In the matter of One.Tel Limited (in liquidation)  NSWSC 1892
Last year, Johnson Winter & Slattery acted for the special purpose liquidator1 of One.Tel Limited (in liquidation) (One.Tel), Mr Stephen Parbery, in an application seeking his release from liability under section 480 of the Corporations Act 2001 (Cth) (Corporations Act) for any acts or defaults in relation to the administration of the affairs of One.Tel. As far as the Court was aware, it is the first instance of such an order being granted to a special purpose liquidator.
Mr Parbery was appointed special purpose liquidator of One.Tel in June 2012 after the Supreme Court of New South Wales found One.Tel’s creditors had justifiably lost faith in the former special purpose liquidator. The former special purpose liquidator was appointed over nine years earlier to pursue a claim on behalf of One.Tel arising from the cancellation of a renounceable rights issue in the months before One.Tel went into liquidation.
In May 2007, One.Tel had instituted proceedings in the Supreme Court of New South Wales in relation to the renounceable rights issue. Those proceedings were dismissed in September 2010 after a number of orders extending the time for service of the Statement of Claim were set aside.
In June 2012, the former special purpose liquidator caused fresh proceedings to be filed in relation to the cancellation of the renounceable rights issue, which alleged breaches by the Respondents of certain equitable duties (the Equitable Proceedings).
Mr Parbery was then appointed special purpose liquidator to prosecute the Equitable Proceedings. Those proceedings were settled in April 2014 and, consequently, the purpose for which Mr Parbery had been appointed special purpose liquidator was discharged. It was in those circumstances that Mr Parbery sought a release under section 480 of the Corporations Act.
The operation and effect of a release under section 480 of the Corporations Act
Broadly, section 480 of the Corporations Act provides that, where a liquidator has:
- realised all of the company's property, or so much of that property as can, in his or her opinion, be realised without needlessly protracting the winding-up;
- distributed any final dividend to the creditors and adjusted the rights of the contributories amongst themselves; and
- made any final return to the contributories,
he or she may apply to the Court for an order that he or she be released.
The effect of an order for release of a liquidator under section 480 is to discharge the liquidator from all liability in respect of any acts or defaults made in the administration of the company's affairs or in relation to his or her conduct as liquidator, unless the order was obtained by fraud or by suppression or concealment of any material fact, and operates as a removal from office2. The effect of the release is “to wipe the slate clean”3.
The novelty of the application by Mr Parbery was that, so far as the Court was aware, no such order had ever been previously obtained by a special purpose liquidator.
The Application – hearing and judgment
The application to release Mr Parbery as special purpose liquidator of One.Tel was heard before Black J in the Supreme Court of New South Wales on 29 September 2014. The court noted that the issue of potential novelty that arose on the application was that the authorities concerning the release of a liquidator generally relate to a liquidator appointed for all purposes. The concept of a “special purpose liquidator” is not a concept which is itself the subject of definition in the Corporations Act and, in his Honour’s view, a special purpose liquidator is simply a liquidator appointed for the purposes of the Corporations Act with a specified scope of responsibility. Accordingly, his Honour found that there was no reason of principle, statutory construction or policy why the provision in section 480 of the Corporations Act could not apply to the release of a special purpose liquidator.
Further, while the limited scope of a special purpose liquidator’s appointment may be relevant to what needs to be established in order to warrant his or her release as liquidator, it does not appear to be an obstacle to such a release in an appropriate case. Mr Parbery was therefore granted the release under section 480, subject to notice of the orders being given to certain third parties.
In appropriate cases, special purpose liquidators are entitled to a release pursuant to section 480 of the Corporations Act from liability respect of acts or defaults in the administration of the company's affairs or in relation to his or her conduct as special purpose liquidator