Supreme Court New South Wales Medium Neutral Citation: In the matter of Purcom No 34 Admin Pty Ltd (Receiver and Manager Appointed) [2012] NSWSC 543 Hearing dates: 3 May 2012 Decision date: 03 May 2012 Jurisdiction: Equity Division - Corporations List Before: Hammerschlag J Decision: Order for the removal of the applicant as receiver of Purcom No. 34 Admin Pty Ltd (Receiver and Manager Appointed) and the appointment of a new receiver. Order for the appointment of a new external administrator in number of other external administrations. Catchwords: CORPORATIONS - Australian Securities and Investments Commission Act 2001(Cth) ss 502 and 503 - Where liquidator is to be removed or has resigned his appointment in a number of external administrations after disciplinary proceedings - appointment of new liquidator being a principal of the firm where the first liquidator works - comprehensive undertakings having been given by the first liquidator to ASIC under s 93AA of the Australian Securities and Investments Commission Act 2001(Cth) - appointments made Legislation Cited: Australian Securities and Investments Commission Act 2001 (Cth) Corporations Act 2001 (Cth) Supreme Court Act 1970 (NSW) Cases Cited: Dean-Willcocks v Militto's Transport Pty Ltd (in liq) (2006) 61 ACSR 356 Category: Principal judgment Parties: Peter Ngan - Plaintiff Purcom No. 34 Admin Pty Ltd (Receiver and Manager Appointed) -First Defendant Australian Group Investments Pty Ltd - Second Defendant Banksia Building Services Pty Ltd - Third Defendant Bridal Village Australia Pty Ltd - Fourth Defendant Citi Constructions Pty Ltd - Fifth Defendant Concept 2001 Pty Ltd - Sixth Defendant Frassetto Design Pty Limited - Seventh Defendant Frontier Civil (Aust) Pty Ltd - Eighth DefendantGamis Pty Ltd - Ninth DefendantGocube Pty Ltd - Tenth DefendantInterbuild Resources Pty Ltd - Eleventh DefendantJJR Grech Pty Ltd - Twelfth Defendant Magnate Projects Pty Ltd - Thirteenth Defendant On-The-Spot Glazing Supplies Pty Ltd - Fourteenth Defendant Pelle Investments Pty Ltd - Fifteenth Defendant Salex Interiors Pty Ltd - Sixteenth Defendant Securit-E Holdings (MNC) Pty Ltd - Seventeenth Defendant Skatea Pty Ltd - Eighteenth Defendant Surfers Paradise Spa and Bath House Pty Ltd - Nineteenth Defendant Sydney Carwash Pty Ltd - Twentieth Defendant Undersky Pty Ltd - Twenty-First Defendant Representation: Counsel: M. Quintiliani - Plaintiff P.T. Russell - Australian Securities and Investments Commission Solicitors: Kells The Lawyers - Plaintiff File Number(s): 2012/65462 EX TEMPORE JUDGMENT 1HIS HONOUR:The plaintiff, Mr Peter Ngan, carried on business as an official liquidator until 31 March 2011, when he joined the practice of Jirsch Sutherland, after which time he did not accept appointments as an external administrator. Mr Roderick Mackay Sutherland, is a registered liquidator and partner of Jirsch Sutherland. 2In the first half of 2010, the Australian Securities and Investments Commission ("ASIC") reviewed twenty-four administrations in which Mr Ngan had been appointed external administrator with a view to ascertaining whether he had failed to carry out or perform adequately or properly his functions. The result of the investigations was that on 17 January 2012, ASIC accepted under s 93AA of the Australian Securities and Investments Commission Act 2001 (Cth), enforceable undertakings from Mr Ngan under which he will not, for thirty months perform any duty which requires the person performing such duty or function to be registered as a liquidator and in addition, he will not perform any work in relation to any external administration where he is replaced. 3Pursuant to an order of the Federal Court of Australia made on 2 September 2009, Mr Ngan was appointed receiver of Purcom No 34 Admin Pty Limited (Receiver and Manager appointed) ACN 006 794 667 ("Purcom"). By order of that Court, made on 12 September 2011, the proceedings in which he was so appointed were transferred to this Court and may be considered to have been made by this Court. Mr Ngan still occupies the office of receiver. 4As at 5 April 2012, Mr Ngan held sole appointments in fourteen creditors' voluntary liquidations and six appointments in members' voluntary liquidations. The companies concerned are identified in schedule A to the Originating Process. On 5 April 2012, Mr Ngan resigned those appointments. It is accordingly necessary for a new liquidator to be appointed in them. If he did not resigned, it would have been necessary to remove him and appoint someone else. 5It is clear that Mr Ngan must be removed as a receiver of Purcom and a new receiver appointed. Mr Ngan moves for orders that Mr Sutherland be appointed in each case. ASIC appeared, sought, and was granted, leave to appear on the application. 6Counsel for ASIC provided the Court with helpful written submissions which I will mark MFI 1 and which will be retained with the papers. ASIC neither consents to nor opposes the orders sought. 7There is no doubt that the Court can remove Mr Ngan as receiver of Purcom or appoint a new receiver in his place, in the circumstances which have occurred. See s 67 of the Supreme Court Act 1970 (NSW) 8So far as the appointment of a new liquidator in each of the other administrations is concerned, the Court has the power to do so either under s 502 or s 503 of the Corporations Act 2001 (Cth), whichever applies. 9The appointment of Mr Sutherland would be unexceptional but for the fact that Mr Ngan now works in his office. This raises the issue of Mr Sutherland's appointment being sufficiently an arm's length one and the concern described by Gyles J described in the application of Dean-Willcocks v Militto's Transport Pty Ltd (in liq) (2006) 61 ACSR 356 at [6] that the suspension of a liquidator may not achieve very much if the firm of which he is a member continues in practice to do the work. 10The Court must consider all of the circumstances, including the expense and convenience in the case of voluntary windings up to convene meetings of members and creditors to appoint a successor, the cost and convenience of having the administration transferred to an external administrator outside the firm or business where the former external administrator works and the experience and resources of the proposed replacement. In the present case, these factors support the making of the orders sought. 11More importantly however, in my view, is that the lack of arms length concern is alleviated by the comprehensive undertakings which Mr Ngan has given to ASIC. The seriousness of a failure to comply with those undertakings both Mr Ngan and Mr Sutherland, will undoubtedly not have escaped them. 12Moreover, I propose to include in the orders which I intend to make that notice of the orders be given to all relevant members and creditors to enable them to apply to vary the orders should they so be advised. 13ASIC properly raised a further issue concerning the form of the consents originally provided by Mr Sutherland which did not contain the necessary disclosures of relationships. That difficulty has been overcome by the execution of Mr Sutherland of new consents which comply. 14The form of the orders has been the subject of discussion between Mr Quintiliani, the solicitor who appeared for Mr Ngan, and counsel for ASIC, Mr Russell. I am satisfied that the orders proffered reflect the orders which are properly to be made in this proceedings. 15I make the Short Minutes of Order which I have initialled, dated today's date and placed with the papers. 16These orders are to be entered forthwith. ********** 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. Decision last updated: 22 May 2012