In the matter of Richard James Porter and David Ian Mansfield. [2012] NSWSC 220

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Richard James Porter and David Ian Mansfield. [2012] NSWSC 220 Hearing dates: 12 March 2012 Decision date: 13 March 2012 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Plaintiffs to bring in short minutes of order to give effect to judgment. Catchwords: CORPORATIONS - Winding up - Replacement of liquidator - Administration - Replacement of administrator. Legislation Cited: - Corporations Act 2001 (Cth) ss 447A, 449D, 449D(2), 473, 473(1), 473(7), 502, 503, 532(2) - Supreme Court (Corporations) Rules 1999 (NSW) r 7.1 Cases Cited: - Condon v Watson [2009] FCA 11; (2009) 174 FCR 314; 69 ACSR 350 - Re Equiticorp Australia Ltd (in liq) [2011] NSWSC 1368 - Re Free [2010] NSWSC 1079 - Re Vouris [2004] NSWSC 384; (2004) 49 ACSR 543 - Re Wily [2003] NSWSC 1260; (2003) 49 ACSR 44 - Re McGrath [2005] NSWSC 506; (2005) 54 ACSR 55 Category: Principal judgment Parties: Richard James Porter and David Ian Mansfield (Plaintiffs) Representation: Counsel: G. Lancaster (Plaintiffs) Solicitor: Access Law Group File Number(s): 12/572232

Judgment 1By application filed on 21 February 2012, Messrs Porter and Mansfield apply for the appointment of: * Mr Mansfield as liquidator of various companies listed in Schedules 1, 2 and 5 of the Originating Process upon the resignation of Mr Porter as liquidator of those companies; * Mr Mansfield as sole liquidator of the various companies listed in Schedule 3 to the Originating Process upon the resignation of Mr Porter as one of the joint liquidators of those companies; and * Mr Mansfield as sole deed administrator of the company listed in Schedule 4 to the Originating Process upon the resignation of Mr Porter as one of the joint deed administrators of the company. 2This application is prompted by Mr Porter's intention to retire from practice and resign as a consultant to the firm of Moore Stephens in the near future, in circumstances that he is now 64 years of age. Mr Mansfield is a partner in that firm and intends to remain in that role after Mr Porter's retirement. Mr Mansfield and Mr Porter share common professional and administrative staff, who, together with Mr Mansfield, have assisted Mr Porter in respect of the relevant companies. Mr Mansfield has consented to the relevant appointments. Mr Porter gives evidence of the significant costs which would be incurred in convening meetings of the relevant companies and that, subject to the court making the relevant orders, he proposes to tender his resignation from relevant positions to take effect at the time the orders are made to the court appointing Mr Mansfield as liquidator, sole liquidator or sole administrator of each of the relevant companies. 3Notice of the application was published in the company notices section of the Australian newspaper, and the plaintiffs did not receive any objection to the application. The plaintiffs have also notified the Australian Securities and Investments Commission of the application, and the Commission has advised that it does not have any objection to Mr Mansfield's appointment as replacement for Mr Porter in the various external administrations and otherwise considers the matter is properly left for orders by the court. 4I should first note that various orders were sought in respect of Mr Porter's resignation in respect of the companies listed in Schedules 1, 2 and 5, in the form that the court ordered under s 473 of the Corporations Act 2001 (Cth) that Mr Porter resign as liquidator of the relevant companies. It is not necessary for me to make such an order, and I do not propose to do so since s 473(1) allows Mr Porter to resign of his own volition. The question for the court is the orders which should be made so far as the appointment of Mr Mansfield as liquidator or administrator is concerned. 5There is no difficulty, in principle, in making the proposed orders in respect of Mr Mansfield's appointment, although some issues as to the statutory mechanism for doing so arise. It will often be the case that there will be benefit to the relevant administrators in ensuring continuity within the one firm on the resignation or retirement of a partner or consultant. See Condon v Watson [2009] FCA 11; (2009) 174 FCR 314; 69 ACSR 350; Re Free [2010] NSWSC 1079 at [6]. 6As noted above, the first category of the orders sought is the orders under s 473(7) and s 502 of the Corporations Act that Mr Mansfield be appointed as official liquidator of the companies listed in Schedules 1 and 2 of the Originating Process. Specifically, s 473(7) provides that a vacancy in the office of a liquidator appointed by the court must be filled by the court. Rule 7.1 of the Supreme Court (Corporations) Rules 1999 (NSW), in turn, provides that: a liquidator appointed by the court, who wishes to resign, must file with the Registrar, and lodge with the Commission, a memorandum of resignation and his or her resignation takes effect on filing and lodging that memorandum. In order to resign his office, Mr Porter will need to adopt that course. The court has power to replace a court-appointed liquidator, who is about to resign: Re Wily [2003] NSWSC 1260; (2003) 49 ACSR 44; Re McGrath [2005] NSWSC 506; (2005) 54 ACSR 55; Re Free [2010] NSWSC 1079. 7The second category of order relates to the resignation of Mr Porter and the appointment of Mr Mansfield as liquidator of each of the companies listed in Schedule 5 of the Originating Process. Those companies were deregistered prior to the Corporations Act 2001 (Cth) and were subsequently reinstated by the court and Mr Porter was appointed as liquidator. The relevant entities are each a company for the purposes of the Corporations Act and the filing of a vacancy in the office of liquidator is governed by s 473(7) of the Corporations Act : Re Equiticorp Australia Ltd (in liq) [2011] NSWSC 1368. 8In these circumstances, I am satisfied that I have jurisdiction to make orders for the appointment of Mr Mansfield as liquidator of the relevant companies listed in Schedules 1, 2 and 5 of the Originating Process. I propose to make an order to substantially the same effect of that made in Re Wily and Re McGrath , namely an order that any vacancy in the office of liquidator arising by reason of the resignation of Mr Porter as liquidator of the companies named in Schedules 1, 2 and 5 be filled on the same date by the appointment of Mr Mansfield to hold office as liquidator of each such company. The form of order should specify a particular date for Mr Porter's resignation and for Mr Mansfield to fill the position so that the question of resignation and replacement does not remain open indefinitely. 9The next category of order sought relates to the resignation of Mr Porter as joint liquidator of the companies listed in Schedule 3, which are in creditor's voluntary winding up. The plaintiffs seek the removal of Mr Mansfield as joint liquidator of those companies and his appointment as sole liquidator of each such company. In Re Vouris [2004] NSWSC 384; (2004) 49 ACSR 543, the Court recognised that an order can be made of the form that, on the resignation of Mr Porter, Mr Mansfield be removed as the remaining liquidator under s 503 of the Corporations Act and then be appointed as sole liquidator. I am satisfied that such an order should be made in this case. 10The final category of orders sought relates to one company listed in Schedule 4 to the Originating Process where Mr Porter, together with Mr Mansfield, is joint deed administrator. An order may be made under s 449D of the Corporations Act in such a case on the basis that the reference to the administrator in that section includes one of several administrators, and alternatively, such an order can be made under the broad powers conferred on the court under s 447A of the Corporations Act : Re Vouris at [19]. I am satisfied that I should make an order under s 449D(2) and s 447A that any vacancy in the office of deed administrator of the company specified in Schedule 4 arising on the resignation of Mr Porter, on a specified date, be filled on the date it arises by the appointment of Mr Mansfield as sole administrator of the company. 11Mr Porter and Mr Mansfield properly drew attention to the possible application of s 532(2) of the Corporations Act so far as their firm may have claims for costs and disbursements exceeding $5,000 against particular companies. In the circumstances, I will grant leave, so far as it is necessary, for the appointment of Mr Mansfield as liquidator of the relevant companies for the purposes of that section. 12I will also make an order to the effect made by Barrett J in Re Equiticorp , that the Plaintiffs' costs of the proceedings be paid pro rata as expenses of the winding up of each of the relevant companies. 13The orders which I have indicated I will make above do not wholly correspond to those which were sought in the Originating Process. The plaintiffs should bring in short minutes of order to give effect to the judgment.