Reported Decision : (2003) 21 ACLC 606 New South Wales Supreme Court CITATION : re Love (as liquidator of ACN 077 368 257 Limited) [2003] NSWSC 149 HEARING DATE(S) : 11/03/03 JUDGMENT DATE : 11 March 2003 JURISDICTION: Equity Division Corporations List JUDGMENT OF : Barrett J DECISION : Order modifying Part 5.3A CATCHWORDS : CORPORATIONS - winding up - annual meetings and final meeting to be convened by liquidator in creditors voluntary winding up - failure by liquidator to convene annual meetings - explanation and undertaking given - annual meetings may be dispensed with LEGISLATION CITED : Corporations Act 2001 (Cth), ss.446A, 447A, 508 and 509 PARTIES : Andrew John Love (as liquidator of ACN 077 368 257 Limited) - Plaintiff FILE NUMBER(S) : SC 6000/02 COUNSEL : Mr D E GrieveQC/Mr F Kunc - Plaintiff Mr D R Stack - ASIC SOLICITORS : Allens Arthur Robinson - Plaintiff Solicitor for ASIC - 4 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J TUESDAY 11 MARCH 3003 6000/02 - ANDREW JOHN LOVE IN HIS CAPACITY AS LIQUIDATOR OF ACN 077 368 257 LTD (IN LIQUIDATION) JUDGMENT 1 On 18 February 2003, I declined to make an order under s.447A of the Corporations Act 2001 (Cth) dispensing with the requirement for meetings under s.508 in this winding up: see [2003] NSWSC 58. This was because the effect of the order would have been to grant a form of retrospective approval of past noncompliance by the plaintiff with his statutory obligations as liquidator in circumstances where that noncompliance did not seem to me to be satisfactorily explained. 2 Apart from that factor, there is no practical reason now why the requirement for s.508 meetings should not be dispensed with, since the winding up has reached a point where a s.509 final meeting will take place within a relatively short time. Adequate opportunities for consultation will, in the circumstances, be made available through that s.509 meeting and there is no need to attempt somehow to graft s.508 meetings on to it. The s.509 meeting alone will be sufficient. 3 As to the retrospective approval of the noncompliance by the liquidator, there has now been filed a body of evidence which explains in more detailed terms how the situation of noncompliance arose and the steps that were taken. There are two further affidavits of the plaintiff himself, an affidavit of the director in his firm who has been his principal assistant in this winding up and an affidavit of the solicitor at Allens Arthur Robinson who has had the main carriage of work done by that firm for the plaintiff as liquidator and previously as administrator. The impression created by the evidence as it stood on 18 February was that the liquidator had been simply inattentive and inactive. That is now shown not to have been the true position. Steps to seek relief from the requirement to hold s.508 meetings were initiated at a relatively early stage but became protracted. The fact remains, however, that there was noncompliance by the plaintiff with the statutory requirements to convene meetings under s.508. 4 The plaintiff has placed before the court, as an exhibit to one of his recent affidavits, a copy of a report made by him to ASIC. It is, if I may say so, a fully comprehensive and frank report that deals with all matters in an open and entirely appropriate way. It provides very useful information and addresses the concerns about compliance systems expressed in my previous judgment. 5 The plaintiff has taken seriously the question whether compliance measures within his firm are adequate. As well as placing before the court a copy of the report he has made to ASIC, he proffers to the court an undertaking (Exhibit B in these proceedings) to engage an external independent compliance consultant, whose appointment and terms of reference will be approved by ASIC, to review and report on the circumstances leading to the present application in respect of s.508 and to review, assess and make recommendations concerning compliance with statutory obligations generally in relation to external administrations under Chapter 5. 6 The steps the liquidator has taken are entirely satisfactory and the court accepts the undertaking that has been proffered. ASIC has expressed, through its counsel, acceptance of the position as reported to it and its willingness to play the part envisaged by the undertaking. The concern I expressed on 18 February about compliance systems within the plaintiff's firm is adequately addressed by the report to ASIC and the undertaking. The matter now rests with ASIC. Also, the concern I had about retrospective excusing of past noncompliance may be regarded as resolved and the matter of the s508 meetings may be dealt with by simply dispensing with the requirement for those meetings altogether on the footing that, as I have already mentioned, they will, in a practical sense, be subsumed in the final s.509 meeting. 7 As indicated on the previous occasion, I consider it appropriate to make an order dispensing with the need for notice of the s.509 meeting to be forwarded individually to members, as distinct from creditors, although no case has been made out for abolishing members' right to attend. It was suggested by ASIC that removal of the individual notification requirement might be supplemented by a requirement for advertising the s.509 meeting in the daily press. I must say that, with the interests of the members at this stage being entirely academic (see Gibbons v LibertyOne Limited (2002) 41 ACSR 442), I see no need for any such advertising requirement. 8 Pursuant to s.447A of the Corporations Act, I order that Pt 5.3A operate in relation to ACN 077 368 257 Ltd (In Liquidation) as if s.446A had the following additional sub-section: "(8) In the winding up, section 508 shall not apply and, in relation to any meeting convened in the winding up under sub-section 509(1), regulation 5.6.12(1)(b) of the Corporations Regulations shall apply as if the words 'member or' appearing therein were deleted." 9 As to the plaintiff's costs, I make order 2 in the amended originating process filed in court today. I also order that the costs of and incidental to attendance of counsel on behalf of ASIC today be paid by the plaintiff but not be costs in the liquidation of ACN 077 368 257 Ltd. ********** Last Modified: 03/12/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.