Solicitors:
Johnson Winter & Slattery (Plaintiff)
File Number(s): 2014/244923
[2]
Judgment - ex tempore
By Originating Process filed on 20 August 2014, the Plaintiff, Mr Stephen James Parbery, as special purpose liquidator of One.Tel Ltd (in liquidation) ("One.Tel") seeks an order under s 480(c) of the Corporations Act 2001 (Cth) that he be released in that capacity. He also seeks orders dispensing with the application of rr 7.5(5) and 7.5(6) of the Supreme Court (Corporation) Rules 1999 (NSW) ("Corporations Rules") to which I will refer below. He seeks an order that the costs of the application be costs in the liquidation of One.Tel.
The principles which are applicable to the release of a liquidator are well established, and I summarised them in Re RR Impex Ltd (in liq) [2013] NSWSC 1667, to which Mr Sulan, who appears for Mr Parbery, referred in submissions. It is not necessary to state those principles in detail. Broadly, s 480(c) - (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 amongst 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 and, relevantly, releases the liquidator from liability in respect of acts or defaults in the administration of the company's affairs or in relation to his or her conduct as liquidator, unless the order was obtained by fraud or by suppression or concealment of any material fact, and operates as a removal from office. Mr Sulan pointed out, consistent with the authorities, that the effect of such an order is to "wipe the slate clean", subject to the limited exceptions set out in s 481(3) of the Corporations Act, to which I have referred. Mr Sulan also points out that, as I noted in RR Impex Pty Ltd (in liq) at [3]:
"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."
One issue of potential novelty arises in this application, so far as the authorities concerning the release of the liquidator generally relate to a liquidator appointed for all purposes. Mr Sulan has indicated that his research has not located, and I also have not located, any authority which deals specifically with the position in respect of the release of a special purpose liquidator. However, as Mr Sulan points out, the concept of "special purpose liquidator" is not a concept which is itself the subject of definition in the Corporations Act, and a "special purpose liquidator" is, it seems to me, simply a liquidator appointed for the purposes of the Corporations Act with a specified scope of responsibility. There seems to me to be no reason of principle, statutory construction or policy why the provision in s 480 of the Corporations Act cannot apply to the release of a special purpose liquidator, because he or she is a liquidator, just as other provisions of the Corporations Act applicable to the regulation of liquidators may apply to such a person, within the limits of their particular appointment. In the present case, the limited scope of a special purpose liquidator's appointment may be relevant to what needs to be established in order to warrant his or her release as liquidator, but does not seem to me to be an obstacle to such a release in an appropriate case.
This application is supported by evidence of Mr Parbery, dealing with the circumstances of his appointment and the work which has been done in respect of that appointment, together with evidence of his solicitor dealing with service of the application. Mr Parbery, by his affidavit dated 19 August 2014, sets out the circumstances of his appointment, following the decision of Bergin CJ in Eq in SingTel Optus Pty Ltd v Weston [2012] NSWSC 674; (2012) 90 ACSR 225. In particular, Mr Parbery was appointed in circumstances that proceedings had been instituted by his predecessor, a special purpose liquidator of One.Tel, against defendants in this Court and issues had arisen as to the relationship between that special purpose liquidator and the committee of inspection and, on 19 June 2012, the Court had made orders removing the predecessor to Mr Parbery as special purpose liquidator and appointing Mr Parbery in his place.
On 14 February 2014, Mr Parbery took steps to seek to resolve the existing proceedings and, on 9 April, 2014, the parties executed a deed of settlement which contemplated the settlement and dismissal of the proceedings on the basis that directions of the Court would be sought in respect of Mr Parbery's entry into the deed. Those directions were made by Brereton J by judgment delivered on 17 April 2014.
Mr Parbery's evidence is that, as a consequence of the settlement of the proceedings, the purpose and functions for which he was appointed special purpose liquidator were discharged and that he has no outstanding liabilities and obligations of which he is aware to any persons or entities who are not parties to the settlement deed. I will return to the significance, if any, of that qualification in a moment.
There is evidence that notification of the application has been given by the special purpose liquidator to the general purpose liquidator, who has, in turn, indicated that the general purpose liquidator neither opposes nor consents to that application. Notification of the application has also been given to the members of the committee of inspection which, it appears, have had substantial responsibility for the conduct of the relevant proceedings, and each of those have consented to the release of the special purpose liquidator under s 480 of the Corporations Act. Notice of the application has been also been given to the Australian Securities and Investment Commission which, by letter dated 26 September, 2014, has indicated that it neither consents to nor opposes the orders sought in the Originating Process.
Mr Parbery has, appropriately, dealt with the matters contemplated by rr 7.5(3) and 7.5(4) of the Corporations Rules in his affidavit. In particular, he gives evidence that he has completed all steps required to taken by him under the deed to effect the settlement of the relevant proceedings, including the distribution the settlement proceeds, and that there is no further property of One.Tel within his control as special purpose liquidator which has not been realised. It seems to me that evidence addresses, in substance, the content of the statement required by r 7.5(3)(a) of the Corporations Rules, albeit that content has different operation where a liquidator is appointed to part only of the company's property, as will commonly be the case in respect of a special purpose liquidator. Mr Parbery deals with several other aspects of the matters required by r 7.5(3), some of which have no particular application to his role as special purpose liquidator. He indicates that he has not received any objections to his release as special purpose liquidator from any creditor, contributory or other interested person, although that statement must be read in the context of the notice given of this application, to which I will refer below.
There is evidence as to Mr Parbery's remuneration as special purpose liquidator and he notes the payment of that remuneration has been approved in each case by the committee of inspection. The question whether OneTel should be deregistered following his removal as special purpose liquidator does not arise because, by contrast with many applications of this kind, the company's general liquidation will continue under the control of the general purpose liquidator, notwithstanding Mr Parbery's release.
Mr Parbery makes the important 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 special purpose liquidator which is likely to give any 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 that there has been any such act or default.
Mr Parbery seeks an order, as I noted above, that the operation of r 7.5(5) of the Corporations Rules be dispensed with, because it has no application to a special purpose liquidator. That rule contemplates that a liquidator must file, or annex to, his application in support of the application for release, a statement of the company's financial position at the date the application seeking release was filed and a summary of his receipts and payments in winding up the company. It seems to me that the former requirement can have no application to a special purpose liquidator, since the general purpose liquidator would have visibility of the financial position of the company generally. In principle, it seems to me that a summary of the liquidator's receipts and payments in winding up the company ought to be filed in respect of an application by a special purpose liquidator, confined to the area of his responsibility. In the present case, it seems to me that the schedule of the special purpose liquidator's remuneration and disbursements and Mr Parbery's evidence as to the distribution of the settlement proceeds, such that he holds no further property of the company, are sufficient for that purpose and that r 7.5(5) may be dispensed with on that basis.
Rule 7.5(6) of the Corporations Rules, in turn, contemplates that the liquidator must serve the application for relief, unless the Court otherwise orders, on specified persons, including each creditor who has proved a debt in the course of the winding up. Mr Parbery seeks dispensation from that requirement. There is evidence that One.Tel has 1,793 priority creditors and unsecured creditors who must be numerous, since they are owed in excess of $338 million. It is plain that those creditors are likely to have little, if any, interest in any application for release of the special purpose liquidator of this kind and the costs of notification to many persons with limited interest in the application are unlikely to be warranted. In the present case, whatever the position might have been in respect of release of a general purpose liquidator, it seems to me that notification of the committee of inspection, which has occurred, is sufficient to satisfy the policy of r 7.5(6), 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. For that reason, I would dispense with the requirement for notification of creditors under r 7.5(6) of the Corporations Rules, on the basis that notification of the committee of inspection is sufficient for present purposes.
In summary, it seems to me that the evidence establishes that, as Mr Sulan submits, the purpose and function for which Mr Parbery was appointed special purpose liquidator has now been discharged by settlement of the relevant proceedings. There is evidence, as I have noted, that he no longer has the company's assets, being the fruit of the settlement, in his possession and that he does not know of any outstanding liabilities or obligations to any persons or entities. A unanimous resolution has been passed by the committee of inspection that there is no objection to his retirement as special purpose liquidator and, as I have noted, each member of the committee of inspection has indicated that it consents to the special purpose liquidator's release. Neither the general purpose liquidator nor the Australian Securities and Investments Commission have opposed that release. In those circumstances, and subject to one remaining issue, it seems to me that an order for the release of the special purpose liquidator and orders dispensing with the application of the relevant rules, to which I have referred above, should be made in the form sought by the special purpose liquidator.
The remaining issue is that the special purpose liquidator's first affidavit noted that, as a consequence of the settlement of the proceedings, he had no outstanding liabilities or obligations to any persons or entities who are not parties to the settlement deed. The formulation of that statement at least raised the possibility that such liabilities or obligations might continue to exist under the deed. If such obligations continue to exist under the deed, then a question might arise, as to which the special purpose liquidator would need further to be heard, as to whether an order for his release was appropriate, while those liabilities or obligations were outstanding, and how such an order might affect those liabilities or obligations. I will hear the special liquidator further as to that matter prior to making orders which, in principle, I would be prepared to make for the release noted above.
[3]
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Decision last updated: 03 February 2015