Supreme Court New South Wales Medium Neutral Citation: In the matter of Adellos Pty Limited (in liquidation); Parlamartu Pty Limited (in liquidation); Castlove Pty Limited (in liquidation); Donovi Pty Limited (in liquidation) [2013] NSWSC 747 Hearing dates: 8 April 2013 Decision date: 09 April 2013 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Matter adjourned pending final steps to be taken before order for release of liquidator made. Catchwords: CORPORATIONS - winding up - liquidators - orders sought by liquidator to be released as liquidator - where liquidator intends to effect deregistration o two companies after the order of release is made - where application for release is made without a parallel application by the liquidator for an order terminating the winding up or for the deregistration of the company. Legislation Cited: Corporations Act 2001 (Cth) ss 480(c), 481(3)-(4), 481(5)(b), 482, 488(2), 601AC. Supreme Court (Corporations) Rules 1999 (NSW) rr 2.8, 7.5, 7.5(3), 7.5(3)(g), 7.5(4), 7.5(6) Cases Cited: - Deputy Commissioner of Taxation v Tideturn Pty Ltd [2001] NSWSC 217; (2001) 37 ACSR 152 - Re Wayland as Liquidator of ABC Containerline NV (in liq) [2005] NSWSC 13; (2005) 52 ACSR 750 - Singer v Trustee of the Property of Munro [1981] 3 All ER 215 Category: Interlocutory applications Parties: Milan Visnic (Plaintiff) Peter Orest Sywak (First Defendant) Adellos Pty Limited (in liquidation) (Second Defendant) Parlamartu Pty Limited (Third Defendant) Castleove Pty Limited (in liquidation) (Fourth Defendant) Donovi Pty Limited (in liquidation) (Fifth Defendant) Representation: Counsel: S.A. Calabretta (Applicant/Liquidator) Solicitors: ERA Legal (Applicant/Liquidator) File Number(s): 2003/82389 Judgment 1The Applicant, Mr Michael Jones, seeks orders under s 480(c) of the Corporations Act 2001 (Cth) that he be released as liquidator of the Second Defendant, Adellos Pty Limited (in liquidation) ("Adellos") and the Fourth Defendant Castlove Pty Limited (in liquidation) ("Castlove") respectively. 2Section 480(c) of the Corporations Act relevantly provides that, where a liquidator has realised all of the company's property or so much of that property as can, in his or her opinion, be realised without needlessly protracting the winding up, and has distributed any final dividend to the creditors and adjusted the rights of the contributories among themselves and made any final return to the contributories, he or she may apply to the Court for an order that he or she be released. The effect of an order for release of a liquidator under s 480(c) is stated in s 481(3)-(4) of the Corporations Act as follows: "(3) An order the Court releasing the liquidator discharges him or her from all liability in respect of any act done or default made by him or her in the administration of the affairs of the company or otherwise in relation to his or her conduct as liquidator, but any such order may be revoked on proof that it was obtained by fraud or by suppression or concealment of any material fact. (4) Where the liquidator has not previously resigned or been removed, his or her release operates as a removal from office." 3The effect of such an order has been described as to "wipe the slate clean", subject to the limited exceptions set out in s 481(3): Singer v Trustee of the Property of Munro [1981] 3 All ER 215 at 219 (dealing with the corresponding English provisions in respect of a trustee in bankruptcy); Re Wayland as Liquidator of ABC Containerline NV (in liq) [2005] NSWSC 13; (2005) 52 ACSR 750 at [27]. The notification provisions in respect of such an application, to which I will refer below, allow such an application to be the forum at which any claim that the liquidator has been deficient in performing his or her role should be advanced: Deputy Commissioner of Taxation v Tideturn Pty Ltd [2001] NSWSC 217; (2001) 37 ACSR 152; Re ABC Containerline above at [28]. It appears to be implicit in the structure of the sections and those notification requirements that, if the Court is satisfied that the relevant notifications have been given, no creditors have objected to the release of the liquidator or raised any concern as to the performance of his or her duties and the other evidence contemplated by the appropriate rules is placed before the Court, then the Court would ordinarily make an order releasing the liquidator, unless any reason emerges why it should not do so. 4In this matter, Brereton J has previously granted special leave to Mr Jones under s 488(2) of the Corporations Act to distribute surplus funds in the liquidations of Adellos and Castlove in specified amounts to Mr Sywak and the trustee of the bankrupt estate of Mr Visnic. The application now made has been served on the Australian Securities and Investments Commission as required by rule 2.8 of the Supreme Court (Corporations) Rules 1999 (NSW) and also addresses the matters specified in rule 7.5 of the Corporations Rules, to which I will refer below. 5The application is supported by affidavits of Mr David Shannon dated 31 August 2012, 22 February 2013 and 5 April 2013. Mr Shannon has had day-to-day carriage of the relevant windings up subject to Mr Jones' supervision. The first of Mr Shannon's affidavits is primarily directed to the order for distribution of surplus funds that was previously made by Brereton J. Mr Shannon's affidavit dated 22 February 2013 indicates that outstanding tax liabilities in respect of the year ended 30 June 2013 have been discharged; that the liquidator has distributed a final dividend to creditors of Adellos and Castlove in respect of pre-appointment debts, namely to Mr Sywak in respect of Adellos and the Australian Tax Office in respect of Castlove; and the liquidator has discharged all of the post appointment liabilities and expenses that have accrued in respect of the liquidations, adjusted the rights of contributories in accordance with the orders previously made by Barrett J in previous proceedings in the matter and the determination of the entitlements in respect of Mr Visnic's shareholding in other proceedings in the Federal Court of Australia, and distributed the surplus to contributories as noted above. 6Mr Shannon's affidavit addresses each of the matters specified in rules 7.5(3)-(4) of the Corporations Rules, including indicating his opinion that the whole of the companies' property has been distributed and stating that he is not aware of any objection to the liquidators being released from the persons specified in rule 7.5(3)(g); and Mr Shannon makes the statements required by rule 7.5(4) of the Corporations Rules. That affidavit annexes a statement of the companies' financial position at the time of filing the application in accordance with rule 7.5(5) and a summary of the liquidators' receipts and payments. 7Rule 7.5(6) in turn requires that notice of the application be given to creditors that proved a debt in the case of the winding up of the companies and to each contributory of the companies. An employee of the liquidators' solicitors gives evidence as to the service of documents relating to the application on the companies' creditors, the Australian Tax Office and the Australian Securities and Investments Commission and the relevant contributories. The liquidator's solicitors have, properly, drawn those persons' attention to the effect of an order of release of the liquidator under s 481(3) of the Corporations Act, to which I have referred above. The trustee for Mr Visnic's bankrupt has advised, by his solicitors, that he neither consents to nor opposes the application for release and the Australian Securities and Investments Commission has indicated that it does not seek to be heard in respect of the application. 8There remain, however, two practical difficulties with the application. Mr Shannon's affidavit of 22 February indicates that it is contemplated that, after the order of release, the liquidator would effect the deregistration of Adellos and Castlove in due course after any remaining tasks in the liquidations had been attended to. There is a difficulty with that approach, because the effect of s 481(4) is that an order now made for the liquidator's release would operate as his removal from office, necessarily disabling him from undertaking those tasks or attending to the deregistration of the company unless the effective date of that order was deferred. 9A second difficulty is that, as Barrett J observed in Re ABC Containerline above at [37], the effect of an order releasing the liquidator would be to leave the original winding up order made at the time of his appointment in place, without a liquidator then being in place for the companies. As Barrett J observed, if an application for release is made other than in conjunction with a parallel application by the liquidator for an order terminating the winding up under s 482, the Court must have regard to that difficulty in determining whether to make the order for release. That difficulty might also be addressed if, as s 481(5)(b) of the Corporations Act contemplates, the liquidator were to seek an order that ASIC deregister the company at the same time as seeking an order that he be released. Section 601AC of the Corporations Act would in turn require ASIC to deregister the companies, if the Court had ordered their deregistration under s 481(5)(b) of the Act. 10I raised these matters with Mr Calabretta, who appeared for the liquidator today, prior to delivering my judgment, and the liquidator has indicated that he will attend to the remaining tasks in the liquidation, which are no more than to lodge the liquidator's Presentation of Account and Statements with ASIC in Form 524, and will then seek an order from the Court for the deregistration of the company to operate at the same time as the order for release. That course would, in my view, address the practical difficulty to which I have referred. 11I should indicate that, subject to being satisfied that an order for deregistration should be made at the same time as an order for release, I am satisfied by the evidence before me that an order should be made releasing the liquidator in respect of each company, to take effect at the same time as an order that ASIC deregister the relevant companies made under s 481(5)(b) of the Corporations Act. 12I will not make orders giving effect to the release today, for the reasons that I have noted, on the basis that such orders can be made at the same time as any orders for deregistration. I will adjourn the matter to the Corporations List on 15 April 2013, to allow the liquidator an opportunity to consider whether any further evidence is required in support of the application that ASIC deregister the relevant companies. The liquidator should also consider any notification requirements, including in relation to notice to the Australian Securities and Investments Commission, of that application. 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: 21 June 2013