Case: Re Application of Vouris [2004] NSWSC 384 ; (2004) 49 ACSR 543
Outcome: discussed
In Re Application of Vouris [2004] NSWSC 384 ; (2004) 49 ACSR 543 ( Vouris ), Barrett J had occasion to consider the relationship between s 499(5) and s 502 (at [8]-[10]). His Honour treated the s 502 power as an "overarching" power and exercised it in order to avoid the expense and inconvenience associated with the convening of a meeting of creditors (at [10]). Unlike the position in relation to the present five companies, that was a case of the appointment of multiple liquidators by the creditors. Accordingly, in that case, the creditors at least had approved of the identity of the continuing liquidator. Although that was not so in the present case, it was my view that a case was made out for the Court's exercising the power under s 502 and I followed that course. 54 During Mr Watson's time at Condon Associates, he and Mr Condon were appointed as liquidators of each of the nine companies identified in Schedule 4 to the Orders. In the case of eight of the companies, the winding up order and the appointment were by the Supreme Court of New South Wales. In the case of the remaining company, Pyoja Pty Ltd, the winding up order and the appointment were made by the Supreme Court of Victoria. 55 As noted at [40] above, s 473(1) of the Corporations Act provides that a liquidator appointed by the Court may resign. I also refer to rule 7.1 of the harmonised corporations rules of court (set out at [42] above). The evidence shows that written resignations signed by Mr Watson were filed in the Supreme Court of New South Wales and the Supreme Court of Victoria on 3 December 2008, and that notices of the resignations were lodged with ASIC either on that day or earlier. The effective date of Mr Watson's resignations in all nine cases was therefore 3 December 2008. 68 Uninstructed by authority, I would have assumed that where one of two liquidators ceases to hold office, the other succeeds to the office. Barrett J may have thought similarly: see Vouris at [12]. However, his Honour considered that there was a contrary indication in McPherson's Law of Company Liquidation (4 th ed, LBC Information Services, 1999) of which Professor Andrew Keay is the author. Footnote 237 at p 297 of that notable work states that where one of two joint liquidators dies, the appropriate course is for the Court to appoint another liquidator to act jointly with the survivor, or, in the alternative, to remove the survivor and reappoint him or her as sole liquidator. The learned author cites in support a decision of Sir Samuel Griffith, then Chief Justice of the Supreme Court of Queensland, in Re Aplin, Brown &amp; Co Ltd [1902] St R Qd 67 ( Aplin ). Barrett J considered that the relevant provisions of the then Companies Act of Queensland were sufficiently similar to those of the Corporations Act to give rise to the conclusion that any difficulties of the kind suggested in that case "also conceivably arise under the present provisions" (at [13]). 69 Barrett J took the course of removing the continuing liquidator ( Vouris concerned, not the death of a liquidator but the suspension of the registration of a liquidator for three months by the Company Auditors and Liquidators Disciplinary Board) and reappointing him as sole liquidator in the exercise of the power in s 503 of the Corporations Act . 70 Sections 502 and 503 provide: 502 If from any cause there is no liquidator acting, the Court may appoint a liquidator. 503 The Court may, on cause shown, remove a liquidator and appoint another liquidator. Section 502 did not apply in Vouris because there was still a liquidator acting, and Barrett J considered that s 503 gave only a composite power to remove and appoint, not simply a power to appoint. His Honour noted the question whether the expression "another liquidator" means a liquidator other than the one removed, but concluded that it did not mean this. 74 I was minded to follow the course established by Aplin and Vouris of removing the continuing liquidator, Mr Condon, and appointing him as sole liquidator. However, the position must now be considered in the light of the recent amendments made by the Corporations Amendment (Insolvency) Act 2007 (referred to at [61] above). Consistently with the new s 530 (set out at [61] above), s 506(4) of the Corporations Act was repealed by that amending Act (see s 3, Sch1, Pt 3, Item 113.) 85 In Re Wallace Smith; National Express Group Australia (Bayside Trains) Pty Ltd (recs and mgrs apptd) (admins apptd) (2003) 46 ACSR 674, Finkelstein J had to deal with an application for the appointment of a substitute administrator where one of two administrators had resigned. In the present case, however, that is not the relief sought. In passing, his Honour referred to s 449C(6) which provides: Where a company is under administration, but for some reason no administrator is acting, the Court may appoint a person as administrator on the application of ASIC or of an officer, member or creditor of the company. His Honour observed (at [5]): On one view, which may be the correct view, this condition cannot be satisfied when one of two or more joint administrators have ceased to act for, in that event, it cannot be said that "no administrator is acting". It will be recalled that Barrett J took a similar view in the context of joint liquidators in Vouris (see [69] above).