FEDERAL COURT OF AUSTRALIA Hall, in the matter of Interchase Corporation Limited (in liquidation) [2020] FCA 430 File number: NSD 177 of 2020 Judge: GLEESON J Date of judgment: 3 March 2020 Date of publication of reasons: 2 April 2020 Catchwords: BANKRUPTCY AND INSOLVENCY – application for relief under Corporations Act 2001 (Cth) s 473A and Insolvency Practice Schedule s 90-15(3) – where current liquidators retiring and replacement liquidators required – where liquidations long-running and nearly complete – where replacement liquidators appointed – where convenient to appoint joint and several liquidators – application granted Legislation: Corporations Act 2001 (Cth) s 473, 473A, Sch 2, Insolvency Practice Schedule (Corporations) ss 90-15, 90-20 Federal Court (Corporations) Rules 2000 r 2.8 Cases cited: Free & Ors [2010] NSWSC 1079 In the matter of Golden Sands Hospitality Pty Ltd (in liq) [2017] NSWSC 410 Date of hearing: 3 March 2020 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 23 Solicitor for the Plaintiffs: D Turner of Assured Legal Services ORDERS NSD 177 of 2020 IN THE MATTER OF INTERCHASE CORPORATION LIMITED (IN LIQUIDATION) (ACN 010 663 993) GREGORY WINFIELD HALL First Plaintiff PHILIP PATRICK CARTER Second Plaintiff DANIEL AUSTIN WALLEY (and others named in the Schedule) Third Plaintiff JUDGE: GLEESON J DATE OF ORDER: 3 March 2020 THE COURT ORDERS THAT: 1. The requirement to serve this application and its supporting affidavits on the creditors of the following companies: (a) Interchase Corporation Limited (In Liquidation) (ACN 010 663 993); and (b) Owston Nominees No. 2 Pty Ltd ACN 001 769 099, (together, the "Companies") is dispensed with. 2. Pursuant to s 473A of the Corporations Act 2001 (Cth) (the Act) and/or 90-15(3)(c) of the Insolvency Practice Schedule to that Act, the Second Plaintiff and Third Plaintiff are jointly and severally appointed to fill the vacancy in the office of court-appointed liquidator of Interchase Corporation Limited (In Liquidation) (ACN 010 663 993) caused by the resignation of the First Plaintiff from that office. 3. Pursuant to s 473A of the Act and/or s 90-15(3)(c) of the Insolvency Practice Schedule to that Act, the Fifth and Sixth Plaintiff are jointly and severally appointed to fill the vacancy in the office of court-appointed liquidator of Owston Nominees No. 2 Pty Ltd (ACN 001 769 099) caused by the resignation of the Fourth Plaintiff from that office. 4. The creditors of the Companies have leave to apply within 60 days of the making of the above orders. 5. The Plaintiffs notify the creditors of the Companies of the making of these orders within 7 days of the date of these orders being made as follows: (a) by publishing a copy of these orders on the PricewaterhouseCoopers website (https://www.pwc.com.au/business-restructuring/insolvency-cases.html); by notifying the creditors of Interchase Corporation Limited (In Liquidation) ACN 010 663 993 in writing; and (b) by notifying the known creditors of Owston Nominees No. 2 Pty Ltd ACN 001 769 099 in writing. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GLEESON J: 1 On 3 March 2020, I made orders which had the effect of: (1) appointing the second plaintiff (Mr Carter) and the third plaintiff (Mr Walley) as joint and several liquidators to replace the first plaintiff (Mr Hall) as liquidator of Interchase Corporation Limited (in liquidation) (Interchase), and (2) appointing the fifth plaintiff (Mr Theobald) and the sixth plaintiff (Mr Ditrich) as joint and several liquidators to replace the fourth plaintiff (Mr Herbert) as liquidator of Owston Nominees No 2 Pty Ltd (in liquidation) (Owston). 2 I also made ancillary orders. 3 These are my reasons for making the orders. 4 The orders were made on the application of the six plaintiffs by an originating process dated 21 February 2020, supported by the following two affidavits: (1) Mr Hall's affidavit sworn 18 February 2020; and (2) Mr Herbert's affidavit affirmed 10 February 2020. 5 Rule 2.8 of the Federal Court (Corporations) Rules 2000 requires, relevantly, that a person making an application under s 90-20 of the Insolvency Practice Schedule (Corporations) (IPS), being Schedule 2 to the Corporations Act 2001 (Cth) (Act) for an order under IPS s 90-15 must (unless the Court otherwise orders) inform ASIC of the application. As required, the Australian Securities and Investments Commission (ASIC) was informed of the application. By letter dated 2 March 2020 to the plaintiffs' lawyers, ASIC stated that it did not propose to intervene in the application or seek leave to appear at the hearing of the application. Interchase 6 Mr Hall was appointed as liquidator of Interchase by this Court on 7 September 1999. 7 Mr Hall was appointed (together with Richard Barber, who has since resigned from his appointment) to replace the previous appointee, Greg Kelly, who was appointed when Interchase was ordered to be wound up in 1991. 8 Mr Hall's evidence was that the liquidation of Interchase is nearly complete. The principal outstanding tasks in the liquidation are to collect final distributions from the scheme administrators of HIH Casualty and General Insurance Limited (In Liquidation and subject to Schemes of Arrangement) (HIH) and FAI General Insurance Company Limited (In Liquidation and subject to Schemes of Arrangement) (FAI), McGrath Nicol, and distribute this distribution amongst the remaining creditors of lnterchase. The main activity in this liquidation in recent years has been the collection and disbursement of such distributions from the HIH and FAI scheme administrators. 9 Mr Hall was an employee of PricewaterhouseCoopers (PwC), and a former partner of PwC. He decided to retire from PwC, effective from 28 February 2020. In those circumstances, for reasons that he explained in his affidavit but which are, in any event obvious, it was not appropriate for him to continue as a court-appointed liquidator of Interchase. Mr Hall has signed a notice of resignation, expressly subject to the Court's appointment of another registered liquidator to fill the vacancy caused by his resignation. 10 Mr Carter and Mr Walley are registered liquidators and partners of PwC. Mr Hall has explained to them what work remains to be done in relation to the liquidation of Interchase and they consented to act as liquidators of Interchase, conditional on the Court making orders to facilitate Mr Hall's resignation. Owston 11 Mr Herbert was appointed as liquidator of Owston by this Court on 12 November 2010. 12 Mr Herbert was a partner of PPB Advisory at the date of his appointment as liquidator of Owston. PPB Advisory and PwC merged on 1 August 2018 and, thereafter, Mr Herbert was employed by PwC. 13 Mr Herbert's evidence was that the liquidation of Owston is also nearly complete. The sole asset yet to be realised is the right to part of proceeds of legal proceedings which were funded and pursued by a former director of Owston. The recovery of this asset is highly uncertain. 14 Mr Herbert had also decided to retire from PwC, effective from 28 February 2020. As with Mr Hall, it was not appropriate for him to continue as a court-appointed liquidator of Owston following his retirement. Mr Herbert has signed a notice of resignation, in similar terms to the notice signed by Mr Hall and described above. 15 Mr Theobald and Mr Ditrich are registered liquidators and partners of PwC. Mr Herbert has explained to them what work remains to be done in relation to the liquidation of Owston (that is, to collect Owston's share of any recovery from the litigation pursued by its former director) and they consented to act as liquidators of Owston, conditional on the Court making orders to facilitate Mr Herbert's resignation. Legal framework 16 The plaintiffs sought relief under s 473A of the Act and s 90-15(3)(c) of the IPS. 17 Section 473 of the Act provides that a liquidator appointed by the Court may resign. Section 473A provides: (1) A vacancy in the office of a liquidator appointed by the Court may be filled by: (a) the Court; or (b) ASIC. … (4) If more than one liquidator is appointed under this section, the Court or ASIC (as the case may be) must declare whether anything that is required or authorised by this Act to be done by the liquidator is to be done by all or any one or more of the persons appointed. 18 Section 90-15(1) provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. By s 90-15(2)(b), the Court may exercise the power under s 90-15(1) on application under s 90-20. Relevantly, by s 90-20(1)(d), an officer of the company may apply for an order under s 90-15. 19 Section 90-15(3)(c) provides that an order which may be made under s 90-15(1), is an order that another registered liquidator be appointed as the external administrator of the company. 20 Section 90-15(4) sets out, without limitation, matters which the Court may take into account when making orders under s 90-15(1). 21 I accepted that, in the circumstances of the resignations of the court appointed liquidators towards the end of two long running liquidations, it was appropriate to make orders for the appointment of replacement liquidators who are members of PwC, which is the firm from which Mr Hall and Mr Herbert will each retire. I accepted that it was probably convenient to appoint joint and several liquidators, rather than a single liquidator. I was satisfied that the proposed orders were consistent with the approach taken in similar cases, such as In the matter of Golden Sands Hospitality Pty Ltd (in liq) [2017] NSWSC 410 and Free & Ors [2010] NSWSC 1079. 22 As creditors were not notified of the application in advance, I also made an order for the notification of the orders to the creditors of Interchase and the known creditors of Owston, and granted liberty to apply to those creditors to enable them to seek a variation or discharge of the orders made. 23 The plaintiffs did not seek any order for costs, consistent with the usual approach that the costs of applications for orders of this kind are borne by the external administrators. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate: Dated: 2 April 2020 SCHEDULE OF PARTIES NSD 177 of 2020 Plaintiffs Fourth Plaintiff: JEFFREY LAURENCE HERBERT Fifth Plaintiff: SIMON GUY THEOBALD Sixth Plaintiff: ROBERT SCOTT DITRICH