Supreme Court New South Wales Medium Neutral Citation: In the matter of Capricorn Homes Pty Ltd (in liq) [2014] NSWSC 1258 Hearing dates: 30 July 2014 Decision date: 30 July 2014 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Orders made for vacancy in the office of liquidator of company to be filled and that costs of application be costs in the winding up of company. Catchwords: CORPORATIONS - winding up - liquidators - application for appointment of liquidator under Corporations Act 2001 (Cth) - where there has been a death in office of official liquidator - whether Court should exercise power to appoint replacement liquidator. Legislation Cited: - Corporations Act 2001 (Cth) ss 499(5), 502, 588FF Cases Cited: - Condon v Watson [2009] FCA 11; (2009) 174 FCR 314 - Re Application of Vouris [2004] NSWSC 384; (2004) 49 ACSR 543 - Van der Velde v Estate of Sweeney [2013] FCA 593 Category: Interlocutory applications Parties: Estate of the late Duncan Meadley Danny Vrkic (Plaintiffs) Representation: Counsel: W Ellicott (Solicitor) Solicitors: Access Law Group (Plaintiffs) File Number(s): 2014/224386 Judgment - ex tempore 1By Originating Process filed in circumstances of urgency on 30 July 2014, the Estate of the late Duncan Meadley and Mr Danny Vrkic, an official liquidator, bring an application under, relevantly, s 502 of the Corporations Act 2001 (Cth) to appoint Mr Danny Vrkic as liquidator to Capricorn Homes Pty Ltd (In liq) ("Company"), in circumstances of the death of Mr Duncan Meadley, who was previously the liquidator of the Company. 2I note, for completeness, that an order was also sought removing Mr Meadley as the liquidator of the Company, for more abundant caution, but I do not consider that such an order is necessary, where Mr Meadley's death necessarily has the consequence that no liquidator is acting. In taking that approach, I note that it was also taken in Van Der Velde v Estate of Sweeney [2013] FCA 593, to which I will refer below. An order was also sought, but will not be required in the particular circumstances, providing for the extension of time for the commencement of certain proceedings under section 588FF(3) of the Corporations Act. 3The application is supported by evidence of Mr Ellicott, a solicitor who acts on behalf of the estate of the late Mr Meadley. Mr Meadley passed away on 20 June 2014, and, at the date of his death, was liquidator, inter alia, of the Company. He was appointed to the Company on 30 July 2011, and the liquidation is a creditors' voluntary liquidation within the scope of s 502 of the Corporations Act. 4The late Mr Meadley instructed Mr Ellicott's firm to investigate certain transactions, which have involved demands being made upon directors of the Company, and there is evidence that the limitation period for the commencement of proceedings against those directors expires today. In these circumstances, there is plainly significant urgency with the application, which needs to be dealt with, so that a new liquidator is in a position to commence any such proceedings, and avoid the loss of any opportunity to make recovery for the benefit of creditors of the Company by expiry of the limitation period. There is in evidence a consent by Mr Vrkic to his appointment as liquidator. 5Notice of the application has been given to Australian Securities and Investment Commission, which has indicated that it does not seek to be heard in respect of the application. 6Mr Vrkic in turn swears an affidavit in support of the application which indicates that he is a registered liquidator. The late Mr Meadley was previously an employee and associate of Mr Vrkic's firm, before establishing a separate firm. A manager employed by Mr Vrkic's firm assisted the late Mr Meadley in respect of the conduct of a number of insolvency matters under Mr Meadley's supervision. There is therefore, within Mr Vrkic's firm, an expertise and knowledge of matters relating to this winding up, which gives that firm and Mr Vrkic a natural advantage in respect of an appointment, and is likely to lead to a cost saving by the appointment of Mr Vrkic, who will be able to continue to use that manager's assistance, rather than appointing another liquidator to the Company. Mr Vrkic sets out the details of the matters giving rise to the potential proceedings, and expresses the view that having regard to the evidence available, the Company has reasonable prospects of pursuing the proposed defendants to the relevant proceedings. Mr Vrkic indicates his consent to be appointed as liquidator of the Company and indicates that if he is appointed, a summons can be filed today, within the limitation period, commencing proceedings against the proposed defendants. 7Section 502 of the Corporations Act relevantly provides that if, from any cause, there is no liquidator acting, the Court may appoint a liquidator. In the present case, by reason of Mr Meadley's death, there is no liquidator acting. The scope of that section was considered by Lindgren J in Condon v Watson [2009] FCA 11; (2009) 174 FCR 314, in a decision which has frequently been applied subsequently. His Honour there noted that s 499(5) of the Corporations Act provides that in the case of a creditors' voluntary winding up , if a liquidator, relevantly, dies, the creditors may fill the vacancy and a meeting of creditors may be convened by any two or more of their members. That approach would have been available in the present case, but it would have had the difficulty that some delay would have been involved in convening such a meeting, with the significant risk that the limitation period for the commencement of the proceedings would have lapsed unless extended. The relationship between ss 499 and 502 was considered by Barrett J (as his Honour then was) in Re Application of Vouris [2004] NSWSC 384; (2004) 49 ACSR 543, to which Lindgren J referred in Condon v Watson, where his Honour treated the power to appoint a liquidator under s 502 as an "overarching power" and exercised it to avoid the expense and inconvenience, and in this case, delay, associated with convening a meeting of creditors. In Van Der Velde v Estate of Sweeney above, Logan J also exercised the power in that section, following Condon v Watson, to appoint a liquidator in circumstances of the death of a liquidator in office. 8I am satisfied that this is an appropriate case in which to appoint Mr Vrkic as liquidator. It seems to me that he is a proper choice for the appointment, where an employee of his firm has already assisted in the liquidation, and that an appointment should be made urgently given the matters to which I have referred above. It seems to me it is in the interests of creditors to make that appointment, both to avoid the delay involved in a creditors' meeting and the associated costs, and to avoid the risk that the limitation period in respect of the proposed proceedings will lapse while such a meeting is convened. I will make the form of order which was made by Logan J in Van Der Velde v Estate of Sweeney. 9Mr Ellicott raised, in the course of submissions, the question whether an order for costs should be made in a manner which shared the costs between this liquidation and other liquidations of other companies of which Mr Meadley was appointed, which will be the subject of a separate application. I am satisfied that this is a proper case in which the costs of the application should be costs in the winding up of the Company, since the urgency of this matter necessitated that the application be brought as a separate application. 10Accordingly, I make the following orders: 1. The vacancy in the office of liquidator of Capricorn Homes Pty Ltd (in liquidation) caused by the death of Duncan Meadley be filled by Danny Vrkic. 2. The costs of this application be costs in the winding up of Capricorn Homes Pty Ltd (in liquidation). 3. These orders 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: 24 October 2014