In the matter of HIH Insurance Limited (in liquidation);; In the matter of HIH Underwriting & Agency Services Limited (in liquidation);; In the matter of CIC Insurance Limited;; In the matter of FAI General Insurance Company Limited;; In the matter of Christopher John Honey and Anthony Gregory McGrath – in their capacity as liquidators of HIH Underwriting and Insurance (Australia) Pty Limited (in liquidation);; In the matter of HIH Underwriting & Insurance (Australia) Pty Limited;; In the matter of FAI Insurances Limited;; In the matter of HIH Insurance Limited (in liquidation);; In the matter of HIH Holdings Pty Limited [2020] NSWSC 803

Supreme Court New South Wales

Medium Neutral Citation: In the matter of HIH Insurance Limited (in liquidation);; In the matter of HIH Underwriting & Agency Services Limited (in liquidation);; In the matter of CIC Insurance Limited;; In the matter of FAI General Insurance Company Limited;; In the matter of Christopher John Honey and Anthony Gregory McGrath – in their capacity as liquidators of HIH Underwriting and Insurance (Australia) Pty Limited (in liquidation);; In the matter of HIH Underwriting & Insurance (Australia) Pty Limited;; In the matter of FAI Insurances Limited;; In the matter of HIH Insurance Limited (in liquidation);; In the matter of HIH Holdings Pty Limited [2020] NSWSC 803 Hearing dates: 24 June 2020 Date of orders: 25 June 2020 Decision date: 26 June 2020 Jurisdiction: Equity - Corporations List Before: Rees J Decision: Upon the resignation of Anthony McGrath as liquidator taking effect on 1 July 2020, Katherine Sozou be appointed as liquidator of the HIH companies and administrator of the HIH scheme companies together with Jason Preston. Leave granted to Katherine Sozou to hold both positions. Leave granted nunc pro tunc to Jason Preston to hold both positions. Dispense with rule 70-40 of the Insolvency Practice Rules (Corporations) 2016 (Cth) and align the lodgement of annual administration returns with the current lodgement date. Catchwords: CORPORATIONS – 19 year liquidation – two court-appointed liquidators – one liquidator retiring – whether under old s.473 (pre-Insolvency Law Reform Act 2016) all liquidators must be removed in order to replace just one: at [12]-[20] – Condon v Watson doubted – appropriate to appoint a new liquidator STATUTORY CONSTRUCTION – whether construction has unreasonable consequences – "subject to this Part" – specific provisions prevail over general provisions LEGISLATION – transitional provisions – whether current Corporations Act 2001 (Cth) applies – Part 10.25 – "ongoing external administration" – Division 90 of Insolvency Practice Schedule applies – section 1627 (vacancies in office of liquidator) prevails over section 1617 (old Act continues to apply to ongoing proceedings) – s 90-15 and s 473A apply to change of liquidator. CORPORATIONS – Rule 70-40, Insolvency Practice Rules (Corporations) 2016 (Cth) – dispense with requirement - no utility and unnecessary costs [36]-[40] CORPORATIONS – Section 1322(4)(d) Corporations Act – extensions and abridgement of time for lodging of accounts by retiring and incoming liquidators [43]-[45] CORPORATIONS – leave to assume roles of both liquidator and scheme administrator under section 411(7) and 532(2) Corporations Act 2001 (Cth) at [46]-[50], [53] – leave granted nunc pro tunc at [52]-[53] Legislation Cited: Corporations Act 2001 (Cth), ss 9, 411(7), 467(3), 473, 473(7), 473(8), 473A, 503, 530, 532(2)(c)(i), 1322(4)(d), 1551, 1578, 1591, 1592, 1597,1615, 1617, 1617(2), 1617(3), 1627; pt 10.25; Sch 2 Insolvency Practice Schedule (Corporations) ss 70-5; 70-50(1), 90-15, 90-15(3)(c) Corporations Amendment (Insolvency) Act 2007 (Cth), s 144 of Pt 2 Insolvency Law Reform Act 2016 Insolvency Practice Rules (Corporations) 2016 (Cth), r 70-40 Cases Cited: Bell Group Ltd (in liq) and Ors v ASIC (2018) 128 ACSR 247; (2018) 358 ALR 624; [2018] FCA 884 Condon v Watson [2009] FCA 11; (2009) 174 FCR 314; (2009) 69 ACSR 350 Condon v Watson was followed by Besanko J in Naudi, In the matter of ACN 156 335 787 Pty Ltd (in liq) [2017] FCA 815 Dean-Willcocks, Re Militto's Transport Pty Ltd (in liq) (2006) 61 ACSR 356; [2006] FCA 1792 In the matter of Equiticorp Australia Limited (in liquidation) and other companies [2017] NSWSC 1456 In the matter of Equiticorp Australia Limited (in liq) [2011] NSWSC 1368 In the matter of HIH Insurance Limited (in liquidation) & Ors [2018] NSWSC 1886 In the matter of HIH Insurance Ltd (in liq) & Ors [2015] NSWSC 2137 In the matter of PrimeSpace Property Investment Limited (In liquidation) [2018] NSWSC 919 In Winterbottom, in the matter of Ballistic Hydraulic Hose and Fittings Pty Ltd (in liq) [2017] FCA 1101 Nixon, In the matter of Nixon [2015] FCA 976 Re Bridgewater Investments Pty Ltd [2013] NSWSC 426 Re Free & others [2010] NSWSC 1079 Re Gavin Frederick Critchon Thomas and others and the Corporations Act 2001 [2013] NSWSC 2016 Re HIH Casualty and General Insurance Limited (2006) 56 ACSR 295; [2005] NSWSC 1180 Re Jick Holdings Pty Ltd (in liq) [2009] NSWSC 574; (2009) 234 FLR 22 Re McGrath & Anor (in their capacity as liquidators of HIH Insurance Ltd & Ors) (2010) 266 ALR 642; (2010) 78 ACSR 405; [2010] NSWSC 404 Re McGrath (as liquidators of HIH Insurance Limited (in liquidation)) (2005) 54 ACSR 55; [2005] NSWSC 506 Re Obie Pty Ltd (in liq) (No 4) (1984) 8 ACLR 967 Re Octaviar Ltd (in liq) [2016] NSWSC 16 Re One.Tel Limited [2009] NSWSC 1172; (2009) 262 ALR 150 Re Porter and Mansfield [2012] NSWSC 220 Re Spedley Securities Ltd (in liq) (1991) 4 ACSR 555 Re Vouris (2004) 49 ACSR 543; [2004] NSWSC 384 Re Wily v Wily (2003) 49 ACSR 94; [2003] NSWSC 1260 Texts Cited: Perry Herzfeld and Thomas Prince, Interpretation (2nd ed, 2020, Thomson Reuters) Category: Principal judgment Parties: In proceedings 2001/58663: Anthony Gregory McGrath and Jason Preston in their capacity as liquidators of HIH Insurance Limited (in liq) (First Applicants) HIH Insurance Limited (in liq) (Second Applicant) In proceedings 2001/58768: Anthony Gregory McGrath and Jason Preston in their capacity as liquidators of HIH Underwriting and Agency Services Limited (in liq) (First Applicants) HIH Underwriting and Agency Services Limited (in liq) (Second Applicant) In proceedings 2004/182176: Anthony Gregory McGrath and Jason Preston in their capacity as liquidators of HIH Holdings Pty Limited (in liq) (First Applicants) HIH Holdings Pty Limited (in liq) (Second Applicant) In proceedings 2002/63107: Anthony Gregory McGrath and Jason Preston in their capacity as liquidators of HIH Investment Holdings Limited (in liq) (First Applicants) HIH Investment Holdings Limited (in liq) (Second Applicant) In proceedings 2001/58784: Anthony Gregory McGrath and Jason Preston in their capacity as liquidators of FAI Insurances Limited (in liq) (First Applicants) FAI Insurances Limited (in liq) (Second Applicant) In proceedings 2001/58780: Anthony Gregory McGrath and Jason Preston in their capacity as liquidators of HIH Underwriting and Insurance (Australia) Pty Limited (in liq) (First Applicants) HIH Underwriting and Insurance (Australia) Pty Limited (in liq) (Second Applicant) In proceedings 2001/58772: Anthony Gregory McGrath and Jason Preston in their capacity as liquidators of CIC Insurance Limited (in liq and subject to a scheme or arrangement) (First Applicants) CIC Insurance Limited (in liq and subject to a scheme of arrangement) (Second Applicant) In proceedings 2001/58774: Anthony Gregory McGrath and Jason Preston in their capacity as liquidators of FAI General Insurance Company Ltd (in liq and subject to a scheme of arrangement) (First Applicants) FAI General Insurance Company Ltd (in liq and subject to a scheme of arrangement) (Second Applicant) In proceedings 2001/58776: Anthony Gregory McGrath and Jason Preston in their capacity as liquidators of HIH Casualty and General Insurance Limited (in liq and subject to a scheme of arrangement) (First Applicants) HIH Casualty and General Insurance Limited (in liq and subject to a scheme of arrangement) (Second Applicant) Representation: Counsel: Mr C McMeniman (Applicants)