Case: Commonwealth of Australia v Irving (1996) 144 ALR 172
Outcome: cited
After giving due consideration to the prior nexus between Ferrier Hodgson and the respondent, His Honour decided that on balance it was not inappropriate that the proposed appointee be appointed as liquidator of the company. Other cases which indicate that it is necessary to look at the particular circumstances of each case before making a decision as to whether there is a reasonable apprehension of a conflict of interest in relation to the appointment of a proposed liquidator include Commonwealth of Australia v Irving (1996) 144 ALR 172; Network Exchange Pty Ltd v MIG Communications Pty Ltd (1994) 13 ACSR 544 and Advance Housing Pty Ltd (In Liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230. 15 In Irving , Branson J, after a careful analysis of the facts, considered that it had been shown that a fair minded person informed of the facts could reasonably entertain a doubt as to the capacity of Mr Irving to be independent in circumstances where he was required to investigate the past conduct of a person with whom he had a professional relationship. It was on this basis that Her Honour expressed the view that it would not be appropriate for Mr Irving to continue as an administrator of the estate of the respondent. 16 These authorities support the view that in the present case, there is a serious question as to whether the broad approach taken by the Board was in accordance with the established legal and equitable principles applicable to liquidators and administrators. In failing to investigate and consider the circumstances of particular appointments, and by accepting the relationship and the potential for conflict as the decisive consideration, it is at least reasonably arguable that the Board applied the test at too high a level of generality. 17 In my view, there is a serious question to be tried in this matter arising from the way in which the issue dividing the parties was formulated in the Board's reasons for determination. This question concerns whether the relationship alone is sufficient, or whether there must be requisite conduct where, having regard to the circumstances of each particular appointment at the time of the appointment, there are circumstances known which could lead to conflict of interest. It is arguably necessary to investigate the particular circumstances of appointment in relation to specific entities in order to determine whether there is a possibility of conflict. 18 In relation to the balance of convenience, ASIC accepts that publication of the notice that the applicant seeks to have stayed will have an adverse effect on the applicant's reputation. ASIC recognises that the applicant has been a registered liquidator and official liquidator for a substantial period of time and has a substantial reputation at stake. It also acknowledges the inconvenience which will arise if applications have to be made for the applicant's removal from the numerous positions to which he has been appointed. On the other hand, ASIC refers to the important fact that the Board has exercised a broad discretion as to the appropriate sanction. It notes that the Board's determination represents the evaluation of an experienced and qualified expert body, and requires due deference because of this evaluation. It is further urged that on a general basis and paying due regard to the protective nature of the Board's function the issues raised are directed to protection of the public interest as opposed to the resolution of competing private interests. ASIC refers to the application of appropriate standards and sanctions which are fundamental to the proper discharge of its functions, and points out that there is a weighty and legitimate necessity to ensure compliance with carefully formulated Codes of professional conduct. 19 The applicant, on the other hand, submits that ASIC points to no prospect or potential circumstance where any actual conflict of interest may arise or detriment be caused. The applicant also emphasises that the conduct occurred between 5 to 8 years ago, and that there have been no complaints about appointments after 2003 when the joint venture came to an end. There is uncontested evidence from Mr Dean-Willcocks that he has no present intention of entering into any similar arrangements. The applicant also points to the substantial expense and inconvenience in making applications for substituted appointees to handle the large number of commitments, liquidations and administrations in question. In addition, the applicant is also extremely concerned as to the impact on his reputation and that of his practice. In the event that he is ultimately successful, the applicant contends that publication of the Board's determination will cause irreparable harm which is not compensable. The lack of any likely or reasonably foreseeable harm arising if the stay is granted and an early hearing with a tight expedited schedule imposed is important in relation to the balance of convenience.