Condon v Watson [2009] FCA 11 (14 January 2009)

CORPORATIONS – C and W both registered liquidators and official liquidators – W becomes employed by C – at that time W is already sole court appointed liquidator of two companies and sole liquidator of five companies the subject of creditors’ voluntary windings up – C and W are appointed as liquidators of nine companies the subject of court-ordered windings up, as liquidators of eight companies the subject of creditors’ windings up, as voluntary administrators of one company, and as administrators of deeds of company arrangement in respect of 11 companies – W ceases to be employed by C – C and W agree that W will resign all offices and that C will fill all offices – W signs notices of resignation of all offices – W’s entitlement unilaterally to resign office – whether, in the case of the sole appointments, Court can and should appoint C as W’s successor in office – whether, in the case of the co-appointments, C continued in office alone – exercise of discretion to enable C to continue in office alone.

BANKRUPTCY – C and W both registered trustees in bankruptcy – W becomes employed by C – during W’s employment by C, C and W are appointed as trustees in bankruptcy in respect of each of 33 bankrupt estates – the bankruptcies are pursuant to sequestration orders or the filing of debtors’ petitions – W ceases to be employed by C – C and W agree that W will resign as co-trustee, leaving C as sole trustee – W tenders written resignations as co-trustee in bankruptcy – whether Court should accept W’s resignations – direction that W entitled to continue as sole trustee of each bankrupt estate.

Corporations Act 2001 (Cth) ss 447D, 449C, 449D, 451A, 451B, 473, 479, 499, 502, 503, 511, 530, 532(9)
Bankruptcy Act 1966 (Cth) ss 134, 156A, 160, 179, 180
Bankruptcy Regulations 1966 reg 13.07, Form 12
Federal Court (Bankruptcy) Rules 2005 r 8.02
Federal Court (Corporations) Rules 2000 r 5.5(2), 7.1
Supreme Court (Corporations) Rules 1999 r 7.1

Re Aplin, Brown & Co Ltd [1902] St R Qd 67 discussed
Re McGrath [2005] NSWSC 506; (2005) 54 ACSR 55 discussed
Re Application of Vouris [2004] NSWSC 384; (2004) 49 ACSR 543 discussed
Re Wallace Smith; National Express Group Australia (Bayside Trains) Pty Ltd
(recs & mgrs apptd) (admins appted)s (2003) 46 ACSR 674 discussed
Ex parte Griffin; Re Dixon (1826) 2 GL&J 114 cited
Re Gudgeon; Ex parte Pegler (1969) 13 FLR 350 cited

Keay A, McPherson’s Law of Company Liquidation (4^th ed, LBC Information Services, 1999)

SCHON GREGORY CONDON v DAVID PATRICK WATSON

NSD 1848 of 2008

LINDGREN J
14 JANUARY 2009
SYDNEY

BY CONSENT THE COURT:

In relation to each of the 33 bankrupt estates listed in Schedule 1 to these orders (of which the parties are trustees):

1. Orders pursuant to s 180 of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act), that the resignation of the defendant, David Patrick Watson (Mr Watson) as one of two trustees of the estate be, and the same is hereby, accepted.

3. Directs pursuant to s 134(4) of the Bankruptcy Act that from acceptance today of Mr Watson’s resignation, the plaintiff, Schon Gregory Condon (Mr Condon) is sole trustee of the estate and is entitled and obliged to act as such.

In relation to each of the two companies identified in Schedule 2 to these orders (of which Mr Watson is sole court appointed liquidator):

4. Notes that on 3 December 2008, Mr Watson resigned as liquidator of the company.

In relation to each of the five companies the subject of creditors’ voluntary windings up identified in Schedule 3 to these orders (of which Mr Watson is sole liquidator):

6. Notes that Mr Watson resigned as liquidator, in the case of Furnetec Pty Ltd on 10 December 2008 and in the case of each of the other four companies on 27 November 2008.

7. Pursuant to s 502 of the Corporations Act, appoints Mr Condon as liquidator of the company.

In relation to each of the nine companies the subject of court-ordered windings up identified in Schedule 4 to these orders (of which Mr Condon and Mr Watson are liquidators):

8. Notes that Mr Watson resigned as one of the two liquidators of the company on 3 December 2008.

9. Directs pursuant to s 479(3) of the Corporations Act that from the time of Mr Watson’s resignation, Mr Condon has continued to be liquidator of the company and has been, and continues to be, entitled and obliged to act as such.

In relation to each of the eight companies the subject of creditors’ windings up identified in Schedule 5 to these orders (of which Mr Condon and Mr Watson are liquidators):

10. Notes that Mr Watson resigned as one of the two liquidators of the company on 27 November 2008.

11. Determines pursuant to s 511(2) of the Corporations Act, that from the time of Mr Watson’s resignation, Mr Condon has continued to be liquidator of the company and has been, and continues to be, entitled and obliged to act as such.

In relation to the company the subject of voluntary administration identified in Schedule 6 to these orders:

12. Notes that Mr Watson resigned as one of two administrators of the company on 27 November 2008.

13. Pursuant to s 477D(1) of the Corporations Act, directs Mr Condon that since Mr Watson resigned, Mr Condon has continued to be voluntary administrator of the company and has been, and continues to be, entitled and obliged to act as such.

In relation to each of the eleven companies the subject of a deed of company arrangement identified in Schedule 7 to these orders (of which Mr Condon and Mr Watson are deed administrators):

14. Notes that Mr Watson resigned as one of two administrators of the relevant deed of company arrangement (DOCA) on 9 December 2008.

15. Pursuant to s 477D of the Corporations Act, directs Mr Condon that from the time of Mr Watson’s resignation, Mr Condon has continued to be administrator of the DOCA and has been, and continues to be, entitled and obliged to act as such.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

Estate Name	Case Number
AL EIDANY, Muhannad Admad	NSW 6815/7/4
BESHARA, Gabriel and Samira	NSW 3943/8/7
BSAT, Victor	NSW 8671/7/0
CROSBIE, Kym	NSW 1627/8/1
DE TORRES, Santiago	NSW 5977/8/1
DEAN, Chrysanthi	QLD 2638/8/5
DIB, Marwan and Caroline	NSW 4124 of 2008/8
DISSANAYAKE, Dylan	NSW 6723/8/7
EAGLESHAM, Matthew	QLD 4488/7/4
ELSMORE, Grant Baikie	NSW 8729/7/3
EWART, Michael Dean	NSW 3836/8/0
FARID, Meiry Tanas	NSW 2453/8/7
FARID, Wagih Victor	NSW 1488 of 2008/2
FOX, Michael and Sarah	NSW 7263 of 2008/7
FROST, Neil	NSW 7090 of 2008/4
HAN, Sang	NSW 5214/7/7
JORDAN, Leon Thomas	NSW 6700/8/4
JOVANOVIC, Dragisa	NSW 7180 of 2007/3
KAZAS, Stephen	QLD 627/2008/4
KERR, Michael	NSW 8433/8/3
KNOTT, Rhana	QLD 4487/7/3
LA ROSA, Vincenzo	NSW 6827/08/1
LATTOUF, Barry	NSW 7466/7/9
LAURENT, Christopher Dario	QLD 3540/8/7
MEALE, Gregory	NSW 4677/8/1
MINJOOT, Felicia	NSW 7957/7/6
PUDSEY, Glenn	NSW 3807/8/1
SAN, Bao	NSW 5589/8/3
SKELLY, Rosaleen	NSW 4964/7/4
SMITH, Geoffrey	NSW 6138/8/2
VAN DEN BOOGARD, Gerardus and Eleanor	NSW 5762 of 2008/6
YILDIRIM, Nurdogan	QLD 691/2008/8

Company Name

Area 3 Pty Limited ACN 108 156 565 (in liquidation)

Craig Ball Bricklaying Pty Limited ACN 108 614 688 (in liquidation)

Furnetec Pty Limited ACN 102 213 016 (in liquidation)

Handy Crete (NSW) Pty Limited ACN 096 917 261 (in liquidation)

Penrith Ventures Pty Limited ACN 092 184 122 (in liquidation)

Company Name	Court	Case No.
Choirpractice Taven Pty Limited ACN 107 240 282 (in liquidation)	Supreme Court of NSW	3747/08
Frith's Pty Limited ACN 096 459 531 (in liquidation)	Supreme Court of NSW	003495/08
Hotel Naughtons Pty Limited ACN 104 142 529 (in liquidation)	Supreme Court of NSW	003855/08
Interline Interior Linings (NSW) Pty Limited ACN 090 790 720 (in liquidation)	Supreme Court of NSW	003690/08
Material Boy Pty Limited ACN 124 507 615 (in liquidation)	Supreme Court of NSW	4884/08
Orchard Holdings (NSW) Pty Limited ACN 097 062 283 (in liquidation)	Supreme Court of NSW	003731/07
Pyoja Pty Limited ACN 003 762 212 (in liquidation)	Supreme Court of VIC	8765/07
Quicki Smoothi Bars (St Ives) Pty Limited ACN 059 506 151 (in liquidation)	Supreme Court of NSW	3377/08
Sooncorp Investment Management Pty Limited ACN 089 529 180 (in liquidation)	Supreme Court of NSW	3386/08

Company Name

Echo Trading Pty Limited ACN 116 428 865 (in liquidation)

Marrickville Anzac Memorial Club Limited ACN 001 013 083 (in liquidation)

Planet Painting Pty Limited ACN 106 581 533 (in liquidation)

PLM Distributors Pty Limited ACN 101 094 044 (in liquidation)

Premium Computers QLD Pty Limited ACN 103 841 792 (in liquidation)

Rapid Building Services Pty Limited ACN 003 133 588 (in liquidation)

Smart Services Partners Pty Limited ACN 094 086 343 (in liquidation)

The Equipment Repair Company Pty Limited ACN 095 596 973 (in liquidation)

Company Name

BPG Corporate Services Pty Limited ACN 086 940 285
(Subject to Deed of Company Arrangement)

BPG Design Studio Pty Limited ACN 104 214 404
(Subject to Deed of Company Arrangement)

BPG Property Services No 1 Pty Limited ACN 086 898 786
(Subject to Deed of Company Arrangement)

BPG Property Services No 2 Pty Limited ACN 092 516 768
(Subject to Deed of Company Arrangement)

FNQ Property Services No 2 Pty Limited ACN 105 000 708
(Subject to Deed of Company Arrangement)

Hunter Homebase Pty Limited ACN 101 662 702
(Subject to Deed of Company Arrangement)

Lindsay Management Consultancy Services Pty Limited ACN 074 822 558
(Subject to Deed of Company Arrangement)

Manning Rhodes and Associates Pty Limited ACN 083 028 219
(Subject to Deed of Company Arrangement)

MG Developments No 3 Pty Limited ACN 100 532 312
(Subject to Deed of Company Arrangement)

Polo Pastoral Pty Limited ACN 107 215 412

(Subject to Deed of Company Arrangement)

Polo Properties Pty Limited ACN 003 733 631
(Subject to Deed of Company Arrangement)

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

1 These are the reasons why I made orders and gave directions on 18 December 2008. I will refer to those orders and directions as "the Orders".

3 Mr Condon practises under the name "Condon Associates". A company called HAS Administration Pty Ltd (HAS) provides services, including staff, to Condon Associates.

4 Pursuant to a letter dated 28 March 2008 from HAS to Mr Watson, Mr Watson became employed by HAS, which provided his services to Condon Associates. In substance, therefore, though not in form, Mr Condon employed Mr Watson.

5 On or about 14 October 2008 Mr Watson’s employment ceased. On 19 November 2008 the parties entered into a written agreement providing for a parting of the ways.

7 During Mr Watson’s time at Condon Associates, he and Mr Condon were appointed, relevantly as:

8 One aspect of the parties’ separation was that Mr Watson agreed to resign all of his insolvency appointments, both bankruptcy and corporate, in favour of Mr Condon. While it was plain that this was what both parties wished to achieve, there were procedural complexities. The nature and circumstances of the appointments are diverse and different statutory regimes apply.

9 Mr Watson appeared by a solicitor on the record, Mr Graeme Vietch of Brock Partners. The Court indicated that it would be assisted if the solicitor for Mr Watson took an active role. Mr Vietch’s response, as conveyed to the Court by the solicitor for Mr Condon, was that he was not able to do so. It is not clear what this meant. Perhaps it meant that Mr Vietch had not been put in funds by Mr Watson to take an active role having regard to the fact that it was Mr Condon, not Mr Watson, who had a commercial interest in the outcome of the proceeding. Perhaps it meant that Mr Watson had not left Mr Condon on amicable terms, and, beyond signing notices of resignation, Mr Watson was not willing to assist Mr Condon.

10 Be this as it may, it was disappointing that Mr Watson, as an officer of the Court for bankruptcy and liquidation purposes, should, through his solicitor, Mr Vietch, not have discharged his responsibility to assist the Court. In some cases it may be enough that a solicitor on the record provides documents while leaving the conduct of a proceeding to the solicitor for the other party, but this was not one of those cases.

11 To the extent necessary, I treated the present application as being made by Mr Watson as well as by Mr Condon, even though Mr Watson was named as a respondent and only expressed himself as resigning the relevant offices.

12 It is important to understand that according to the evidence, it was Mr Condon and Mr Watson who sought the appointment of themselves as co-trustees, co-liquidators, co-administrators and co-deed administrators in relation to the appointments referred to at [6]-[7] above. In no case did anyone else, such as creditors or a Court, insist on the appointment of two persons. I am satisfied that one rather than both of them might just as easily have been appointed, and that it was immaterial that two had in fact been appointed.

13 Affidavit evidence showed that Mr Condon and Mr Watson sought the appointment of them both in order to cover the position when one or other of them might be absent from the office on leave or for any other reason. I infer that they performed their functions and exercised the powers associated with the various offices as if their appointments had been joint and several.

14 Affidavit evidence also showed that the staff at Condon Associates who were handling the various bankruptcies, corporate insolvencies, voluntary administrations and administrations under deeds of company arrangement during Mr Watson’s time with Condon Associates, had continued to do so following his departure under the supervision of Mr Condon alone. In view of Mr Watson’s departure and Mr Condon’s possession of all relevant files, it was difficult to see any practicable alternative to Mr Condon’s filling the various offices alone.

15 I was satisfied on the evidence to which I have referred that it would be wasteful and inconvenient for the various groups of creditors to be consulted. The cost of ascertaining their wishes would be borne out of the assets constituting the various estates in bankruptcy or the assets of the various companies the subject of external administration, as the case may be.

16 There was evidence that the Insolvency and Trustee Service Australia (ITSA) and ASIC had been notified of the application and had indicated that they did not wish to be heard in opposition to it.

17 In view of all the circumstances referred to above, I was of the opinion that it was in the interests of creditors that the Court should, if possible, facilitate Mr Condon’s continuing to occupy each of the offices in question alone.

1. In relation to each of the 33 bankrupt estates listed in Schedule 1 to the Orders (of which the parties are trustees)

18 Mr Watson signed a written resignation as trustee in relation to each bankruptcy.

I will return to this section below, but first it is necessary to refer to the circumstances and nature of the appointments of Messrs Condon and Watson as trustees of the estates.

20 Mr Condon and Mr Watson became trustees of each of the 33 estates when the debtor became a bankrupt, either upon the making of a sequestration order or upon the Official Receiver’s acceptance of a debtor’s petition: see ss 43(2), 55(4A) and 156A(3)(a) of the Bankruptcy Act. In each case, Messrs Condon and Watson had filed with the Official Receiver a consent to act as trustee of the estate of the debtor under s 156A(1) of the Bankruptcy Act.

The approved form is Form 12 to the Bankruptcy Regulations 1966 (Cth) (Bankruptcy Regulations) (Form 12).

22 It will be noted that a registered trustee who has consented becomes trustee of a bankrupt estate by the operation of the Bankruptcy Act. There is a question whether it is open to two or more registered trustees to sign a form of consent to act, and so to be trustees of an estate. In the present case, there was no contradictor to argue that Mr Condon and Mr Watson were not both validly in office in respect of each estate.

23 Section 156A contains no provision comparable to s 158 of the Bankruptcy Act which expressly empowers the creditors, if they think fit, to appoint two or more registered trustees jointly, or jointly and severally, to the office of trustee. The omission of any comparable provision in s 156A may suggest an intention that only a single registered trustee may sign a consent and become trustee pursuant to that section, notwithstanding the presumption that the singular includes the plural: see Acts Interpretation Act 1901 (Cth) s 23.

24 However, Form 12 (referred to at [21] above) assumes that two or more registered trustees may be trustees in bankruptcy pursuant to s 156A(3). It expressly allows for two or more registered trustees to complete and sign the form.

25 There were in evidence certificates of appointment issued by the Official Receiver pursuant to s 156A(6) of the Bankruptcy Act in relation to the 33 bankruptcies. The certificates are stated to have been extracted from the National Personal Insolvency Index (NPII). Pursuant to reg 13.07 of the Bankruptcy Regulations 1966 (Cth) the certificates are therefore proof, in the absence of evidence to the contrary, of the information on the NPII that is stated in each of the certificates. I proceed on the basis that Messrs Condon and Watson are trustees of each of the 33 estates.

26 The question remains as to whether the appointments of Messrs Condon and Watson were joint or joint and several.

27 Form 12 does not invite the registered trustees signing the form to indicate a choice between a joint office and joint and several offices. There is a question whether it is open to multiple registered trustees, such as Messrs Condon and Watson, to include in Form 12 some such words as "jointly" or "jointly and severally", and so to secure for themselves appointment as joint and several trustees. The certificates were silent on the present question.

28 Section s 5(4) of the Bankruptcy Act does not assist on the question whether Messrs Condon and Watson are joint or joint and several trustees because it assumes that persons are already known to be "joint trustees" or "joint and several trustees".

29 The general rule of law is that two or more trustees in bankruptcy "have only a joint and not a separate authority", although the exigencies of the circumstances of a particular bankruptcy may make it proper for one to leave certain tasks to the other without being liable for the other’s default: see Ex parte Griffin; Re Dixon (1826) 2 GL&J 114 at 116, cited in Re Gudgeon; Ex parte Pegler (1969) 13 FLR 350 at 352.

30 Mr Condon and Mr Watson were not "appointed". Rather they activated the statutory mechanism by which they secured for themselves the office of trustees in bankruptcy. There was no appointer who have chosen to have two trustees.

31 I infer that the intention of Mr Condon and Mr Watson was that they be joint and several trustees: as noted earlier, they put both of themselves forward so that either one could act as the circumstances might require. However, I do not think that that undisclosed intention signifies that their appointment was in fact as joint and several trustees. Rather, I think that they held office as joint trustees: see [29] above.

32 It is necessary in the light of this conclusion to return to s 180 of the Bankruptcy Act, set out at [19] above.

33 In my opinion, on the basis that multiple trustees are permissible, s 180 allows the Court to accept the resignation of one of them. The alternative and narrower construction is that the Court can accept the resignation, whether of one trustee or of multiple trustees, only if no registered trustee would be left in office. I cannot think of any sensible purpose that would have been intended to be served by this narrower construction.

34 The power of the Court to remove a trustee given by s 179 of the Bankruptcy Act is available only following an inquiry into the conduct of a trustee in relation to the bankruptcy and is inappropriate in the present circumstances. The present case is therefore not one in which the Court could accept Mr Watson’s resignation, remove Mr Condon and reappoint Mr Condon.

35 Upon the Court’s acceptance of Mr Watson’s resignation, Mr Condon would remain a trustee of each estate. In these circumstances I do not think s 160 of the Bankruptcy Act would be activated. That section provides:

36 The resolution of the issue before the Court is to be found in the Court’s power under s 180 to accept Mr Watson’s resignation "subject to such terms and conditions as it thinks just" (see [19] above). In circumstances in which there are multiple trustees, the terms of s 180 are apt to entrust to the Court the function of ensuring the continuance of the office of trustee of a bankrupt estate. In the present case it would have been appropriate to make the Court’s acceptance of Mr Watson’s resignation subject to the condition that Mr Condon consent to continue as sole trustee. In fact, Mr Condon had so consented, thereby satisfying in advance the hypothetical contemplated condition.

37 Since the hypothetical contemplated condition had already been satisfied, I considered it appropriate to give a direction pursuant to s 134(4) of the Bankruptcy Act that from the time of the Court’s acceptance of Mr Watson’s resignation, Mr Condon would be sole trustee of each estate and would be entitled and obliged to act as such. Section 134(4) provides:

38 I also made an order pursuant to O 1 r 8 of the Federal Court Rules that compliance with the requirements of rule 8.02(1) and (2) of the Federal Court (Bankruptcy) Rule be dispensed with.

2. In relation to each of the two companies identified in Schedule 2 to the Orders (of which Mr Watson was sole court appointed liquidator)

39 Mr Watson was appointed as sole liquidator of Coastace Pty Ltd by the Supreme Court of New South Wales on 28 June 2006 (proceeding number 002262/2006), and as liquidator of Goodbat Pty Limited by the Family Court of Australia on 6 March 2008 (proceeding number SYF4776/2005).

41 In relation to the appointment by the Supreme Court of New South Wales (Coastace Pty Ltd), the Supreme Court (Corporations) Rules 1999 (SC Corporations Rules) apply. Like the Federal Court (Corporations) Rules 2000 (FC Corporations Rules), they are part of the harmonised scheme of Corporations Rules of the Federal Court and all State and Territory Supreme Courts. Those harmonised rules are not, however, rules of the Family Court of Australia.

43 The evidence showed that Mr Watson filed with the Supreme Court of New South Wales and lodged with ASIC a memorandum of resignation in relation to Coastace Pty Ltd on 3 December 2008. His resignation as liquidator of that company therefore took effect on that date.

44 In relation to Goodbat Pty Ltd, a notice of resignation was lodged with ASIC on 3 December 2008. I infer that in this case also, the resignation took effect on that date.

I do not think that this provision means that the vacancy must be filled by the Court that made the original appointment of the liquidator. It is not as if the filling of the vacancy involves a variation of, or other form of interference with, the order made by the appointing Court. It is sufficient that the vacancy is filled by a "Court" as defined in s 58AA of the Corporations Act. Accordingly, this Court can fill both vacancies.

46 There was a total vacancy in the office of liquidator in the case of each of the two companies referred to, and it was appropriate that Mr Condon be appointed to fill that vacancy. In relation to each company, he had signed a form of consent to act as liquidator pursuant to s 532(9) of the Corporations Act and r 5.5(2) of the FC Corporations Rules.

47 I ordered that Mr Condon be appointed as liquidator of each of the two companies. That appointment took effect from the date of the making of the Orders, 18 December 2008 (each company was without a liquidator from 3 December 2008 to 18 December 2008).

3. In relation to each of the five companies the subject of creditors’ voluntary windings up identified in Schedule 3 to the Orders (of which Mr Watson was sole liquidator)

48 At the time of the commencement of his employment with Condon Associates, Mr Watson was the sole liquidator of each of the five companies specified in Schedule 3 to the Orders, each of which was the subject of a creditors’ voluntary winding up.

49 Section 499(5) of the Corporations Act assumes, in the case of a creditors’ voluntary winding up, that a liquidator, other than one appointed by or by the direction of the Court, may resign his or her office. Mr Watson signed forms of resignation as liquidator in the case of each of the five companies listed in Schedule 3 to the Orders. The signed form of resignation was served on the relevant company, being delivered, in each case, to the office of the liquidator, namely, Condon Associates (see s 109X(1)(c) of the Corporations Act). In the case of all but one of the five companies, delivery took place on 27 November 2008. In the case of the remaining company, Furnetec Pty Ltd, delivery took place on 10 December 2008.

50 In relation to each of the five companies Mr Condon had signed a form of consent to act as liquidator pursuant to s 532(9) of the Corporations Act and r 5.5(2) of the FC Corporations Rules.

51 Section 499(5) of the Corporations Act, to which I referred above, provides that "the creditors" may fill the vacancy caused by the resignation. I referred at [15] above to the evidence of the inconvenience, cost and wastefulness of seeking an appointment by the creditors.

53 In Re Application of Vouris [2004] NSWSC 384; (2004) 49 ACSR 543 (Vouris), Barrett J had occasion to consider the relationship between s 499(5) and s 502 (at [8]-[10]). His Honour treated the s 502 power as an "overarching" power and exercised it in order to avoid the expense and inconvenience associated with the convening of a meeting of creditors (at [10]). Unlike the position in relation to the present five companies, that was a case of the appointment of multiple liquidators by the creditors. Accordingly, in that case, the creditors at least had approved of the identity of the continuing liquidator. Although that was not so in the present case, it was my view that a case was made out for the Court’s exercising the power under s 502 and I followed that course.

4. In relation to each of the nine companies the subject of court ordered windings up identified in Schedule 4 to the Orders (of which Mr Condon and Mr Watson were liquidators)

54 During Mr Watson’s time at Condon Associates, he and Mr Condon were appointed as liquidators of each of the nine companies identified in Schedule 4 to the Orders. In the case of eight of the companies, the winding up order and the appointment were by the Supreme Court of New South Wales. In the case of the remaining company, Pyoja Pty Ltd, the winding up order and the appointment were made by the Supreme Court of Victoria.

55 As noted at [40] above, s 473(1) of the Corporations Act provides that a liquidator appointed by the Court may resign. I also refer to rule 7.1 of the harmonised corporations rules of court (set out at [42] above). The evidence shows that written resignations signed by Mr Watson were filed in the Supreme Court of New South Wales and the Supreme Court of Victoria on 3 December 2008, and that notices of the resignations were lodged with ASIC either on that day or earlier. The effective date of Mr Watson’s resignations in all nine cases was therefore 3 December 2008.

57 In the case of two of the nine companies, Orchard Holdings (NSW) Pty Ltd and Pyoja Pty Ltd, the Court making the appointment referred to it as joint and several. In the other seven cases, however, there was no purported compliance with s 473(8).

58 Subsection (7) raises two questions. The first is whether there is a "vacancy in the office of a liquidator" where there is a vacancy in the office of one co-liquidator, or only where a sole liquidator or all co-liquidators have ceased to hold office so that no one remains in office.

59 The second question is whether the word "must" means only that if a vacancy is to be filled, it is the Court and no one else that must fill it, or that the Court must fill any vacancy when it occurs, no matter what the circumstances.

60 In Re McGrath [2005] NSWSC 506; (2005) 54 ACSR 55, Barrett J appears to have thought that even where, as in the present case and in the case before him, there is a continuing co-liquidator in office, there is a "vacancy in the office of a liquidator appointed by the Court" where a co-liquidator ceases to hold office, and therefore s 473(1) requires the Court to fill the vacancy (at [5]). His Honour appointed a second liquidator to replace one who had resigned.

This provision has assimilated the position of multiple liquidators to that of multiple voluntary administrators and of multiple administrators of deeds of company arrangement under s 451A(2) and s 451B(2) of the Corporations Act respectively (set out at [84] and [93] below).

62 Clearly, s 530 produced the effect that following Mr Watson’s resignation, as prior to it, Mr Condon was entitled alone to perform the functions and exercise the powers that were vested in "the liquidators". In the result, whatever be the correct meaning of the word "must" in s 473(7), there is only a vacancy in the office of a liquidator for the purposes of that subsection where a sole liquidator or all co-liquidators have ceased to hold office.

63 Accordingly, I gave a direction pursuant to s 479(3) of the Corporations Act that from the time of the resignations, Mr Condon had continued to be liquidator and had been, and continued to be, entitled and obliged to act as such.

5. In relation to each of the eight companies the subject of creditors’ windings up identified in Schedule 5 to the Orders (of which Mr Condon and Mr Watson were liquidators)

64 During Mr Watson’s time at Condon Associates he and Mr Condon were appointed as liquidators of the eight companies listed in Schedule 5 to the Orders, which are the subject of creditors’ windings up.

65 In seven of the eight cases, the evidence showed that the resolutions appointing Messrs Condon and Watson appointed them as joint and several liquidators. In the eighth case, that of PLM Distributors Pty Ltd, the resolution simply referred to their appointment "as Liquidator to act for the purposes of winding up the company".

66 As noted at [49] above, s 499(5) of the Corporations Act assumes that a liquidator other than one appointed by the direction of the Court, may resign his or her office. In my opinion that provision applies to one of two or more liquidators as well as it does to a sole liquidator: see my observations at [33] above, which apply mutatis mutandis.

67 Mr Watson’s written resignation of office was served on the relevant company and was received, in each case, by Mr Condon at the office of Condon Associates, being the office of the liquidator (see s 109X(1)(c) of the Corporations Act).

68 Uninstructed by authority, I would have assumed that where one of two liquidators ceases to hold office, the other succeeds to the office. Barrett J may have thought similarly: see Vouris at [12]. However, his Honour considered that there was a contrary indication in McPherson’s Law of Company Liquidation (4^th ed, LBC Information Services, 1999) of which Professor Andrew Keay is the author. Footnote 237 at p 297 of that notable work states that where one of two joint liquidators dies, the appropriate course is for the Court to appoint another liquidator to act jointly with the survivor, or, in the alternative, to remove the survivor and reappoint him or her as sole liquidator. The learned author cites in support a decision of Sir Samuel Griffith, then Chief Justice of the Supreme Court of Queensland, in Re Aplin, Brown & Co Ltd [1902] St R Qd 67 (Aplin). Barrett J considered that the relevant provisions of the then Companies Act of Queensland were sufficiently similar to those of the Corporations Act to give rise to the conclusion that any difficulties of the kind suggested in that case "also conceivably arise under the present provisions" (at [13]).

69 Barrett J took the course of removing the continuing liquidator (Vouris concerned, not the death of a liquidator but the suspension of the registration of a liquidator for three months by the Company Auditors and Liquidators Disciplinary Board) and reappointing him as sole liquidator in the exercise of the power in s 503 of the Corporations Act.

Section 502 did not apply in Vouris because there was still a liquidator acting, and Barrett J considered that s 503 gave only a composite power to remove and appoint, not simply a power to appoint. His Honour noted the question whether the expression "another liquidator" means a liquidator other than the one removed, but concluded that it did not mean this.

71 It is necessary to go back to Aplin. Two persons, Aplin and Brown, were appointed as liquidators in a voluntary winding up, without any determination being made as to the exercise of their powers. They acted in the winding up jointly until Aplin died. For reasons that do not matter, the company in general meeting was not competent to act, and so there was no question of its filling of the vacancy pursuant to s 130 of the Companies Act 1863 (Qld). A representative on behalf of one of the contributories made an application by petition to the Supreme Court of Queensland for an order replacing Aplin or appointing Brown as sole liquidator.

72 Section 123(6) of the Companies Act 1863 provided that when several liquidators were appointed, their powers were exercisable by such one or more of them as might be determined at the time of their appointment "or in default of such determination by any number not less than two". In the circumstances, the effect of this provision was that although there was still a liquidator in place, he was incapable of continuing to exercise the powers of "the liquidators".

73 Until recently, the Corporations Act contained in s 506(4) an analogue of s 123(6) of the Queensland Act of 1863. Section 506(4) provided:

74 I was minded to follow the course established by Aplin and Vouris of removing the continuing liquidator, Mr Condon, and appointing him as sole liquidator. However, the position must now be considered in the light of the recent amendments made by the Corporations Amendment (Insolvency) Act 2007 (referred to at [61] above). Consistently with the new s 530 (set out at [61] above), s 506(4) of the Corporations Act was repealed by that amending Act (see s 3, Sch1, Pt 3, Item 113.)

75 As I noted at [62] above, by the operation of s 530, it is clear that following a resignation of one co-liquidator, just as prior to such a resignation, the other liquidator can perform the functions and exercise the powers of "the liquidators" except so far as the resolution appointing them otherwise provides. Although s 530 does not do so in terms, its effect seems to be to make the appointments of multiple liquidators joint and several appointments. I do not regard the terms of the appointment of Messrs Condon and Watson in the case of PLM Distributors Pty Ltd (see [65] above) as providing otherwise.

76 Accordingly, I was of the view that from the time of Mr Watson’s resignation, Mr Condon had continued to be liquidator.

78 One of the powers that the Court might exercise if the company were being wound up by the Court is a power to give directions pursuant to an application by the liquidator under s 479(3). However, I made a "determination" directly under s 511(1) that from the time of Mr Watson’s resignation, Mr Condon had continued to be liquidator of each of the eight companies, and had been, and continued to be, entitled and obliged to act as such.

6. In relation to the company the subject of voluntary administration identified in Schedule 6 to the Orders (of which Mr Condon and Mr Watson were voluntary administrators)

79 On 4 September 2008, during Mr Watson’s time at Condon Associates, Mr Watson and Mr Condon were appointed as voluntary administrators in respect of the company identified in Schedule 6, Hiafargo Pty Ltd.

80 Mr Watson’s written resignation was served on Hiafargo Pty Ltd and was received by Mr Condon at the office of Condon Associates, being the administrators’ office, on 27 November 2008 (see s109X(1)(d) of the Corporations Act).

82 Section 449C(1)(c) of the Corporations Act assumes that a voluntary administrator of a company may resign by notice in writing given to his or her appointer and to the company. In my opinion the assumption extends to one of two voluntary administrators.

83 Section 449C(2) gives the meaning of "appointer". Relevantly, if the administration began because of an appointment under s 436A, as was the case here, the appointer is the company. Mr Watson resigned as one of two voluntary administrators by notice in writing given to Hiafargo Pty Ltd on 27 November 2008.

85 In Re Wallace Smith; National Express Group Australia (Bayside Trains) Pty Ltd (recs and mgrs apptd) (admins apptd) (2003) 46 ACSR 674, Finkelstein J had to deal with an application for the appointment of a substitute administrator where one of two administrators had resigned. In the present case, however, that is not the relief sought. In passing, his Honour referred to s 449C(6) which provides:

It will be recalled that Barrett J took a similar view in the context of joint liquidators in Vouris (see [69] above).

86 By reason of s 451A(2), Mr Condon remained entitled to exercise the powers of the voluntary administrators. Indeed, the evidence shows that the appointment of Mr Condon and Mr Watson was expressed to be an appointment of them as "joint and several administrators".

88 For the above reasons, I gave a direction pursuant to s 447D(1) that since Mr Watson’s resignation, Mr Condon had continued to be voluntary administrator of the company and had been, and continued to be, entitled and obliged to act as such.

7. In relation to each of the eleven companies the subject of a deed of company arrangement identified in Schedule 7 to the Orders (of which Mr Condon and Mr Watson were deed administrators)

89 During Mr Watson’s time at Condon Associates, Mr Watson and Mr Condon were appointed as administrators under eleven deeds of company arrangement (DOCAs) in respect of eleven companies listed in Schedule 7 to the Orders.

90 Of the eleven DOCAs, nine were in a common form. They referred to the deed administrators as "joint". The same firm of solicitors prepared those nine DOCAs.

91 The other two DOCAs contained references to "joint and several". Each of those two was prepared by a different firm of solicitors – different from the firm that prepared the nine and different as between themselves.

92 I infer that Condon Associates instructed, or had some role in instructing, the firm that prepared the eight DOCAs that are in the same standard form.

94 I do not regard the use of the word "joint" in the standard form nine DOCAs referred to as providing otherwise than to the effect of s 451B(2)(a).

96 In my opinion s 449D(1) assumes that one of multiple administrators of a DOCA may resign by notice in writing given to the company. Mr Watson gave notice in writing of his resignation to each of the eleven companies on 9 December 2008 and his resignations took effect on that date.

97 It was my opinion that under s 451B(2), following the resignations of Mr Watson, Mr Condon was entitled and obliged to perform the functions and exercise the powers of "the administrators" of each of the eleven DOCAs just as he had been prior to Mr Watson’s resignations, unless and until the Court should appoint a replacement for Mr Watson. I would not appoint a replacement for the reasons given at [15] above.

98 Accordingly, I gave a direction pursuant to s 447D of the Corporations Act that from the time of Mr Watson’s resignation, Mr Condon had continued to be administrator of each of the eleven DOCAs and had been, and continued to be, entitled and obliged to act as such.

99 Counsel for Mr Condon submitted that there should be an order that Mr Condon’s costs be paid out of the assets of the bankrupt estates referred to in Schedule 1, the assets of the corporations in liquidation referred to in Schedules 2, 3, 4 and 5, the assets available to the administrator of the company (Hiafargo Pty Ltd) referred to in Schedule 6, and the assets available to the DOCA administrator in respect of each of the companies referred to in Schedule 7. I agree. However, it is important that while Mr Condon should not be out of pocket, in each case the amount of his costs and disbursements be the appropriate fraction, having regard to the fact that he has made only the one application to this Court.

100 Orders 13 and 15 made on 18 December 2008 contained a clerical slip or error. Order 13 referred to s 477D(1) of the Corporations Act rather than to s 447D(1) of that Act, and order 15 referred to s 477D of the Corporations Act rather than to s 447D(1) of that Act. On 12 January 2009, pursuant to O 35 r 7(3) of the Federal Court Rules, after notification to the parties and without objection by them, I corrected those orders.

101 It was for the reasons set out above that I made orders and gave directions on 18 December 2008.

JUDGE:	LINDGREN J
DATE OF ORDER:	18 DECEMBER 2008
PLACE:	SYDNEY

BETWEEN:	SCHON GREGORY CONDON Applicant
AND:	DAVID PATRICK WATSON Respondent

JUDGE:	LINDGREN J
DATE OF ORDER:	13 JANUARY 2009
PLACE:	SYDNEY

Counsel for the Applicant:	Mr R Marshall

Solicitors for the Applicant:	John Walsh & Partners

Solicitors for the Respondent	G Vietch of Brock Partners (who did not appear at the hearing)

Date of Hearing:	27, 28 November; 1, 17 December 2008

Date of Judgment:	18 December 2008

Date of Publication of Reasons:	14 January 2009

Federal Court of Australia