Re Munro; Ex parte Singer v Trustee in Bankruptcy

Service by prepaid post

1. As already described in Australasian Barrister Chambers at [34] to [37] but repeated for ease of reference, rule 7.5(6) of the Supreme Court (Corporations) Rules provides: Unless the Court otherwise orders, the liquidator must serve by prepaid post, on each creditor who has proved a debt in the course of the winding up, and on each contributory, a copy of the interlocutory process accompanied by: (a) a copy of the summary of the liquidator's receipts and payments in winding up the company, and (b) a copy of the statement of the financial position of the company at the date when the interlocutory process seeking release was filed.
2. The importance of adhering to the requirements for service was explained by McLellan J in Re Austral Family Homes Pty Ltd (in liq) (1992) 8 ACSR 322; (1992) 28 NSWLR 247 at 249: … However an order for release of the liquidator does terminate such liabilities: it operates to discharge the liquidator "from all liability in respect of any act done or default made by him in the administration of the affairs of the company or otherwise in relation to his conduct as liquidator" (s 382(3)). For this reason it is a matter of very considerable potential significance to creditors and contributories, and it is important that they have proper notice of any application for such a release: see generally, Re Autistic Therapy Society of Queensland Ltd (In Liq) (1981) 5 ACLR 658; ACLC 33,293; Re Budget Floor Coverings Pty Ltd (In Liq) (1982) 6 ACLR 657; 1 ACLC 313; Re Munro; Ex parte Singer v Trustee in Bankruptcy [1981] 1 WLR 1358; [1981] 3 All ER 215.
3. Examples of where the service requirements have been dispensed with include Re One.Tel Ltd (in liq) [2014] NSWSC 1892, where Black J dispensed with the need to notify the 1,800 priority creditors and numerous unsecured creditors of One.Tel and instead permitted the special purpose liquidator to notify the committee of inspection only. His Honour considered that this was sufficient to satisfy the policy of the rule, "namely, that persons who might have reason to complain of the liquidator's conduct should have an opportunity to disclose that complaint to the Court before he or she is released": at [13]. In In the matter of RR Impex Pty Ltd (in liquidation) [2013] NSWSC 1667, Black J dispensed with service on a creditor where the liquidator had endeavoured to serve a creditor at his last known address several times with no success: at [10]-[11].
4. Here, the creditors of the Company are: 1. The Australian Bar Association; 2. New South Wales Bar Association; 3. ABCD Corporation; and 4. Mr Minus. The contributories are ABCD Corporation and Mr Minus. Each were served with the material required by the rule by email rather than by prepaid post.
5. This was in circumstances where I found in Australasian Barrister Chambers at [15]: … it is apparent from the notices filed by Mr Minus with the Court … that ABCD Corporation has consented to electronic service in accordance with UCPR rule 3.7 and the parties have been conducting themselves accordingly for some time. Even if the notices had not made this clear, consent may also be inferred from the manner in what a party has chosen to communicate over the course of a dispute or legal proceedings: In the matter of Outix Corporation Pty Limited [2019] NSWSC 1716 at [21]. Such consent may be inferred here given the evidence of Mr Dale as to his email communications with Mr Minus in these proceedings for more than four years. In addition, I found in Australasian Barrister Chambers at [16] to [17] that the liquidator's application and supporting documents had come to Mr Minus' attention and thus informal effective service had occurred in any event.
6. Mr Minus' submissions addressed a number of topics but, in respect of whether I should "otherwise order" that service of the creditors and contributories be by email rather than pre-paid post, Mr Minus advanced three propositions.
7. First, what Mr Minus was alluding to in his submissions to the Court on 9 March 2020 was, in fact, that the requirements of rule 7.5(6) of the Supreme Court (Corporations) Rules had not been complied with. If that was Mr Minus' submission made on that occasion, it was too subtly made. Mr Minus' submission was in respect of service generally, not rule 7.5(6) in particular.
8. Second, before the Court should "otherwise order" under rule 7.5(6), the liquidator must file an application seeking such an order and identifying the grounds on which the order is sought. The Court should not "otherwise order" on its own motion.
9. It certainly would have been preferable for the liquidator to raise the problem with Mr Minus before the hearing on 9 March 2020, either by a proposed Amended Interlocutory Process or fresh Interlocutory Process or simply informing him of further relief which the liquidator intended to seek at the hearing. Failing that, it would have been preferable for the liquidator to raise the problem during the hearing on 9 March 2020, either before Mr Minus departed or at all. But I apprehend from the manner in which the application was conducted by the liquidator's senior counsel that the problem was not noticed at the time.
10. The Court has power to make orders of its own motion to dispense with rules in order to ensure the just, quick and cheap resolution of the real issues in a proceeding. Section 14 of the Civil Procedure Act 2005 (NSW) provides: Court may dispense with rules in particular cases In relation to particular civil proceedings, the court may, by order, dispense with any requirement of rules of court if satisfied that it is appropriate to do so in the circumstances of the case.
11. The problem with compliance with rule 7.5(6) having now been identified, albeit post-hearing and judgment, all of the creditors and contributories of the Company have had an opportunity to make submissions if they wish to oppose such an order now being made. Mr Minus has availed himself of this opportunity. I do not think there is much to be gained by adhering to the formal processes suggested by Mr Minus with the attendant cost and delay but no readily perceivable benefit.
12. Third, Mr Minus submitted that the strictness of the notification procedures in the rules indicated the importance of creditors having notice of their right to know the date and time of the hearing at which any claim that the liquidator had been deficient in performing his or her role could be advanced. Mr Minus submitted that, at the very minimum, justice required that the parties against whom orders were proposed to be made should be given adequate and appropriate notice of the hearing and provided with the material to be relied on so that they could seek their own legal advice as to how they should proceed. Whilst that submission is undoubtedly correct as far as it goes, it does not squarely address why service by email on 7 February 2020 of the Interlocutory Process and affidavits was somehow inadequate notice of the date and time of the hearing and the material to be relied on.
13. In the absence of any specific contention as to why service by email on 7 February 2020 - a month before the hearing - failed to communicate these matters to Mr Minus, it seems to me, consistent with Black J's observations in Re One.Tel, that service by email of the application and the accompanying material required by rule 7.5(6) was sufficient to satisfy the policy of the rule, being that persons who might have reason to complain of the liquidator's conduct should have an opportunity to disclose that complaint to the Court before the liquidator is released. Mr Minus had ample opportunity to do so and chose not to avail himself of that opportunity.
14. Finally, Mr Minus requested in his submissions that, if the Court was minded to "otherwise order", then a stay should be granted to allow an appeal to be filed "to this ex parte determination". I assume this is a reference to the hearing on 9 March 2020, which became ex parte after Mr Minus excused himself once his contention that he had not been validly served was rejected. The order releasing Mr Sampson and that the Company be deregistered was made on 9 March 2020, now two and a half weeks ago. I do not know what has happened since and thus the utility of such an order. If Mr Minus wishes to seek a stay, he should bring an application in the ordinary way as there is presently no evidence which would enable me to determine such an application and I expect that Mr Sampson will have something to say about it.
15. For these reasons, I make the following order: 1. Pursuant to section 14 of the Civil Procedure Act 2005 (NSW), dispense with the requirement under rule 7.5(6) of the Supreme Court (Corporations) Rules 1999 (NSW) that each of the creditors and contributories of Australasian Barrister Chambers Pty Limited be served by prepaid post.

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