ASIC v Bettles
A look at the common law duties of a Liquidator draws on the case of Australian Securities and Investments Commission v Bettles 2023 FCA 975 (“ASIC v Bettles).
Australian common law and that of England and Wales are usually not often in conflict where a Liquidator’s duties are concerned.
In ASIC v Bettles the Australian regulator sought cancellation of Jason Bettles’ registration as a Liquidator. The application was dismissed.
The judgment was a lengthy document and amongst other things considered the common law duties of a Liquidator when assessing the conduct of Jason Bettles.
Standard Of Conduct Of A Liquidator
The critical function of a Liquidator is to identify, take possession and realise the company’s assets. In addition, he or she has to investigate, determine creditor claims and apply the realisations in accordance with the statutory order of payment in insolvency proceedings.1
Liquidators have to become properly familiar with the affairs of the company and not to suppress or conceal anything arising from their investigations.2
A Court appointed Liquidator is an Officer of the Court entrusted to match the Court’s requirement for impartial and proper performance of duties.
Liquidators must not only be independent of the company but must also be seen to be independent of the company.3
Reasonable Care And Skill
A Liquidator is expected by the public to perform their role to a high standard, to act with reasonable care and diligence in good faith as someone paid to do the job of Liquidator.4 They have a fiduciary duty to act with complete impartiality between creditors and avoid personal interests conflicting with the duty of the office of Liquidator.
Reasonable care and skill does not mean a Liquidator’s conduct should be judged with wisdom born of hindsight.
There is a duty to undertake the role within a reasonable period of time.5
When in difficulty there is a clear duty to inform the Court and seek directions.
Agent Of The Company
As an agent of the company a Liquidator owes fiduciary duties, acting honestly6 and deploying his or her powers for a proper purpose.
The fiduciary duty is owed to the company and not to individual creditors. As a result, save where there is a statutory entitlement, a creditor has no right of action against a Liquidator for damages or compensation.
Whilst a Liquidator has a duty to pay attention to the interests of creditors the duty is not to shareholders or creditors.
Similarity To Director Duties
Liquidators are subject to the same statutory duties as directors.7
References
1ASIC v Edge [2007] VSC 170; (2007) 211 FLR 137 at [40]
2Re Contract Corporation (Gooch’s Case) [1872] UKLawRpCh 19; (1871) LR 7 Ch App 207 at 211.
3Re National Safety Council of Australia, Victorian Div [1990] VicRp 2; [1990] VR 29; (1989) 15 ACLR 602; Bovic Lend Lease Pty Ltd v Wily (2003) 45 ACSR 612; 21 ACLC 1737; [2003] NSWSC 467 at [123].
4Pace v Antlers Pty Ltd (in liq) (1998) 80 FCR 485 at 497, 499.
5Re House Property & Investment Co [1954] Ch 576 at 612.
6ASIC v Edge [2007] VSC 170; (2007) 211 FLR 137 at [44]; Re Owston Nominees No 2 Pty Ltd (in liq) (rec and mgrs apptd) (2013) 94 ACSR 500; [2013] NSWSC 538 at [24].
7ASIC v Dunner (2013) 303 ALR 98; [2013] FCA 872 at [28].
