Bride, Edward James v Australian Securities Commission & Anor [1997] FCA 213

C A T C H W O R D S CORPORATIONS - registered liquidator - security bond - liquidator de-registered at his own request - subsequently applied for discharge of security - applicant objected to such discharge - objection based on alleged misfeasance by liquidator in respect of two companies associated with applicant - liquidator appointed by secured creditor as receiver of the assets of those companies, but never appointed as liquidator to either of them - applicant alleged liquidator acted as "de facto liquidator" of both companies - whether security bond available in respect of losses said to have been suffered by the conduct of a person who has never been appointed as a liquidator of a relevant company. Corporations Law s.1284 Corporations Regulations reg.9.2.05(1) EDWARD JAMES BRIDE v. AUSTRALIAN SECURITIES COMMISSION and DAVID JAMES YOUNG No. WAG 126 of 1996 CARR J PERTH 8 APRIL 1997

IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WAG 126 of 1996 GENERAL DIVISION ) On appeal from the Administrative Appeals Tribunal B E T W E E N : EDWARD JAMES BRIDE Applicant and AUSTRALIAN SECURITIES COMMISSION First Respondent and DAVID JAMES YOUNG Second Respondent CORAM: CARR J. PLACE: PERTH DATE: 8 APRIL 1997 MINUTE OF ORDERS THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The applicant pay the first respondent's costs, to include the costs of the directions hearing on 17 September 1996. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WAG 126 of 1996 GENERAL DIVISION ) On appeal from the Administrative Appeals Tribunal B E T W E E N : EDWARD JAMES BRIDE Applicant and AUSTRALIAN SECURITIES COMMISSION First Respondent and DAVID JAMES YOUNG Second Respondent CORAM: CARR J. PLACE: PERTH DATE: 8 APRIL 1997 REASONS FOR JUDGMENT Introduction This is an appeal, under s.44 of the Administrative Appeals Tribunal Act 1975 (Cth), from a decision of the Administrative Appeals Tribunal (constituted by Deputy President T.E.Barnett) given on 31 July 1996. The Tribunal affirmed a decision of the first respondent, Australian Securities Commission ("the Commission"), made on 24 August 1995. That decision was to discharge the security bond of Mr David James Young, the second respondent (who until 7 May 1992 had been a registered liquidator), "on the basis that the legislation provided for the security bond to apply only in respect to duties performed as a liquidator". In particular, the Tribunal decided that even if a registered liquidator, while acting in the capacity of receiver and manager, in some manner conducted himself or herself as a "de facto liquidator", the security would not be available in relation to pecuniary loss caused by that conduct. Put slightly differently, the question of law to be decided is whether a security lodged by a registered liquidator, in accordance with s.1284(1) of the Corporations Law, for the due performance of that person's duties as a liquidator, is available only to satisfy claims in relation to the conduct of that person in his or her capacity as a liquidator appointed to a particular corporation or corporations. Factual Background The second respondent (to whom I shall refer also as "Mr Young") was registered as a liquidator on 26 November 1982 under s.20 of the Companies (Western Australia) Code ("the Code"). He may have previously been registered as a liquidator under the Companies Act 1961 because it is not clear from the evidence whether his appointment was under s.20(1) or s.20(2) of the Code. At all material times Mr Young was a partner in the firm of Messrs Peat Marwick or its successor Messrs KPMG Peat Marwick. On 8 April 1992 Mr Young, in accordance with s.1290 of the Corporations Law, requested the Commission to cancel his registration as a liquidator. On 7 May 1992 the Commission cancelled Mr Young's registration as a liquidator. On 31 August 1994 Mr Young gave notice (by advertisements published in "The Australian" and "The West Australian" newspapers) of his application to the Commission for the discharge of the security which he had lodged in relation to the performance of his duties as a liquidator. That security was lodged in accordance with s.22(1) of the Code but took effect, with some modifications, under the Companies Law - see s.1284A(2) of the latter. On 12 September 1994 the applicant wrote to the Commission objecting to the security being released. Over ten years earlier, on 9 August 1984 Mr Young (together with a Mr.J.D.Anderson) had been appointed by Australian Bank Limited ("the Bank") as joint receiver and manager of all of the assets of the applicant, the applicant's wife, and two companies associated with the applicant, Bride Foods Pty Ltd and Swan Stock Foods Pty Ltd ("the Companies"). Each of the Companies had in December 1982 executed debenture charges in favour of the Bank. Both those charges were registered by the Commissioner for Corporate Affairs on 31 December 1982. Mr Young was never appointed as a liquidator of either of the Companies. Although sued as a respondent in these proceedings, Mr Young took no part in them. The Statutory Framework Section 1284 of the Corporations Law relevantly provides as follows: "1284(1) Where the Commission grants an application by a person for registration as a liquidator or as a liquidator of a specified body corporate, the person shall lodge and maintain with the Commission a security for the due performance of his or her duties as such a liquidator in such form and for such amount as is, from time to time, determined by the Commission in relation to that liquidator and with such surety or sureties (if any) as the Commission, from time to time, requires. 1284(2) Where a security is lodged in accordance with subsection (1), the security may be applied by the Commission in such circumstances, for such purposes and in such manner as is prescribed." Regulation 9.2.05(1) of the Corporations Regulations provides that: