Federal Court of Australia

Tayeh v 113 134 964 Pty Ltd (formerly Chase Building Group Pty Ltd) (in liq) [2022] FCA 649

ORDERS

THE COURT ORDERS THAT:

1.    Leave be granted, under s 532(2) of the Corporations Act 2011 (Cth), for the second plaintiff, Ms McCallum and the third plaintiff, Mr Resnick to seek to be appointed and act as the liquidator of the defendants.

2.    Pursuant to s 473A(1)(a) of the Corporations Act 2011 (Cth) and s 90-15(3)(c) of the Insolvency Practice Schedule (Corporations) in Schedule 2 to the Corporations Act 2011 (Cth), the vacancy in the office of the liquidator of:

(a)    113 134 964 Pty Ltd (ACN 113 134 964) (formerly CHASE BUILDING GROUP PTY LTD) (in Liquidation);

(b)    MANHATTAN DEVELOPMENT PTY LIMITED (ACN 144 701 173) (in Liquidation); and

(c)    WITH-YOU PTY LTD (ACN 613 236 123) (in Liquidation);

caused by the resignation of the first plaintiff, Mr Tayeh, be filled by the second plaintiff, Ms McCallum and the third plaintiff, Mr Resnick with each appointment to have effect from the date of this Order.

3.    Pursuant to s 90-15(3)(c) of the Insolvency Practice Schedule (Corporations) in Schedule 2 to the Corporations Act 2011 (Cth), the vacancy in the office of the liquidator of:

(a)    AJSS PTY LTD (ACN 108 834 582) (In Liquidation),

caused by the resignation of the first plaintiff, Mr Tayeh, be filled by the second plaintiff, Ms McCallum and the third plaintiff, Mr Resnick with each appointment to have effect from the date of this Order.

4.    The second and third plaintiffs issue a notice, within 7 days of these Orders, to all known creditors of the defendant companies which:

(a)    advises of the first plaintiff’s resignation as liquidator of the companies;

(b)    confirms the appointment of the second and third plaintiffs as liquidators of the companies;

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

(d)    confirms copies of the Originating Process and Affidavits filed by the first plaintiff are available to be provided to the creditors on request and at no cost; and

(e)    encloses a copy of these orders.

5.    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 defendant companies be dispensed with.

6.    A creditor or creditors of the defendant companies has liberty to apply to the Court in relation to the Court’s orders, with such liberty to be exercised by filing an Interlocutory Process with supporting affidavits, within 21 days of these Orders.

7.    The plaintiffs are to file a copy of the Court’s orders on each Court file concerning the company liquidations, as applicable.

8.    The plaintiffs bear their own costs of these proceedings and of the actions taken to implement the resignations of the first plaintiff and the appointment of the second and third plaintiffs in his place.

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

(REVISED FROM TRANSCRIPT)

HALLEY J:

Introduction

1    By an originating process filed on 31 May 2022, the plaintiffs seek orders pursuant to s 473A of the Corporations Act 2001 (Cth) (Act) and s 90-15(3)(c) of the Insolvency Practice Schedule (Corporations) (IPSC) in Schedule 2 of the Act, to fill the vacancies in the office of liquidator for each of the four defendants, being 113 134 964 Pty Ltd (ACN 113 134 964) (formerly CHASE BUILDING GROUP PTY LTD) (in liquidation), MANHATTAN DEVELOPMENT PTY LIMITED (ACN 144 701 173) (in liquidation), WITH-YOU PTY LTD (ACN 613 236 123) (in liquidation), and AJSS HOLDINGS PTY LTD (ACN 108 834 582) (in liquidation) (AJSS Holdings).

2    The vacancies have arisen by reason of the resignation of the first plaintiff, Mr Riad Tayeh, as the sole liquidator of each of those companies, such resignation to take effect only from the making of orders by the Court that two of his former partners, Ms Suelen McCallum (the second plaintiff) and Mr Antony Resnick (the third plaintiff) be appointed as joint and several liquidators of each of the defendants.

3    Mr Resnick and Ms McCallum have provided consents to act as joint and several liquidators of each of the defendant companies, subject to any necessary leave being granted under s 532(2) of the Act.

4    The plaintiffs rely upon an affidavit affirmed by Mr Tayeh on 30 May 2022 in support of the relief that they seek in the originating process.

Factual Background

5    The defendants, other than AJSS Holdings, were wound up by orders of the Supreme Court of the Australian Capital Territory and the Supreme Court of New South Wales. AJSS Holdings was wound up pursuant to a members’ resolution. Mr Tayeh, until yesterday, 31 May 2022, was a partner of de Vries Tayeh (Partnership) together with Mr Resnick and Ms McCallum.

6    Mr Tayeh practices as an insolvency accountant.

7    Mr Tayeh has been a registered liquidator since 1992 and is not currently subject to any disciplinary proceedings or investigations.

8    In or about March 2015, Mr Tayeh was diagnosed with stage 4 head and neck cancer and has been treated for that cancer since that time. Mr Tayeh has concerns about a deterioration in his health due to stress and work and an impending hearing of a creditor’s petition that has been served on him.

9    The events leading up to the service of the creditor’s petition on Mr Tayeh arose in or about 2006, when Mr Tayeh invested in a managed investment scheme known as Timbercorp.

10    As a result of that investment, a claim was subsequently made against him by the financier of that investment scheme, being Timbercorp Finance Proprietary Limited (in liquidation) (Timbercorp Finance). Mr Tayeh denied any liability to Timbercorp Finance but has been unsuccessful in defending proceedings that have been brought by that company.

11    He has recently been served with a creditor’s petition from Timbercorp Finance which is returnable on 23 June 2022.

12    Mr Tayeh gives evidence that the disputed litigation with Timbercorp Finance has caused him considerable stress, such that he has concerns about his health, and regardless of any bankruptcy which may follow from the hearing of the creditor’s petition he wishes to change his working commitments.

13    Mr Tayeh understood, as a result of the existence of the creditor’s petition and the potential for the making of a bankruptcy order against him, that his partners had grounds to give notice to him that he be expelled from the Partnership. Mr Tayeh was informed by Mr Resnick and Ms McCallum that they proposed to exercise their rights under the partnership agreement to give him notice of expulsion on or about 31 May 2022.

14    Following that notification from Mr Resnick and Ms McCallum, Mr Tayeh decided to exercise his rights under s 473 of the Act to resign as the liquidator of the defendant companies, such resignation to take effect from the date of any order of the Court made under s 473A or s 90-15(3)(c) of the IPSC to fill the vacancy which such resignations would cause.

15    On 31 May 2022, Ms McCallum and Mr Resnick provided Mr Tayeh with a formal notice confirming that he had been expelled from the Partnership.

16    Each of the four defendant companies have been provided with initial reports from Mr Tayeh, as a liquidator of each of those companies, which provided the information that is required to be provided to creditors in those reports.

Consideration

17    Given that at the time the consents by Ms McCallum and Mr Resnick to act as joint and several liquidators of the defendants were signed, they were a partner of an officer of the defendant companies, namely Mr Tayeh in his capacity as a liquidator of each of the defendants, I consider it prudent that an order be made pursuant to s 532(2) of the Act that they nevertheless be appointed as joint and several liquidators of the defendants. I appreciate that at the date of the hearing of the application, being the day after Mr Tayeh was expelled from the Partnership, that was not the case. But for the abundance of caution, I consider it appropriate to nevertheless grant leave pursuant to s 532(2) to the extent that it might otherwise be considered necessary.

18    The plaintiffs have, in accordance with r 2.8(3) of the Federal Court (Corporations) Rules 2000 (Cth), served copies of the documents in the proceedings on the Australian Securities and Investments Commission (ASIC). ASIC has indicated that it does not propose intervening in the proceedings. It has taken 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 this application.

19    The effect of s 70-50 of the IPSC and of r 70-30 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPRC) is that Ms McCallum and Mr Resnick will be required to give to the creditors of each company, as soon as reasonably practicable, the information specified in r 70-30(2): see Lock, in the matter of Lock [2021] FCA 682 at [10] (White J). The plaintiffs seek a dispensation from the requirement for Ms McCallum and Mr Resnick to do so on the basis that, given Mr Tayeh has previously circulated that information, there is no commercial utility in doing so again.

20    There is a utility in all the creditors of the four defendants being notified of Mr Tayeh’s resignation as liquidator and of the appointment of Ms McCallum and Mr Resnick in his place. In order to address that issue, the plaintiffs propose an order which will require Ms McCallum and Mr Resnick to provide a notice to all known creditors of each of the four defendants. I consider it appropriate to make such an order.

21    Given that that order will be made, I accept that it is appropriate to make an order dispensing with the requirement of the plaintiffs to comply with the obligation imposed by s 90-15(1) of the IPSC and r 70-30 of the IPRC.

22    Mr Tayeh gives evidence that as a result of his experience, he considers there are benefits to the creditors of each of the defendant companies for the Court to make orders appointing his former partners Ms McCallum and Mr Resnick as the joint and several liquidators of each of the four defendant companies. He states, and I accept, that those benefits that exist as at the date of this application are:

(a)    the staff of the Partnership have knowledge of the liquidations and, by comparison to transferring the appointment to another firm, they will not need to expend any time familiarising themselves with the files;

(b)    there will be no additional time and cost charges to the appointments as a result of the new liquidators familiarising themselves, because they are prepared to forgo charging any fees for that task and such fees will be minimal, due to the current involvement of the Partnership;

(c)    the new liquidators are consenting to act in circumstances where there are doubts about the recoverability of funds on the liquidators, and as partners of the Partnership, they are aware of the risk that they will not be paid for future fees; and

(d)    it is unlikely that any other liquidator would be willing to undertake that risk, in the circumstances.

23    I am satisfied, in all the circumstances, that it is in the interests of creditors that Ms McCallum and Mr Resnick be appointed as joint and several liquidators of each of the defendant companies following the resignation of Mr Tayeh as the liquidator of those companies, such resignation, as I have indicated above, to take effect from the date of making orders under s 473A and s 90-15(3)(c) of the IPSC.

Disposition

24    The orders sought in the originating process pursuant to s 473A of the Act and s 90-15(3)(c) of the IPSC and the related orders will be made.

Associate:    

Dated:    2 June 2022