Federal Court of Australia

Graham v Condon (Liquidator), in the matter of Silcocks Road Estate Pty Ltd (In Liquidation) (No 2) [2026] FCA 1571

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed 23 July 2026 (Interlocutory Application) be dismissed.

2.    The plaintiff pay the defendant’s costs of the Interlocutory Application.

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

REASONS FOR JUDGMENT

MOORE J:

1    The plaintiff, Mr Graham, wishes to remove the defendant, Mr Condon, as liquidator of Silcocks Road Estate Pty Limited (in liq) (receivers appointed) ACN 647 360 530 (the Company).

2    By originating process dated 18 February 2026, Mr Graham made an application (the Main Application) under section 90-15 and section 90-20 of Schedule 2 to the Corporations Act 2001 (Cth), being the Insolvency Practice Schedule (Corporations) (IPS Corps), seeking that:

(a)    Mr Condon be removed as liquidator of the Company;

(b)    Mr Gregory Andrews and Mr Andrew Juzva of GS Andrews Advisory Pty Ltd, in their capacity as receivers and managers appointed to the Company (the Receivers), be appointed as replacement liquidators of the Company; and

(c)    the replacement liquidators provide him with various details regarding the proposed sale of the Company’s real property.

3    Mr Graham is a litigant in person. Mr Graham did not obtain or file a consent to act as liquidator from the Receivers, but now seeks that an independent registered liquidator or special purpose liquidator be appointed as liquidator of the Company as well as a variety of other orders relating to the powers of any replacement or special purpose liquidator, once appointed.

4    The hearing of the Main Application is not scheduled for some time. In the meantime, Mr Graham has sought to call a meeting of creditors so that he can remove Mr Condon by other means. On 23 July 2026, Mr Graham filed an interlocutory application (Interlocutory Application) seeking an order, pursuant to section 90-15 of the IPS Corps, that Mr Condon convene a meeting of the creditors of the Company. There is some question as to whether the Interlocutory Application is properly brought as ancillary and interlocutory relief in the proceeding commenced by the originating process, but in light of my conclusion on the Interlocutory Application there is no need to consider that question further.

5    These are my reasons with respect to the Interlocutory Application.

Evidence

6    The plaintiff relies on three affidavits, being the affidavits of John Frederick Graham filed on 23 July 2026, 4 August 2026 and 13 August 2026. The respondent relies on four affidavits being the affidavits of Schon Gregory Condon dated 17 April 2026, 12 May 2026 and 12 August 2026 as well as the affidavit of James David Moloney dated 12 August 2026.

7    During the hearing on 26 August 2026, the defendant also tendered Exhibit SGC-1 (being the exhibit to the affidavit of Schon Gregory Condon dated 17 April 2026) and Exhibit JDM-2 (being the exhibit to the affidavit of James David Moloney dated 12 August 2026).

8    No objection was raised by either party to this evidence, and the evidence has therefore been read on this Interlocutory Application.

Background

9    On 24 August 2022, by special resolution, the Company resolved to be wound up and to appoint Mr Condon and Mr King as joint and several liquidators. Mr King later resigned as liquidator of the company in August 2024, leaving Mr Condon as the Company’s sole liquidator.

10    Mr Condon first called for formal proofs of debt on 5 September 2022 as part of the initial circular to the creditors of the Company. This circular advised the creditors of the liquidators’ appointment and the initial creditors meeting, as well as providing the creditors with documents including a Formal Proof of Debt (Form 535) to be completed “by each Creditor intending to be represented at the meeting”.

11    In response to this circular, on 16 September 2022, Mr Graham provided the liquidators with a proof of debt for $200,000 in respect of “Consulting Works, over 2 Years” conducted between 2020 to 2022 (POD). No further details or substantiating documentation was provided with Mr Graham’s POD.

12    On 24 November 2022, the liquidators issued a statutory report to the creditors of the Company in which they stated that the director of the Company had reported unsecured creditor claims totalling $381,875. The liquidators also requested that any creditors complete and return to them a formal proof of debt “together with any documents substantiating their claims in the Liquidation if they had not provided one previously”.

13    There were other instances of Mr Condon referring to the claims in relation to the company being unsubstantiated, including by communications to Mr Graham directly as well as by documents filed in these proceedings. Some of these instances include:

(a)    On 13 February 2026, prior to Mr Graham making his Application, Mr Condon issued a further report to creditors where he recorded that a number of proofs of debts remained unsubstantiated and indicated that these claims cannot be admitted unless and until sufficient documentary evidence is provided;

(b)    the materials initially filed by Mr Condon is these proceedings, including his written submissions dated 12 May 2026 ([11]-[12], [29]) and 27 July 2026 ([2]) as well as his affidavit dated 12 May 2026 ([4](h)), emphasised that Mr Graham’s POD remained unsubstantiated; and

(c)    the solicitors for Mr Condon wrote to Mr Graham on three separate occasions (18 June 2026, 24 June 2026 and 30 June 2026) inviting him to substantiate his POD. For example, in the letter dated 18 June 2026, Mr Condon’s solicitors said that Mr Condon was unable to consider whether Mr Graham’s request to call a meeting was a valid request until he provided documents that might substantiate his claim. The letter also noted that even if Mr Graham substantiated his claim, it might still be unreasonable for Mr Condon to call a meeting where Mr Graham had not offered to cover the costs of such a meeting.

14    On none of these occasions did Mr Graham provide documentation substantiating his POD to Mr Condon or his solicitors.

15    However, on 4 August 2026, after the Interlocutory Application had been filed and following the case management hearing on 29 July 2026, Mr Graham filed with the Court documentary evidence said to support his POD. This was contained in Exhibit JFG-12 to his affidavit dated 4 August 2026, which includes a one-page document titled “Management and consultancy Agreement” between Mr Graham, Break Ground Developments and the Company dated 26 January 2021 (Management Agreement). The Management Agreement suggests that the Company contracted Mr Graham and Break Ground Developments to perform certain activities relating to property obtained by the Company, but no price relating to those activities is given.

16    Mr Condon received the Management Agreement on 5 August 2026. On the same day, Mr Condon’s solicitors wrote to Mr Graham, explaining they had not previously seen the Management Agreement and requesting further detail as to how the sum of $200,000 in his POD was calculated. On 6 August 2026, Mr Graham replied by email and provided a further document titled “Memorandum Confirming Management and Consultancy Commission Arrangement” signed 28 January 2021 (Management Memorandum) as well as previously undisclosed calculations of the sum claimed in his POD.

17    On this basis, in paragraph 9 and 21 of his affidavit dated 12 August 2026, Mr Condon has now accepted Mr Graham’s POD in full for all voting purposes including for the purpose of directing Mr Condon to convene a meeting of the Company’s creditors in accordance with s 75-15(1)(c) of the IPS Corps. Mr Condon also accepts that Mr Graham’s POD represents more than 25% of the value of creditors’ claims.

18    I pause here to note a few things with respect to Mr Condon’s acceptance of Mr Graham’s POD. On 11 June 2026, the day prior to the first case management hearing before me in this proceeding, Mr Condon indicated that for the purposes of the proceeding he would concede that Mr Graham is a creditor of the Company for an unknown or unspecified amount. The letter provided to Mr Graham in this respect indicated that the concession was not to be taken as an adjudication by Mr Condon of his POD or as a dispensation of any requirement for Mr Graham to establish the quantum of his claim for dividend or any other purposes. Following the provision of the Management Agreement and Management Memorandum, Mr Condon also indicated in his affidavit dated 12 August 2026 that he was only accepting Mr Graham’s POD for voting purposes (and not dividend purposes, to which a higher standard of proof would be applicable). These are important caveats on Mr Condon’s current acceptance of Mr Graham’s POD and status as a creditor of the Company.

19    Despite now accepting Mr Graham’s POD for voting purposes and for the purposes of calling a meeting, Mr Condon has nonetheless formed the opinion that complying with Mr Graham’s direction to convene a meeting of the Company’s creditors would be unreasonable, within the meaning of s 75-15(2)-(3) of the IPS Corps and 75-250(2)(b) of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR), in circumstances where the Company does not have sufficient available property to incur the costs of doing so. Mr Condon, by his affidavit dated 12 August 2026, estimates that convening a creditors’ meeting would cost $11,112.20 (including GST) and has offered to comply with Mr Graham’s direction if this amount is paid by Mr Graham into the trust account for the liquidation.

Submissions of the parties

20    At the hearing on 26 August 2026, it became clear that Mr Graham does not contest that the present assets of the Company are insufficient to meet the costs that would be incurred by Mr Condon in calling a meeting. Nor does Mr Graham contest that it is reasonable that he provide money to meet the cost of calling the meeting. However, Mr Graham contends that he should not have to provide the $11,112.20 sought by Mr Condon, on the basis that the costs estimate provided by Mr Condon is excessive. Mr Graham also submits that the cost of the meeting should not include any solicitors’ costs, and that this contributes to the excessive costs estimate.

21    Mr Condon relies upon the terms of s 75-15 of the IPS Corps, which relevantly provides as follows:

(1)    The external administrator of a company must convene a meeting of the creditors if:

…

(c)    at least 25% in value of the creditors direct the external administrator to do so in writing;

(d)    both of the following are satisfied:

(i)    less than 25%, but more than 10%, in value of the creditors direct the external administrator to do so in writing;

(ii)    security for the cost of holding the meeting is given to the external administrator before the meeting is convened; or

…

(2)    However, the external administrator need not comply with the direction if the direction is not reasonable.

(3)    The Insolvency Practice Rules may prescribe circumstances in which a direction is, or is not, reasonable.

…

22    The relevant provision of the IPR (r 75-250) provides as follows:

(2)    A direction to the external administrator of a company to convene a meeting of the creditors is not reasonable if the external administrator, acting in good faith, is of the opinion that:

…

(b)    there is not sufficient available property to comply with the direction;

…

23    Mr Condon highlights that, with respect to the operation of these provisions, the question for the Court is not whether the direction to convene a meeting of the company’s creditors is objectively reasonable, but rather whether the liquidator has, in good faith, formed an opinion on any of the matters identified in rule 75-250 of the IPR. In Re Balamara Resources Ltd (in liq) (2025) 177 ACSR 164; [2025] NSWSC 618 (Re Balamara), in the context of an application for a declaration that the liquidators were justified in declining to convene a creditors’ meeting, Black J observed (at [40]) that:

In his opening outline of submissions, [senior counsel] submits, by reference to these provisions and the case law, and I accept, that:

The question for the Court is not whether the Direction was reasonable. Rather, the question is whether the Liquidators, acting in good faith, formed an opinion of either of the matters (relevantly) in 75-250(2)(a) or (d) of the IPR. If the Court is of the view that such an opinion was formed in good faith, then there was no need for the Liquidators to comply with the Direction…The structure of the provision, namely by leaving it to the Liquidator to decide, acting in good faith, as to whether the Direction is justified, reinforces the practitioner’s role as being primarily responsible for the conduct of the winding up — subject ultimately though to supervision and control by the Court and creditors — the latter through exercise of statutory rights given by the Act, the Insolvency Practice Schedule and Rules.

24    This decision was affirmed on appeal in Ample Skill Ltd v Reidy [2026] NSWCA 32 (Reidy), at [159]-[163], where Ward P (Payne JA and Free JA agreeing) observed that:

159    No error has been established in the construction of r 75-250 of the IPR. The rule in its terms provides that a direction to convene a meeting of creditors is not reasonable if the external administrator “acting in good faith” is of the requisite opinion. As the Liquidators contend, the predicate of “acting in good faith” qualifies the subject of the condition (the external administrator) not the opinion itself. Therefore, the question is as to whether the external administrator (here, the Liquidators) has, acting in good faith, formed the requisite opinion. While there is not a direct reference to the process of decision-making, that is clearly what must be explored when determining whether the opinion that has been formed has been reached in good faith.

160    There is no basis for reading into the rule a requirement that the opinion be one that is objectively reasonable. It may readily be accepted (as the Liquidators have) that an opinion which is arbitrary or capricious is unlikely to have been one reached when acting in good faith. However, that does not mean that there is a requirement of reasonableness in the sense of the opinion being one that must be shown to have been reached in the absence of capriciousness, as the Liquidators have submitted. Rather, it points to the difficulty an external administrator is likely to have of showing that an arbitrary or capricious decision was made in good faith.

…

163    As indicated above, I do not accept that a “narrow” reading of the good faith requirement undermines the objective of empowering creditors to protect their interests (by ensuring their ability to call meetings to monitor the administration of the winding up and to remove external administrators) or provides a “backdoor” for liquidators to defeat creditors who desire to remove them. The right of creditors to direct the convening of a meeting (including one to consider a resolution to remove the external administrators) is subject to the limitation that the external administrator may decline to convene the meeting if the direction to convene a meeting is unreasonable. When such a direction will be unreasonable for this purpose is provided for by r 72-250 and, as his Honour found, that rule sets out exclusively the circumstances in which a direction will be unreasonable. The requirement that the external administrators act in good faith in forming an opinion of the kind required before the direction will be unreasonable is the protection against the creditors being denied the right to request that a meeting be convened.

25    There is no need in the present case to consider the outer limits of the meaning of “good faith” in r 75-250 of the IPR.

26    To the extent that Mr Graham raises the question of whether the decision of Mr Condon was made in good faith, he alleges in his written submissions dated 12 August 2026 (at Part D) that this case has a “materially different history” from Re Balamara and Reidy. Mr Graham submits that Mr Condon initially said that he would not decide the request for a creditors’ meeting at all due to Mr Graham not substantiating his POD and that Mr Condon now states (for the first time on 12 August 2026) that he cannot act due to the request being unreasonable.

27    Mr Graham also contends that, given that s 75-15(1)(d) of the IPS Corps requires security where the voting percentage of the creditors calling the meeting is less than 25%, no such security can be required when the creditors calling the meeting have 25% or more as in the present case.

28    Mr Graham also contends that Mr Condon’s “proof of debt objection has failed”.

Consideration

29    The present application can be dealt with briefly. It is misconceived. There is no proper basis for the Court to make any order of the type sought by Mr Graham. Mr Condon has set out detailed and itemised evidence of the costs he expects to incur in calling a meeting. The evidence makes plain, and I find, that the Company does not have sufficient assets to meet these costs. This fact is not disputed by Mr Graham in any event. Mr Condon has decided that there is no sufficient property available to him to comply with the direction. That is a matter for Mr Condon to decide, provided that he acts in good faith. There is no basis for suggesting that Mr Condon has not acted in good faith. There is no separate requirement that Mr Condon’s opinion be objectively reasonable.

30    Mr Graham accepts that he cannot require Mr Condon to call a meeting without underwriting the costs of that exercise, but does not agree to meet the costs identified by Mr Condon. Mr Graham has not proposed any particular lesser amount. There has therefore been no further occasion for Mr Condon to make a fresh determination as to whether the property available to the Company, including any amount provided by Mr Graham, is “sufficient” within the meaning of rule 75-250(2)(b) of the IPR.

31    More generally, in the circumstances of the present case, Mr Graham cannot obtain an order compelling Mr Condon to call a meeting just because Mr Graham considers that the meeting should be able to be held for a lesser amount than the costs estimated by Mr Condon. It is a matter for Mr Condon, provided no absence of good faith is demonstrated.

32    Even if the Court was to consider that the costs estimate was somewhat excessive, that would not be a basis for making an order of the type sought by Mr Graham, provided that it did not impugn the position that Mr Condon was acting in good faith. However, there is in any event nothing in the present case to suggest that Mr Condon’s estimate is excessive. The practical effect of the order sought by Mr Graham would be to force Mr Condon to call a meeting where there are insufficient funds for that purpose, thus in effect forcing Mr Condon to incur personal expenses. It is plainly inappropriate for the Court to make such an order.

33    In relation to Mr Graham’s contention that Mr Condon is not acting in good faith because he has changed the basis on which he is resisting the calling of the meeting, this complaint is of no substance. There has been no inconsistency in the position adopted by Mr Condon. The development is not a change of position as such but rather is the result of the belated provision of substantiating documentation relating to Mr Graham’s POD and therefore does not reflect any lack of good faith. Further, the solicitors for Mr Condon made clear in their letter of 18 June 2026 that even if Mr Graham was to provide verification for his claim, it might still be unreasonable to call a meeting.

34    In relation to Mr Graham’s contention in his written submissions that the requirement for security in the circumstances identified in s 75-15(1)(d) of the IPS Corps means that no security can be required in the circumstances identified in s 75-15(1)(c), it is not clear whether this contention is pressed in light of the stance adopted by Mr Graham in oral submissions. Nevertheless, it is misconceived. The provisions of the IPS Corps operate such that if creditors representing less than 25% by value call the meeting then security may be required, but if there is 25% or more then the company will pay. That is subject to s 75-15(2) and (3), which provide an exception if the direction is not reasonable, and pursuant to the IPR a direction is not reasonable if (inter alia) the external administrator, acting in good faith, considers that there is not sufficient available property to comply with the direction (i.e., inter alia, the company cannot fund the meeting). The structure of s 75-15 does not mean that the external administrator can never require security if creditors representing over 25% of value call for a meeting.

35    The Interlocutory Application should be dismissed.

36    In relation to costs, Mr Graham in his written submission suggests that he has achieved most of what he set out to achieve. In one sense, Mr Graham has made progress, in that Mr Condon has accepted that Mr Graham is a creditor entitled to call a meeting of creditors. However, that is not a result of the present application but is a result of Mr Graham belatedly providing supporting evidence for his POD, evidence which Mr Condon had been seeking for a long time. In those circumstances, there is no reason to make any order other than the usual order that costs should follow the event.

Associate:

Dated:    21 October 2026