Pty Ltd (In Liquidation) , cited above, at 679-80), though proceedings commenced as an application may sometimes be converted into proceedings for the determination of substantive rights. In the present case the orders which are sought do not purport to determine or declare substantive rights. The question which they raise is whether the liquidator's proposed course of conduct would be justified in all the circumstances, not whether the recipient of the distribution is entitled to it as against the trustee of the Trust or potential beneficiaries: (compare Editions Tom Thompson Pty Ltd v Pilley (1997) 77 FCR 141, 149G.)
39 It is true that if the liquidator makes a distribution in reliance on the court's direction he will be protected from personal liability and the true beneficiaries (if there are any) will find it more difficult to recover their entitlements. This is because they will then need to establish a right to trace the assets distributed into the hands of the recipients (or even beyond them) or a right of recovery against the recipients personally. But the court's direction does not purport to determine their rights, and leaves it open for any beneficiary to seek to establish a right subsequently if permitted by relevant limitation periods to do so. Proof an entitlement will necessarily involve evidence not before the court in this application.
40 Further, the court's direction does not and cannot deprive a person claiming an interest through a trustee or beneficiary which is a deregistered company, of the opportunity to apply to the Commission or the court to reinstate the company under s 601AH.
41 I conclude, therefore, that the court's reluctance to determine substantive rights in an application for directions is no impediment to the present proceedings.
The liquidator's duty and its discharge in the present case
42 The liquidator has a duty to act impartially and a duty to discover who are the creditors of the company: Re Autolook Pty Ltd (1983) ACLR 409. A liquidator is obliged to enquire into all claims. There is a duty to ascertain by direct enquiry whether a claim is being pressed and the liquidator has a duty not merely to advertise but to write to creditors of whose existence he is aware: Harry Gourdias Pty Ltd v Port Adelaide Freezers Pty Ltd (1992) 7 ACSR 303. The question is whether the plaintiff has conducted sufficient investigations to discharge his duty in this case, as regards possible claims by the trustee or beneficiaries of the trust.
43 In the present case it is relevant, first, that Graf Holdings No 4 Pty Ltd (In Liquidation) and Mr Stewart, who was the liquidator of Mary Victoria and is the liquidator of Graf Holdings No 4, are parties to the proceedings. The Commission is a party to the proceedings as well, and is the statutory inheritor of the assets of the deregistered companies, Mary Victoria, Jagolmbe, Kemlat and Justbon.
44 In addition to joining relevant parties to the proceedings, the plaintiff in this case has made quite extensive enquiries. He has placed advertisements in a national newspaper. He has corresponded with the Commission and with Mr Stewart. He has corresponded with Mr Malouf, solicitor, who represents Maryanne Menzies, who was the principal executive officer of Mary Victoria, and a director of the company for a time, and was a signatory to annual accounts. He has also corresponded with Ms Patricia Keith, who is the solicitor for Ailsa Mansell, a shareholder in Graf Holdings. Ms Keith located records with the widow of Mr Langham-Dale, the deceased solicitor who had acted for Mr Graf. The plaintiff has kept the Commission, Mr Malouf and Ms Keith informed of the state of the proceedings and has served on each of them a copy of the application in its final form.
45 In my opinion it is fair to say that by taking these steps, the plaintiff has done everything which could reasonably be expected to advertise and to deal with those who might be anticipated to have claims. I therefore conclude that the plaintiff has discharged his duty as liquidator of the two companies to make proper investigations concerning the Trust and to notify potential claimants in respect of the Trust.
Responses of potential claimants
46 I should note the evidence concerning the responses of those who were notified of the proceedings. In each case the plaintiff's solicitor supplied the potential claimant with copies of the amended summons and the relevant affidavits. All claimants had the benefit of legal advice. In these circumstances I regard the disclosure to them as adequate.
47 By a letter dated 25 February 1999 the Commission informed the plaintiff's solicitor that 'it is a stranger to the action and does not wish to contest the orders sought by your client'.
48 On 9 February 1999 Mr Stewart informed the plaintiff's solicitor that he intended to provide copies of the relevant documents to all the shareholders of Graf Holdings No.4, to advise them that he did not propose to take any action, and to give them until 12 February 1999 to notify him of any claims which they may wish to make. By a letter dated 12 February 1999 he informed the plaintiff's solicitor that he intended to take no further action on his own behalf or as liquidator of Graf Holdings No.4, and that he did not intend to appear at the hearing.
49 By a letter dated 12 February 1999 Mr Malouf informed the plaintiff's solicitor that he was instructed to take no further action on behalf of his client Maryanne Menzies to recover any amount that may be owing by the Trust to Mary Victoria. I take this to include any amount which may be owing by it as trustee by virtue of its duty to get in trust assets and distribute the assets to the beneficiaries. Mr Malouf indicated that he did not intent to appear at the hearing.
50 By a letter dated 22 February 1999 written on behalf of Ailsa Mansell, Ms Keith advised the plaintiff's solicitors that her client had instructed her that she did not wish to take part in the proceedings.
Regulation 5.6.48
51 One particular matter which the plaintiff relies upon in this case is that as liquidator of Graf Holdings and Parer, he has given notice in writing pursuant to reg 5.6.48(1) of the Corporations Regulations for formal proofs of debt or claims to be lodged. Notice was given by advertisement in a national newspaper. Specific notice was given to the Commission as the successor in title of the trustee, Jagolmbe. The plaintiff submits that it follows from the giving of those notices, by virtue of sub-reg 5.6.48(4), that if the Commission was otherwise a creditor or claimant of Graf Holdings or Parer, then the Commission's failure to lodge a proof of debt in accordance with the liquidator's requirements, or otherwise to object to distribution, has the consequence that it is properly to be excluded from the benefit of the distribution to be made.
52 I would prefer not to express any concluded opinion about this submission, especially in view of the absence of any contradictor in the present proceedings. It seems to me to be unnecessary for the plaintiff to rely upon reg 5.6.48(4), in view of my findings as to the scope of s 511(1)(b) and the plaintiff's discharge of his duty of investigation. My hesitation arises because whatever may be the effect of reg 5.6.48, there exist in the Corporations Law other avenues by which a party such as the Commission could seek to challenge a distribution notwithstanding the giving of notice under the regulation. I have in mind, in particular, s 601AH which permits both the Commission and the court to reinstate a deregistered company. This power is expressed in relevantly unqualified terms and, if exercised, could be used to resuscitate a claim and possibly even to override the excluding effect of reg 5.6.48(4).
Conclusions and orders
53 In all these circumstances the question which falls for decision is whether this Court, in the exercise of its discretion, should give directions of the kind sought by the plaintiff under s 511(1)(b). There being no relevant impediment to my doing so, my decision is essentially a discretionary one. I have decided that it is appropriate in the special circumstances of this case to give directions of the kind sought, but I emphasise that the circumstances of this case are special indeed. It seems to me that s 511(1)(b) should not be used by a liquidator in a voluntary winding up to obtain protection and reassurance from the court whenever some doubt arises in the course of administration of the company's affairs.
54 What makes the present case special is the combination of the following factors:
(a) The question which is put to the Court for decision relates to whether the liquidator is justified in making the distribution, and does not require the Court to make any determination of rights or entitlements;
(b) The proceedings have been constituted in proper form and those persons who might reasonably be anticipated to have any interest in the outcome have been joined as parties, and therefore the difficulties that may arise in an ex parte application are avoided;
(c) The attitude to the proceedings taken by the other parties, and particularly the Australian Securities and Investments Commission, which says it regards itself as a stranger to the proceedings;
(d) None of the defendants has appeared and there is no identified opponent to the directions which are sought;
(e) The liquidator has made all reasonable enquiries and has contacted all known parties who may wish to make a claim;
(f) The affairs of the relevant companies appear not to have been properly documented and recorded and, in view of the lapse of time since relevant events, it is entirely understandable the liquidator may find himself in a position of real uncertainty of a kind which cannot be resolved by relevant enquiry.
55 I therefore make orders 1 and 4 in the summons in each matter.