Federal Court of Australia

Lock, in the matter of Lock [2021] FCA 682

ORDERS

THE COURT NOTES THAT:

1.    The First Plaintiff, Mr Lock, has resigned as liquidator of the companies listed in Schedule 1 to these orders with those resignations to take effect from 30 June 2021.

2.    The Plaintiffs agree that they bear their own costs of these proceedings and of the actions taken to implement the resignations and the appointment of the Second Plaintiff in his place.

3.    No person other than the plaintiffs has sought to be heard on the application.

THE COURT ORDERS THAT:

1.    The application be heard instanter.

2.    Pursuant to s 473A(1)(a) of the Corporations Act 2001 (Cth) (Corporations Act) and s 90-15(3)(c) of the Insolvency Practice Schedule (Corporations) in Schedule 2 to the Corporations Act, the vacancy in the office of liquidator of:

(a)    CAD Cleaning Pty Limited (in Liquidation) (ACN 606 387 704);

(b)    Living SA Pty Limited (in Liquidation) (ACN 125 686 302); and

(c)    SA Freedom Pty Limited (in Liquidation) (ACN 613 212 561),

caused by the resignation of the First Plaintiff, Mr Lock, be filled by the Second Plaintiff, Mr Sheahan, with each appointment to have effect from 30 June 2021.

3.    The Second Plaintiff is by 5 pm on 11 June 2021 to issue a notice to all known creditors of the companies referred to in paragraph 2 of these orders which:

(a)    advises of the First Plaintiff’s resignation as liquidator of the companies;

(b)    confirms the appointment of the Second Plaintiff as liquidator of the companies;

(c)    informs creditors that they may make an application to the Court in relation to these orders;

(d)    confirms that copies of the Originating Process and affidavits filed by the Plaintiffs are available to be provided to creditors on request; and

(e)    encloses a copy of these orders.

4.    Pursuant to s 90-15(1) of the Insolvency Practice Schedule (Corporations), the requirements of r 70-30 of the Insolvency Practice Rules (Corporations) 2016 (Cth) in relation to the companies referred to in paragraph 2 of these orders be dispensed with.

5.    A creditor or creditors of the companies referred to in paragraph 2 of these orders has liberty to apply to the Court in relation to these orders, with such liberty to be exercised by filing an Interlocutory Process with supporting affidavits by 4.30 pm (ACST) on 30 June 2021.

6.    The First Plaintiff’s resignation, with effect from the date of these orders, as trustee of each of the bankrupt estates listed in Schedule 2 to these orders is, pursuant to s 180 of the Bankruptcy Act 1966 (Cth), accepted.

7.    The Second Plaintiff is by 5 pm on 11 June 2021 to provide a copy of these orders to each of the bankrupt persons the subject of the bankrupt estates listed in Schedule 2 to these orders.

8.    The Plaintiffs are to file a copy of these orders on each Court file concerning the company liquidations and concerning each of the bankrupt estates.

9.    There be no order as to costs.

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

EX TEMPORE REASONS FOR JUDGMENT

WHITE J:

1    Mr Ian Lock, the first plaintiff, is the Court appointed liquidator of 26 companies: jointly and severally with Mr John Sheahan, the second plaintiff, in the case of 23 companies; and as sole liquidator in the case of three. Mr Lock is also currently the trustee in bankruptcy of 19 bankrupt estates: 15 as joint and several trustee with Mr Sheahan and four as joint and several trustee with Mr Nicholas Fryer. Mr Sheahan and Mr Lock are the principals in the firm Sheahan Lock Partners. Mr Fryer is a director of that firm. All have considerable experience in insolvency.

2    Mr Lock is resigning from his position as liquidator and as trustee in bankruptcy. It is intended that his resignations as liquidator will take effect on 30 June 2021, whereas the plaintiffs intend that his resignations from the trusteeships in bankruptcy take effect on the making of the Court’s orders. The reason for the resignations is that Mr Lock intends to take a period of “sabbatical” of at least 12 months.

3    Mr Lock and Mr Sheahan propose that Mr Sheahan continue as the sole liquidator of the companies in which they are joint and several liquidators, that Mr Sheahan be appointed as liquidator of the three companies of which Mr Lock is currently sole liquidator and that Mr Sheahan and Mr Fryer, respectively, continue as the sole trustee of the bankrupt estates in which they are with Mr Lock presently joint and several trustees. They seek orders from the Court to give effect to those proposals together with some consequential orders.

4    Section 473A of the Corporations Act 2001 (Cth) provides that a vacancy in the office of a liquidator appointed by the Court may be filled by the Court. I take the word “vacancy” in s 473A to encompass a pending vacancy as well as an extant vacancy. In any event, s 90-15(3)(c) of the Insolvency Practice Schedule (Corporations) in Schedule 2 to the Corporations Act, provides that the Court may make an order that another registered liquidator be appointed as the external administrator of a company.

5    Mr Sheahan is a registered liquidator and, as indicated, he is the joint and several liquidator, with Mr Lock, of 23 companies. Both Mr Lock and Mr Sheahan have deposed to Mr Sheahan’s ability and capacity to undertake and to discharge properly the functions of liquidator in relation to those companies of which Mr Lock and Mr Sheahan are presently joint and several liquidators. There is no reason for the Court to doubt their evidence to that effect. There are obvious benefits to those liquidations in Mr Sheahan continuing as liquidator as it will save the time and expense of a replacement liquidator having to familiarise himself or herself with the liquidations before continuing the work in the liquidations.

6    Mr Lock has deposed that he is not aware of any prejudice to the liquidations if Mr Sheahan continues as sole liquidator or if Mr Sheahan is appointed as liquidator of the three companies of which he, Mr Lock, is presently the sole liquidator.

7    No order from the Court is sought in order that Mr Sheahan may continue as the sole liquidator of the 23 companies.

8    Mr Sheahan consents to the Court appointing him liquidator of the three companies of which Mr Lock is presently the sole liquidator. Again, both Mr Lock and Mr Sheahan have deposed to Mr Sheahan’s ability and capacity to undertake and to discharge properly the functions of the liquidator of each of those companies. Mr Sheahan has already familiarised himself, in his own time and without charge to the companies in liquidations, with the circumstances and issues of each liquidation. He has also had a briefing from Mr Lock on the outstanding matters which require attention in those liquidations.

9    Mr Lock has, in accordance with r 2.8(3) of the Federal Courts (Corporations) Rules 2000, served copies of the documents in the proceedings on the Australian Securities and Investments Commission. It is said that it does not propose intervening in the proceedings, taking the view that the matter is properly left for the determination of the Court. No other party has sought to be heard today in relation to the application.

10    Mr Lock and Mr Sheahan accept that the effect of s 70-50 in the Insolvency Practice Schedule (Corporations) and of r 70-30 of the Insolvency Practice Rules (Corporations) 2016 will require Mr Sheahan to give to the creditors of each company, as soon as reasonably practicable, the information specified in r 70-30(2). They seek a dispensation from the requirement for Mr Sheahan to do so on the basis that Mr Lock, having previously circulated that information, there is no commercial utility in doing so.

11    There is, of course, a utility in all of the creditors of the three companies being notified of Mr Lock’s resignation as liquidator and of the appointment of Mr Sheahan as the liquidator in his place. In order to address that circumstance, the plaintiffs propose an order which will involve Mr Sheahan providing a notice to all known creditors of each of the three companies. I consider it appropriate to make that order. Given that that order will be made, I accept that it is appropriate to make the dispensing order sought by the plaintiffs in respect of the obligation imposed by s 90-15(1) of the Insolvency Practice Schedule and r 70-30 of the Insolvency Practice Rules.

12    In the case of the bankruptcy trustee appointments, s 180 of the Bankruptcy Act 1966 (Cth) provides that the Court may, subject to such terms and conditions as it thinks just, accept the resignation of a registered trustee from the office of trustee of an estate.

13    Mr Lock and Mr Sheahan seek an order of the Court accepting Mr Lock’s resignations with those resignations taking effect today. As I understand it, Mr Fryer supports the Court making such an order. In those cases in which Mr Lock is the joint and several trustee with Mr Sheahan, Mr Sheahan intends to retain his appointments. Again, there is no reason for the Court to doubt Mr Sheahan’s ability and capacity to do so.

14    For the same reasons as given earlier, there are practical reasons making it appropriate that Mr Sheahan continue as trustee rather than a new trustee being appointed.

15    The position is the same in the case of the joint and several trusteeships which Mr Lock holds with Mr Fryer. The latter intends to continue his trusteeships and again there is no reason to doubt his ability and capacity to discharge the functions of trustee. I accept that there are advantages in Mr Fryer continuing to do so, in particular in the saving of the time and expense involved in a replacement trustee familiarising himself or herself with the circumstances of each trusteeship.

16    Mr Lock has deposed that he is not aware of any prejudice which would be caused to the bankruptcy estates by Mr Sheahan and Mr Fryer, respectively, continuing as sole trustees. For these reasons I am satisfied that, upon noting two matters, it is appropriate to make the orders sought by the plaintiffs.

17    The first matter to note is that the first plaintiff, Mr Lock, is to resign as liquidator of the companies listed in Schedule 1 to the orders, with those resignations taking effect on 30 June 2021. The second matter is that the plaintiffs agree that they are to bear their own costs of the proceedings and of the actions taken, and to be taken, by way of implementation of the resignations and the appointment of the second plaintiff in his stead. The orders are set out at the commencement of these reasons.

Associate:

Dated:    23 June 2021

Schedule 1

No. SAD 80 of 2021

Federal Court of Australia

District Registry: South Australia

Division: General

Companies in liquidation from which the First Plaintiff has resigned as liquidator with effect from 30 June 2021

1.    B & I Finances Pty Limited (in Liquidation) (ACN 095 761 452)

2.    BCI Finances Pty Limited (in Liquidation) (ACN 055 988 531)

3.    Binqld Finances Pty Limited (in Liquidation) (ACN 119 243 220)

4.    Cascade Infrastructure Pty Limited (in Liquidation) (ACN 147 019 654)

5.    Colvid Homes Pty Limited (in Liquidation) (ACN 131 159 978)

6.    Custom Sportswear Pty Limited (in Liquidation) (ACN 101 459 527)

7.    E.G.L. Development (Canberra) Pty Limited (in Liquidation) (ACN 008 517 646)

8.    Erbin Finances Pty Limited (in Liquidation) (ACN 138 259 800)

9.    Erma Nominees Pty Limited (in Liquidation) (ACN 000 957 040)

10.    Gerobin Finances Pty Limited (in Liquidation) (ACN 140 586 410)

11.    Impact Solutions Group Pty Limited (in Liquidation) (ACN 160 443 523)

12.    Ligon 158 Pty Limited (in Liquidation) (ACN 003 464 015)

13.    Ligon 159 Pty Limited (in Liquidation) (ACN 003 464 024)

14.    Ligon 268 Pty Limited (in Liquidation) (ACN 051 824 081)

15.    Marbin Finances Pty Limited (in Liquidation) (ACN 140 572 970)

16.    Maverick Investments (Miranda) Pty Limited (in Liquidation) (ACN 606 633 621)

17.    Milgerd Nominees Pty Limited (in Liquidation) (ACN 000 957 059)

18.    Octane Holdings Pty Limited (in Liquidation) (ACN 611 647 155)

19.    Octane Investments Pty Limited (in Liquidation) (ACN 117 346 022)

20.    Octane Property Pty Limited (in Liquidation) (ACN 603 256 131)

21.    Rawbin Finances Pty Limited (in Liquidation) (ACN 150 576 549)

22.    Territory Heavy Industries Limited (in Liquidation) (ACN 149 466 142)

23.    Yardoo Pty Limited (in Liquidation) (ACN 005 242 311)

24.    CAD Cleaning Pty Limited (in Liquidation) (ACN 606 387 704)

25.    Living SA Pty Limited (in Liquidation) (ACN 125 686 302)

26.    SA Freedom Pty Limited (in Liquidation) (ACN 613 212 561

Schedule 2

No. SAD 80 of 2021

Federal Court of Australia

District Registry: South Australia

Division: General

Bankrupt estates from which the First Plaintiff has resigned as trustee with effect from the date of these orders

1.    The Deceased Bankrupt Estate of Emil Menachem Binetter (SA 459 of 2020/1)

2.    The Bankrupt Estate of Christine Susan Brindal & Stephen Kennion Brindal (SA 481 of 2020/7)

3.    The Deceased Bankrupt Estate of Johann Gottlieb Engelbert Werner Frank (VIC 2073 of 2014/7)

4.    The Bankrupt Estate of Antonio Furina (SA 393 of 2020/5)

5.    The Bankrupt Estate of Sheryl Furina (SA 429 of 2017/2)

6.    The Bankrupt Estate of Alvin Sablan Gonzales (QLD 387 of 2019/5)

7.    The Bankrupt Estate of Patricia Annette Greene (WA 1618 of 2018/6)

8.    The Bankrupt Estate of Sean Timothy Greene (WA 1839 of 2018/7)

9.    The Bankrupt Estate of Lalindra Rajitha Ilayperuma (VIC 1532 of 2019/5)

10.    The Bankrupt Estate of Ann Ramona Jayasuriya (VIC 1555 of 2019/8)

11.    The Bankrupt Estate of Bunthoeun Khat (SA 1067 of 2018/7)

12.    The Bankrupt Estate of Robert Charles Moltoni (WA 2124 of 2018/8)

13.    The Bankrupt Estate of Glenn John Rufford (NSW 253 of 2020/5)

14.    The Bankrupt Estate of David Christian Weber (SA 291 of 2016/9)

15.    The Bankrupt Estate of Troy Michael Atkinson (WA 284 of 2020/4)

16.    The Bankrupt Estate of Helen Tai Iung Li (NT 63 of 2019/2)

17.    The Bankrupt Estate of Kevin Seu Tsoi Li (NT 64 of 2019/3)

18.    The Bankrupt Estate of Lino Pacillo (SA 977 of 2018/1)

19.    The Bankrupt Estate of Ninos Moshy (NSW 1828 of 2020/4)