Tayeh v 113 134 964 Pty Ltd

JACKSON J: 1 Neil Cribb is a registered liquidator of long standing and a partner of the accounting firm RSM Australia Partners. Mr Cribb has retired from RSM Australia, which from the evidence appears to have taken effect on 30 September 2022. It appears that along with that, Mr Cribb wishes to retire as liquidator of a number of companies. 2 For some of those companies Mr Cribb is appointed jointly with another person, so if he ceases to be liquidator of those companies that will not give rise to any difficulty as the other liquidator will continue in office. However, for some companies Mr Cribb is, or was, the sole liquidator. I say 'was' because it appears from an affidavit dated 27 September 2022, which Mr Cribb has sworn, that the liquidations of certain companies were to be finalised before his retirement. But there are 15 companies where the liquidations have not been finalised and where Mr Cribb's retirement as liquidator will leave a vacancy in that office. 3 Mr Cribb therefore makes application for orders which will have the effect of replacing him as liquidator of those 15 companies. For 13 of the companies, Mr Cribb is in office by reason of court-ordered liquidations. So his application in relation to them is made under s 473A of the Corporations Act 2001 (Cth), which empowers the Court or the Australian Securities and Investments Commission to fill a vacancy in the office of a liquidator appointed by the Court. Two of the companies are in creditors' voluntary liquidation, and Mr Cribb's application there is made under s 499(3)(a), which empowers the Court to fill a vacancy in the appointment of a liquidator other than a liquidator appointed by the Court. 4 Mr Cribb proposes that another partner in RSM Australia Partners, Jerome Mohen, will replace him as liquidator of the relevant companies. Mr Mohen is a registered liquidator and, according to Mr Cribb's evidence, has considerable experience in corporate reconstruction and insolvency. He has been appointed to a number of large and complex liquidations and administrations, and Mr Cribb states on oath his belief that Mr Mohen is suitably qualified and experienced to be appointed liquidator of each of the relevant companies. Mr Mohen has affirmed an affidavit dated 28 September 2022 annexing his written consent to act as liquidator of those companies. 5 Mr Cribb's affidavit also gives evidence about how his proposed replacement by Mr Mohen will impact the interests of creditors of the companies. Mr Cribb's belief is that it will allow for continuity in the liquidations of the companies because current staff of RSM Australia Partners who have worked on the liquidations will be able to continue working on them under Mr Mohen's direction and supervision. According to Mr Cribb's affidavit, prior to his retirement on 30 September 2022 he was to give Mr Mohen any required background and briefings on each liquidation to ensure that the liquidation of each of the companies could proceed uninterrupted and as efficiently as possible. 6 Much of the work to transfer the liquidations had already taken place. Mr Cribb says, and Mr Mohen has confirmed, that in relation to each of the liquidations Mr Mohen intends to continue with the existing rates of remuneration. Mr Mohen has also provided a further affidavit today confirming that he does not have any personal interest in relation to any of the companies (other than an interest that arises solely by reasons of his position as a partner of RSM Australia), and that he will not charge for time he spends in becoming acquainted with the affairs of each of the companies. 7 Mr Cribb's belief is that it will be in the interests of the creditors of each of the liquidations for Mr Mohen to be appointed as liquidator. For the reasons given by Mr Cribb and Mr Mohen, I accept that to be the case. Mr Mohen's appointment is likely to ensure maximum continuity in the conduct of the liquidations at a minimum of additional cost to creditors, if any. 8 Mr Cribb also seeks orders that will be ancillary to the orders providing for his replacement as liquidator. One of those orders concerns reports to creditors. It is arguable that Mr Mohen's appointment as creditors to the relevant companies will trigger requirements under s 70-30 and s 70-40 of the Insolvency Practice Rules (Corporations) 2016 (Cth) to give written reports to creditors on matters such as the company's estimated assets and liabilities and the likelihood of creditors receiving a dividend. 9 However, Mr Cribb's affidavit indicates that he has already, in his capacity as liquidator of the companies, provided reports covering those matters either under s 70-30 and s 70-40 of the Insolvency Practice Rules or under the legislation that applied before those Rules were introduced in 2016. For that reason, Mr Cribb seeks an order of the court under s 90-15 of the Insolvency Practice Schedule (Corporations) (being Schedule 2 to the Corporations Act) exempting Mr Mohen from compliance with the reporting obligations consequent upon his appointment as liquidator of the relevant companies. That section of the Insolvency Practice Schedule has been used to exempt from compliance with those sections of the Insolvency Practice Rules in previous matters: see for example Tayeh v 113 134 964 Pty Ltd (formerly Chase Building Group Pty Ltd) (in liq) [2022] FCA 649 (Halley J). 10 Mr Cribb and Mr Mohen have given estimates in their affidavits of the likely cost to creditors should Mr Mohen be required to provide the reports. The estimates exceed $50,000 in total. It appears that the creditors of the companies will receive no substantive benefit from a repetition of the reports which Mr Cribb has already given, so that they should not be put to cost of that kind. It is appropriate to make the orders sought exempting Mr Mohen from the reporting requirement. 11 Mr Cribb and Mr Mohen have confirmed that, nevertheless, Mr Mohen will notify creditors of the companies by circular of Mr Cribb's resignation and Mr Mohen's appointment as liquidator, including notifying creditors of the remuneration rates of the liquidator and staff that are to apply. One of the orders sought will require Mr Mohen to do that. 12 The solicitors for Mr Cribb have corresponded with ASIC, which has confirmed in a letter dated 19 October 2022 that these matters are properly left for the determination of the Court, and that ASIC did not propose to intervene in the application or seek leave to appear at the hearing, which indeed ASIC has not done today. 13 For the above reasons it is appropriate to make orders essentially in the terms sought by Mr Cribb. Appropriately, Mr Mohen and RSM Australia Partners do not seek the costs of this application, which will be borne by RSM Australia Partners. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackson.