Queensland Mining Corporation Ltd v Butmall Pty Ltd, in the matter of Butmall Pty Ltd (in liq) [2016] FCA 16

File number:

NSD 892 of 2015



Date of judgment:

15 January 2016


CORPORATIONS – whether Court should exercise power under s 473(1) of the Corporations Act 2001 (Cth) to remove liquidators – whether liquidators are subject to an actual or apparent conflict of interest – arguable conflict of interest not established – application dismissed


Corporations Act 2001 (Cth) s 473(1)

Cases cited:

ASIC v Franklin (liquidator), in the matter of Walton Constructions Pty Ltd [2014] FCAFC 85; (2014) 223 FCR 204

Dudley, in the matter of Manamy Pty Ltd v Deputy Commissioner of Taxation [2015] FCA 1448

In the matter of Butmall Pty Ltd [2015] NSWSC 1211

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

Queensland Mining Corporation Ltd v Renshaw [2014] FCA 365; (2014) 229 FCR 13

Renshaw v Queensland Mining Corporation Ltd [2015] FCCA 1555

Date of hearing:

15 January 2016


New South Wales


General Division

National Practice Area:

Commercial and Corporations


Corporations and Corporate Insolvency



Number of paragraphs:


Counsel for the Plaintiff:

Mr N Furlan

Solicitor for the Plaintiff:

Jurisbridge Legal

Solicitor for the Defendant:

Mr T Kerr of Lander & Rogers Lawyers

Solicitor for the Applicant on the Interlocutory Application:

Mr P Beazley of Beazley Boorman Lawyers


NSD 892 of 2015











15 JANUARY 2016


1.    The interlocutory application dated 17 December 2015 be dismissed.

2.    Howard Victor Renshaw pay the costs of the plaintiff and defendant of and in connection with the interlocutory application, as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.



1    This is an interlocutory application that James White and Luke Targett be removed as liquidators of Butmall Pty Ltd (in liq) (Butmall). Orders for their appointment were made by Markovic J on 10 December 2015. These orders were made:

1. Pursuant to s 459A of the Corporations Act 2001 (Cth), the respondent, Butmall Pty Ltd ACN 060 658 639, be wound up.

2. James White of BDO, Level 11, 1 Margaret Street, Sydney NSW 2000 and Luke Targett, Level 14, 140 William Street, Melbourne VIC 3000 be appointed as joint and several liquidators of the respondent.

3. The applicant's costs (including reserved costs, if any) be taxed and reimbursed out of the property of the respondent in accordance with s 466(2) of the Corporations Act 2001 (Cth).

2    At the time the liquidators were appointed no issue was raised before Markovic J about their appointment. However, a few days after her Honour made those orders communications were received about an application sought to be made by Mr Renshaw, the director of Butmall, for the liquidators who had been appointed to be removed. As such, on 18 December 2015, Markovic J made orders for the filing and service of the foreshadowed interlocutory application, as well as directions to enable the interlocutory application for removal of the liquidators to be heard today.

3    It is apparent from the evidence on which Mr Renshaw relies and the submissions made in support of the interlocutory application that the basis upon which it is said the Court, pursuant to its powers under s 473(1) of the Corporations Act 2001 (Cth), should remove the liquidators is that the liquidators are subject to an actual or apparent conflict of interest. The conflict of interest is said to arise in circumstances where the liquidators are partners of a firm known as BDO East Coast Partnership (BDO) given that another partner of that firm is the auditor of the major creditor, Queensland Mining Corporation Pty Ltd (QMC).

4    It is clear that BDO is and has been for some years the auditor of QMC. What is said on behalf of Mr Renshaw is that there is vested in Butmall, the company in liquidation, two potential claims against QMC, being claims as described in some written submissions which were relied upon by QMC in the proceeding before Markovic J at paragraph 15, namely that QMC owes Butmall what was said to be $264,000 for breach of a contract between QMC and Butmall of 27 November 2011 and that QMC also owes Butmall some $178,000 for services performed by Butmall under a contracting agreement dated 23 October 2012.

5    In short, what is put for Mr Renshaw is that because there are these claims or potential claims vested in Butmall, a reasonable observer might perceive that the liquidators might not bring an independent mind to bear upon the assessment of those claims, thereby giving rise to an apparent conflict of interest. Mr Renshaw, in the submissions put for him, relied upon the observations set out in [5] of Dudley, in the matter of Manamy Pty Ltd v Deputy Commissioner of Taxation [2015] FCA 1448 as follows:

(1)    A liquidator must be independent of the company, its directors and shareholders and individual creditors and must act impartially in the discharge of his or her duties and responsibilities: Re Stewden Nominees (No 4) Pty Ltd (1975) 1 ACLR 185 at 187.

(2)    A liquidator must ensure that he or she does not place himself or herself in a position where there is, or might be, a conflict between his or her duty to creditors and members and his or her personal interest: National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 161 FLR 1 at 29-30; [2001] NSWSC 253.

(3)    A liquidator may be removed for an actual or apparent conflict of interest, or if his or her conduct is such that a reasonable observer would perceive a lack of impartiality or lack of objectivity: Re Allebart Pty Ltd (in liq) [1971] 1 NSWLR 24 at 30.

(4)    A liquidator may be removed, inter alia, where the liquidator faces a conflict of interest arising from his or her relationships with the company, its management or persons interested in its affairs, or for bias or the appearance of bias: Re Ross Wood & Sons Pty Ltd (in liq); Wood v Targett (1997) 23 ACSR 291 at 298-299.

6    In addition, reliance was placed on the observations in ASIC v Franklin (liquidator), in the matter of Walton Constructions Pty Ltd [2014] FCAFC 85; (2014) 223 FCR 204, specifically the observations at [55] to [64] as follows:

55    Section 503 of the Corporations Act provides that the Court may "on cause shown" remove a liquidator appointed in a voluntary winding up and appoint another liquidator. The words "cause shown" are not to be construed narrowly. An applicant for removal may rely on any conduct or inactivity by a liquidator ranging from moral turpitude to bias, lack of independence, incompetence or other unfitness for office: Domino Hire Pty Ltd v Pioneer Park Pty Ltd [2003] NSWSC 496 at [58]; (2003) 21 ACLC 1,330 at 1,340. The overall considerations are the interests of the liquidation and the purpose for which the liquidator was appointed: Domino Hire at [58]-[63], 1,340-1.

56    Lehane J observed in Wood v Targett (1997) 23 ACSR 291 at 298-9 that the discretion under s 503 will commonly be exercised in favour of removal of a liquidator when it appears that the liquidator, through relationships and connections with the company, its management or particular persons concerned in its affairs, is in a position of actual or apparent conflict of interest. Lehane J gave examples in the authorities of the exercise of the discretion in these circumstances, namely, Aboriginal and Torres Strait Islander Commission v Jurnkurakurr Aboriginal Resource Centre Aboriginal Corp (in liq) (1992) 10 ACSR 121; Re Club Superstores Australia Pty Ltd (in liq) (1993) 10 ACSR 730; Re Biposo Pty Ltd (1995) 17 ACSR 730 and Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230.

57    An appearance of bias arising by association is a recognised category of disqualification: Webb v The Queen (1994) 181 CLR 41 at 74. It arises when the apprehension of bias results from some direct or indirect relationship, experience or contact with a person or persons interested in a matter.

58    The guiding principle is that a liquidator must be independent and be seen to be independent: Re Queensland Stations Pty Ltd (in liq) (1991) 9 ACLC 1,341 at 1,344; Re National Safety Council of Australia [1990] VR 29 at 34; Advance Housing at 233-4. In Re Chevron Furnishers Pty Ltd (in liq) (No 2) [1995] 1 Qd R 125 at 130, Fitzgerald P, Pincus JA and Williams J said:

The liquidator must have had no prior or other involvement either with the company in liquidation, its directors and major shareholders, or one of its creditors so that he could not fairly and impartially carry out his duties as liquidator requiring him, in broad terms, to act in the best interests of the general body of creditors.

However, as Santow J observed in Advance Housing at 234, some previous involvement by the liquidator may be permissible:

In my judgment, the correct balance is struck by permitting a liquidator to act as such even if there be a prior involvement with the company in liquidation, provided that involvement is not likely to impede or inhibit the liquidator from acting impartially in the interests of all creditors or be such as would give rise to a reasonable apprehension on the part of a creditor that the liquidator might be so impeded or inhibited. In short the question should be whether there would be a reasonable apprehension by any creditor of lack of impartiality on the liquidator's part in the circumstances, by reason of prior association with the company or those associated with it, including creditors, or indeed any other circumstance.

59    It was common ground at first instance, and on the appeal, that the test for apprehended bias in a liquidator is the same as that which applies to the judiciary and to administrative decision makers. That is the test stated by the majority in Ebner v Official Trustee in Bankruptcy [2000] HCA 63 at [6]; (2000) 205 CLR 337 at 344, namely, whether "a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide". Gleeson CJ, McHugh, Gummow and Hayne JJ went on to say (at [8], 345) that the application of this test requires two steps:

First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an "interest" in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.

60    The "double might" test stated in Ebner has been regarded as relatively undemanding and, on occasion, has been described as "Spartan". Nevertheless, the degree of independence and impartiality to be expected of a decision maker may differ from one statutory context to another. As Spigelman CJ observed in McGovern v Ku-ring-gai Council [2008] NSWCA 209 at [11]; (2008) 72 NSWLR 504 at 508, "the judicial paradigm is not universally applicable". Similarly, this Court observed in Cabcharge Australia Ltd v Australian Competition and Consumer Commission [2010] FCAFC 111 at [27] that, "although the test for apprehended bias is ordinarily the same wherever it arises, the precise language used in applying the test has frequently varied depending on the context in which it falls to be applied". This means, in the present case, that particular regard must be had to the position of liquidators in a voluntary winding up.

61    Liquidators are officers of the court and are, accordingly, expected to conduct themselves with independence, impartiality and integrity. However, questions of bias in relation to liquidators arise in a context which differs in material respects from that of the judiciary or administrative decision makers. Liquidators are themselves engaged in business in a competitive environment. They have to attract work. This makes it almost inevitable that they will develop contacts and relationships with those who are actual or prospective sources of referrals. Further, the success or otherwise of liquidators will depend in part on their maintaining good professional reputations.

62    All liquidators, both those who are appointed by a court and those conducting voluntary liquidations, are subject to review by ASIC, and, ultimately, by the courts.

63    The public interest in judges not recusing themselves too readily would not appear to be so strong in the case of liquidators. A decision by a liquidator to decline an appointment, whether too readily or otherwise, will not ordinarily raise a matter of public interest.

64    In my opinion, knowledge of these circumstances pertaining to liquidators can be imputed to the hypothetical reasonable fair-minded observer.

7    My attention was also drawn by the liquidator to [85] in ASIC v Franklin, specifically the observation that:

Consideration of the view of a hypothetical fair-minded observer in a case of this kind [a case involving a potential conflict of interest by way of association] requires

analysis of the interest said to give rise to the conflict and of the effect which that interest may have on the discharge of the respondents' duties.

8    Further, that:

It is necessary to keep firmly in mind that there must be a real, and not merely theoretical, possibility of conflict of duty or interest.

9    It seems to me that this case is to be determined by reference to this observation, namely, there must be a real and not merely a theoretical possibility of conflict of duty or interest. In the rather unusual circumstances of the present matter, I am firmly satisfied that nothing that has been put forward on behalf of Mr Renshaw should be taken as satisfying the requirement that there be a real and not merely theoretical possibility of a conflict of interest. The reasons for this have been comprehensively set out in the oral submissions made by Mr Furlan on behalf of QMC and are also set out in the written submissions which address the same issues at paragraphs 15 to 41. While those submissions were prepared for a different purpose – namely, the winding up application before Markovic J – they deal with the same two alleged claims of Butmall against QMC.

10    As to the first claim, I accept the submissions which Mr Furlan put that it is apparent that there is an issue estoppel arising from the decision of Perry J in the matter of Queensland Mining Corporation Ltd v Renshaw [2014] FCA 365; (2014) 229 FCR 13. I do not accept what has been said on behalf of Mr Renshaw about that matter. It is plain that what has been characterised as the first potential claim has been dealt with by Perry J, and that the claim is not available having regard to the outcome of those proceedings. This, moreover, is consistent with what occurred in Supreme Court proceedings before Black J in which the same claim (which was being then relied upon to set aside a statutory demand) was not pressed as a consequence, so it appears, of a judgment delivered the day before by Judge Street in the Federal Circuit Court of Australia (Renshaw v Queensland Mining Corporation Ltd [2015] FCCA 1555) in which his Honour dealt with the first claim and concluded that there was an issue estoppel at [9]. Insofar as Justice Black's decision (In the matter of Butmall Pty Ltd [2015] NSWSC 1211) is concerned, the fact of the first claim not being pressed as a result of an acknowledged issue estoppel is apparent from the reasons for judgment, in particular at [2].

11    This leaves the second claim. What is put by the respondents to this application is that there is an Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589) arising in relation to this claim. In the proceeding before Perry J there was a cross-claim in respect of this second claim which was expressly abandoned in an amended notice of cross-claim filed on 18 December 2013. This abandonment was said to be for the purpose of substantially decreasing the number of disputed issues, with no suggestion being given by Butmall that it wished to preserve this claim.

12    In these circumstances, I note again that Black J dealt with this matter in the Supreme Court proceedings. His Honour concluded that although he was dealing with a claim to set aside a statutory demand on the basis of an offsetting claim, it was clear that the relevant matter, being the same second claim, was raised in the earlier proceeding before Perry J and was then abandoned without any reservation of the possibility of bringing that claim in future proceedings. As such, his Honour concluded that there was no serious question to be tried or, indeed, even an issue deserving of a hearing as to whether Butmall could now maintain the very claim which it abandoned in the Federal Court proceedings.

13    In these circumstances, I have concluded that it cannot be said that there is a real as opposed to a merely theoretical possibility of any conflict of interest arising. This also has to be weighed against other relevant discretionary considerations. In particular, although the notice of consent of the liquidators was served on Butmall many months ago in August 2015, no objection was taken by or on behalf of Butmall at that time or by Mr Renshaw. The matter was allowed to progress to hearing before Markovic J on 10 December 2015. During the hearing before Markovic J, no objection was taken to the appointment of the liquidators. As has been said by QMC, the explanation that has now been proffered for this delay is inadequate. In fact, there is no explanation at all because I do not accept that Mr Renshaw having been out of the courtroom at the relevant time in any way explains why the issue was not raised between August 2015 and 10 December 2015. Nor do I understand why, when he went back into the courtroom and told his solicitor that the liquidators were the auditors of QMC, that the issue, if there be an issue, was not raised at that time. In addition, I accept the evidence from one of the liquidators, Mr White, that there has been substantial work done already in relation to the liquidation.

14    The only other observation I should make is that I accept the submissions put for the liquidators that there is nothing particularly unusual about a firm having a relationship with a creditor, in this case the relationship being that BDO is the auditor of QMC. It is Butmall that is the company subject to the liquidation. There is no suggestion of any potential conflict of interest in that regard, other than by reason of the allegations of the two claims by Butmall against QMC. The inference is said to be that a reasonable person might perceive that by reason of the existing auditor relationship between BDO and QMC, BDO might not bring an independent mind to bear upon the assessment of those claims. As I have said, this might have some substance if I could be persuaded that the claims were in any way reasonably arguable. The problem for this application is that, as matters presently stand, there is no basis upon which I could be satisfied that the claims are reasonably arguable. In any event, as has been said in the affidavit of Mr White, Mr Renshaw has not provided any information to the liquidators about the potential claims as requested (apart from this application).

15    Further, if there is some matter about which I am not aware which materially changes circumstances relating to these potential claims then, as set out in paragraph 23 of Mr White's affidavit, there are other means by which any possible conflict of interest could be addressed. The relevant point is that at present there are no indicia that give rise to any apparent conflict of interest.

16    Consequently, this application must fail and I make orders accordingly.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.


Dated:    27 January 2016