Rowena Margaret Sigelski, James Alexander Shaw, Paul William Gidley and the Corporations Act 2001 [2012] NSWSC 449

Supreme Court New South Wales

Medium Neutral Citation: Rowena Margaret Sigelski, James Alexander Shaw, Paul William Gidley and the Corporations Act 2001 [2012] NSWSC 449 Hearing dates: 5 April 2012 Decision date: 05 April 2012 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: The Second Plaintiff appointed external administrator of the externally administered bodies corporate listed in Annexure "A" to the Originating Process. The Third Plaintiff appointed external administrator to the externally administered bodies corporate listed in Annexure "B" to the Originating Process. No order as to costs. Catchwords: CORPORATIONS - Winding up - Resignation of liquidator - Application for appointment of replacement liquidators. Legislation Cited: - Corporations Act 2001 (Cth) ss 495, 495(3), 499, 499(5), 502, 503, 532(2) Cases Cited: - Awada v Linknarf Ltd (in liq) [2002] NSWSC 873; (2002) 55 NSWLR 745 - Re Application of Vouris and Godfrey [2004] NSWSC 384; (2004) 49 ACSR 543 - Re Wily [2003] NSWSC 1260; (2003) 49 ACSR 94 Category: Principal judgment Parties: Rowena Margaret Sigelski (First Plaintiff) James Alexander Shaw (Second Plaintiff) Paul William Gidley (Third Plaintiff) Representation: Counsel: A.L. Connolly (First, Second and Third Plaintiffs) Solicitors: Baker Love (First Plaintiff) Trisley Lawyers (Second and Third Plaintiffs) File Number(s): 12/108391

Judgment- EX TEMPORE 1In this matter, three plaintiffs, Ms Rowena Sigelski, Mr James Shaw and Mr Paul Gidley, apply for the appointment of Mr Shaw in place of Ms Sigelski as the liquidator of several externally administered body corporates and for the appointment of Mr Gidley in place of Ms Sigelski as the liquidator of several other externally administered body corporates. 2Ms Sigelski is presently the liquidator of twenty companies which are, in the case of three companies, in members' voluntary winding up and, in the case of seventeen companies, in creditors' voluntary winding up. None of those appointments are appointments made by the Court. The First Plaintiff has resigned from her employment with the firm of Shaw Gidley, by which she has been employed, and seeks to resign her appointment as liquidator in the twenty voluntary liquidations which are in issue before me. There is in evidence a signed resignation by Ms Sigelski which will take effect when the Court makes orders replacing her as liquidator of the relevant companies. The persons proposed to replace Ms Sigelski as liquidator, Messrs Shaw and Gidley, are the principals of the firm at which she has been employed. Both of them consent to their appointment as liquidator. 3The application is primarily brought under s 502 of the Corporations Act 2001 (Cth) although the Plaintiffs have identified a possible alternate jurisdiction to make the relevant orders under s 503 of the Corporations Act. Section 502 provides that, if, from any cause no liquidator is acting, the Court may appoint a liquidator. Section 503 provides that the Court may, on cause shown, remove a liquidator and appoint another liquidator. 4Applications of the kind brought by the Plaintiffs have been dealt with in several previous decisions of the Court. Palmer J made orders of a similar kind in Re Wily [2003] NSWSC 1260; (2003) 49 ACSR 94, to which the Plaintiffs refer. The Court's jurisdiction to make such orders was considered by Barrett J in Re Application of Vouris and Godfrey [2004] NSWSC 384; (2004) 49 ACSR 543, where Mr Vouris had resigned from various appointments including his appointment as the sole liquidator of several companies in several voluntary windings up. Barrett J noted that s 495(3) and s 499(5) of the Corporations Act, in the case of a members' voluntary winding up and creditors' voluntary winding up respectfully, each contemplated that a liquidator could resign and allowed one method of appointing a replacement liquidator. Barrett J referred to his earlier decision in Awada v Linknarf Ltd (in liq) [2002] NSWSC 873; (2002) 55 NSWLR 745 and observed (at [10]) that s 502 of the Corporations Act should be regarded as an overriding power exercisable by the Court in the circumstance of a vacancy in the office of a liquidator in a voluntary winding up and permits the Court to appointment a liquidator in that situation, notwithstanding that the same result could be achieved by an appointment in general meeting in a members' voluntary winding up under s 495 of the Corporations Act and by a creditors' meeting in a creditors' voluntary winding up under s 499 of the Corporations Act. His Honour noted that a factor which supports the exercise of the Court's power to appoint a replacement liquidator in that situation, particularly where numerous companies are involved, is that there would be expense and inconvenience, in convening separate meetings of every relevant company to consider the appointment of a replacement liquidator and that expense and inconvenience may be avoided by the exercise of the Court's power under that section. 5Ms Sigelski gives evidence of several considerations which plainly support the exercise of the Court's power in the present circumstances. First, she identifies a benefit to the creditors if the handling of the files remain with staff of Shaw Gidley who have been working on those files. That is a common feature of applications of this kind, and in the ordinary course, there are likely to be advantages of continuity of staff in circumstances that a liquidator resigns which are most likely to be secured if a liquidator from the same firm is appointed. Ms Sigelski also gives evidence of her belief that it would be unduly expensive and inconvenient to have to convene meetings of members or creditors of each of the relevant companies for the purposes of filling the vacancies created by her resignation, and that factor was also recognised in Vouris. 6For these reasons, I would exercise the Court's power to make the relevant orders. As Barrett J noted in Vouris, if there is any reason that members or creditors do not favour the new appointment, it is of course open to them to approach the Court under s 503 of the Corporations Act to seek an alternative appointment. If they are content with the appointment, then there will be a significant saving by proceeding in this manner. 7I note that a question may arise in this case as to the application of s 532(2) of the Corporations Act if (although the evidence is not clear as to this matter) Messrs Shaw or Gidley or their firm, have claims for costs and disbursements exceeding $5,000 against any of the relevant companies. In that situation, they could not be appointed as liquidators of the relevant companies without leave of the Court. However, an appointment in that situation does not change the position of creditors in any adverse respect, since the claims for remuneration of the firm would be the same after the appointment as before notwithstanding the change in the identity of the liquidator. I consider that I should grant leave under s 532(2) of the Corporations Act to the extent to which it may be necessary for the appointment of Mr Shaw as liquidator of the companies listed in Annexure "A" to Ms Sigelski's affidavit and for Mr Gidley's appointment as liquidator of the companies listed in Annexure "B" of Ms Sigelski's affidavit. 8I note, for completeness, that it is not necessary for me to make an order under s 503 of the Corporations Act removing Ms Sigelski as liquidator of the relevant companies, since her resignation will take effect in accordance with its terms at the same time as the appointment of Messrs Shaw and Gidley as replacement liquidators under these orders. 9Accordingly, I make the following orders: 1. On their undertaking to pay the filing fee, the Plaintiffs have leave to file in Court the Originating Process dated 4 April 2012 and the affidavits of Rowena Margaret Sigelski sworn 2 April 2012, James Alexander Shaw sworn 4 April 2012, and Paul William Gidley sworn 4 April 2012. 2. The Originating Process be returnable instanter. 3. The Court notes the resignation of Rowena Margaret Sigelski (the First Plaintiff) from her appointments as liquidator of the companies listed in Annexures "A" and "B" to the Originating Process, those resignations taking effect at the time of the making of these orders. 4. Pursuant to s 502 of the Corporations Act 2001 (Cth), James Alexander Shaw (the Second Plaintiff) be appointed in the First Plaintiff's stead as the external administrator of the externally administered bodies corporate listed in Annexure "A" to the Originating Process with effect from the time this order is made. 5. Pursuant to s 502 of the Corporations Act 2001 (Cth), Paul William Gidley (the Third Plaintiff) be appointed in the First Plaintiff's stead as the external administrator of the externally administered bodies corporate listed in Annexure "B" to the Originating Process with effect from the time this order is made. 6. There be no order as to costs.